Managing Micromanagers

A fund manager here at the bank, Felix, is currently experiencing what can only be described as a slow death by micromanagement at present. The poor chap is about 10yrs older than myself, quietly spoken, and as amiable a chap as you can find amongst the ego's and bullshit of the Front Office. As such, he is eminently experienced and more than good enough to complete his job without interference or additional supervision.

All that changed about two months ago, when one of the two MD's over in emerging markets was unexpectedly let go: part of one of a number of 'mini-culls' that all of the banks have been carrying out to avoid headlines while they quietly reduce numbers. That had a profound effect on his close friend and colleague, a purple-faced Frenchman who quickly clocked that his own number could soon be up.

Therefore he has spent the time since actively calling up 'Free leeks', as he calls him, and attempting to create himself a new role from what little business is left in the area. This has taken the form of him poking his not-insubstantial nose into every area of the business for a sniff. Should anybody talk to him now, he has become a sommelier of triviality, spouting opinions on everything but with little substance.

In short, his input has been the very worst kind of management, which drives any halfway competent professional insane with frustration. Felix has confided in me several times that he is close to snapping and is toying with a move elsewhere, such is the stress he is finding all this.

For poor Felix, he has had to endure Le Sommelier infrequently attending calls and meetings, and hijacking them by asking lots of questions that waste time going over old ground. Le Sommelier has combined that with tasking him with plenty of pointless status updates, insisting on reviewing everything and then responding back requesting irrelevant changes to current procedures - all along with delegating anything he ought to be doing himself back to Felix. In short, he is treating a man in his 40's like an intern, and Felix finds himself with a new level of middle management that offers nothing.

I can't blame Le Sommelier for his desperation in avoiding losing his job. However one would hope he would be proactively looking around for additional work in the bank as well; instead he prefers to do as little as possible while cultivating the illusion to those above that he is now vitally overseeing important work. I suppose this is how large business functions everyday, but having seen it in microcosm it has brought home just what an appalling waste of time it is.

On another note, GGP announced their earnings last night, which are reasonable but below analyst expectations - how positive or negative depends on whether you read Reuters or the Wall Street Journal it seems. Looking at the market at present, we seem to be well into a second wave of panic after the temporary optimism that followed the falls from September to November. This will gradually wear off as government initiatives gain some semblence of confidence from investors, and we will likely see a month of rises and calm coming soon.. before another round of selling off, panic and negativity.

The key issue I am looking to see resolved is the unlocking of frozen credit markets. Right now, the Commercial Real Estate sector in the US for example, has approximately $200bn in loans to roll over in 2009/10. That is a staggering figure, and means this issue of refinancing is not just GGP's but an industry wide problem to be tackled. GGP are under most pressure because they are the most stretched, but the fact we are now as much as a month into technical default of loans without a single lender pushing them to file Chapter 11 says a lot about the appetite banks have for pushing them under.

A combination of fear, risk and uncertainty continue to depress GGP's share price so severely. When that ends is anybody's guess, but the March 16 deadline for various extended loans seems a reasonable focus point for now.

Coping with Investment Nerves

It is interesting how, on a reasonably substantial trade such as my long position in GGP, even after so many years of investing I still myself effected by emotion. Having steadfastly held since early December 2008, and increasing my position as the stock fell to $1, until now I have had few concerns. However with global markets continuing to fall hard this week, GGP now sits priced at a mere 45 cents - back to near its lowest ever price. I made the mistake of calculating my paper loss: currently about £54,000.

Of course being an unhedged trade is the root cause behind that figure; I have equal upside and downside exposure here, which is never desirable. However without access to short facilities or options (outside the bank I work for), my choices here are limited. Enough to make me look at that unrealised loss and think the usual: "ouch, my net worth is lower by x amount", "God, I wish I had never got into this" and "if only I had waited until now, I could have bought TWICE as many shares for my money!"

Falling prey to such thoughts is a fallacy. Nobody can 'know' the short-term movement of stocks (despite confident assertions by junior trader). With hindsight my only wish is that I had acquired my position in GGP more gradually to give a wider spread position - that would have given me a better opportunity to take advantage of its steady falls to date. Still, to put it into context, should the price move back to where it was 5 weeks ago now, I would be sitting on an unrealised £35,000 profit.

That is a big 'if' of course. At present the reason for the increasing decline is that other investors are acting upon their own fears that GGP will probably file for Chapter 11 and that common shareholders will lose everything. I have to constantly remind myself of my previous analysis on this, and that fundamentally nothing has changed to date.

