warden woods, fall 2008
cheltenham badlands, fall 2008
October 30, 2008
Economist: The stance of both executives and the rating agencies suggests that insurers will avoid an avalanche of emergency capital raising, although some will cancel dividends and tap governments if the terms are favourable. The problem for investors is the sheer opacity of insurance solvency models. In today’s markets, “trust me” just doesn’t cut it.
October 27, 2008
Thursday, a little depressed sitting in the greyish Terminal B at Bradley Airport. On the shelves of the convenience store, a novel caught my eye. Son of a witch. Elphaba always cheers me up. But it is hard to read this without thinking about how the US allowed Ethiopia to invade Somalia and destroy its hope for peace.
Saturday afternoon, after the rain, I went for a jog along the dirt trails on the west side of the river. The slopes of Warden Woods were entirely dressed in textured gold while the branches retained shades of susurrous chartreuse, as if painted by Gustav Klimt. I stopped, rolled around in the leaves and watched a tiny snake quiver by.
Monday, no more treadmill for Vendy. I'm staying across the street from the capital building this week. From the hill, Hartford looks like a city. I ran past the latino neighbourhoods, past the cementaries and found a pretty spot to watch the sunset.
Economist: Some institutions and bankers, including the chairman of Shinsei—once known as Long Term Credit Bank, which was nationalised a decade ago—have urged regulators to suspend accounting rules that force the banks to value assets at present market value. The use of “mark-to-market” standards may force firms to write-down the value of their assets painfully, even though the trough may be temporary. As it stands, banks must subtract around 60% of their paper losses from their core capital. The government has signalled that it may be willing to ease the rules. The government may also request that pension funds and life insurance firms buy equities to support the market, though whether they would respond remains to be seen.
October 25, 2008
Economist: When introducing her at a recent event in Washington, DC, the host reminded her audience that Christine Lagarde, France’s finance minister, had once been a member of the French national synchronised-swimming team. Synchronisation, he suggested, was a useful experience in handling the current financial crisis. To which Ms Lagarde added, without missing a beat: “You also have to hold your breath.” Formerly global head of Baker & McKenzie, in Chicago, where she specialised in labour law and antitrust, she has the disarming tendency of saying what she thinks.
Economist: To understand just how much Nicolas Sarkozy has upturned French diplomacy, try inserting the name Jacques Chirac into the following report. The French president invited himself to Camp David (see picture), where he appeared alongside “dear George”, spoke warmly of “the great American nation” and called for a special summit of G8 countries to “refound capitalism” soon after the American presidential election. The Americans should host it, he declared, “because the crisis took off in New York”.
Economist: The biggest brigade in the Obamacon army consists of libertarians, furious with Mr Bush’s big-government conservatism, worried about his commitment to an open-ended “war on terror”, and disgusted by his cavalier way with civil rights. There are two competing “libertarians for Obama” web sites. CaféPress is even offering a “libertarian for Obama” lawn sign for $19.95.
October 24, 2008
Economist: Basel 2 is looking less relevant by the day. Government recapitalisation of the banking industry continues apace. On October 19th ING announced that it was taking a €10 billion ($13 billion) dollop of cash from the Dutch government. The following day the French government allocated €10.5 billion of capital among six of its banks. BayernLB become the first German bank to request money from a state fund on October 21st. One curious result of all this intervention, says one Basel buff, is to make it hard to work out just how risky assets are now that the state is underwriting the system.
Basel 2 certainly does a better job than its forerunner, particularly in areas such as banks’ off-balance-sheet exposures. The new accord’s framework also has the great merit of being flexible. Among its three main components, or “pillars”, is one that allows national supervisors to turn the screw on capital as necessary. As for the unfortunate effect on Wall Street, the regime was not designed to be used by investment banks that only had mark-to-market trading-book exposures. Even opponents of the accord say that the American firms’ regulator, the Securities and Exchange Commission (SEC), ought to have been much more careful in moving banks on to the new rules.
October 23, 2008
Wednesday, Josh and I discovered decent sushi in Hartford at Feng, a Chinese restaurant. Favorite billboard: Hartford Steam, we don't sell insurance, we sell comfort.
Friday, landed in Orlando. There is nothing other than outlet mall and disney world around my hotel, so I chose the lesser evil. Bought three dress shirts, two pairs of dress pants, one work jacket and one winter jacket for 270 at ann taylor. Not bad for my first ever outlet mall experience.
Monday, delivered presentation on hedge strategy optimization.
Wednesday, running on the treadmill accompanied by Lipstick Jungle. Wow. I can actually relate to a female character on prime time television. And her name is Wendy.
