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GLG News by this Author

Task Force must dump a conflict ridden rating agency compensation system

August 28, 2009

Analysis of:Bipartisan Policy Center Announces New Credit Rating Agency Task Force | news.corporate.findlaw.com

The task force should elicit not only comments from industry sources -- who after all have deep vested interests -- but independent experts with no axe to grind who argue that the Municipal Securities Rulemaking Board (MSRB) precedent can be adapted to devise a new conflict free system of payment for ratings from a fund fed by a fee from investors and issuers on each new issue and each secondary market trade in the short and long term public (and possibly private) capital markets.

There is less than meets the eye in this hoopla about SWFs!

August 18, 2009

Analysis of:New sovereign funds to emerge as crisis eases | uk.reuters.com

Doubling of money managed by SWF in ten years is just 7 per cent more pa on average and that is both from return on investment and additional funds. So how rapid is it really and how good a return is it? In both cases, not very. Are SWFs really going to invest in risky assets on those assumptions of returns? Not really, especially given their losses in stock markets and alternative investments since 07.

Growth of sovereign wealth funds limited by the financial crisis

August 10, 2009

Analysis of:New sovereign funds to emerge as crisis eases | uk.reuters.com

SummaryYes there will be more funds allocated to long term investments for returns but as countries incur high fiscal deficits and look to fund them through public debt - both domestic and potentially foreign, there may be some sovereign funds less able to make such allocations.

SWF are no fools

August 18, 2008

Analysis of:Sovereign Wealth Fund Assets Could Triple by 2013 | www.bloomberg.com

Sovereign Wealth Funds (SWF) have a lot of money. So they can buy advice. What they do with it is another matter. Investing in Blackstone was investing in a reputable firm at a bad time. So short term the investment looks bad. Long term is the the time horizon of SWF and in the longer term it may turn out fine.

Indian FDI into Europe will fall in size

May 23, 2008

Analysis of:India bigger source of FDI for European firms than China | www.hindu.com

Indian industry is coming of age but Indian FDI in Europe will not keep up the indicated pas 

SEC may tinker with regulation of rating agencies but solutions lie elsewhere

January 30, 2008

Analysis of:Credit Raters Face Heat; Moody's Is Sued by a Fund | online.wsj.com

What should the rating agencies do?   1 perhaps step back a little from ratings based largely on what they put forward as immutable quantitative stress tests that were not supposed to change with the credit cycle and turn a bit more to judgment and subjectivity because credit is not just a numbers game. 2. carefully separate the role of determining ratings standards and that of applying those standards on a transactional basis because using the same teams to do both exposes the rating agency analysts to pressures from issuers and investment bankers leading rating agencies to lower standards in good times and tighten them in bad rather than having standards that can stand the test of time. 3. consider barring for a period of time – perhaps a year or longer – former rating analysts from lobbying their colleagues after they leave the rating agency for lucrative positions on wall street a cooling off period.  

Limitations of VaR are significant

January 29, 2008

Analysis of:Death of VaR Evoked as Risk-Taking Vim Meets Taleb's Black Swan | www.bloomberg.com

VaR requires past price series which is not reliablie for illiquid securities VaR can be used for credit risk to do Credit VaR but this is frequeently not done VaR does indeed miss liquidity risks VaR entails many assumptions and so it is hard to compare VaR from one to another institution Internal policies should be set using not only VaR but other measures that capture broader risks - including credit and liquidity

Rating Sins and Redemption

January 2, 2008

Analysis of:Rating Subprime Investment Grade Made `Joke' of Credit Experts | www.bloomberg.com

1 Rating agencies should perhaps step back a little from ratings based largely on what they put forward as immutable quantitative stress tests that were not supposed to change with the credit cycle and turn a bit more to judgment and subjectivity because credit is not just a numbers game.  2. And the rating agencies may have to jettison – or to carefully separate -- the role of determining ratings standards and that of applying those standards on a transactional basis.  3. The rating agencies should also consider barring for a period of time – perhaps a year or longer – former rating analysts from lobbying their colleagues after they leave the rating agency for lucrative positions on wall street so as to require a cooling off period before they use their inside information to beat down on the rating standards they helped create and/or enforce.

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