Cluster Family Office Blog

Although this article is dated Tuesday 22 January 2008, I can assure you that we wrote it over the weekend. In fact, it has been sitting in the «drafts» folder for three days now, and I imagine the Rankia administrators can confirm this. Following the events of this Black Monday (or perhaps Grey Monday, depending on how Tuesday and Wednesday turn out…), we considered updating it. But we believe it is far more revealing to publish it exactly as it was written, with its original photos included. Exactly as it has been sitting in the «drafts» folder for three days. So here it is, without any changes, the post we had planned to publish on Tuesday 22 January 2008:

In my view, we are not experiencing a crack at in the strictest sense, but rather a major, widespread crisis that comes as a surprise only to those who are uninformed. A crisis that has existed for many months but which only becomes visible to most people when their stock market investments fall, or when the news reports and amplifies on television the sharp declines in the world’s major equity indices. The sharp sell-off of shares worldwide is nothing more than a reflection of the macroeconomic crisis that has been building up unmistakably for some time. It is one of its many knock-on consequences.

Against a backdrop of deep mistrust, the outcome has been fairly predictable. It is true that the starting gun was as unexpected as it was unknown: very few (if any) foresaw a couple of years ago that the collateralised debt, hammered into AAA status, would blow up in the faces of every investor on the planet due to suicidal securitisation. That really was a black swan. But since that initial spark, the chain reaction has taken a course that should come as no surprise to anyone living in Disneyland. That is why the current economic situation bears far more resemblance to a Perfect Storm than a Crack, since this event, by definition, is a sudden occurrence that leaves no room for reaction, whereas the perfect storm is brewing.

To analyse this development, I think it is worth re-reading articles (both our own and those by others) in the light of the past 8 or 9 months of global financial turbulence and upheaval. We do not in any way claim to possess the gift of prophecy. There are no crystal balls, but there is a certain amount of experience and common sense that sometimes (and only sometimes) helps us take steps in the right direction in anticipation of future events. Most texts stand up very poorly to being reread with the passage of time (try it with your most admired financial authors), and of course our posts are no exception. But when some of our analyses stand up to this re-reading in such a turbulent environment, we feel proud, to say the least. Here are some interesting examples in chronological order:

• Crisis? What crisis? (23 June 2007)
• A historic opportunity or a global economic collapse. Chapter 1 y Chapter 2. (12 and 17 August 2007)
• Fasten your seatbelts. (14 September 2007)
• Managers’ tactics. Each to their own. (30 September 2007) Take note of the forecasts and insights from Gustavo Trillo Garrigues, Head of Asset Management at JP Morgan Asset Management for Spain and Portugal; or those from Alberto Espelosín, Head of Research at Ibercaja Gestión. The most The curious thing is that they’re still in their posts and admired by many, without so much as breaking a sweat or blushing.

Perhaps there were few ideal options eight months ago for responding in the best possible way to the situation looming over our assets. But no one should be taken by surprise, nor should they absolve themselves of all responsibility for their losses. There was, there is and there will be room for manoeuvre, not only to minimise the damage, but also to take advantage of the opportunities offered by the storms, even if these are perfect.

We find ourselves in an environment where we see a great many falling knives, and I’m not referring solely to share prices. But we must not only scrutinise the market to identify the golden opportunities and grit our teeth in an attempt to seize them; the hail of knives is such, and will be so prolonged, that we must also be on the alert for those that may fall directly upon our heads, whilst we search for golden glimmers with our liquidity in hand.

Here’s a chart showing the emotional cycle of the average investor. Take note of the adjectives used and the typical thoughts associated with each stage of the cycle: just like real life.

Whilst the scale of the tragedy seems, in the eyes of many, even greater than anticipated, known or acknowledged, we have always maintained that a good investor must recognise opportunities in critical situations and changing circumstances. Undoubtedly, looking back at past events is a good exercise in self-criticism, especially during such times. Why, in the same scenario where most lose, but some win? If we blame a black swan or at random never We will learn in order to improve, and our losses will never turn into investments.

As we have said on previous occasions, the apparent chaos is nothing more than a new order that we do not yet understand, for which familiar timings and cycles no longer apply. It would not even be of much use to apply lessons from other historically critical moments in the global financial system. That is why we must be even more humble and cautious in our predictions and analyses. In a nutshell: Strategy and Humility. And, of course, plenty of caffeine to keep our eyes wide open so we can spot opportunities and avoid getting stabbed in the back.

Whatever our best wishes may be, your happiness and prosperity in 2008 remains in your hands. I love this game!

Spanish fixed income and money market funds have lost purchasing power in 2007. Only 9 out of a total of 360 so-called conservative funds have been able to outperform inflation. Poor management and the prices charged for it have led 351 funds to obtain a paltry return or even losses. Attention to the percentage: 97.5% of these funds failed in 2007. Well, in reality, it was the investor who failed, as he wanted to keep his capital away from risk and the manager's overheating, which has cost him so much money and so much trouble in the past. Strategic lurches that take him from one extreme to another in terms of risk and investment profiles, but at the hands of the same advisor. A crass and double mistake.