Given the recent events in the financial markets, I wrote an email to Sam and told him that he was right: everyone is greedy. He wrote back and expressed concern over the looming central control of financial institutions. I am also very concerned. Risk management is taken seriously when it provides a competitive advantage. Risk management provides a competitive advantage when the markets are volatile. Regulation that creates an artificially stable environment will also create financial institutions that do not take risk management seriously.
October 15, 2008
Avinash Persaud: Where assets are funded with short-term liabilities, then whatever the perceived liquidity or intentions of the asset owners, it is appropriate to mark the value of that asset to market in case funding dries up and the assets need to be sold tomorrow. But where assets are funded with long-term liabilities or set against long-term liabilities, then marking asset values to market is not appropriate and can lead to an artificial view of risk and investment decisions based on a risk that is not important to the holder.
October 14, 2008
Monday, running on the treadmill accompanied by gossip girl.
Tuesday, running on the treadmill accompanied by previleged.
Why are normal people obssess with rich people? Why are certain small American cities circled by highways and therefore are awful for outdoor running?
My last Kiva loan was repaid so I can loan it out again.
"Mrs. Moeurn Huch is a pig breeder in Trapaing Krasang Village in Takeo Province. Since this business is going well, she wants to expand it, so she decided to ask for a loan to buy more piglets for breeding; if there is any money left over, she will use it to buy pig food. Mrs. Moeurn Huch is a 37-year-old widow with three children, one of whom is a construction worker; the other two are still attending the local school."
Her field partner, Angkor Mikroheranhvatho Kampuchea (AMK), has a five star risk rating.
October 13, 2008
Two thousand and eight has been an important year in my personal history. On my twenty-fifth birthday, I realized that I needed change. I thought about moving to Hong Kong. I thought about moving to Shanghai. I thought about moving to New York. The streets of these cities are crowded with too many people wanting too much.
In the end, I realized that the change I needed was a place to call home. I moved back to Toronto three months ago. Weekdays are not very different: wake up at 9, run, show up at work at 11, leave the office at midnight, read, sleep at 2. Weekends, on the other hand, feature shrimp dumplings, piano lessons and hiking with Mum + Dad. The frenzy in the markets highlights the few things in life that I can count on: close relationships with family, friends and myself.
October 12, 2008
Saturday, beautiful day. Mum + Dad + Vendy decided to hike around Cheltenham Badlands, soft rock tinted with red and green iron oxide. Given the exotic appearance of the surroundings, Stephen and I performed moon walk. He is much better than me.
Economist: Now all hope that Japan might remain aloof is gone. Overseas hedge funds have been panic sellers of shares. Even cast-iron Japanese government bonds are being shunned in favour of cash—leaving questions about how the government is to refinance a lot of debt coming due over the next month or more.
Not only are buyers of stocks conspicuously absent, but much of the selling is forced. All agree that there will be no meaningful recovery until the credit markets are unclogged. The rates at which banks lend to each other are still at or near records. The rate at which companies can borrow over short periods is starting to fall, but only slightly. Longer-term borrowing markets are still mostly shut.
October 9, 2008
Thursday, team dinner at Jump to celebrate the end of the project. The miso-glazed cod melts my heart.
Two things Vendy needs to work on.
1. Don't put too many charts in the body of the deck and confuse yourself. Throw the not 100% necessary ones in an appendix.
2. Deliver the key message first when you go to a slide. Then assess the audience response and provide as much details as necessary.
October 6, 2008
Thursday, team dinner at Ki to celebrate second last week of the project. Mmm ... sashimi.
Friday, Durgesh's first day in the Toronto office. Family-style firm dinner at Gio Rana's Really Really Nice Restaurant featuring really really fresh pasta.
Sunday, decorated with pink ribbons, the Oliver Wyman team participated in the run for the cure.
Dominic D'Alessandro: “One of the benefits that we've had here in Canada is we've been able to run our business constantly with the view as to what is the best economic decision, not what is the best accounting decision,” Mr. D'Alessandro said. “And we've been able to hold assets and invest our policy holders' money in a blend of assets which over the long term has delivered substantial value to them. Well, under the new accounting rules that have been foisted upon us, I'm not sure that's going to be possible going forward.”
“The consequences are that, ultimately, consumers will pay a lot more for insurance, they'll be getting less value. Because if insurance companies, which have 30- and 40-year liabilities can't, because of the accounting model, invest in equities, or invest in long-term assets, or assets whose value goes up and down … It's just nuts.”