As such, I am not going to do anything - although I am toying buying another £10k's worth of stock at these low levels. An RBC Capital analyst summarised the situation GGP faced relating to the credit market seizure and refinancing the Las Vegas malls:

"Basically we had a very large, very successful company asking banks, insurance companies, anyone who is interested, 'Please lend me money on two very, very good retail properties.' And the lending community simply said, 'No.' "

I recall mulling over the psychological aspect of all this some time ago; that when GGP stock cooled off again from the period in which I first purchased, that fear would possibly reassert itself and push the price back down. I toyed with selling in the January rise - which turned out to be from the hedge fund Pershing Square making further substantial purchases - but decided the $2.25 price was too far below my target exit price.

Of course with hindsight, I should have sold then and bought now, but if we could see the future we would all be millionaires very quickly. It seemed quite possible that the price would stay in the same range as December, and at any moment could increase significantly. Quarterly earnings are on Monday, mall purchase deals are still potentially out there, and there is potential for government refinancing of the CMBS market through the starting up (at last) of the Term Asset-Backed Securities Loan Facility (TALF).

One thing's for sure - the GGP pressure pot is close to boiling now, and something is going to blow and start to move this whole situation further. I am inclined to believe now that it will be through government intervention, given the entire commercial real estate sector faces these same refinancing issues in 2009/2010.

Could This Be It?

There seems to have been a subtle shift in the wind here at the bank. Go back a month, and there was naked fear in the air about imminent job cuts - in no small part fueled by stressed managers making unsubtle references to resource unavailability and performance limitations. And vicious rumour mongers like myself.

Yet there seems to have been a surprising turnaround in the last fortnight - at least here, I can't speak for other banks busy absorbing huge losses and laying off thousands. From what I can determine from various trusted sources, it seems the bank has postponed plans to lay off any more people. That in itself is significant - from top to bottom now, we have shed around about 22% of headcount which is certainly a lot.

The economy is cyclical (Gordon take note, a 10yr boom will not be followed by another one), and one effect of a particular sector going into downturn first is that the impact of this ripples outwards to the rest of the economy like a bomb exploding. I had many a bemused discussion in the last 18mths talking to very intelligent (home loving) bankers, who were coming out with ridiculous views that the London housing market was somehow "immune" from any downturn.

In this case, we in financial services have now weathered a 20 month storm since Bear Stearns' nationalisation first shook the financial world - the first significant job cuts coming from late 2007. It seems reasonable that we are therefore going to hit the bottom first too, and reach a period where things stop getting worse and headcount (and performance/earnings) stabilise. Timing is so difficult, but I am going to call us reaching that period across financial services in around 6-9mths, with us reaching the bottom of the markets in Q3 2009.

Otherwise on a work social last night, I took the opportunity to find out more details about the current talk amongst Prime Brokerage here, that we have inadvertently gotten ourselves caught up in this whole fiasco relating to yet another investment shark, Allen Stanford. Not directly of course, we would be no more likely to entrust our own funds to the financial equivalent of an East End used car salesman as we would have given a penny to Bernie Madoff.

No, the problem is that yet again Private Wealth Management have played the 'not my problem guv' card. Whereas before we had a commendable ban on any trading activity with Madoff's ponzi scheme, we seem to have let a number of our cricket-loving HNW's (high net worth individuals) go and place funds with him. As you can imagine, the internal impact has been the usual internal cover-up for now, so not much is being openly said but it is difficult to imagine we won't be openly mentioned in the press in connection to all this soon enough.

I wish I could say I was bothered, but previously market shocking stories are becoming a daily soap opera nowadays. Is it just me or is the collapse of the financial system absolutely hilarious?

What's the Point?

As the howling chorus of public anger towards bankers for our crimes reaches a glorious epiphany, I have to question the underlying motives once again. I only wish that Gordon or David would learn to clasp their hands while they preach morality to the masses - just look to your great predecessor's display at Princess Diana's funeral for guidance.

"Be not too hasty to trust or admire the teachers of morality; they discourse like angels but they live like men."

Dr Johnson's quotes remain so timeless because they are pungent observations of human nature. On that note, as I restarted work on my business plan yesterday, on something which feels like it might have some genuinely positive purpose and meaning, I found myself musing over the question asked by even the most zealous androids of the corporate world: what's the point of all this?

Yes, my move away from key emerging markets last year was perfectly timed with hindsight. My role at the bank continues to develop, is interesting enough to pass the days, and compensates well enough. However work here has ceased to be about innovation and revenue generation, and is largely focused on the bank's amusingly desperate struggle to recover confidence and reignite core business again.

Some of the initatives proposed and to which banks are devoting significant resources now are just absurd. There seems to be a bizarre lack of awareness or willingness to believe that the deleveraging of the past year is continuing, and that those valuable hedge funds clients will not be returning in the shape and form of the past.

In fact, I've talked myself into it - time to get back onto the business plan this afternoon.

