-Caveat Lector- from; http://www.aci.net/kalliste/ Click Here: <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Today's Lesson from The Life of F. Scott Fitzgerald by Matthew J. Bruccoli Fitzgerald made two trips from New Orleans to Montgomery in January, bringing Zelda sazarac cocktails, her first orchids, and a $600 platinum-and-diamond wristwatch paid for by writing "The Camel's Back" in one day. He told Perkins that he started at 8 a.m. and finished at 7 p.m., then recopied the manuscript by 4:30 a.m. and mailed it a half hour later. Fitzgerald was not proud of this trick story about a masquerade party; but it brought his first inclusion in the O. Henry Prize Stories series and was later bought by the movies. The young author must have thought he could write a popular story anytime he needed to. His best story ideas came to him as complete structures, and by writing them in concentrated bursts of effort he was able to preserve the spontaneity of the narrative. He later explained, "Stories are best written in either one jump or three, according to the length. The three-jump story should be done in three successive days, then a day or so for revise and off she goes. This is of course the ideal--In many stories one strikes a snag that must be hacked at but on the whole, stories that drag along or are terribly difficult (I mean a difficulty that comes from poor conception and consequent faulty construction) never flow quite as well in the reading." ----- The Dark Side of the Farce Clinton's Increasing Insanity He bangs his balls in the dark as reporters watch. A STRANGE, solitary figure could be seen on the Army and Navy Country Club golf course outside Washington on Sunday night, whacking ball after ball into the pitch darkness as the rain poured down. It was Bill Clinton, inadvertently offering the stark image of an increasingly isolated and frustrated President heading towards the end of his second term, his temper rising and his power waning. Dusk was already gathering when he suddenly announced that he was going to play golf, alone, and for two and a half hours he worked his way around the sodden course, deserted save for his Secret Service detail and a handful of damp journalists. "He was playing in the pitch dark," one reporter said. "He was swinging and wildly hitting balls everywhere." Mr Clinton's obsession with golf is well known, but his eccentric solo session has inevitably invited speculation about his state of mind in the twilight of his presidency. "It was odd. It was strange," one White House official was quoted as saying. With just over a year of his last term remaining, Mr Clinton is having to cede the political spotlight to his would-be successor, Al Gore, and to his wife, while his ambitions for his own legacy have become bogged down in partisan politics and bitter budget wrangling. Recently Mr Clinton has taken to public bouts of introspection, and by his own admission the presidential temper is starting to fray. "Some days I wake up on the wrong side of the bed, in a foul humour," he told an audience earlier this month. "It has occurred to me really that every one of us has this little scale inside . . . on one side there's the light forces and on the other side there's the dark forces in our psyche. "Life is a big struggle to try to keep things in proper balance," he added. Mr Clinton's darker side was on full display last week after the Senate rejected the treaty banning nuclear tests that he had planned as the centrepiece of his foreign policy. Mr Clinton lambasted Republican senators for what he called their "reckless partisanship" and "isolationism". And the Senate is not alone in feeling the rough edge of the presidential tongue. In the past few weeks he has been heard to lash out at his conservative enemies, unsympathetic media and even the FBI. Earlier this month, at a White House picnic, one reporter for Investor's Daily found himself in a slanging match with Mr Clinton, who then gave instructions that the journalist be banned from all such functions in the future. Mr Clinton's frustration was also evident recently when he reflected on the stalled peace process in Northern Ireland and compared the opposing sides in the conflict to drunks addicted to violence. The President's periodic bursts of ill humour may be partly attributable to disappointment with the campaign being run by his Vice-President, whose election Mr Clinton sees as crucial to preserving his own place in history. He has been vociferous in his support of Mr Gore, but last weekend the front-runner for the Democratic nomination clearly hinted that he might forgo Mr Clinton's help. Many voters see Mr Gore as tainted by the scandals of the Clinton presidency. The President is also said to be finding it hard to adjust to playing second fiddle to the political ambitions of Hillary Clinton. While he jokes about joining the "Senate spouses club", associates say he feels more than a twinge of envy that his political career is winding down, unglamorously, at a moment when hers may just be taking off. Some associates say Mr Clinton is still determined to leave an imprint from his final year in office and is gearing up for a battle over spending with Republicans in Congress. "He's been in great spirits and he has lots of fight," Terence McAuliffe, a Democratic fund-raiser and Clinton confidant, told The Washington Post. But Mr Clinton's public comments have taken on a mournful, valedictory tone, and his introductions to White House visitors now tend to start with the formula "as our time here draws to a close". On a recent trip to New York a park guide joked that the President could always get a job with the National Park Service. "I can work cheap, I've got a good pension," Mr Clinton replied. But White House insiders say that for all the jocularity, the future is weighing heavily on his mind. But the only thing that Mr Clinton has stated with absolute certainty about his plans after leaving the White House is that they will involve a large amount of golf. When he climbed, dripping, into his limousine after Sunday's impromptu and solitary round of golf, his aides declined to say what he had scored. Perhaps he was not even counting. The London Times, October 19, 1999 The Queen's Portfolio British Banks Get Chinese Loans The Queen is in the counting house . . . The Bank of China is to mark this week's state visit to the UK by President Jiang Zemin with agreements to provide renminbi loans to HSBC and Standard Chartered to bolster the business of the two British banks in the Chinese market. The deals, to be signed in London tomorrow, are expected to total Rmb3bn ($362m) apiece, making them the largest such loans granted to foreign banks in China since the rules on funding lending business there were relaxed last summer. The deals should give the two banks an edge in the Chinese market because they will have more money to lend to corporate customers operating in China than their competitors, all of whom have faced difficulties raising renminbi in the local market. Foreign banks see lucrative opportunities in renminbi lending in China but are not allowed to take deposits from the public and may only lend Chinese currency to corporate ventures financed with foreign investment. HSBC and StanChart declined to comment, but officials involved in the visit said the loans should generate a general mood of goodwill early on in Mr Jiang's trip, which begins this afternoon. The loans follow strong international pressure on China to open its heavily restricted banking market. The Chinese government agreed in August to allow foreign banks to raise large loans on fixed maturity terms direct from Chinese banks. Before their only source of Chinese money was very short term borrowing in the interbank market. But loans granted under the new rules have been much smaller than those now being made available to the British banks. Bank of Tokyo-Mitsubishi raised only Rmb50m in one of the first such deals in August. Mr Jiang is also expected to meet executives from BP Amoco. BP has been seeking authorisation for a $2.5bn petrochemicals plant near Shanghai. The Financial Times, October 19, 1999 Gold Market Saudi Prince to Rescue Ashanti? The true definition of a goil (gold-oil) hedge. The Saudi Arabian investor, Prince Al-Waleed Bin Talal Bin Abdulaziz Al Saud, yesterday pledged financial support for the Ghanaian government, which owns 20 per cent of the troubled gold miner Ashanti, in a move that could block Lonmin's bid for the company. The surprise development came shortly after Lonmin, which owns 32 per cent of Ashanti, had reduced its bid for the company, but before a banking consortium, entitled to ask Ashanti for $270m (�161.6m) in margin deposits, had decided to renew the existing moratorium for 72 hours. Prince Al-Waleed has made several investments in Africa in the past two years. He has a holding in CAL Merchant Bank in Ghana, whose managing director, Kofi Bucknor, is co-ordinating the financial experts advising the government on the Ashanti. Last November he bought a stake in United Bank for Africa, Nigeria's third largest bank. Someone with knowledge of the situation said: "The Prince has informed us of his interest in supporting the Ghana government. We are very happy to have his support." Earlier in the day Ashanti had announced that Lonmin, the mining rump of former conglomerate Lonrho, had reduced its conditional share exchange offer from 32 Lonmin shares for every 43 Ashanti to 16 Lonmin shares for every 27 Ashanti (plus a fraction of a warrant). The reduced offer is rests on five conditions: the irrevocable commitment of the Ghanaian government, the written consent of the Minister of Mines, the unanimous agreement of Ashanti's hedge counterparties to a standstill covering its existing obligations, the support of lenders under its $270m revolving credit facility and appropriate shareholder approvals. With Lonmin shares at around 600p, the revised offer values Ashanti shares at around 355p ($5.33) compared with yesterday's market price of $4.50. Some stockbrokers have become so confused by the Ashanti situation that they have stopped offering an investment view on the shares. The Ghanaian government, which has asked for a one month extension of the standstill agreement, has begun a detailed review of the situation. The review includes discussions with Lonmin and other Ashanti shareholders, as well as potential investors which have expressed an interest in the company, hedge book counterparties and creditors. The government is also working with Ashanti's management to address the liquidity situation. Ghanaian government advisers have talked to AngloGold, the South African gold producer and Barrick Resources, the Canadian group, in an effort to rescue Ashanti from the liquidity problems in its hedge book of derivatives resulting from the sudden recovery in the gold price last month. The Financial Times, October 19, 1999 Speculative Markets The End of Trading? Investment banks turn wimpy. Investment banks say they want to reduce the risks they are taking. This poses as many problems as it solves SWAGGERING and arrogant: the Wall Street trader of legend, a master of the universe who bets on bonds, currencies or whatever else he fancies, was never the most attractive of species. So few tears will be shed that it is a dying breed. For dying it seems to be: over the past year, most big investment banks have sharply cut back or even closed their proprietary-trading desks, which punt the firm�s capital. �There are still proprietary trading desks, but they are like chicken soup made out of the shadows of chickens,� says one analyst. Salomon Smith Barney, which, as Salomon Brothers (before it became part of Travelers, an insurance company, and now part of Citigroup), once epitomised the bond-trading culture, closed its American fixed-income arbitrage operation last year and concentrated what was left of the business in London. Now it is about to pull out of proprietary trading altogether. Sources in the firm say it has been told to close all its positions by the end of the year. Although the transformation of Salomon may be the most dramatic, other investment banks are moving in the same direction. Not that they are eschewing trading entirely: they still need traders to provide liquidity to clients. And the line between making markets for clients and proprietary trading is fiendishly difficult to draw. Even bog-standard market-makers take risks, albeit smaller ones, just as do their more exalted (and higher-paid) proprietary-trading brethren. But save for one or two holdouts (�Trading is an important part of our