But to return to the Spanish money market and RF funds, their mediocrity is appalling. The curious thing is that there are many millions of euros invested in these funds. capital freezers that only produce cubes of ice to cool the cubatas with which their managers and custodians celebrate their astonishing ability to win clients., The toast to the naivety of those who prefer their investment funds to a simple fixed-term deposit, without going any further. Among their audience, we will find uninformed and weak-willed people who succumb to the pressure of the grandiloquent corsage that the entity places in the front line. But we will also find as participants in these funds the remnants of investors who have been chastened by turbos, forex and other highly speculative investments that are not at all suited to their family's needs, and which have done them far more harm than their manager will ever want to know, let alone know about. take on (I recommend this article of Echevarri).

It seems to be commonly accepted that a money market or conservative RF fund is not capable of equal a simple bank deposit. It is as if, in order to exceed this minimum requirement, it is necessary to take on equity or equity risk. alternative inevitably. Those who believe so must have been viciously hypnotised by their vampiric managers/advisors, in order to bleed them for a bigger slice of their succulent wealth pie through the assumption of higher risk and fees. A way of deprogramming the minds of these investors. handicapped The first way to bring them back to the realities of fixed income markets would be to replace their managers with competent and independent Counsellors. And another, perhaps much more accessible one, would be to participate in the monthly colloquium by Francisco Llinares. Although both the former and the latter may make mistakes and say some foolish things, there is no doubt that the informational and ethical shock they will receive will awaken more than one.

Let us all make sure that next summer the managers of these funds and the advisors who recommend them will have to toast with a toast with a glass of wine. of time, no matter how sweaty and hot they are. And may their irritated chattering throats not be cooled. on the rocks at the expense of the uninformed, the misinformed and the weak. Repeat after me: Not with my ice cubes!
(value on the rocks)

There are now more than 30 Rankia bloggers. This is an incentive for those of us who have the privilege of writing in this economic and financial scenario. We can also enjoy writing content that, we know, interests and helps many investors. This is the greatness of financial blogs. Something that grows and grows without the Establishment The economic and journalistic world can remedy this, although it can criticise or even sue. And anyone who wants to close the doors to this field is wasting his time and prestige.

The proliferation of blogs, wikis and virtual financial publications in general has had a brutal effect in popularising economics. There are countless sites available for anyone interested in the subject to learn, but also to pervert and contaminate their knowledge. investment knowledge. The Internet is like that, with its virtues of freedom and its shortcomings of dangerousness. This is not a university where teaching is regulated, where you have to accredit an academic background and/or pass entrance exams. This is like the street of a neighbourhood, that is a financial district. It is like life itself, where we will find ill-educated people we would rather avoid or mediocre investors/advisors who will be a bad influence. We will see websites of financial institutions with flamboyant virtual neon signs, modest little bars or even real financial brothels that prostitute their employees to clean the pockets of the most candid and/or vicious investors, in exchange for advice and services. brokerage more than guarrindongos. Anyone can give advice on how to invest, even those who do very badly, win or lose. But you can learn even more on the Street than at University. However, we will also find Friends, Analysts, Gurus, Colleagues, Advisors, Brokers, Apprentices, Teachers, Amateurs, Specialists and even Counsellors from whom we will obtain many benefits, not only economic ones. To paraphrase a comparison of my admired JMDV in which he said that «Coca-Cola is the poor man's Moët.«I would say that financial blogs are the University of small investors.

Welcome, then, to the world of finance through a medium so popular, free and interactive despite its drawbacks and dangers. In my opinion, its virtues outweigh its defects. And if not, just ask the majority of young people who share and learn experiences and lessons through these blogs. Some of them will have bad experiences because they have known, read or learnt bad arts that have harmed them. But, heck, we have also been harmed by some of our teachers throughout our formative years! This is the price to be paid for the universalisation of financial knowledge, the globalisation of investment experiences, etc. Thanks to this unstoppable phenomenon, the Establishment The financial system will receive more and better criticism, and it will have no choice but to improve in every way.

It is true, however, that this ease of access to self-taught methods can lead to reckless «...the use of self-taught methods can lead to a lack of confidence".«Juan Palomo... when I buy they fall plumb down!»Believing themselves to be self-sufficient and saving as much commission as possible, they will not be able to invest better. But some of them will be able to invest on their own with the knowledge they were able to access academically, if they add the good that the network offers them. Unfortunately, this inducement to invest in the Juan Palomo is reckless for many (I would say the majority), who will not reach the minimum level not to leave. cyclically The most capable ones will eventually be cured of their mistakes and not be ruined for good. Only if they learn from their mistakes and don't ruin themselves for good will the more capable ones eventually become more mature.

Nevertheless, I repeat that in our opinion the benefits outweigh the disadvantages. We modestly try to contribute to advise from our experience so that the readers can avoid some mistakes in their patrimonial approaches, and can improve by avoiding some scars. In all likelihood the rest of bloggers have similar motivations and I would not believe that advertising revenue is the motivation of any of those in Rankia, as some seem to think. Revenues that, by the way, this blog has always renounced and that we would not even know how to quantify. It would be absurd to give philanthropic advice to small and medium investors, and at the same time share the advertising income with Rankia. We think it is better that this money contributes to maintaining this blog. financial district where we can all freely share advice and experiences. Some useful and some polluting, but all of them well-intentioned, free and accessible.

