Boardmad

I have friends in Perth-shire have just opened their new shoot near Logiealmond. Visit their new site here to book a shoot…they can take up to 10 guns with shoots from 150 to 500 birds.

www.logiegameshooting.com

S

1. Knowledge can only be volunteered, it cannot be conscripted.
2. We only know what we know when we need to know it.
3. In the context of real need, few people will withhold their knowledge.
4. Everything is fragmented.
5. Tolerated failure imprints learning better than success.
6. The way we know things is not the way we report we know things.
7. We always know more than we can say, and we always say more than we can write down.

THERE are two radically different tales doing the rounds about HSBC, Europe’s biggest lender by market value. The first says that HSBC, deep down, is still an emerging-markets operation run by rugged types who disdain the sorcery of modern finance. Under the temporary grip of an evil spell in 2003 they bought Household, an American consumer-credit firm that then haemorrhaged losses. On March 2nd they snapped out of it. HSBC’s chairman acknowledged that it was “an acquisition we wish we had not undertaken”, wrote off its cost and promised to run down its book of dodgy loans. Having opened its heart, HSBC felt able to lower its dividend and raise its core tier-one capital ratio to 8.5%, above those of JPMorgan Chase (6.4%) and Santander (7.2%), two more of the Western world’s biggest banks also vying for the title of the safest one.

Against this there is a horror story. It says that HSBC’s definition of capital excludes mark-to-market losses on asset-backed securities (ABS). Furthermore, particularly demanding critics say that it also excludes mark-to-market losses on its loan book. Like almost all banks, HSBC carries these at book value and impairs as customers default. However, include both these items and the core tier-one ratio would drop to just 2%. Treating loan books on the same basis, JPMorgan would be at 5% and many other banks would be insolvent.

This would suggest that HSBC is in fact poorly capitalised, and needs to raise even more equity. The alternative, advocated by, among others, Knight Vinke, an activist investor, would be to cut loose Household, which HSBC does not legally guarantee and which accounts for just over half of the additional mark-to-market losses. Household’s credit spreads are much higher than HSBC’s, suggesting that investors think this is possible, despite HSBC’s verbal assurances to the contrary.

Which story is right? Given the risk of litigation, the reputational hit and the fact that HSBC has itself loaned Household some $13.5 billion, its mark-to-market loss would have to get a lot worse before HSBC was prepared to let it default. And like many banks, HSBC argues that there is at least some chance mark-to-market losses overstate the ultimate impairments it will face. The ABS loss has been very volatile, doubling in six months and stands at ten times HSBC’s “stress test” estimate of the probable hit. The mark-to-market loss on Household’s loan book is double what optimistic analysts think the likely ultimate impairment will be.

Pleading that fair-value accounting is cruel is hardly unique, but what makes HSBC’s position more credible than most is that it has the capacity to wait and see. Its funding position is excellent with deposits exceeding loans, reducing its dependence on wholesale markets. And the core business continues to generate lots of pre-provision earnings. If spread out over several years, the bank could absorb the hit from Household implied by the mark to-market valuation without damaging its capital.

Indeed the real moral of the tale is different. Compared with other banks HSBC is protected by its big deposit base and its profitability. It looks therefore as if investors will back the rights issue. Others do not have even that comfort.

Interesting to watch the day traders and short sellers trying to test the rights issue price and today see their meddling firmly rebuffed ! Of course it’s a fickle market at the moment, and a brave man that thinks he can guess which way to jump.

So here’s the deal…I work in an investment bank as a very small part of the big motive engine that grinds the cash, that feeds the global money markets and keeps us all stretching for the golden ring.

I’ve been awestruck as many of us have over the past weeks and months, at the utter collapse of RBS (an institution for whom I used to work) and the ensuing blamestorming that’s been undertaken by various wooly-suited, political non-entities at the ‘hearings into financial probity’ farce.

So where do I stand on this embuggerance ?

“Who cares..?” I hear you decry !

Well…I do. “Fred The Shred” is not a term of endearment you know, he came to us as the head arse-kicker in RBS via a number of significant ‘boot-application-to-buttock’ roles through Bank of Australia, then via Scotland’s very own Clydesdale Bank….he’s a long lineage in the deal-making, hard-boiled, ‘my way or yer bum’s oot the windae’ style of management and the mythology that surrounded him in my time in RBS was legend.

So given his track record why are you all stunned he’s acted as he has while leading RBS…he’s a nutter ! When he sticks two fingers up at the stock market and says ‘I want ABN’ come hell or high water, nevermind what your so-called analysts see as glaring gaps in the financials, or once finally being brought to heel (but still not accepting ‘mea culpa’) infront of a government sub-committee, and most recently claiming his pension (there’s an OAP I’m tempted to shadow to the local post office and trip on the way back to the hoose!) why are you stunned by his brazen mendacity ?

I’ll tell you…in Britain we love to hate a winner…it’s a desperate inferiority complex ! And the only thing we love to hate more than that ? A winner who’s now on his @rse…and don’t we revel in sticking the boot in ?

Though having said that…£1.2k per day pension ’til he pops his clogs ? I might enter the hitman business and see if HM Gov needs my services ?

Any of you bothered or even pay attention when something on your Vista PC pings up the UAC dialog ? Well you SHOULD be !?

Following recent Proof of concept whitehat hacks proved it’s not infallible…this video show’s it’s completely useless. Enjoy…You HAVE BEEN WARNED !

Watching the terrible scenes around Melbourne and your heart goes out to the people that have lost it all…but there’s no excuse for this kind of web journo pap

One can only assume this is to aid the septics logging onto the Beeb website ?

Oh for the hard of thinking amongst you:

1) A Brush fire

2) Strong prevailing winds

3) Spot fires caused by annotated ‘flying embers’ being blown downwind…And they say we’re dumbing down ?

My mate is updating and managing the website for our local community and doing a great job - come along and take a look sometime ?

http://www.eastlinton.uk.com

Absolutely loving this piece of work !

Then clicking on these summaries takes you to a detail view

Not particularly groundbreaking you might think but the implications are significant…data (the bard’s poems in this case) reside in the Google App Engine ‘Cloud’ and the heavylifting gets done by a little python scripting to get the content down to the iPhone client.

For extreme programming or agile delivery prototyping the opportunities are considerable and not just limited to the iPhone client (which was picked in this instance) it could as easily have been leveraged in a silverlight RIA or an Adobe Air.