business and fits well with our investment-banking activities,� says John Thain, Goldman Sachs�s co-president), investment banks seem anxious to take much less risk than they once did. Part of the reason for this is short-term. Millennium-bug worries have led banks to cut their exposures for fear that financing their positions over year-end could be hard. But there are deeper reasons for the banks� new aversion to punting. A combination of shareholder sniffiness (investment-bank shares trade at a huge discount to the market as a whole), some heavy losses in recent years, and the threats posed by technology, mean that betting the firm�s capital is becoming ever more unappealing. Periodic growls about tighter regulation of risk positions also play a part. Take, for example, J.P. Morgan, a bank that once relied on trading for most of its profits. In the mid-1990s almost 60% of the firm�s pre-tax profit came from such activities; since 1998 only a fifth has done. Credit Suisse First Boston, Warburg Dillon Read and Merrill Lynch: all have, of late, curtailed their reliance on trading in favour of fee-based income such as advice on mergers, which are booming. There was once a good rationale for investment banks to think that they might have an edge over other investors in the markets. They were paid to transfer risks from one client to another. And since they were the conduits through which this business passed, the information helped to give their smart, tech-savvy traders an edge. Chinese walls or no, it is no accident that most proprietary-trading desks are placed in the middle of the trading floor. But the rationale has lost its force. Advances in technology have made information more freely available and have remorselessly reduced spreads (the differences between buy and sell prices). Yet the risks involved in trading have not fallen�rather the opposite. �On a risk-adjusted basis these businesses stink,� says one insider. This has been brought home many times in recent years, from the bond-market crash in 1994, to the turmoil in financial markets sparked by Russia�s default last year, to the dramatic widening of credit spreads in America this year. The danger of being caught on the hop by extreme moves in financial markets seems, if anything, to have risen. Nor, for all the supposed advances in risk-management techniques, has banks� ability to cope with such moves got much better. Anyone that relied on so-called value-at-risk models, which purport to show how much a firm could lose over a certain period, has been crucified. That is why these models have been supplemented with �scenario testing�, in which risk managers try to imagine the worst that could happen to their bank�s positions. But the limit to such an approach lies in the imagination�almost nobody dreamt of what happened to Long-Term Capital Management, the hedge fund that nearly went under last autumn. Investment banks are no longer as confident as they once were of their ability to control trading risks. Better, then, to take fewer of them�or, at least, to seem to do so. One way to do that is to outsource proprietary trading to a hedge fund. Although still risky (think, for example, of UBS�s $704m losses last year from its investment in LTCM), this strategy has several advantages. It avoids the huge internal pay gap between high-flying proprietary traders and the rest. And it shifts exposure off the balance sheet, so that shareholders are left less aware how much risk their bank is taking. Salomon Smith Barney seems to be pursuing this route. Although the firm says that nothing has been decided, sources say that its proprietary traders plan to set up a hedge fund in which Citigroup will invest $650m (though it will not own any of the fund). A better banking model None of this means that investment banks will get out of trading completely. But they have been trying hard to expand their other, fee-earning businesses, such as asset management and investment banking. In essence, investment banks that once focused on transactions are now trying to attract clients instead. �The battle is over clients. I don�t see anyone saying that the best model for an investment bank is Long-Term Capital Management,� says the boss of one big investment bank. Unfortunately, there is a scarcity of investment bankers and good analysts�especially in such hot areas as telecoms and the Internet. The result is that investment banks are falling over themselves to pinch teams from rivals. And the costs of doing so�or of paying to keep analysts that have been offered jobs elsewhere�have rocketed. The bosses of two of the biggest firms reckon that the cost of keeping their top research people has risen by roughly 40% this year. Two probable results will flow from this. The first is that, since only a handful of firms�notably Merrill Lynch, Goldman Sachs, Morgan Stanley Dean Witter, CSFB, and J.P. Morgan�handle most equity and M&A business, they will be able to afford to pay more for their analysts.That suggests more consolidation in an industry that has already become markedly concentrated. The second is that analysts� conflicts of interest, already sharp, will become sharper still. For all the claims that an analyst�s worth lies in investors� perceptions of his independence, few are ever brave enough to put out a sell recommendation on a firm with which their bank does investment-banking business. Take the example of the oils team poached by Goldman Sachs from Schroders in London earlier this year. It had seemed irredeemably gloomy about the prospects for Repsol, a Spanish oil company. Two weeks before it left to join Goldman, the team suddenly became bullish. Oddly, Goldman advised Repsol in its takeover of YPF, an Argentine oil company, soon afterwards. The risk is that, when the good times come to an end�and markets have looked distinctly wobbly of late�investment banks will find themselves stuck with lots of expensive analysts and investment bankers, and shrinking revenues from asset-management. With all those mouths to feed, they may feel tempted to start punting again�and traders could regain their old swagger. The Economist, October 15-21, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://home.ease.lsoft.com/archives/CTRL.html http:[EMAIL PROTECTED]/ ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