Coca-Cola is the Moët of the poor, as I used to say JMDV, but in some financial blogs we can find authentic Moët Chandon in recyclable Coca-Cola glasses..

Here's to Juan Palomo, his prudence, humility and also to the honesty and independence of his future advisors.

And I'd much rather do it with Moët in a Coke glass than with cheap sparkling wine in elegant bottles and fine crystal glasses.

The ban has been lifted. It seems that anyone without a wallet uncorrelated If you’re not keeping up with market trends, you’re not investing your money wisely. And how is that being done? Well, through the ineffable Alternative Investment, a real catch-all term if ever there was one. Call it alternative investment, call it decorrelation, call it hedge fund, call it God, call it a divine being, call it energy… The point is, anyone who doesn’t sign up to invest their money «alternatively»is frowned upon by" analysts In general. The approach seems to be to insulate oneself from an uncertain and volatile market through a range of strategies, including arbitrage, long and short positions in equities, fixed income, commodities, traditional and renewable energy, metals, investment in unlisted companies, venture capital, and a host of other options as diverse as the market itself.

I’m not saying that decoupling oneself from general market trends is a misguided strategy; only time will tell. But it is very dangerous to entrust a large portion of our capital to a management firm whose name encompasses any strategy, however erratic, controversial or incoherent it may be. Fashion and fear drag us into excesses that stray from a rigorous and dispassionate analysis of the right strategy for each individual, for each specific portfolio. Some managers and advisers dismiss any investment that is not alternative as obsolete and/or risky, and it seems that anything that is not alternative is unsustainable in this new world order, which still seems to us to be more chaos than order. But from our perspective, market decoupling cannot be a mass strategy of not a safe haven for our capital, but simply another option to be used as part of the diversification strategy tailored to each individual portfolio. This is particularly true given the lack of transparency and the wide variety of investments we expose ourselves to when we embrace alternative investment. It is just as dangerous to regard an equity investment as safe as it is to channel our assets into venture capital firms, for example. How can anyone regard such diverse alternative investments as a conservative strategy? In the current climate, not even top-tier non-sovereign fixed income offers an absolutely solid safe haven, as we have seen in this credit crisis. Therefore, we must not fall into the trap or delude ourselves into thinking that decoupling from the market allows us to safeguard our investments from danger. Not if we do so in exchange for the concept of «Alternative Investment», which is nothing more than a giant catch-all where our investments will be at the mercy of the free will of the managers who get their hands on our capital. Time will tell whether this strategy is sound or not, depending above all on what investments are made under this blanket alternative label. But under no circumstances can we regard it as the epitome of a conservative strategy, however much decoupling from the market we achieve. On paper, it would seem that staying on the sidelines of market trends reduces our risk, but in practice we will be allowing various fund managers, whom we will never get to know, to engage in risky practices with our capital. Furthermore, there is the more than likely increase in costs and fees, which are uncontrollable due to the very diversity of the investments.

As has been reported ad nauseam in various media, This is a widespread trend among high-net-worth individuals, but in our experience, it is very difficult to apply to the average, unsupported investor. What is a carefully executed strategy by family offices for large fortunes can turn into a veritable bloodbath for smaller fortunes, leaving them at the mercy of traditional private banking at best. Giving carte blanche for an average or small fortune to be invested «alternatively» in a myriad of opaque strategies, with the well-intentioned aim of decoupling from the market, is more than reckless without rigorous monitoring of each of these investments. In many cases, it is like signing a blank cheque to invest in any kind of financial venture. Furthermore, most managers, let’s say «traditional«, are jumping on the bandwagon of hedge funds (yet another catch-all euphemism) whose workings they are completely unaware of. In fact, very few would pass the litmus test if we were to ask them to explain in detail the alternative investments into which they are channelling our money. But unfortunately, most of their clients will happily pay commission upon commission just to feel secure in the knowledge that they are uncorrelated with the market.

Once again, the protocols and investment strategies employed by high-net-worth individuals are not easily applicable to the average investor. Generally speaking, the service received by a portfolio without the support of a multi-family office tends to be far less competent, rigorous and independent. And in this case, market decoupling and alternative investment in general require close professional monitoring, which the average investor’s wealth does not usually have access to. That is why much of this capital jumps out of the frying pan only to land in the fire—albeit an alternative one. Meanwhile, other managers rub their hands together with glee.

Every day we see more and more platforms such as AllFunds o Luxornet, for example, which offer all kinds of international investment funds and even a wide variety of structured products. They are primarily aimed at financial institutions capable of placing these products with their clients. It is something of a permanent exhibition where every conceivable product is on display, enabling intermediaries, financial advisers and the like to compile their own catalogue.

A very common feature of these platforms is the lack of in-house products. In other words, these are «wholesalers» that offer a wide range of financial products which generate commissions for the retailers which distribute them without giving preference to one financial institution over another. Furthermore, there is virtually no advice provided, as it is assumed that this is carried out by the financial intermediaries who sell the products at retail level. All of this lends it a not inconsiderable air of independence, as it leaves behind the the traditional relationship between banks and financial advisers, which completely undermined the advice received by the end investor. Financial intermediaries will, unfortunately, continue to charge commissions on products sold, but at least there is the certainty that they will be paid by the platform for placing any Thanks to its vast catalogue, it will ensure that the investment choices made for its clients are, in theory, more carefully considered and potentially more successful. Some of these platforms require purchases to be made through a specific investment bank, which has nothing to do with the chosen product, but most do not even require that.

