spikegifted.net - Archive Q3 2007
Work: One of client has gotten into trouble. In my portfolio of clients, there are a number of funds that are managed by sophisticated investment managers who specialize in asset backed securities. These folks are essentially CDO managers who have branched out to run hedge funds that invest solely in ABS assets. Since the beginning of the US sub-prime RMBS problem, these funds have been under a lot of pressure - there were simply no accurate market for these things. If the investment managers tried to get a price for the assets, they would have a price of some sort. However, when it come to actually selling the assets, the prices achieved might not have been the same. It was a real problem then to accurately mark the portfolio. However, as with other banks, the senior risk management folks were getting nervous about these assets that we were financing. As a result, the investment managers were forced to reduce the amount of assets financed by investment banks. The only way to reduce this type of financing was selling them. With a market going weak, prices achieved were nowhere near 'normal circumstances'. Additionally, these funds typically invest in junior tranches of CDOs, which were also under pricing pressure. Double trouble! In risk management, when dealing with leveraged funds (of which hedge funds are just one of the sectors), there are typically value triggers put in place to terminate trading with the hedge funds. Basically a way to protect the banks that deal with them - to allow them to get out when the heat is on. Unfortunately, this 'technology' is widely deployed, so that if a hedge fund breach one set of triggers with one bank, it is more than likely that will also breach similar triggers with another bank. That's what happened to one of my client - it breached one of its value triggers and was forced to deleverage. It was not a pretty sight.
Home: After a good meal nearby, we were off to bed early. On the Sunday morning, we were planning to go for a bike ride around the New Forest. Just before leaving for breakfast, we were looking at alternatives to the bike ride and discovered that the ‘big circle’ that we completed was in fact the other route suggested by the B&B. No wonder we were tired! Two routes in one go. After breakfast, we checked out of our room and decided to explore the area a little before deciding what we wanted to do. The idea of riding bikes was just getting less appealing by the minute, as we realized that we were still tired from the previous day. As we were tired of walking, we decided to drive to the coast, the Solent, the bit of water between the Isle of Wright and mainland UK. It was a beautiful day with medium wind and scattered cloud, so the sailing boats were out in force. The Ruler_of_spike just loves the sea and it was great that we managed to squeeze both the sea and the forest in one weekend. Awesome!
Home: By accident, when we were resting before going out for dinner, we managed to catch the Wales vs. Fiji match, the last game of the World Cup group stage. Wales have been playing poorly and have really been struggling to qualify from the group and they were not playing clever rugby. So it was a huge disappointment, but not entirely surprising, that Wales lost to Fiji and failed to progress beyond the group stage. The question now was - this group of players was largely the same group that won the Six National Grand Slam back in 2005 - what has gone so wrong?
Home: We picked up directions for a couple of walks from the B&B and off we went. It was raining and we were walking in the forest. The Ruler_of_spike was getting impatient as we didn’t seem to be going anywhere. We were hoping to take one of the routes which would take us to the Oak Inn, at Bank near Lyndhurst, but we seemed to be doing a large circle. By accident, we found the route we originally wanted. There were distance markers along the forest paths and we were over 11km from where Brockenhurst by the time we arrived at the pub. After such a long walk, a sit-down meal in a friendly pub was just what we needed (we must have completed over 15km by the time we sat down). The return trip wasn’t as grueling as I had anticipated, probably thanks to the little bit of rest in the pub. But we were tired out by the time we got back to the B&B.
Home: I know we have just return from France for our summer vacation, but we decided to spend a weekend in the New Forest. We drove down to Hampshire on the Friday night and thanks to my ‘superb’ navigation skillz and my overconfidence, I chose not to listen to the directions given by the Ruler_of_spike. Guess what, the trip took a lot longer than expected. Stupid me! However, the detour turned out to be of benefit too. We went through the New Forest and saw the famous New Forest Ponies (some of them walking on the road) and wild rabbits and hares. The little bed & breakfast was pleasant and after a good night sleep, we went out to explore Brockenhurst, a cute little village. To be completely honest, we weren’t there to see the village, so the fact that there wasn’t much to it was not a particular concern.
Home: After tiling, it was time for grouting. The only question was what color grout we should use. White grout would be neat, but gets dirty quickly and is difficult to clean. Dark grey is just too dark for the color of our house and for the tiles. Then I started reading the side of the bucket of the tile adhesive. It turned out that it can also be used as grout! This not only saved getting more material, but the color was perfect - it was a sandy color. So that kind of settled matter for us - we just used the adhesive.
