eFinancialCareers

So you were feeling good about the world? Think again, says our new columnist and senior investment banking risk professional, Dr Dread. Massive global imbalances, trade deficits, current account deficits, a plunging dollar, rising inflation, a monumental housing bust, mountains of mis-priced and illiquid derivatives, banks teetering on the edge of bankruptcy, bust investment banks, wholesale monetization of worthless securities by the Federal Reserve, counterparty trust a contradiction in terms, inept... Read more

Investment banks are things of the past, says our resident naysayer. And financial services lawyers are about to become very hot property. The system is bust. The food chain is coming apart rapidly. Banks' capital ratios are flashing danger signals. Investment banks only continue to exist courtesy of the blank check of Uncle Ben. Rating agencies dare not act ethically and truthfully for fear of self-destructing. Regulators, the very embodiment... Read more

Mervyn King’s scathing attack on bonuses would be easy to dismiss as the naïve whining of an underpaid regulator, were it not for the stench coming from the system. The investment banking world, or the ‘Shadow Banking System’ – let's call it SBS, is a different world and a law unto itself. It exists in the real world (RW) and yet is distinct and apart – like oil on... Read more

It was the hedges wot done it. Lehman Brothers, which has had another bad week, forcibly removed both its CFO and COO yesterday, less than a week after declaring substantial losses following ineffective hedges on its mortgage securities and other ‘hard-to-trade and hard-to-value securities’ – ie, securities which are marked-to-model. Why hedge? Back to basics, what is a hedge? And why is it needed? A hedge to a security is created to... Read more

This week has seen the discovery of one more rogue trader – this time at Merrill Lynch. Following hot on the footsteps of Jérôme Kerviel and the contingent at Credit Suisse, Merrill’s rogue is far from the first. And nor will he be the last. Rogue trading is but a symptom of a cancerous system created and nurtured on the founding principle of ‘Maximum gain for the minimum number of people... Read more

Ignore what banking bosses say: the nice decade is most definitely past and the nasty decade is upon us, says the purveyor of gloom…. Banking bosses are trumpeting the notion that the worst is over. But for a realistic perspective on the current state of play, the best person to listen to is Paul Volcker. The former chairman of the Federal Reserve, he who conquered inflation in the... Read more