Clearly, that approach is still a long way from a genuine and healthy client-counsellor relationship/A solicitor who is paid on a fee basis. As we have mentioned on other occasions, if the advice is provided on a fee basis in itself, can and must to be completely and truly independent, passing on to the client any commission received from these platforms or directly from investment banks or private banks. In fact A rigorous multi-family office will save its clients far more than its fees through this approach alone. Very often, the best investment for a client is not the purchase of a financial product, and so it may not be in the advisor’s best interests to earn any commission at that particular time. However, if the adviser has to earn a living through commissions, the temptation to sell as much «fish» as possible before it goes off (the maturity of structured products, for example) will take precedence over what is actually in the best interests of each specific investor and their families. Furthermore, traditionally, the ‘fish’ comes from just one or two institutions with which the adviser has signed collaboration or referral agreements. In other words, this is advice very similar to what you might receive from your own ‘trusted’ bank manager – that is, a voracious coffee for everyone.

The slow but steady roll-out of these platforms means that the catalogue selection of the retailer towards their clients is significantly greater. This allows for more professional advice without any loss of remuneration for the broker/adviser. Clearly, this is not the ideal scenario in which the investor-broker relationship should be established/counsellor, but it is an improvement on the way they are currently being treated, being ruthlessly forced to buy their own bank’s products or eagerly persuaded by commission agents or so-called financial advisers to invest in the products recommended by the bank.

Lately, even these platforms are being used by some high-net-worth retail investors, and they are increasingly resembling a business retail than an older person. This phenomenon, which we view as positive, is similar to what has led to the emergence of the well-known ETFs. In other words, the globalisation and popularisation of financial investments, which is spreading day by day, largely thanks to the internet, which facilitates this accessibility—something that, until a few years ago, was reserved for the financial elite.

Continuing with the analogy from the title of this article—that of the pedlar or merchant who supplied local residents with basic provisions in remote corners of the ancient world—we have evolved towards the large, 24-hour hypermarket just a click away, where we find A vast array of products: interesting, superfluous, tedious, reckless or simply unsuitable for a specific client. It is therefore highly advisable for 99.91% of investors that a specialist, who is well acquainted with their financial and family circumstances, helps to draw up the shopping list on a regular basis. To tailor this list to the family’s current and future financial needs and to what they already have in their pantry, they must be thoroughly advised by those who know the hypermarket well, its offers, special deals and the quality of its products. And not to follow the recommendations of outdated advisers single-brand who simply recommend shopping at the corner shop because the revenue from their misnamed advice comes almost exclusively from the owner of that very shop.

Some investment banks have already picked up on this trend and are jumping on the bandwagon. Something is changing on the investment horizon, and private bank managersThat's something, isn't it? utterly outdated in light of the new landscape in which some investment banks are operating. Multi-level marketing techniques such as those used by Citigroup, or even Fibanc with personal advisors freelance who are peddling their products left, right and centre will have to rethink their strategy, which until recently was both innovative and exceptionally aggressive.

Any bank that continues to seek out customers in order to sell them its own products as a means of boosting its turnover has no future in the medium term.

Now, pioneering banks are positioning themselves by sourcing products through these platforms and creating bespoke products for customers. They are not looking for customers for their products (they downplay their own products) but rather products for customers. Customers who, moreover, are not necessarily the bank’s own clients to begin with, but are mainly referred by those who best understand their specific needs: multi-family offices, financial institutions and even independent financial advisers. As it should be. It is a pity that most of them continue to follow in the footsteps of the traditional commission-based broker, as long as payment for advice is not widely accepted.

Globalised specialisation appears to be leading the traditional private banking sector to bring together, under the umbrella of financial soundness, three pillars on which it will base its business:

1. Exclusively bespoke product design.
2. The search for professional product developers (pure investment banking).
3. The collaboration between multi-family offices and independent advisers who provide support to clients constitutes the third fundamental pillar.

Customers are no longer primarily clients of the bank; instead, they are increasingly turning to multi-family offices and independent advisers in whom they place their trust, not their money (or at least it never should). So banks are now trying to provide services to these companies so that they can meet their customers’ needs using the tools and platform offered by the bank’s umbrella organisation. This allows the bank to avoid the extremely costly, aggressive advertising campaigns typically used to attract customers, the opening of branches across the city, or the creation and maintenance of hordes of internal and external personal account managers. And at the same time, it allows these firms to maintain a more than acceptable degree of independence, given that the products to which they have access through that bank are universal. A smart, proactive and intriguing strategy if ever there was one, which is sure to succeed in the short and medium term. Could this be the strategic alliance we were calling for the last AugustHard to believe, isn't it?

Private banking is dead. Long live banking!