Home: When we were in France during the summer, we went to Castorama (a DIY store) and picked up some tiles. They were for the porch of the house. Since moving into the house, we've been saying how awful the laminated floor in the porch looked like, especially after we've had the floor board stripped and varnished. We've been going to various places to check out their tiles offerings and we just couldn't find the right ones. At one point, we were thinking of putting something that was inspired by the old Victorian tiles, but owing to the small size of the porch, it was not practical to have an extra tile just for the edges. I borrowed a tile cutter from a friend and picked up some tile adhesive and off I went. The old laminated floor board was so poorly put together that it wasn't even fully secured - they were removed in a flash. Under the old laminated stuff, it was a nice flat concrete base, which was convenient as an uneven surface would have added a lot of work. After a few hours of cutting and laying tiles, the tiles were down. Even without grouting, the porch looked a million times better. I even managed to set some metal edging on the step going down from the porch to the floor of the house.
Home: Finally, we got back to London and at the station, we all went our own way. I got to the car park and found my car. You would not believe how nice it was to be sitting in my own car, my own space, after a long day of mixing with humanity! It was gratifying to finally be away from all the noise. I was trying to move it out of the parking space and found that I could not do it. Initially, I thought I was just tired and not concentrating in squeezing the most out of the space available. However I soon found out that in fact another Mercedes E class as parked immediately behind me and it was not parked properly. There were so many empty spaces in the car park, it was incredible that the other driver should choose to park just behind me. Getting out of that place was not easy and it took several maneuvers to effect my escape.
Home: Up that point, it was a good day, however, things started to go bad... We figured that, given our experience in the morning, it would probably be easier for us to leave Cardiff and return to London as early as possible. We were betting that most people would stay there for a few drinks before getting on a train. Well, we got to the station and where was a long line there already. We waited and waited. After about an hour, there was still no movements. It was then that we were told that there had been a problem further up the line (to the west of Cardiff) and there were substantial delays to trains traveling east to the direction of London. We were informed that there was a three-hour delay to the trains! To add insult to injury, there were no additional trains being put on and the last train leaving Cardiff for London will be around 10:20pm. Wow! Could they pick a worse day to have train problems? Did they put out more carriages per train? No! The whole organization was just inadequate. Luckily, when the first train eventually arrived, it was an empty train and we jumped on it and got seats. At least we were not standing during the trip back to London.
Home: One of the reasons for getting so excited about the RWC was because I had a ticket to go and watch Wales' second match in the tournament, against Australia, in Wales. It has been many years since I last went to Cardiff to watch Wales play rugby and back then the stadium was called Arms Park. That has since been demolished and the new Millennium Stadium has been build in its place. A couple of colleagues and I managed to get tickets for the match against Australia (we actually ordered the tickets over twelve months before the event). Man, it was a long day! I left home early to drive to Paddington station and there was already big crowds of people waiting to board trains. Because there were so many people and the cheapest tickets on offer did not actually reserve a seat, we were standing all the way from London to Cardiff. That was painful. After arrival, we picked up some food and then we were off to the stadium. What a stunning place that was. That match itself was horror for any Wales fan - the team almost didn't show up in the first half, but tried in vein to come back in the second. We lost (of course). Given how poorly the team played up to that point, I was not surprised, even against a relatively poor Australian team (by historic standards). Nevertheless, it was a disappointment.
Home: We have been talking about it at work for a long time and like a flash the event was upon us! Of course, I'm talking about the Rugby World Cup. I didn't know what to expect of Wales - a lot of great things have happened since the last RWC, including winning the Six Nation Grand Slam in 2005, but a lot of stupid things have also taken place (like losing the coach that won us that victory). Wales' build-up to the RWC was not something I'd call ideal and there appeared to be lots of questions still to be answered. My fear was confirmed when the team gave a rather unconvincing performance in the first game (a win against Canada). Sometime soon, Wales has to find it in themselves to play at a higher level. I just hope that they manage to do it before they get knocked out of the Cup.
Work: Coming back from two weeks of vacation, I discovered that all kinds of things were happening. My strongest counterparty was in trouble and a senior member of my team has taken over the management of this client. I tried to provide input wherever I could, but was told to back off. Lots of things were happening, but I was left out of developments. Very frustrating! Unfortunately, in the name of being a 'team player', I decided not a make a fuzz... and observe developments. At least for the time being, anyway. Let's see how this thing pans out.
Home: Although we picked up most of our wedding presents in our trip in June, there was still one thing we left in France - an antique side cupboard. The reason we didn't take it in an earlier trip was that there was simply no space left after we loaded the car. Additionally, the piece is actually quite big and if our car was another model, it would not have fit! We were double checking and triple checking to make sure that the piece of furniture would go in. We managed to ease it into the car without any problems. If the customs people ever bother to keep track of what we bring between France and the UK, they'd think that we were smuggling things! This was the third time we have furniture in the back of our car when we make a cross-channel trip.
Home: Our vacation was gone in a flash. The problem was that I was called by my colleagues from London a couple of times during the vacation. So I could not keep work of my mind. What was even more troubling was that the calls where related to the strongest counterparty in my portfolio. I tried my very best not to think about work during the two weeks but there was always something at the back of my mind.