Recession Regeneration

A woman collapsed on top of me while on the train into work this morning. I was sitting there, minding my own business, and the next thing I knew I was struggling to hold her weight up, with her sheet-white face inches away from mine. She appeared to have nearly fainted; I was on my feet in a moment of course. However despite insisting repeatedly that she sit down, she refused and got off at the next stop.

It reminds me of a time I came across a man lying on the pavement on Queen Victoria Street right by Bank on a weekend. The place is always deliciously empty around that time of the week, and so it was left to L and I to keep him company with his shocked friend, while we waited over 20mins for an ambulence (appalling service). I never did find out what was wrong with him, but sincerely wished him good luck as he left, given the range of possibilities. Anyway, combined with this sobering photograph of the former reality TV oddity Jade Goody, now diagnosed with terminal cancer, it was a reminder of what is really important in life - and that does not include spending the rest of life in the rat race or on a daily commute.

I am going to pick up on the business plan I started working on last summer. I am about one-third of the way through so far, but it got shelved during the excitement and fall out of the banking crisis - partly because I needed to focus on trading, and partly because the concept is suddenly less appealing in the short-term when the world is undergoing severe risk aversion. However that will change again, and I am going to set myself an aim to have an initial version of the site released by the end of July, not least because the primary cost will be my time and effort.

On an aside, my cat sitting weekend was far from the purr-fest we had been anticipating. My brother seems to own a schizophrenic moggy, which rather like him is socially dysfunctional. The moment he left, L and I were greeted with hisses and growls (yes, from a cat), and it only got worse when we opened the door to introduce him to our own kitty. Ours is a Norwegian Forest cat which are a good natured breed. It turned out to be a good illustration that we all live in our own reality, and make as much or little of a situation as we choose. So in my brother's cats case, he had a miserable, stressful weekend locked in a room away from us instead of being pampered.

A choice quote today came from the noted British historian Dr David Starkey, who commented on the City, recession and Prime Minister:

"..the City is always rebuilding - it is like a slow-motion film, rising and falling. It's absurd of our Prime Minister to say 'No more boom and bust'. The City depends as much on bust and destruction as it does on boom."

Of course, with some historical perspective Dr Starkey is absolutely right. The press continue to feast on the bad news: isn't this the worst recession in a thousand years yet? It is easy to forget that in just a few years time this will be behind us, and we will be building again from a sustainable platform for growth and prosperity. By contrast the last decade is personified by a morbidly obese football fan, who spent all his money on an expensive flat screen TV (with cable of course) - and did nothing but watch it while eating hamburgers all day. In short, it was unhealthy, unproductive and unsustainable.

Those nearest the above caricature are likely to suffer most, but it is the recession which will ensure we all learn the importance of fiscal responsibility. Not least the importance of that old proverb 'always save for a rainy day'. Boring yes but welcome to the real world, fat bastards.

Otherwise Starkey's best observation relates to the splendid restoration today of The Monument, that seventeenth century marvel which represents the City of London's rise from the ashes of the Great Fire of 1666. When asked 'is there a modern equivalent of the Monument? It serves no commercial purpose', Starkey had no hesitation in replying:

"The whole of Canary Wharf. Every modern bank is to do with the length of the banker's cock."

I had to smile at that one, and when I started cross-referencing the height of those bland, glass towers to the incumbant CEO's of the respective banks, there was no argument from me.

Foreclosure Plan May Impact GGP

The share price of GGP continues its steady downward slide, as expected, in the wake of continued uncertainty around lending which prolongs the current financial limbo. GGP remains locked in protracted negotiations with a range of lenders including Deutsche Bank and Goldman Sachs relating to loans all now past their due date, and all now beyond the period of foreclosure.

That in effect means that if a single lender decides 'enough is enough' and pulls the plug, there would likely be a domino effect on other lenders that would lead to them all declaring default - and forcing General Growth to file for Chapter 11 bankruptcy protection.

It is interesting to note that yet again none of the wider lender consortium have done so, despite now being as much as a week beyond the foreclosure period, and only illustrates once again that lenders are desperate to avoid pushing such an enormous firm into bankruptcy.

As I have stated previously, this is in nobody's best interests - particularly Chapter 7, which would force immediate liquidation of distressed assets at firesale prices, and lead to all lenders making a loss. This seems to be shared by others in the banks that make up the lender consortium, as this article outlines:

"There seems to be a lot of concern regarding what happens when loans come due in the next couple of years. There are large numbers of loans coming due in 2009 and increasing through 2010 and 2011. J.T Coe, Managing Director, Deutsche Bank states, “Everything’s getting extended, foreclosure is the LAST resort”. Waynebern continues “[Lenders will] Extend, Forebear, Modify loans on cash flow assets.” “The Banks can’t run the business as well as the borrower.” So, the consensus opinion is that the banks will use foreclosure only as a last resort. They simply can’t maximize their returns, or minimize their losses trying to run the businesses themselves, or, liquidating assets in weak markets."