Releyendo nuestro artículo pre-crack estival titulado La Economía mundial y la teoría del caos escrito el 14 de Julio, parece claro visto lo visto a finales de este histórico 2007, que nos encontramos en un momento financiero mundial que constará en los libros de texto de las futuras generaciones de estudiantes de economía. Pero todavía no sabemos si se hará referencia a esta era como la crisis del 2008, 2009 o, quién sabe, la del 2014 por ejemplo.

El Nuevo Orden Mundial tiene más de nuevo y de mundial que de orden. Los ciclos históricos económicos de gran cantidad de sectores han saltado por los aires y casi nada sigue un patrón cíclico al que nos hemos acostumbrado durante muchas décadas. Los timings de burbujas, cracks y ciclos ya no siguen los caminos acelerados respecto al anterior como han ido haciendo en los últimos años. Las reglas del juego del escenario económico mundial han cambiado radicalmente. Aparentemente ni siquiera las hay, pero probablemente sí existan aunque todavía no seamos capaces de identificarlas entre el aparente caos existente.

El petróleo ha dejado de ser cíclico, Fernan2, maestro del crudo, ya lo advierte en diversos artículos que ha ido publicando a lo largo de los últimos meses. También las divisas están convulsas por la irrupción de una segunda moneda de referencia importante (€) donde apoyar el buque insignia de las divisas ($). La globalización del carry trade y la no fluctuación del yuan chino que exporta y crece a ritmos jamás imaginados, hacen el resto. Los EE.UU., en auténtica economía de guerra, extraen petróleo militarmente de Irak y someten la cotización del € a su favor mientras subvencionan sin otra alternativa a morosos y usureros que tambalean el sistema crediticio con sus abusos. Los metales preciosos suben sin tener claro hasta dónde ni por qué, y los bancos caen en bolsa y desconfían unos de otros. No existe una consigna clara para refugiar el dinero con una inflación más que considerable, sobre todo a los españoles a quienes el ladrillo se les desmenuza entre los dedos y el Euribor en forma de hipoteca abusada también les echa la soga al cuello como a muchos hispanos de Norteamérica. ¿Caos o nuevo orden mundial que todavía no somos capaces de concebir y acotar para diseñar las estrategias razonables más adecuadas? El tiempo dirá, de hecho dice día tras día.

Se produjo un importantísimo cambio (como muchos intuimos en aquel momento) a partir de aquel 11-s de 2001, aunque la inercia del gran buque económico global ha tardado unos pocos años en mostrar los primeros indicios de ese cambio de rumbo y escenario mundial. Pero que no cunda el pánico, la capacidad humana para equilibrar y estabilizar la economía mundial históricamente ha podido con todo. Eso sí, se ha llevado por delante muchas y enormes fortunas como por ejemplo las de los infelices que saltaron de los rascacielos de Manhattan a finales de 1929. Pero aunque personalmente considero el panorama actual potencialmente más transcendente que un simple crack bursátil, estoy no obstante convencido de la capacidad global de reequilibrio. Es decir, la globalización tiene un efecto multiplicador para contagiar por ejemplo la crisis subprime pero también incrementa proporcionalmente la capacidad de la economía mundial de reequilibrarse concertadamente. Otra cosa es el reequilibrio geopolítico que los dirigentes del planeta sean capaces de conseguir pero, con el permiso de las religiones, siempre he creído ciegamente en la capacidad humana en los momentos difíciles. De hecho el reequilibrio económico facilitará muchísimo el geopolítico.
En definitiva, la Globalización que nos ha llevado a la situación actual, que no es todavía ningún punto de inflexión (al menos positivo), por nuestra mala cabeza, debe servirnos también para ayudarnos a estabilizar la economía del primer mundo que sienta las bases de nuestro Sistema. Algunos diréis que quizás sea mejor no encontrar esa estabilización y comenzar la fundación de un nuevo sistema más justo y con menos desequilibrios entre el primero, segundo y tercer mundo. No digo que no fuera más justo, pero egoístamente confieso que prefiero el reequilibrio del Sistema capitalista que hasta hoy conocemos por estos lares.

La globalización es a mi entender la clave que ha hecho que los ciclos y escenarios históricamente mínimamente predecibles ya no se puedan repetir tal y como los hemos conocido y estudiado. Estamos sentando una nueva praxis sobre la que se teorizará en el futuro, pero no hoy. Las aguas se volverán a encauzar, pero en otros cauces desconocidos y no por ello menos estables o productivos que los que conocimos antes del 11-s y que ahora empezamos a darnos cuenta de que quedaron definitivamente atrás.

The cisnes negros nacen grises, y hay que saber apreciarlos en todo su esplendor y rareza. Si toda crisis es una oportunidad, estamos ante la madre de todas las oportunidades. Mantengamos los ojos bien abiertos y que Dios reparta suerte.

Feliz Navidad y próspero Caos Nuevo 2008.