Home: The rest of the journey was quite uneventful as we knew the route from our previous trip. Two weeks appeared such a short time when you're relaxing and just generally taking things easy. Earlier in the summer, the Ruler_of_spike spotted a Victorian chair in a local antique fair. It was in fact one of a pair, but it was a shame that she found it just after another lady has bought one of them. Undeterred, she went ahead and bought the remaining one. While it has been restored, the seat was not properly covered. It was understandable as people might prefer fabric that complements their own furnishing. We decided to take it to France to see if her cousin could do something about it. So it went into the car with us to France.
Home: After a couple of difficult months, it was finally time for our annual summer vacation! The Ruler_of_spike and I were so looking forward to this holiday. Just like back in June, we drove to Portsmouth and took the overnight ferry to St. Malo. Unfortunately, we booked the crossing relatively late and this was the high season, so all the cabins were taken. We had to make do with 'reclining seats' in one of the onboard cinemas. That was a very uncomfortable experience! It was made worse because there was party upstairs from our room and the music and noise was just so loud that we were woken up in the middle of the night. The Ruler_of_spike, snapped and stormed to complain with the staff, who disclosed that it was actually a staff party and things were getting out of hand. We were invited to meet with the commodore of the ferry before disembarking in the morning. He was full of apologies and promised to refund us of our cost of the reclining seats (which wasn't that much).
Work: There were increasing evidence that the whole ABS market was getting more and more in trouble. What was originally purely a problem related to US sub-prime RMBS were now spreading to CDOs that have these assets as collaterals. There were evidence that counterparties that were previously considered as good quality were now getting in to difficulties in getting funding. If we take our bank as an example, we were reluctant to finance assets, via repo, that were considered at risk to sudden drop in pricing, what hope do the conduits and vehicles who finance themselves in the ABCP market based on their ratings? People were getting touchy and there was just no-way anyone would base their investment decision on ratings alone. On the whole, liquidity was drying up in the market.
Home: Finally, we arrived at the last part of the room project - the floor. Back when we just moved in, we hired someone to come and stripped all the floor boards and since then this floor has been covered by dust sheets. While the painting was going on, we moved all the items in the room to the middle to allow work to be done on the walls and ceiling and the sheets protected the floor from splashing paint. We removed all the stuff that was still in the room and lifted the dust sheets - the floor was still in good shape and I could get on the job of varnishing the floor boards without having to do any more work. Over a period of three days, I applied three coats of varnish and the room was done! Finally, we have completed all the bedrooms in the house! It has taken a long time, but the result was very pleasing.
Home: The Ruler_of_spike decided to take a day off and spend some time at home. She is just amazing - on her day off, she was painting the skirting boards and the radiator in the newly painted room. Don't ever allow me to give you the impression that I have done most of the renovation work in the house, the Ruler_of_spike is as much a contributor to this renovation project as I am. In fact, she has been the ideas all along and the fact that she contribute to the execution of these ideas is evident in the final product.
Home: Finally, all the preparation work has been completed and we're ready to get some real painting done. Two coats of paint in one weekend and the room was in business! I was feeling really motivated to get the room done and it was as much satisfaction as well as relieve to have the walls and ceiling completed. The work itself wasn't difficult, but it was getting started that proved difficult - it was all a question of motivation. Anyway, now that most of it was done, things will become easier.
Home: A massive hug and many congratulations to my dear cousin over in Toronto, who has just given birth to a gorgeous little boy!!
Home: Back to the now covered textured wallpaper... Even after sanding down the more prominently raised parts, it was still quite ugly when paint was put on the new surface. Basically, it didn’t look at great. Before I got too depressed about the situation, the Ruler_of_spike suggested that I should pull out the wallpapering kit and slap on some lining paper. Now, it has been nearly nine months since my initial foray in wallpapering (the dining room) and I was itching to have another go as soon as she mentioned it. In the interest of expedience, I drove to the local DIY store to get more lining paper before starting and before I realized I had all but the parts around the window completely covered. Unfortunately, I ran out lining paper before it was all completed, so I was forced to ‘down tools’. It was particularly frustrating also as all I required was an additional 150cm of paper and that part of the job was done! Errrrr!!!
Work: Throughout the time when we were dealing with the financing of ABS assets, the only way to describe our approach was inconsistent. Conflicting answers were given by different areas of risk, contradicting decision from different locations, and different decisions for similar asset/collaterals qualities; basically, the decision was determined by the time of day, the person you happen to talk to, the direction of the wind at Heathrow - anything other than the credit. Sometimes when approval had been given by one area was subsequently over-ruled by another person another time. The whole situation was out of control, not just because of the market or the clients, but because of ‘us’ internally. It was difficult to believe that our bank, which aspires to be a major player, could not come up with a coherent approach to something that is considered important in the current market condition.
