July 26, 2007
The New Humility: Or beware of Anglo Saxon Bankers Bearing Gifts
Reading the FT arty on the continuing sub-prime crisis blow back and in particular the rather nasty issue of whether the new habit of supposedly 'slicing and dicing' risk to meet specific appetites has any meaning and whether new questions about this will choke off all the M&A fun, I am amused to think of a comment by a big risk management cheese in a meeting last week btw bankers where a MENA banker asked him "what about modeling, how robust is it?"
His answer: "My answer last year would have been different. Now my answer is, I don't know."
But a rather more intellectual statement on Risk Management and Regime Change: "Specifically, it is yet to be established with a sufficient degree of confidence that, by diversifying across risky asset classes, investor portfolios will continue to sufficiently mitigate risk."
My curiosity now is what does this mean for emerging markets.... Orderly retreat from the froth?
I hope so, I would hate to see my beautifully over-leveraged investment scheme go down the tubes.
Posted by The Lounsbury at July 26, 2007 01:34 AM
Filed Under: Biz - Private in MENA
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You're reading the FT?
I would have thought your time was taken up with studying a decade of back issues of the ubiquitous and infinitely popular Sayyidati.
Posted by: secretdubai at July 30, 2007 12:24 AM
Ah, well, since I know nothing of Arab culture or the region....
Posted by: The Lounsbury at July 30, 2007 04:28 PM
Since Sayyidaatii is ubiquitous, L obviously has been reading it all along ... so surely no need for studying back issues.
On the other hand - I'm sure the women in his life tell him more than he ever wants to know about fashioncelebritygossip so he won't even have to take recourse to print media.
That reminds me of how in all Lebanese gyms that have monitors, the one channel that is guaranteed to be on is "Fashion TV".
(Sorry to have contributed to the veering-off-topic but I simply have no clue what "over-leveraged investment" is.)
Posted by: MSK at July 31, 2007 07:44 AM
"over-leveraged investment" == "more money than sense".
Posted by: Tom Scudder at July 31, 2007 04:43 PM
"that, by diversifying across risky asset classes, investor portfolios will continue to sufficiently mitigate risk."
I quite like the "continue," by the way, as it demonstrates a complete lack of actually understanding what "risk" is and how it works.
To put it another way, if you suddenly realize that the emperor has no clothes, he did not suddenly become naked at the instant of your realization. Rather, he has always been naked.
Posted by: Anonymous at July 31, 2007 05:41 PM
First, your lesson in financial jargon:
"over-leveraged investment"" means an investment carrying more debt than is prudent (that is the ratio of debt financing to equity -i.e. generally hard cash in). Equity doesn't have to be repaid, so if things end up south of where you projected, hey, my bad. Debt, well, banks and bond holders strangely like to be paid on a regular basis for accepting merely 8% and no upside...
Now, Anon, you're being unkind. (Well maybe)
I am sure the phrasing is more about "Never admit our assertions about diversification and asset classes may have been based entirely on wishful modelling...."
Posted by: The Lounsbury at July 31, 2007 08:16 PM
I've always assumed Fashion TV=porn for men in repressed countries.
Posted by: secretdubai at August 1, 2007 04:23 PM
No, it's also elegant semi-porn for fashionable drinking establishments in not terribly repressed places.
Posted by: The Lounsbury at August 2, 2007 12:51 AM