The US.US. are in a sorry state. We are not referring to the widespread chronic obesity among its inhabitants, nor to the mental instability of the armed schoolchildren who carry out massacres at their schools. We are referring to its economy and its geopolitical situation: a mortgage crisis that includes the sharp fall in the value of American banking in general, terrorist threat Islamist on its own territory, pseudo-warVietnamese in the Persian Gulf, their enemies southerners beyond the Castro supporters are on the rise, a nuclear threat from Russian-backed extremists, etc…

The invasive virus coursing through American veins and causing that state of shock with a very high fever and blood test results that were completely out of the norm, is appropriate from countries such as China, Venezuela, Iraq, Russia, Cuba, Bolivia, Iran and others who have injected a host of pathogens into the US economy. Their bad habits and the unsustainable domestic credit practices they have exported have done the rest. Their constant actions have ceased to to be, his life is in danger, and with it the survival of Western economies; for our part, we are trying to protect and save the life of our capitalist model with all the resources at our disposal. Europe has thus become the healthcare team on which the necessary recovery of what was once the world’s largest and strongest economy for decades depends.

That’s right, the US’s best and most powerful weapon has always been its position No.. 1 in the global economy. The traditional driving force of capitalism is now set to face far greater difficulties due to China’s unfair competition and the other ‘viruses’ that have been injected into it, causing it to become seriously ill worrying for those of us who depend on this breadwinner. There are many of us doctors and nurses who are treating him, medicating him, feeding him, caring for him and even praying in various languages and to various gods for his recovery. Europe, like other countries in the rest of the capitalist world, is sacrificing its currency, its banking and corporate profits, and whatever else is needed to restore American patient. Risking catching some (or all) of their ailments, and with the prospect of falling ill just as they are recovering Yankee should that happen. It is possible that in the future the patient may have to act as a doctor and vice versa, but I doubt that, once back on their feet and in a white coat, they would make such sacrifices to save the life of a European patient, even if that patient were terminally ill.

For the time being, blood transfusions worldwide are USA... essentially from Europe, whose blood type seems particularly compatible with that of the North American, is keeping the economy of that ailing world leader afloat. One euro shorta policy that keeps the dollar at levels that would revive the dead, turns the Plan Marshall in the 1947 singles peanuts now repaid, unwittingly, with usurious interest. We could talk about European altruism or the instinct for survival, since if Dad Yankee (the head of the family) dies, the rest of his European offspring will have a very, very hard time of it. What seems crystal clear to us is that this massive transfusion continues day after day, whilst Europe’s cheeks grow pale and wither away extremely proud the «strength of the euro, the world’s safe-haven currency» (sic). A rampant crisis in which we find ourselves trapped, with no room for manoeuvre in the short to medium term. Perhaps the lack of blood flow to our brain (the one upstairs) is one of the reasons why our beloved European stock market keeps rising and rising, oblivious to reality macroeconomic and the impending perfect storm.

Personally, I am less terrified by this anaemic scenario in the Old Continent than by the capitalist collapse of the New World, which could lead to the extinction of a financial system that would sweep away the very foundations of global capitalism. That is why I believe that Europe’s sacrifice is necessary if we are to revive the American patient by means of transfusions, vitamins, medication, rest and pampering. Their immune system starts to kick in and the scavengers native o foreigners help prevent life-threatening complications.

In Europe, it’s all about cash, but at US.US It's about time to start investing. As always, the article is insightful, Jose Mª Díaz Vallejo EURO/DOLLAR – The currency has taken a nosedive, in which he gives a few practical examples of the advantage that the recipient gains over time compared to the donor.

European altruism, solidarity or obligation to save the sick person, lest they run us over or leave us helpless in the face of a new (dis-)order worldwide with the enemies of North America on the head.

Perhaps Europe’s future inevitably lies in taking a hit in order to save the lives of the US.US. and then cross our fingers that the US leadership will be able to look after us during our economic decline, which is just around the corner – as distant as the recovery of our American patient.

A good shot from Yuan expensive oil and cheap oil would revive the ailing economy and, incidentally, the team Doctors Without Borders in spectacular fashion. I’ll tell my children to put it on their list for the Three Kings… from the East, of course.

Happy Holidays and a Happy New Year. Here’s to a better year.

As everyone knows that a fee is not the same as a commission. Etymologically, a fee honours the person receiving it, who is usually a self-employed professional, whereas a commission agent is not grants always the best reputation. It is a burden we all bear that banks charge all sorts of fees (small, medium, transparent, obscure and even Ali Drool), but… What if bank charges were levied as a fixed fee or percentage of each customer’s total assets, regardless of the products and services they use?

Let’s think about it. Let’s think about it again. Questions arise fascinating, isn't it? For example, quantifying this all-in-one fee It could be as simple as applying the average profit from the bank’s current customer accounts as a percentage of the amount contributed by the saver or investor. In other words, for every euro the customer deposits with the bank, the bank deducts its one-off fee annually, half-yearly, quarterly or however it sees fit. Obviously, loans and mortgages would have to generate the cost of the money itself separately, with whatever margin the financial institution wishes to add, as it would not be fair for a customer who generates an asset for the bank to pay the same as one who generates a liability (or perhaps it would). But from there on, it’s the same for everyone.