Home: The fact that there was two types of surfaces to deal with in the room meant the work was more varied. This was a good thing. So to have a break from playing with textured wallpaper, I decided to put some primer over the ‘jungle scene’. After two coats of that stuff, I’d say that 90% of the scene has been covered up. I was guessing that a couple of coats of paint would completely erase an evidence of the existence of the jungle.
Home: Ok, I’d be the first person to admit that I’m not much of an “DIYer”. Yeah, I can do my painting and stuff, but the more sophisticated stuff is just not my ticket. After putting the “smooth-over” over the textured wallpaper, I discovered that the finish wasn’t smooth enough to paint on. So I did the next most reasonable thing - sanded the rough parts down. Wow! You can’t image how much dust that created! By the time I was done, the Ruler_of_spike said I looked like someone who just emerged from a coal mine. Even though I closed the door when I was sanding, there was still some dust escaping to other parts of the house. What a messy job.
Home: It has been a while since we get on with our acts and get some serious renovation going in our house. Ok, we have done bits and pieces (like the front door, the mantelpiece, the kitchen door, etc.), but we’re effectively in a ‘comfort zone’ regarding the house - we can live quite comfortably in the rooms that we’ve completed. However, there is one eye-sore that we’ve been resisting from tackling - the ‘jungle room’. Having bad weather should actually mean we should concentrate on the renovation work, but the extended rainy season just meant making hard work even more depressing. In the end, I have had enough of the inaction and started the work. There were two problems in tackling that room - the sides with the ‘jungle’ painting has so many colors that it will require many coats of paint to cover everything. Then the sides with the ‘camouflage’ have textured wallpaper. These meant renovating the room will require quite a bit of work... Home: Believe it or not, we actually bought the stuff to tackle the textured wallpaper a couple of months back. This stuff isn’t rocket science, but it’s really clever. It is effectively a plaster paste which is spread on the texture wall using a trowel. It’s kind of messy but it does it job.
Work: Normally, I’m very keen to go and visit a client. However, there was one visit in early July that I really didn’t want to participate. Why? The reason was because it would have been an embarrassment to our firm. I know this client very well and am very comfortable with the client’s risk management and its ability to weather the current market conditions surrounding the US sub-prime RMBS and CDO markets. However, some people choose not to believe me and some people are rather clueless about how a good quality investment manager functions. So, we marched in there with a team of six people. Being the most junior person of the six (but with the best knowledge of the client, from a risk perspective), I was relegated to taking notes. I did not learn anything I don’t already know about the client, except on the market update and some news on the vehicles. There wasn’t a single intelligent question asked by the senior risk folks and frankly the meeting was a complete waste of time. We, the risk management people, looked like dorks - someone was looking for weakness in their risk management, but we were shown how in depth their research and knowledgeable they’re in their activities. I told my seniors of that before the meeting was arranged, but they chose to go and hear it from the client, and in the process demonstrated how ignorant they’re. We looked stupid and I don't like looking stupid!
Home: Since the latter part of April, the weather in the UK has been, well, unpleasant. May and June 2007 have been the wettest months on record and there was no let up in July. After the record-breaking heat of last summer, many people were predicting another scotching hot summer. So far, that hasn’t been the case. Quite the opposite actually. The weather sucked. One thing that we have noticed in that past was that under certain wind conditions, water comes into the kitchen near the door that goes from the kitchen to the back garden. There isn’t any possible explanation for that except that the seal between the door and the frame has deteriorated so much that it doesn’t stop water from coming through under all conditions. There has been a number of occasions which we discovered a large puddle of water behind the kitchen door after heavy rain. Of course, with the amount of rain we’ve seen in the past few weeks, it was just a matter of time before the puddle was large enough to seep through into the dining room, where there are exposed pine wooden floor boards. That was what we discovered one evening when we got home. Even though the puddle in the dining room was small and we mopped it up in no time, the damp that managed to get into the wood took a long time to dry, thanks to the rainy, humid conditions. To save us from further worries, the Ruler_of_spike came up with an ingenious idea - put an old towel behind the kitchen/garden door. This arrangement has already proofed very useful and it will serve as an interim solution until we have the door and frame changed.
Home: Finally, it was the weekend and I would have time to really spend some time to find out what is wrong with my Main Rig. After much poking around, I finally worked out that it was the motherboard. As the Gaming Rig was just sitting at the time, I swapped out the motherboard. Once I got all the pieces installed back into the case, I pressed the power button and the Main Rig came back to life, but with a different motherboard. Even though the PC was now up and running, it could not find the operating system and without that I didn’t have a working PC. After much trouble shooting, I decided the best course of action was to reinstall the OS, as it had been over a year since I had a clean install. It would have been nice to have a nice clean PC, no matter how brief that would be.