Once in a while a technology shift is big enough to require mention.  Amazon Silk fits that category.  I was sitting with some developer folks listening to a conversation about this stuff and relating it to what Amazon has done.  Basically browsers are not very smart and work on architecture that is more than 20 years old. In simple terms when you click a link today, it sends several requests to the server and receives the responses. If there are 20 pictures on the page, you need 20 requests and responses, plus a few others for handling the general page. … Continue reading Amazon Silk is a game changer and now the cloud makes sense

The Groupon situation continues to deteriorate.  As noted earlier, their financial forecasts were full of holes.  Now they are altering their revenue forecast to reflect the earlier fiction of gross income which is now restated to reflect payments to merchants.  If a groupon costs $10 then $5 +/- is paid to the merchant.  Previously Groupon claimed $10 as revenue.  Their restated S-1 to the SEC reflects real revenue as $5 in this example. Who knows if they will even make IPO.  There is so much insidiousness about this company.  Their last raise was designed to pay out investors and founders.  … Continue reading Groupon efforts to give a bad name to accounting are caught out

The video in this Finextra piece shares the vision Paypal have for shopping.  The integration of smart phones, product barcodes, store databases, payments and bypassing the cash register line up is fascinating and potentially disruptive for payments. Continue reading Paypal share their vision for shopping

It is simply delightful to read about the UBS loss today.  If you read this article by Tett at the FT you will be hard placed to understand how Mr Adoboli did anything illegal. In Europe, for example, so-called “synthetic” ETFs, or packages of derivatives, have become very hot and now account for almost half of all ETFs. I say delightful, because not only have no lessons been learned since 2008, things have in fact become worse.  The combination of the now “Delta One” derivatives desks, where Mr Adoboli worked at UBS allows derivatives based on ETF’s.  These are 100% … Continue reading The argument for ringfencing just gained another boost from Adoboli loss at UBS

The most controversial aspect of the Independent Commission on Banking is the ringfence.  Now we have a definition in the final report: The Commission’s view, in sum, is that domestic retail banking services should be inside the ring-fence, global wholesale/investment banking should be outside, and the provision of straightforward banking services to large domestic non-financial companies can be in or out. The aggregate balance sheet of UK banks is currently over £6 trillion – more than four times annual GDP. On the criteria above, between one sixth and one third of this would be within the retail ring-fence. The novel … Continue reading ICB report provides definition of ringfence and flexibility on certain commercial banking components

The Independent Commission on Banking released its Final Report on 12 September 2011. It is available here (ICB site pdf). Continue reading The Independent Commission on Banking released its Final Report on 12 September 2011

Some early indications tonight about the implications of the Vickers report tomorrow.  Ring fencing is in, but with the qualification that banks can pick what is in or out, and customers can pick too. It will be interesting to watch the unintended consequences of the higher funding charges and how banks will allocate. UK banks eye £6bn cost of reforms As foreshadowed, the central recommendation of the Independent Commission on Banking, chaired by Sir John Vickers, will be that banks’ core operations – including consumer deposits and small business lending – must be ringfenced from the rest of their businesses. … Continue reading Vickers report tomorrow will implement ringfence of retail bank operations

This is a fascinating piece by Taleb (Black Swan) and Spitznagel.  It is fascinating because it summarises much of what I talk about here in a very concise manner yet goes way beyond by suggesting that portfolio managers should boycott investment in bank stocks. The Great Bank Robbery Project Syndicate by Nassim Nicholas Taleb and Mark Spitznagel Mainstream megabanks are puzzling in many respects. It is (now) no secret that they have operated so far as large sophisticated compensation schemes, masking probabilities of low-risk, high-impact “Black Swan” events and benefiting from the free backstop of implicit public guarantees. Excessive leverage, … Continue reading Review of “The Great Bank Robbery – Nassim Nicholas Taleb and Mark Spitznagel”