Lunchtime Bonkers
To ensure weâre all clear about the banking sector having learned its lessons, the Financial Times yesterday noted that Peter Hancock (a prime mover in the invention of credit derivatives) is to join AIGâ¦.one of the many institutions which suffered from his little brainchild.
His job at AIG is going to be âthe overseeing of riskâ, an onerous task but one that Iâd imagine involves largely looking in the mirror. For those of you who donât have âpackaged toxic debtâ etched painfully onto your brain using a rusty garden fork, Hancock was one of the MOTUs (Masters of the Universe) who pioneered the concept of taking radioactive loans, and folding them lightly into a mélange of Russian cowboys loans and African government loansâ¦.along with a few tasty morsels of not too bad at all debt. The whole then became a âderivativeâ, pretty much in the same way that Homo sapiens is a derivative of the jackal.
Although originally designed as a way to spread risk, after a while it became clear even to those packaging them that there wasnât much meat in the Scouse: some of the spuds going in there were yelling âplease kill me before I default againâ. So Hancock and his chums came up with the Credit Default Swap â a game of Polish roulette played with other banks, in which all the gun-chambers had bullets in.
Hancock made his name at JP Morgan, the original source in 1991 of the very CDs and CDSs that bankrupted nigh on every bank in the world â except of course Morgan the Pirate.
Heâs going to pull down $7.5 million a year, and is being groomed as the eventual CEO of AIG. Until then, heâll just be the SOB in charge of auditing risk. Having absorbed this news, I shall sleep soundly in my bed tonight.
One thing you really can be pleased about is that Hancockâs unique skills are unlikely to screw up your pension, because being only 51 itâs not really his bag. No, there are other folks busy ensuring that your pension will be worth one 1923 German Mark before too long.
You may find this hard to grasp, but pension funds and other unrelated clowns have been pouring our retirement money into the commercial property sector. You may say âAnd what better place for it?â and I might reply âHow long have you got?â
It has long been the job of pension companies to ride into town just as the James Boys have finished all the Beer and shot the sheriff. During the boom of 2006 in commercials, a cool £1.7 billion was thrust upon those selling the action. So in the light of the internetâs incursions into retail (and none of the banks having any money to fund so much as a leveraged buy-out) the pension industry whacked £3.2 billion in there during the last quarter of 2009 alone.
Anyone got a few million guilders for a tulip? Very nice tulip. Much sought-after.
Copyright John Ward
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February 9, 2010 at 14:37 -
As AIG are the shirt sponsors of Manchester United he will be in a prime position to observe debt and risk.
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February 9, 2010 at 16:46 -
Saul
As a Reds fan of some 55 years standing (most of them in the rain) I could not agree with you more.
I put out a fatwah on the Glazer family’s failed cryogenic experiments three years ago – but sadly so far, no takers.
There is now an alternative club called FUCM (gerrit?). Since its foundation, FUCM has moved up four divisions. At this rate they will be in the Premiership by 2029.
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February 9, 2010 at 19:00 -
I could reply…serves you right. However people in Boro houses shouldn’t throw stones.
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