Archive for the ‘Uncategorized’ Category

Is HSBC’s $17.7 billion rights issue a sign of weakness or of strength?

Tuesday, March 10th, 2009

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.

Fred get’s shredded…

Friday, February 27th, 2009

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 ?

Windows UAC controversy goes to a new and altogether darker place

Friday, February 13th, 2009

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 !

Ozzie bush fires and the state of the British Nation

Tuesday, February 10th, 2009

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

how a brush fire occurs !

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 ?

Website publicity…

Thursday, February 5th, 2009

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

The Story of Mel…

Tuesday, January 6th, 2009

If you’ve programmed in non-4GL you’ll appreciate this…you may have already even read it but it’s a great anecdote.


A recent article devoted to the _macho_ side of programming
made the bald and unvarnished statement:
Real Programmers write in FORTRAN.
Maybe they do now,
in this decadent era of
Lite beer, hand calculators, and ``user-friendly'' software
but back in the Good Old Days,
when the term ``software'' sounded funny
and Real Computers were made out of drums and vacuum tubes,
Real Programmers wrote in machine code.

Not FORTRAN.  Not RATFOR.  Not, even, assembly language.
Machine Code.
Raw, unadorned, inscrutable hexadecimal numbers.
Directly.
Lest a whole new generation of programmers
grow up in ignorance of this glorious past,
I feel duty-bound to describe,
as best I can through the generation gap,
how a Real Programmer wrote code.
I'll call him Mel,
because that was his name.
I first met Mel when I went to work for Royal McBee Computer Corp.,
a now-defunct subsidiary of the typewriter company.
The firm manufactured the LGP-30,
a small, cheap (by the standards of the day)
drum-memory computer,
and had just started to manufacture
the RPC-4000, a much-improved,
bigger, better, faster --- drum-memory computer.
Cores cost too much,
and weren't here to stay, anyway.
(That's why you haven't heard of the company,
or the computer.)
I had been hired to write a FORTRAN compiler
for this new marvel and Mel was my guide to its wonders.
Mel didn't approve of compilers.
``If a program can't rewrite its own code'',
he asked, ``what good is it?''
Mel had written,
in hexadecimal,
the most popular computer program the company owned.
It ran on the LGP-30
and played blackjack with potential customers
at computer shows.
Its effect was always dramatic.
The LGP-30 booth was packed at every show,
and the IBM salesmen stood around
talking to each other.
Whether or not this actually sold computers
was a question we never discussed.
Mel's job was to re-write
the blackjack program for the RPC-4000.
(Port?  What does that mean?)
The new computer had a one-plus-one
addressing scheme,
in which each machine instruction,
in addition to the operation code
and the address of the needed operand,
had a second address that indicated where, on the revolving drum,
the next instruction was located.
In modern parlance,
every single instruction was followed by a GO TO!
Put _that_ in Pascal's pipe and smoke it.

Mel loved the RPC-4000
because he could optimize his code:
that is, locate instructions on the drum
so that just as one finished its job,
the next would be just arriving at the ``read head''
and available for immediate execution.
There was a program to do that job,
an ``optimizing assembler'',
but Mel refused to use it.
``You never know where it's going to put things'',
he explained, ``so you'd have to use separate constants''.
It was a long time before I understood that remark.
Since Mel knew the numerical value
of every operation code,
and assigned his own drum addresses,
every instruction he wrote could also be considered
a numerical constant.
He could pick up an earlier ``add'' instruction, say,
and multiply by it,
if it had the right numeric value.
His code was not easy for someone else to modify.
I compared Mel's hand-optimized programs
with the same code massaged by the optimizing assembler program,
and Mel's always ran faster.

That was because the ``top-down'' method of program design
hadn't been invented yet,
and Mel wouldn't have used it anyway.
He wrote the innermost parts of his program loops first,
so they would get first choice
of the optimum address locations on the drum.
The optimizing assembler wasn't smart enough to do it that way.
Mel never wrote time-delay loops, either,
even when the balky Flexowriter
required a delay between output characters to work right.
He just located instructions on the drum
so each successive one was just _past_ the read head
when it was needed;
the drum had to execute another complete revolution
to find the next instruction.

He coined an unforgettable term for this procedure.
Although ``optimum'' is an absolute term,
like ``unique'', it became common verbal practice
to make it relative:
``not quite optimum'' or ``less optimum''
or ``not very optimum''.
Mel called the maximum time-delay locations
the ``most pessimum''.
After he finished the blackjack program
and got it to run
(``Even the initializer is optimized'',
he said proudly),
he got a Change Request from the sales department.
The program used an elegant (optimized)
random number generator
to shuffle the ``cards'' and deal from the ``deck'',
and some of the salesmen felt it was too fair,
since sometimes the customers lost.
They wanted Mel to modify the program
so, at the setting of a sense switch on the console,
they could change the odds and let the customer win.
Mel balked.

