Life As It Goes By

Captain America, leading Uncle Sam, had responded to the nonsense from the brash Wall Street fighters. Slamming a 10-year 50% tax on banks was really something I had in mind as well. However, I still feel the range should be extended to the individuals that receive the sky-high bonus. A 50% income tax on their bonuses is still way too little for the kind of risks (unless a life is cost less than trillions of dollars) they have taken for the past year.

I don’t expect this to end so quickly. That gotta be some kind of retaliation, given the fact these bankers had been so well fed with silver spoons. Besides, they are elite, top of the minds. They will come up with groundbreaking schemes like those in the derivative products they sold. Unless they wise up and keep their mouth shut. In this way, the damage shall be limited just to the banks, not the individuals. They will win most in this option. This is why I propose President Obama to launch a second attack with the income tax.

Yes, we do want to corner them and give them really a hell of time. We badly need some discipline in the house. The financial crisis has hit us hard and painfully. We should not forget this and so should they not. If this crisis is to be labeled as a classic excuse of being the norm of economic cycles or trends, then let regulation be a new lesson of uncertainty. Yes, they are going to be so screwed that they will regret what they have done for the making of the crisis. They would want to change industry and not work in this line any more. Yes, we are going to come so hard on them that they would have nightmares every nights, worrying about the unethical deals they have committed during the day.

In reality, here are a few things that I feel will follow suit: rise in stock market, poor quarterly results for banks (blaming government actions have severely demoralized the spirits in the banks) and acquisitions. The rise in stock market means a transfer of funds from the hard cash to paper profit or loss. Of course, it is not just limited to the stock market. Any market that is capable of giving returns of investment shall be affected: currency, bonds, commodities, ETFs and so on. This is only the short term strategy. To get these money back after only 10 years, it will be an unsound investment. In the meantime, there will be lots of political lobbying around to try to shorten their sentence. Money is power and banks have plenty of them.

Any investors would think of a long term plan. At this juncture, they have a choice of stating their true financial status now (and hence justify the levels of their current bonus) or report a much lesser value, keeping a portion for the future. Those banks on the borderline  ($50 billion) could save themselves by not joining the leaders of the herd. Those leaders might want to take a gamble and go for it this round. No one will ever know when such opportunity will knock again. Besides, first time offenders might take a lighter punishment or let off unnoticed. But it is still a 50-50 game. If they do think long, they will find ways to produce 2 quarters of rather disappointing results to avoid a repeat next year.

One best way of spending is to acquire big. This will slow the whole growth while keeping the stock price up. What this brings would be laying off of staff in banks and less consumer choices. The smart ones are already doing that now. And while we are talking about banks all this time, the tax proposal by President Obama include other financial institutions such as insurance companies.

This is assuming no big reactions from the those involved in this tax proposal which will only come into effect in June. Since it is based on the past year’s books (unless I got it all wrong), I believe the effect will remain. There got to be a way to bypass the tax restrictions imposed. With their clever minds, they will soon come up with something. Benefits-in-kind can include stuff such as properties, stock options/shares themselves and all kinds of big-ticket items. As for the companies themselves, they can break into smaller parts, so that none falls into the category of “above $50 billion”. Basically, options are plentiful.

It will be more than just a chasing game. It’s life and death. These monies or bonuses are the blood of these people and they will do anything for them. Expect the best, the very best from them to get back what they feel they deserve.

The financial crisis is over now. At least for the bankers. They have the best of years for the past few years. Having received record bonus in the year 2007 before the tumbling of stocks in 2008, which triggered the flow of funds from governments to help them save the free fall. Amazingly, like perfectly crafted plan, the stock market returned to the levels before the crisis towards the end of 2009. The bankers were thrown another lifeline: another chance to bag big money. Once in a lifetime opportunity, some must have felt. Where can you find someone who will give you money to gamble, take back exactly what he or she has lent you and ask no share of your winnings even though they are 2 or 3 times the amount you have lent? There is no way they are going to let go of this chance…

Disappointed? Why should I? I have finally found a certain future for myself. No matter how smart the governments are, they are just politicians. What do they know about making money and controlling the financial systems? It belongs to the exclusive club, only for the most intelligent men. The past 3 years have shown who are made of better materials. Even in the post crisis, the bankers still dare to show hand to the guys in the White House or Westminister. Never once there is a need for them to be on their kneels to beg. Saying sorry in the public costs so much little to the amount of dollars they will get from the bonus. It doesn’t take a financial analyst to see how worthwhile the deal is. Only the fools at the top of the nations think repentance is on the way.

The end is fixed. A sad ending for the bankers is a mission impossible. Sarcastic I may sound here but helpless is the louder voice in me. There is nothing anyone can do to change that. No, it’s not the duty of the God to punish those who take profits for the risks taken. It’s the choice of the governments to pick the jobs of the bankers, rather than the general public to save. Their fears of greater failures have provided the answers to why they made such a choice. And now to save their own jobs, they are thinking of ways to raise taxes (or incomes to the governments) for the majority while keep taxes on sensitive items such as stock markets and currency stimulant.

I have decided not to wait and see anymore. No more disappointments. Now it’s the time to jump on the bandwagon. Join the banks or you will regret for life. Be on the winning side. The line is clear.

This article is definitely overdue and my apologies for this.

It has been a hectic start of the year for me. It’s not about work though. I just had a good break, much needed after such an eventful year. X’mas spending has been normal, like everyone here. Thanks to the great works done by governments around. The measures taken to save the financial sector have proven to be effective. Fewer people than it supposed to be, were out of the job. Business lending has not been less active and property prices have more or less recovered to levels before crisis (applies to some regions though).

There remain questions, or uncertainties to be exact, to be answered. Rising public debts and high unemployment rates keep the minds of many top policy maker spinning. According to Keynesian economics, jobs could be created in the public sector and hence, aggregate demand would be raised. However, when you have state government such as that in California, at the brink of bankruptcy, you will find it hard to get funds to pay for these much needed extra hands. Some time in 2009, there was a bill for energy passed and yet there was little impact on the job market from the so-called stimulus package. One would wonder now whether the same will happen to the healthcare bill.

Other governments have some other worries on hand: double-dip recession, default risk and weather change. Those with deep pockets can afford to provide a second round of stimulus to hold the economy, at least in current state. As for those ailing states, the future remains bleak.

UK and their European counterparts suffer another wave of attacks (from the nature this time) when sudden change in weather take the cities by storm. China is another victim of this change but perhaps in a better position and mood for the new year, having known that its GDP for 2009 registered growth of close to 10%.

United States of America almost encountered another attack from terrorist. Perhaps it is a sign of lady luck coming back home. The terrorist had outsmarted the system and must have gotten himself a shock, knowing that. Obviously, the shock did him no good as explosives fail to work (probably more thorough testing is still required to ensure there is no further reaction between the private parts of a human body and the explosives). Regardless of the outcome, the intention might be interpreted as a revenge on the recent progress (on the capture of Mr Osama’s family members).

The road ahead is still unclear. Which direction will the world economy head remains a mystery. Signs of strong growth particularly in China are welcome. There could be the before or after effects of the collective actions by the governments around the world. There were many economic growths around the globe in 2009. But this one looks authentic enough. Having said so, it is insufficient for just one such growth around the world. To swing the whole world back to the growth side, it seems, much more is needed. To be fair, an imbalance is preferred. If every country is going to the double dip recession, then the whole world may enter depression again. This somehow reflect the importance of a growing China.