Sunday, February 15, 2009

You want a little clue? Go look at the Wall St IT budgets

There is no question that Big 8 Banks including former Wall St investment banks and broker dealers – are for-profit businesses.
That means – every dollar spent is expected to generate profits correct? No argument there.

The best place to begin to look for causes of this toxic asset problemo.
IT computer, data & information systems (there goes that word again) dollars spent - past 5 years - 2004 to 2008 should suffice.

1) What was the size of the budget in total for each firm – worldwide?
2) Subtract out what was spent on mandatory compliance and regulatory.
3) What amount is left over? This is called the discretionary part of IT.
4) How much was expended upon proprietary trading and analysis - systems, people, software and hardware?
5) There is no question, totally discretionary, totally profit-driven, proprietary trading desk IT systems dominate monies spent by Big 8 on Wall St and hedge funds.
6) Such budgets dwarf the IT budgets of most countries combined.
7) There is more computing power devoted to securities analysis than many other worthy causes in the world combined.
8) The answer lies within right? (facetiously) ONLY after intense analysis - the computers bought (and held) the toxic assets and added the leverage huh?

Or so the sheep are led to believe – the systems caused the problems.

One minor catch, Systems are void of emotions. And systems do not get paychecks.
Must be - somehow - as improbable as it might appear - greed – got into the “systems”.

Who might have contributed that?
Facetiously - surely it must have been the US Taxpayer and future generations; because make no mistake my friends we are – being de-frauded, ripped off in the largest ponzi scheme to hit B'way - think mega-Madoff; while the music is still playing - help yourself to a little Wall St music.
Darkness is the operative term here as it explains much of the problemo - most of these investments were created, traded and valued in the DARK, in Wall Street parlance, Over the counter (OTC).
But for the bonus checks - they were paid in the full light of day; authorized and blessed by CEOs, Auditors, Boards, SEC, State banking and securities regulators. almost forgot the parade-watching business media; no one, I repeat, no one upon receiving a bonus check ever raised their hand and said it's too much huh?

I couldn't resist to add to the entertainment of the "financial theater" we are already paying for; this one is free.

SO! while our pockets are being fleeced the Wall St and Big 8 bank CEOs and cronies:

  • Keep their jobs and not insignificant paychecks; oh that’s because they’re gonna fix the (their own self created) problemos – NOT;
    Get to keep all the bonuses paid out in past years based upon phony / perhaps fraudulent securities valuations;
    They get bailed out by us because they invented the “too big to fail” illusion;
    That’s ok here’s a few hundred billion $ from the taxpayer;
    To the banks - you don’t have to reveal what’s on (or excuse me, what’s off) your books; just take the money; "we HAVE to do THIS deal to reassure the world's investors"
    Warren buffet, middle east and Asian sovereign and government investment funds got better due diligence than we did,
    US Treasury officials committed arguably the largest breach of investment fiduciary duty in the history of the world.
    Keep their jobs and not insignificant paychecks; oh that’s because they’re gonna fix the (their own self created) problemos – NOT;

Where was the prudence? Show me and the US taxpayers.
If there’s such long term value – where are all the insider stock purchases of Big 8 banks CEOs and cronies? Show me.
If there’s even more value – where are all the private equity buyers? Show me.
That’s ok we’re the sheep; go ahead keep picking our pockets
The conclusion of this type of treatment by authority - is there may not be as many sheep left as expected - only wolves.
Wolves are predators and travel in packs.

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