More credit card fees?

Apparently, BoA is planning to impose extra fees on people who pay off their credit card loans before the interest period kicks in.

Et tu UBS?

The Swiss are disgusted with the way the UBS has been involved in the US subprime crisis: something viewed as a very un-Swiss thing to do. Read this BBC article.

Oh this is funny! Hedge funds being dosed with their own medicine.

Let me summarize the matter: short selling is when you sell shares of a company that you don't own AT THIS POINT. Wait, what? Yeah, that can be done. As long as you buy the shares you sold later. Its complicated. Read here. So why do it? Because if you have some information about the company that indicates that the share prices are going to tumble tomorrow, then short sell today at high prices, and buy back tomorrow after the prices have dropped. That gives one a big profit. Hedge funds like to do this. That is why insider information is important. Also shady. Well, hedge funds and pirates frequently like to get together to drive prices down on a company. In that case, short selling will also garner massive profits. Also in the process devaluing the company and perhaps putting it through the wringer, but what do brokers care?

This week, hedge funds in NY and London tried pulling this on VW. Making it, for a short while, the largest capitalized company in the world. Except that it did not work. Thanks to VW, and also thanks to Porsche, a major shareholder. Read on here.

Just to put some things in perspective

Source: http://www.phdcomics.com/
All credits to Dr. Jorge Cham. The man rules.

Financial Intervention and the Government of the day

Warning... I am not trained in finance.. these are merely the opinions of a layman. Let us begin with India. Back in the early 60's, the Government of India (GOI) decided to start a mutual fund company. This was called the Unit Trust of India (UTI), and their major vehicle was a fund called US64. Our economy has always been a troublesome one. By constitutionally describing it as a 'mixed' economy, we have brought upon us the corruption and inefficiency of the worst socialist models, while on the other end we have the unlimited wealth (greed?) of a few lucky individuals and companies who have toadied up to the Sarkar. Anyway, so the sublime ridiculousness of starting a mutual fund in an economy where almost everything was PSU owned was actually subsumed by the fact that 'national wealth', as one might term it was being drawn from the coffers of savings accounts and pumped into industry. Well, it did make sense. From a traditional Indian standpoint(still very much extant): the only true wealth one might have is property and gold. Shares and stocks come later to the aam aadmi. So, the best way to kick start a nascent economy would be to divert money from property/gold and put it into stocks. Or so we thought. Except that in the late 1990s', UTI was in deep shite. They needed a GOI bailout to the tune of perhaps 3,300 crores of Rupees. That would be almost a billion $ at today's exchange rate. UTI staggered along for a while longer and then had to fold US64. This required a much bigger restructuring package from the GOI.

Today we are seeing the same things happen on Wall Street. Bear Stearns, one of the largest finance corporations was taken over by JPM Chase for a song. On the 8th of Sept, two of the largest Mortgage financers, the Federal National Mortgage Association (Fannie Mae) and Freddie Mac were taken over by the US government. Hardly a week passed before Merrill Lynch was bought up by Bank of America. Then Lehman Brothers went under. And now, AIG which underwrites some of the biggest and potentially most hazardous investments has been given an 88 billion $ bailout by the Fed.

The question is always the same: most of these huge companies are going under because of their incompetence/greed. Remember Enron? The company whose watchword was 'innovation'? They traded in dreams too: and for a while they made it big. But then people started calling their bluffs and they went under. Except of course, when giant corporations go under; the CEO's rarely, if ever suffer. They have awesome golden parachute deals written into their contracts.. so even if they f**k up, they come out of it smelling like roses. Or a couple of hundred million bucks. Take your pick.

Why should the people of India pay through their taxes for the mismanagement of UTI? And why should US citizens pay.. what was it 29 billion $ for the Merrill Lynch deal and a colossal 88 billion $ for the AIG bailout? The point has been reached at which these companies know that they are now TBTF. That stands for Too Big To Fail. These people cannot be allowed to play fast and loose with other people's money and then yell for Fed help when they get their noses bloodied. If Government intervention is asked for, then the whole industry should submit to Government oversight, if not actual regulation. That is the bottom line.

Reality bites: can one afford to be ill anymore?

This links to an excellent article on illness and financial troubles which come along with it.