Saturday, December 26, 2009

US debt ceiling up again to $12.4T

It’s a bit disconcerting to learn “The bill permits the Treasury Department to issue enough bonds to fund the government's operations and programs until mid-February. The Senate will vote again on the issue Jan. 20Yahoo News). At this point, the lack of any debt-reduction proposals has become sadly expected.

LAURIE KELLMAN (AP) then went on to say “Obama must sign the measure into law to prevent a market-rattling, first-ever default on U.S. obligations.” Given that Bernanke could literally create as much USD as he wants, American treasury debt would always make good on its obligations, the risk lies in speedy inflation.

So why would the Associated Press plant fear of default into the readers? It’s to probably rally support for the (reckless or intentional?) excessive borrowing by the few people who run American congress. How will this end? Badly I bet.

Thursday, December 10, 2009

Aussie bank raises interest rates (Outrage!)

This (shortened) video was meant to pacify bank customers regarding rising credit cost.

It failed to mention still something. While central banks, who lend to commercial banks largely, have kept interest rates significantly low, why does Westpac NEED improved returns, so urgently? hmm...

Saturday, December 5, 2009

Murdoch hates climate change folks

The usual pro-government FOX News has lately displayed an Anti-Global Warming (i.e. anti-establishment) agenda. What's going on here? Is it simply Obama Administration-disapproval trend following, or has FOX News decided to take a fair position in the climate-change debate?

Friday, December 4, 2009

837% return in 33 days (Poker)

Smasharoo, a pro poker player, documented a return of 837% within 33 days, with very little volatility (adequate bet size management), at That’s pretty amazing. I have learned a few things from his much appreciated shared experience.

Minimum volatility

Position size/bankroll management and playing strategy largely optimize return volatility. Basically, understand the statistics behind your strategy and make betting size decisions with respect to it for optimization. The Kelly Formula is a pretty good reference.

High frequency of compounding

This explains why successful day traders practically always outperform those holding longer positions. I have discussed that even with a small statistical edge; higher frequency of compounding makes a HUGE difference (see Slight Edge Butterfly Effect).

Poker and financial instruments

I see a lot of similarities. They both hold inefficiencies due to varying skill levels, i.e. more informed players will consistently profit over time. So the key then lies in becoming more informed, the part that requires diligence, critical thinking, and probably guts too amidst discouragement from fixed, traditional thinkers. Kinda cool huh!

Tuesday, December 1, 2009

Dubai debt questions

OK, so UAE has banned Sunday London Times from disclosing actual debt figures. The state's future appears bleak. Let's see how it affects the rest of the world.

UAE existing debt

Figures are from Zero Hedge,

United Arab Emirates (via Bank of America - Amortization figures only):

Total Debt: $184 billion

of which...

Dubai: $88 billion
Abu Dhabi: $90 billion


Due in:
2010: $12.0 billion
2011: $19.0 billion
2012: $18.0 billion
2013: $ 7.5 billion
2014: $ 5.5 billion

Abu Dhabi:

Due in:
2010: $ 8.5 billion
2011: $14.7 billion
2012: $10.0 billion
2013: $12.4 billion
2014: $ 9.4 billion


Due in:
2010: $22.0 billion
2011: $34.7 billion
2012: $29.0 billion
2013: $20.3 billion
2014: $14.9 billion

Of United Arab Emirates (By Entity via Credit Suisse, citing Emirates Bank Association):

HSBC Bank Middle East Limited: $17.0 billion
Standard Chartered Bank: $ 7.8 billion
Barlays Bank Plc: $ 3.6 billion
ABN-Amro (RBS): $ 2.1 billion
Arab Bank Plc: $ 2.1 billion
Citibank: $ 1.9 billion
Bank of Baroda: $ 1.8 billion
Bank Saderat Iran: $ 1.7 billion
BNP Parabas: $ 1.7 billion
Lloyds: $ 1.6 billion

Credit derivatives

Leo Wang, a former SEC Enforcement Attorney, states

The key question is whether we have another AIG--i.e., a financial institution that wrote a large portion of the credit default swaps, or insurance, for Dubai debt protecting debt holders in the event of a default... These crises always have secondary and tertiary effects. Some market participants are getting nervous about debt of other UAE members, and also the debt of certain nations in Eastern Europe and elsewhere. What if credit default swaps for the debt of these other nations were written by a major financial institution that also wrote a lot of Dubai credit default swaps?

This blow up clearly affects American and European economies, perhaps of epic proportions.