Good morning

The headlines:

  1. Greek Poll shows Syriza gaining support. Link: Is that exit coming in July? They have 30% support. On the other hand, Pasok and New Democracy have also shown some polled improvement. The other result of the polls is that the majority of Greeks want to stay in the euro. The sum conclusion seems to be that it’s important both to have one’s baklava and to eat it. With a medium Greek coffee on the side and a glass of water*.
  2. SEC staff end Lehman probe without recommending action. Link: Does the SEC really do anything? They were looking for fraud, trying to decide if Lehman had misrepresented its financial health just before its collapse way back, like, three financial crises ago (2008). The internal agency memo that Bloomberg got its hands on reads something like “we’re finished, and we’re not going to do anything”. One conclusion might be that they got lost in the math, and realised that any misrepresentation would have been impossible because no one would have understood anyway. The other conclusion is that the SEC isn’t really good at its job. The bankrupcty examiner found “accounting gimmicks”. So the SEC conducted interviews and trawled emails. The point is – if you suspect an accounting gimmick, you ask the bankrupcty guy what he found, you then go look at a trial balance, look at some journal entries, and then decide whether the treatment was deliberately misleading prima facie. Surely? I know I know – “due process” and “admissable evidence”. It’s the trouble with trial by jury – how the hell is an American public jury** meant to understand what an accounting gimmick is and how it affected everyone? Obvious flaw. Found it.
  3. The Investment Banks made almost $100 million on stabilising the Facebook stock. Link: Naturally – the banks always win. On the way in and on the way out.
  4. UBS sued over CDO losses. Link: Bandwagons travel real slow – jump on whenever. The losses amount to $331 million, which sounds like nothing in the grand scheme of investment banking***. Apparently, UBS made misrepresentations about the CDO risk. Question: are these the subprime CDOs? Must be, because the complaint suggests that UBS knew that the CDO hay day was about to lose its sunshine – so they got “aggressive” about selling them. CDOs haven’t really been a hot investment spot since the Subprime story – so what took these investors so long?
  5. Ariba investor sues over SAP purchase. Link: And sometimes, you have to just be the bandwagon. The investor thinks Ariba was undervalued at $4.3 billion. The gentleman’s name is Herbert Silverberg, and he owns about 2000 shares. By my calculations, if SAP is offering $45 a share (which they are), he has about $90,000 at stake. How much could he possibly gain? Another few thousand? And how much will his legal costs be? He can’t possibly be right – purely on the basis that he’s quite obviously lost his mind. In any case, by my further calculations, he owns about 0.00002% of this company. This, folks, is the technical definition of an “immaterial rounding error”.
  6. SA’s Central Bank leaves rate unchanged. Link: 5.5% it is. The low rate, unchanged for a record 18 months, is intended to stimulate recovery. Inflation is sitting at 6.1%, 10 basis points above the upper end of the inflation target range.

That’s all for now.

Have a good day.

*In all honesty – the solution to “having one’s cake and eating it” seems to be a choice of eating disorders: not eating the cake at all is an anorexic that refrains; eating the cake and then having it is an anorexic that binges and purges. The Greeconomy analogy seems somehow appropriate.

**Which may or may not include a “freelance beauty consultant” like the Gupta trial jury.

***If JPM’s $2 billion losses were “egregious”, I’d say that losses of about a tenth of that are, at worst, “lamentable”, but probably closer to “perfunctory”.