This is just a light-hearted exercise, and I hope it will prompt some comments from you all, which I’m sure will be very interesting and insightful. Some of you may think it’s unfair for a casual saver to pay the same proportion as a more active investor who will be using a whole range of financial products and tools. At first glance, it may seem that way, but Let's have a look at it One more thing: what happens to a saver who neither wants nor knows how to invest their money beyond seeing it reflected in their savings account? They are easy prey for fund managers who kindly cause to invest their money in financial products that no member of their family can understand. This harassment is constant, relentless and ruthless. The money unemployed Placing money in a simple savings account or a fixed-term deposit is considered negligence on the part of the bank employee on duty, bordering on gross misconduct. This misnamed ‘adviser’ needs sell financial products that improve their clients’ operating results if they do not want to lose their job. Furthermore, they must do so exceptionally well if they hope to progress within the organisation and move from a customer-facing role to a more senior position—in other words, to go from a rank-and-file employee to cigarette lighter. I have personally met a few honest and dedicated bank managers who try to to do as little collateral damage as possible whilst barely meeting their commercial obligations, but they all feel uncomfortable with the work they do and long to one day be able to offer independent advice without the commercial pressure they feel is being exerted on them by their superiors. Obviously Only a lucky few will succeed. The rest will continue to live by the rule that has been etched into their very being: Sell or die.

Some of you might say that this commercial pressure is common to most of the work we do, and that’s true. But as I see it, it is infinitely more serious to sell inappropriately a financial investment product which, for example, consists of a collection of DVDs that we don’t need. Ethically speaking, there is no comparison: the significance and danger of negligence when it comes to our heritage is vital not only for us but also for our children. You don’t mess about with food.

In a scenario where a bank manager generated exactly the same profit for their firm, regardless of the volume of assets or the type of investment their clients made, the advice would be provided in a manner infinitamentity more appropriate and tailored to the needs and intentions of investors and savers. Even their personal relationship with them would improve substantially if, instead of selling to them, I simply provided them with a service. A service that would be worth a fixed percentage of the total amount of money customers have deposited with the bank. The professional expertise of the fund managers and the banks themselves would do the rest, and moreover, the monitoring of these fees by a competent body would be far simpler and more effective.

This scenario would be far more hygienic and convenient than the current one. Many of you will think it’s unfeasible or utopian; perhaps it is. But at the end of the day, it’s how a family office any self-respecting to be, and therefore does not have its own financial products. Obviously, the bank should continue to develop its own products, but without shove them down their throats straight to the heart of the financially inexperienced customer – that is, the vast majority.

The current situation is unlikely to improve much with the MiFID, as reported Consumerist y Echevarri in his interesting articles. As he rightly says Echevarri: «…it ends up protecting financial institutions rather than customers.» More or less the same kind of exploitation we see on a daily basis will continue, since, unfortunately, bank profits depend largely on it.

Anyway, we just wanted to put this idea out there so that you can let us know what you think. It’s always good to give some thought to to question ourselves methods that do not have to be set in stone. Progress has always depended on this.

The £25 billion injections made by the Bank of England (Bank of England) to the popularised Northern Rock have been and remain a source of contention amongst Britain’s political and financial elite, as well as within the EU. The funds lent to ensure the bank’s solvency in the face of capital flight to other institutions are guaranteed by the Treasury. It could not have been otherwise; either solvency was guaranteed, or the domino effect could have put the entire British banking system – and by extension the European one too – in serious trouble. The consequences of this would be incalculable, and the banking sector in the US and the rest of the world is not exactly in the best of health, shall we say. Consequently, the actions of the FSA, from the Bank of England or the Ministry of Economy, was flawless and succeeded in containing the crisis perfectly; it will be fully resolved when the scavenger on duty do its job and take advantage of this situation, to the benefit of us all. For the time being, the vultures circling Northern Rock’s dying body are Olivant, Cerberus or Virgin itself, among others. I recommend this excellent article by Enrique Gallego, who understands the situation at this bank better than almost anyone else. Although, in the end, an even more powerful and professional vulture will probably step in, recycling the spoils with the approval of the Chancellor of the Exchequer (Darling) and returning the cheque to the forced lender, much to everyone’s relief. Faced with a crisis such as that of this bank or any other, and I would go so far as to say in general:

A loan is infinitely healthier than a grant, but an investment is even better.

But what is truly scandalous is that the European Commission is seeking to boycott this welcome rescue operation launched by the Bank of England, which has averted a crisis of confidence with potentially global consequences. Officials (some call them politicians or pseudo-bureaucrats) at the Commission are threatening to scrutinise these loans to ensure the integrity of free competition. The funds lent by the Bank of England are guaranteed by the British Treasury and could therefore be regarded by these officials as intolerable state aid. Unbelievable.

It should not occur to any rational mind—be it civil servants, politicians or bureaucrats—that Northern Rock’s competitors feel they are being treated unfairly because of the cash injections received to quell the crisis of confidence in the banking sector. But the European Commission’s inability to grasp the global credit landscape is made clear by its threats to launch an investigation. Ladies and gentlemen, no British bank – nor, for that matter, any bank in the world – has been treated unfairly because of the «preferential treatment» accorded to Northern Rock through the capital injections provided by its central bank. Quite the opposite, had these injections not been administered, the problem would have spread like wildfire. The explosion could have reached the ECB, the EDF and, of course, into the pockets of the European Commission itself. The potential for a devastating shockwave was effectively nipped in the bud from the outset by the guarantee of funds from the UK Treasury. The process will soon be perfected with the acquisition of the bank’s remains by the vulture of the moment, thus completing the cycle of the global financial food chain.

