Global Investing

Bankers’ ball binned, a step towards appeasement?

The storm raging through financial markets has already cost bankers much of their business, bonuses and public esteem. But now they won’t even be able to drown their sorrows in their usual glass of bubbly at one of the most cherished events in Frankfurt’s social calendar.

The glitzy, champagne-laden black-tie gala that usually closes Frankfurt’s annual Euro Finance Week and hosts the VIPs of Europe’s banking and insurance industry, has been cancelled.

Top German banks, Deutsche Bank and Commerzbank and Dresdner Bank concluded that such a show of opulence was not “suitable for the times”, writes Spiegel magazine.

“The reason was the financial crisis, it (holding the ball) just wasn’t right,” a Commerzbank spokesman told Reuters.

The banks however failed to burnish their responsible credentials and win over public opinion through this act of self-denial, by incurring nonetheless up to 700,000 euros of planning costs for the cancelled event, according to media reports. The Commerzbank spokesman said the specific sum to be paid up had not yet been decided upon.

Never Mind The Bankers

Malcolm McLaren, the man who gave us The Sex Pistols, has found the real punks — bankers. In an interview with Britain’s The Observer, he says punk was not just about spiky hair and ripped t-shirts.

“It was all about destruction, and the creative potential within that. It turns out that the bankers may have been the biggest punks of all.”

McLaren says we are now at a transformative moment.

“We’re at the end of the culture of desires; we may be going back to a culture of necessity.”

from Pakistan: Now or Never?:

“Plan C” – Pakistan turns to the IMF.

Pakistan has agreed with the International Monetary Fund (IMF) on a $7.6 billion emergency loan to stave off a balance of payments crisis. 

Shaukat Tarin, economic adviser to the prime minister, said the IMF had endorsed Pakistan's own strategy to bring about structural adjustments. The agreement is expected to encourage other potential donors, who are gathering in Abu Dhabi on Monday for a "Friends of Pakistan" conference.

The government had long delayed announcing its plans to turn to the IMF for help and President Asif Ali Zardari said in September the country did not want to seek IMF assistance. Tarin said in October that going to the IMF was "Plan C" if other lenders failed to come through.  "If we want to go to the IMF, we can ... but only as a backup," he said.

Banks: what price freedom?

What price freedom? Or at least freedom from government interference?

Barclays needs to answer that question after selling big stakes to Middle East investors rather than tap taxpayer funds. The bank is effectively paying 13 percent annual interest for at least a decade, whereas it could have paid the UK Treasury 12 percent for a few years. Add in a whopping 300 million pounds in fees and the deal could cost shareholders as much as 3.2 billion pounds extra, Merrill Lynch reckons.

 

Barclays shares have lost almost 20 percent in two days and many investors aren’t happy about the cost and the bank riding roughshod over shareholders.

 

But it looks like a price worth paying. Sure, it’s more than Barclays had expected to pay, but sovereign wealth funds are in the box seat. All banks want SWF money so the investors can get good long-term deals. “Long-term” works both ways as well, and the deal should leave Barclays with a commercial advantage over rivals. Not constrained by government it can poach top staff, pick-up asset bargains and lend how and where it wants. Shareholders should start getting dividends by Q3 2009, long before semi-nationalised rivals.

Pond life: understanding the ecology of the financial crisis

Bankers have already had a barrage of abuse, so an article in New Scientist comparing them to pond life will perhaps raise few eyebrows.

But it is worth a closer look.

The popular science journal cites experts in complexity and ecology in its latest edition explaining how the financial system is a tangled network of relationships, like the ecosystem of a pond.

Normally, life ticks over just fine. But then the wrong set of circumstances - an explosion of algae, perhaps – trigger a change, throwing the whole community of life forms off balance. The result is a stagnant, smelly swamp.