How do you say… I lost $18bn?
How do you do that? I realise financial stuff isn’t normally allowed on the site but with Bethy pretty much out of commission on the site now, it’s pretty much all me and I’ll very occasionally mention these because it’s important people keep up with the quite ridiculous amount of money going on right now.
The two major stories in the financial world this week, certainly as regards the US sub-prime mortgage crisis, were regarding one legendary investos and one supersize Swiss banking uber-power.
The first I’ll skip over briefly. Warren Buffett, the ‘Sage of Omaha’ and world’s third richest gent, offered to reinsure $800bn in municipal bonds. $800bn. Yep.
The other is about Swiss wealth management conglomerate UBS, which this week warned its shareholders that it may have to make a further $18bn in provisions available to cover debt. That’s just a mind-boggling amount of money to lose. I get really quite irked if I misplace a tenner. The whole thing just puts so much in perspective about how much money really exists. The losses won’t even bring the bank down, they’ll be okay. They’ll need a capital injection but they’ll carry on.
I suppose really this isn’t a story about banking, it’s just a story about how on Earth these things happen. Surely, long before your losses crank up to $18bn, you’ve got folks trying to re-attribute the money. Surely, it hits $500m and you get out. It’s not as simple as this obviously. Alan Greenspan, the former head of the Fed, said wisely on The Daily Show that markets are not run on graphs and financial data. They are run on the human sentiment and feeling towards the graphs and data. That’s the jist of what he said anyway. He’s right too, this is the key issue. Markets run on what bankers, traders and investors feel. If they are concerned, they fly to safe haven investments. If they are buoyant, just watch the dollar fly.
So anyway, back to the original question. How do you phrase that you lost $18bn?