These are fundamental principles of the global financial and business markets, but they appear to pose a threat to the integrity of free competition in the eyes of certain European pseudo-bureaucrats, who could do with some basic lessons in common sense, the responsibilities of their positions, and a grasp of reality.

Pure incompetence, even if it’s disguised as overzealousness.

Almost all of us have at some point suffered from an infection that has required a course of antibiotics to clear up. These medicines, in tablet form, are usually prescribed in varying doses, with one or more tablets to be taken each day over the course of a treatment that often needs to be continued for at least a week. The symptoms of the illness (fever, decay, discomfort, etc.) do not disappear after the first dose, but usually do so after a few days and following several doses of the antibiotic. Similarly, once the symptoms have disappeared, we must continue with the course of treatment until it is fully completed; otherwise, we could suffer a relapse.

If we apply this dynamic to the current credit crisis, we can draw some interesting conclusions: Let’s say that the infection is the mortgage crisis, which is affecting the creditworthiness of almost our entire financial system. The fever and symptoms are evident in the stock market performance of that sector, the sudden rise in default rates across all types of debt, the necessary liquidity injections provided by central banks worldwide, and so on. Furthermore, this infection is not localised in our tonsils, as one might expect, but rather the source of the infection is mysteriously and dangerously widespread, as we have already explained in Where is Wally?. We are therefore faced with a sepsis credit in every sense of the word. But that is not the end of our clinical picture: this infection has struck us right in the middle of weakened immune system or, as it is also known, the energy crisis, with oil at $100 a barrel and rising; the rise in Euribor makes us choking y distress, as well as a depression The local estate agent is really putting us off everything. From the jihad globalised We’d better not talk, just in case our hypochondria proves to be more well-founded (or fundamentalism).

Given a clinical picture such as the one we have described, and always with reference to the average investor or patient, the most appropriate and effective treatment is rest to conserve our limited energy, fever-reducing to bring the fever down and, of course, a course of treatment antibiotic which must be strictly followed if we are to recover without relapses or complications. In fact, I would say it is the only possible treatment.

The rest, even if it is not absolute, we would apply it to our investments in RV since we are not in the best position to deal with the stressful current market. Perhaps in a few days’ time, when the fever has broken and we’re feeling a bit better, it will be time to make a strong comeback with our flexible investments. But as things stand, we need to take it easy and stick to really good food. The scraps are only for those who scavengers with pedigree.

The fever-reducing, in their various forms, such as property sales, will help us to lower the temperature in our oversized mortgage boom. Investments in RF They will also help bring our stock market fever down. If we also maintain our income by collecting our sick pay on time, we’ll avoid chills and shivers. In short, these are remedies that won’t cure the global infection, but they will help us feel less ill.

And so we come to the what on the matter: The antibiotic. Is there any effective medication to cure sepsis caused by the US mortgage crisis? According to our modest knowledge of economics and healthcare, this ‘antibiotic’ is called balance sheet showing a loss. Investment banks and the banking sector in general began a few weeks ago (some even earlier) to publicly acknowledge massive losses arising from collateralised debt. In other words, the defaults in the securitisations that the financos were built on feet of clay, and the sorters irreverently blessed them. It is only through the quarterly publication of losses—recognised and recorded in the relevant balance sheets—that they can be assimilated, reconciled, accounted for, realised and, ultimately, to digest los billions dollars and euros lost in securitisations qualified hammered with several A’s.

This slow and painful process of acknowledging gaps and losses that come out of the closet for to take shape in financial statements, they are the antibiotic tablets that will slowly but effectively cure the sepsis credit which the global economic system is suffering. Some accompany the publication of this dire news with a shameful resignation or a pretentious termination devastating from the head of everyone capi of the company. Although I doubt that the shareholders and/or those affected by that disregard for risk (don’t miss out on What’s happening in the financial sector? from JMDV) offers them any comfort at all. Perhaps seeing the credit rating agencies hanging in the Plaza Mayor would be quite a bit more rewarding, but I'm afraid there's no way to make up for it.

We now have a clear diagnosis (something we didn’t have at the start of the summer) and have started taking the first pill of a antibiotic treatment which may span two financial years fully aware. With the first doses, we won’t feel any improvement in symptoms just yet; it may take some time for that to happen. However, the publication of results is beginning to eliminate bacteria and microbes, and this elimination will become more evident and potent once the respective financial periods of the affected entities have ended. It will be then that the seals and signatures of the auditing firms, living up to their name, will certify the veracity (sic) of those losses. Some organisations will not be able to withstand this public and accounting scrutiny. But the natural course of events will take its toll, and then the scavengers with pedigree which will be responsible for absorbing aseptically human and financial assets that have not passed the accounting test.

Our convalescence It will be a long process, but it seems clear that we will come through this. That said, we must see the process through to the end and iron out all the discrepancies in the audited financial statements. And that may not be possible until we have had the accounts audited for a couple of years, as once we have closed the current will continue collateral debts are exploding in the hands of the world’s most financially sound institutions. For now, stick to your medication, get plenty of rest and take care with the fever.

This is proving to be a real struggle, no doubt about it. Along the way, we’ll lose a good chunk of our physical and mental health, as well as money—lots of money. Damn natural selection… or maybe not.