Angsty over Barclays 08 Annual report - Barcap Performance Metrics

I'm like reading Barclays 08 annual report and i'm feeling irritated. This is why. Pg59 reports on the performance of barcap (Barclays capital investment bank). Apart from a principal transaction gain of 2bn (due to their heavily discounted Lehman acquisition), they would have made a lost of 960m GBP. Now look down at Performance ratios- Return on average economic capital. Why did they include the transaction gain? Isn't it a one off?

Dissidents might argue that economic capital include the risks of the investments, including that of Lehman, therefore validating the inclusion of the transaction gain. But from the New York Times, its seems that the purchases included a mere 207m GBP residential real-estate mortgage securities. In which case the economic capital should have increase from the previous year. But it didn't. In fact it fell by 626m GBP (owner est.) from 2007. It is unfair to reflect the gain in a discounted asset as economic reality when it has no part of your operations till recently. Barcap should be honest and say they (like the rest of the banks) didn't do well.

There must be a certain justification management used, probably some accounting methodology which we will never know of, but nonetheless, the observation is a interesting one. To a large extent, the principles of accounting are used to justify the economic behavior ( perceived by managers) of the firm.

Bloomberg snipes & the implications for Government intervention

Sick, didn't go for AT class today. Woke up at noon and watched a some Bloomberg news

1) Scares of Deflation result in creeping inflation: Governments, scared that their economies will face deflation, rapidly try to combat it by investing into infrastructure. There are questions and implications here:

a) Is the country ready for infrastructure? Will more infrastructure result in a stronger demand for goods and services ? see ' The IMF warns about surplus countries and global imbalances' @ http://mpettis.com/

b) Stock markets have been booming, property markets in asian countries. A huge flow of capital unable to work conventionally as deposit rates remain depressed, this moves into 'less bad' assets (note the new mid term mantra is invest in ' less bad' , no need to be 'good')

c) Inventories kept artificially low to maintain pricing power. Yup, that's right, apart from saving on storage costs, companies control supply, allowing them to maintain their prices at a high level ( or at least as high as possible)

In addition, George Soros is investing into clean energy. Bloomberg's tagline --> Political responsibility funded by private capital. Reminds me of what i learnt in accounting theory. See Ross L. Watts and Jerold L. Zimmerman ' The Demand for and Supply of Accounting Theories: The Market for Excuses' . The paper argues that alot of the accounting concepts such as depreciation, accrual accounting, economic income come about by government intervention, and most of the time, the decision is the product of lobbyists, corporates, all arguing under " public interest" justification to serve their own interests. Its not conspiracy theory, but rather its an unconscious result of how the private sector influences the government in decision making and agendas over a long period of time. Of course, in the short run, governments do have the say. But in the long run, if they do not follow the market (ie private), then they are left behind. More on the government and how they influence their own economies in my next post.

Joeyhops.

Initiation - Resurrection

Hello all, joeyhops is BACK!

For those who have been wondering where has my virtual self gone too, i'm ashamed to admit that it was quite dead for some time. But who cares about the past, lets kick off with some new insight which i uncovered today:

It all started with just being a little down coz of challenges at job applications. Felt frustrated because i had put in so much effort into my work and internships the last two years and i felt nothing was coming out of it. At the same time, my spiritual life has been dry. My dad was advising me, to just come back and speak to Him, trust Him and the rest will fall in place.

Ironically, no one but me knows why i keep drying up. Its because i simply can't see/feel God physically even though he has been working in my life. His Word, try hard as i may, does not come alive to me.

But somehow, God is a very faithful God, as i read a sermon on ' Be Constant in Prayer for the Joy of Hope' by John Piper, a section struck me:

(Read Eph 1:18 first) ---- Before we look at them take note here of this phrase “eyes of the heart.” That is what we need to have enlightened. The glory of God in his wisdom and revelation is not seen by the physical eye. You can read and hear God’s revelation till you are blue in the face, and if the eyes of your heart are not enlightened, you will not see and savor the beauty and sweetness of God’s wisdom and revelation. You will not know God. Something must happen to us. We must have a heart that sees spiritual reality. This is a gift from God. That is why Paul is praying for it. The things we need most, we cannot get on our own. That is why prayer is utterly crucial in the Christian life. When someone says, “I get along just fine without prayer,” they don’t know what they are missing. They are missing it now. They will miss it forever. If you can get something now on your own, you will lose it at death. It’s not worth much. But if you pray for what you cannot get on your own now, and God gives it to you—a spirit of wisdom and revelation in the knowledge of him, that is, the enlightenment of the eyes of your heart to know him—you will not lose that at death. And it will give you sweetness of pleasures now and inexhaustible joys for eternity. That is what we should pray for.

Very eloquent. This is the first time someone ever wrote spiritual advice so simply and succinctly. My mum has attempted to explain this to me, but somehow it never caught on. But the truth is, for Christians who fall away; they fall away due to a lack of spiritual reality. How easy it is to blindsided or be discouraged by the ' harsh reality' of this world, and never come to know that the power of God lies in spiritual reality, a realm that exists but we cannot see, make no attempt to trust and ultimately fall away before believing.

I guess its a great learning lesson for me, to believe in the power of the spiritual realm. Of course there remain much physical work and effort to be put in (for the job search). But somehow, i think, the orientation.... is being to become one of faith, not just perseverance.