He felt this was patently dishonest,
which it was,
and that it impinged on his personal integrity as a programmer,
which it did,
so he refused to do it.
The Head Salesman talked to Mel,
as did the Big Boss and, at the boss's urging,
a few Fellow Programmers.
Mel finally gave in and wrote the code,
but he got the test backwards,
and, when the sense switch was turned on,
the program would cheat, winning every time.
Mel was delighted with this,
claiming his subconscious was uncontrollably ethical,
and adamantly refused to fix it.
After Mel had left the company for greener pastures,
the Big Boss asked me to look at the code
and see if I could find the test and reverse it.
Somewhat reluctantly, I agreed to look.
Tracking Mel's code was a real adventure.
I have often felt that programming is an art form,
whose real value can only be appreciated
by another versed in the same arcane art;
there are lovely gems and brilliant coups
hidden from human view and admiration, sometimes forever,
by the very nature of the process.
You can learn a lot about an individual
just by reading through his code,
even in hexadecimal.
Mel was, I think, an unsung genius.
Perhaps my greatest shock came
when I found an innocent loop that had no test in it.

No test.  _None_.

Common sense said it had to be a closed loop,
where the program would circle, forever, endlessly.
Program control passed right through it, however,
and safely out the other side.
It took me two weeks to figure it out.
The RPC-4000 computer had a really modern facility
called an index register.
It allowed the programmer to write a program loop
that used an indexed instruction inside;
each time through,
the number in the index register
was added to the address of that instruction,
so it would refer
to the next datum in a series.
He had only to increment the index register
each time through.
Mel never used it.
Instead, he would pull the instruction into a machine register,
add one to its address,
and store it back.
He would then execute the modified instruction
right from the register.

The loop was written so this additional execution time
was taken into account ---
just as this instruction finished,
the next one was right under the drum's read head,
ready to go.
But the loop had no test in it.
The vital clue came when I noticed
the index register bit,
the bit that lay between the address
and the operation code in the instruction word,
was turned on ---
yet Mel never used the index register,
leaving it zero all the time.
When the light went on it nearly blinded me.
He had located the data he was working on
near the top of memory ---
the largest locations the instructions could address ---
so, after the last datum was handled,
incrementing the instruction address
would make it overflow.
The carry would add one to the
operation code, changing it to the next one in the instruction set:

a jump instruction.
Sure enough, the next program instruction was
in address location zero,
and the program went happily on its way.
I haven't kept in touch with Mel,
so I don't know if he ever gave in to the flood of
change that has washed over programming techniques
since those long-gone days.
I like to think he didn't.

In any event,
I was impressed enough that I quit looking for the
offending test,
telling the Big Boss I couldn't find it.
He didn't seem surprised.
When I left the company,
the blackjack program would still cheat
if you turned on the right sense switch,
and I think that's how it should be.
I didn't feel comfortable
hacking up the code of a Real Programmer.
This is one of hackerdom's great heroic epics, free verse or no. In a few
spare images it captures more about the esthetics and psychology of hacking
than all the scholarly volumes on the subject put together. For an opposing
point of view, see the entry for Real Programmer.
[1992 postscript -- the author writes: "The original submission to the
net was not in free verse, nor any approximation to it -- it was straight
prose style, in non-justified paragraphs. In bouncing around the net it
apparently got modified into the `free verse' form now popular. In other
words, it got hacked on the net. That seems appropriate, somehow." The
author adds that he likes the `free-verse' version better than his prose
original...]
[1999 update: Mel's last name is now known. The manual for the LGP-30
refers to "Mel Kaye of Royal McBee who did the bulk of the programming
[...] of the ACT 1 system".]
[2001: The Royal McBee LPG-30 turns out to have one other claim to fame.
It turns out that meteorologist Edward Lorenz was doing weather simulations
on an LGP-30 when, in 1961, he discovered the "Butterfly Theorem" and
computational chaos. This seems, somehow, appropriate.]

Damn this recessive geek gene…I just can’t shake it off ;0P And I love how the LPG-30 was being worked on by Lorenz…just love it!

Laughing in adversity…

Tuesday, September 23rd, 2008

Firstly this nifty bit of photoshopping celebrating the coupling of Lloyds TSB + Halifax

And this little beauty on the might of the US dollar

Aurora loveliness

Tuesday, September 23rd, 2008

Yum ! This imagineering concept converges communications, data, UI and OS into one seamless and beautifully conceived platform…if only one thing comes of this pllleeeeeaaasssssse let it be the semantic, clustered file system?

You’ll be a man my son…

Tuesday, September 16th, 2008

“If you can keep your head when all about you Are losing theirs and blaming it on you; If you can trust yourself when all men doubt you, But make allowance for their doubting too; . . . If you can meet with Triumph and Disaster And treat those two impostors just the same . . . Yours is the Earth and everything that’s in it.”

Or….alternatively you could just grab a buddy and amid the hand-wringing, woe is us media frenzy infront of Lehman Brothers snog the crap out of your buddy on live US TV….good job guys. Made me laugh in the midst of a tough day.

http://www.theregister.co.uk/2008/09/16/cnn_broadcast/

tempting…very tempting !

Saturday, September 13th, 2008

This further education opportunity will come in very useful at project kick-off meetings and pitching sessions !

‘…you don’t need to see our project plan’

‘…these aren’t the requirements you’re looking for!’

‘..go about your business’