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Wednesday 9 July 2008

Of vice and men

Taki lives the High Life

Gstaad

There’s fear and loathing around here, and it has nothing to do with lousy snow conditions. Fear that UBS, the biggest Swiss bank, is in trouble, loathing for those whose greed brought this about. ‘Reckless’ is now a synonym for ‘banker’ as the financial system teeters on the brink. UBS has denied it is in trouble, but then so did Bear Stearns just before it collapsed. In other words, there is a credibility problem, one that dwarfs Fayed and the Mills woman put together. Asset write-downs and credit losses will continue, according to the greatest financial expert of our times, Professor Taki, OBE, MBE, UBS, JPM, and job cuts and asset sales are a given, always according to the professor.

So what else is new? Bear Stearns is roughly 30 per cent owned by its staff, but it’s the top dogs who brought the place to its knees. A $70-billion company sold for two bucks a share, oy veh! But there’s help on the horizon. Just kidding, of course. Sovereign wealth funds, those state-backed funds flush with oil moolah, are staying away in droves. Foreign investors like this Alwaleed fellow — he’s big in Citigroup — have already seen their investments fall by roughly 38 per cent, so they’re staying away with a vengeance. What does the great financial professor Taki see in his crystal ball? That’s an easy one. More pain, fewer options for the Federal Reserve, overpriced housing becoming underpriced, and, as always, a bailout for the truly greedy. Ah yes, I almost forgot. China, Dubai, Kuwait and other such great democracies will end up owning large chunks of American financial institutions, which means that the next time you see American banking big shots they will be wearing a chequered tablecloth on their heads.

As we all know, human greed has no frontier, but the Bush administration is unique in its ignorance and incompetence. Where were the federal regulators when all this reckless lending was taking place? In Iraq, I suppose, getting kickbacks from Halliburton and Cheney. Incidentally, as I write this, there are 80,000 Sunnis spread all over Iraq who were paid ten dollars per day to fight against al-Qa’eda — the only way we could get anyone to fight on our side — and these 80,000 suckers have not been paid for the past three months or so. Which means they’re turning against us quicker than you can say Halliburton. What I’d like to know is if there are other American contractors who have not been paid. A little birdie tells me no way. Yet Bush insists the corner has been turned and we are about to pronounce victory in Eiraq, as he calls it.

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