Barclays Results - how good?

We are not running a financial research business but every so often we are tempted to comment on a company result when we can use it to pinpoint some interesting development in our patch - banking, securities and money management. The one detail that caught our interest in the Barclays results was the fact that actual return on shareholder's equity seems to be below the 10 per cent mark. While this is a respectable number - is has been produced during the second part of the Credit Crunch at a time when the sizable Lehman USA acquisition had to be digested - it puts into perspective the fact that the banking giants produce headline catching numbers (total compensation paid out, profits earned) but this has to be seen in proper perspective. Making that kind of return with a lot of tailwind from financial markets and ultra-cheap central bank money is no superhuman feat. Any new costly regulation may well put downward pressure on banking profitability in the future.

Greece: Banks and Hedge Funds must watch out

The present crisis in and about Greece may look like a god-sent opportunity to make money but banks and hedge funds must be careful not to take too high a profile. Speculation against the Euro and Greece may well backfire if it turbo-charges downward pressure on the Euro and Greek bonds. The days when speculation was a cottage industry and could be ignored are long a thing of the past. Speculative moves do not reflect reality but they actually CREATE reality (a thankful nod to George Soros' theory of reflexifity). So this is not a harmless crap game but the lives of millions of citizens are at stake - and they will not tolerate for ever that a few make millions on the back of ordinary working people. Recent criticism (James Rickards in last week's Financial Times and today's Neue Zuercher Zeitung) pointed the finger at Goldman Sachs. But its competitors should not gloat but may well find themselves in the firing line as well. The New York Times points out that the same investment banks that now point the finger at Greek profligacy when they issue their research reports were more than willing to lead the country deeper into the debt trap. Can you really have it both ways? Even with the help of God?

Bank Tax: Brown barking up the wrong tree

When statists sniff an opportunity to extract more tax from their subjects they usually find an excuse quite quickly. Gordon Brown certainly thinks that the solution to all of our problems is to invent a new tax. So it is no wonder that taxing banks is his solution to the global credit crunch. How that is supposed to absolve us from problems such as excessive borrowing, mismatch of maturities in balance sheets or simply bad lending is not explained to the public. In addition we have to expect the worst when it comes to disposal of the loot: will the tax money end up in some sort of reserve fund? or is it a pay-as-you-go scheme like the national 'insurance' or unemployment 'insurance' schemes that we are so familiar with?