After the widespread market backlash at the lack of substance behind the Financial Stability Plan, news emerged yesterday that Barack Obama will be releasing details of the plan relating to preventing real estate foreclosures on Wednesday. I need to find out whether this also includes commercial real estate, but assume so for now. Either way, of interest is that meantime several banks have openly pledged to stop foreclosures.

At present the future of GGP remains finely balanced. One of Chicago's largest property companies on the brink, partly owned by a wealthy, Chicago-based family and major backers of a new President from Chicago. It is difficult to see GGP being thrown to the wolves when a commercially viable business could be saved through refinancing of its loans - not additional capital.

I remain comfortable with the situation relating to GGP - unlike many small investors who appear to be suffering psychological swings of doubt and worry. Interesting to note how the major institutions invested in GGP view the firm, most notably ones such as Pershing Square.

This presentation on slide 46 gives a good summary of their view of GGP. I remain optimistic that this next month is going to bring some significant news that is going to lead to a huge increase in the stock price.

Old Boy 'Career Breaks'

Well, our junior trader is leaving today; he didn't qualify for gardening leave and instead had his market access revoked, and so has been our tea boy for the last fortnight. He certainly personifies the cocky Essex youth that is the stereotype of the modern City barrow boy trader - if his performance had lived up to even a tenth of that arrogance I suspect he would not be on his way. However he has spent the last week loudly proclaiming he knows the head of an obscure hedge fund (I had to look it up), and will soon be landing a job there.

Either that or he's desperately insecure about his failure to make it here. Naturally we're all assuming the latter for now, and the Desk is running a sweepstake on how long it will actually take him to secure a new position. The stipulation is that it has to be a City job - I've gone for a nice, round 10 months.

Either way he really does seem to have something about him with the girls in the office. Several of them seemed upset at his leaving ceremony this morning. On that note, leaving speeches really are one of the most vacuous aspects of corporate life, but today was a rare exception. The Boss used the occasion to impress us with his leadership and oratory skills, his speech ran thus:

"I would.. err.. first like to say a few words to thank [junior trader] for his outstanding contribution to the Desk and [bank]". We waited expectantly, while the Boss shuffled his feet, clearly not sure what to say next. Bless him, he's never been particularly good at thinking on his feet.

"I know that [junior trader] will be very much missed by many in the team". Whole team turns to look at the PA whom he was rumoured to be shagging - several give her a knowing wink.

"He has contributed a great deal throughout his relatively short time here such as.. err.. " Boss shuffles again uncomfortably, now aware he has not got a clue what the junior trader has actually been doing. Several in the team give the PA another wink - presumably a reference to junior traders actual 'contribution'.

"..such as helping Mark and Gary on the Emerging Markets desk." The Boss was clearly relieved to have strung the whole sentence together, meanwhile I had been toying with whether I should interrupt this nonsense with a few prompts to help him out. I did find my eyes constantly drawn to junior trader's dinner plate ears meantime. Should any of my future children end up with such a recessive gene, I pledge now to ensure they have whatever surgery it takes on their 18th birthday to enable them to hear behind them.

Fittingly I was in the 'Barrow Boy and Banker' last night with some non-City friends, and it still surprises me how so many of the old stereotypes persist about the City. In particular, one of the most outdated is the assumption that the entire place is a plummy, old boys network that relies exclusively on nepotism as the fuel for new entrants. There is the odd backwater such as the Lloyds reinsurance market and some niche private banks, where that is the case, but by and large nothing could be further from the truth. The invasion of Wall Street fortunately ended that particularly unpleasant aspect of the City, and I can honestly say it is now one of the most meritocratic places in the world.

Well with the weekend approaching, L and I need to confirm our holiday plans, and meantime have the good fortune of cat sitting for my brother all weekend. Either way it will be an improvement on the office tedium.

Tough Times On The Milk Round

No sign of any movement today regarding job cuts, although a chap in Synthetics mentioned earlier that he has already cleared his desk and gone so far as to draft a goodbye letter to his team in readiness. Optimism seems to be but a distant memory, although with unemployment in the UK forecast to spiral upwards by 1 million in 2009, perhaps that is justified.

The spectre of unemployment is something all of us in the City are having to live with right now. I must admit, I am feeling a bit guilty about all the rumour spreading now. Oh well, I'm preparing them mentally for the big push when it happens - and I heard from another source just now that the cull has merely been postponed for a week. I suppose it partly depends on the firm, role and all manner of other factors. There is no harm in me divulging more interesting detail at some point - after all nobody is reading this anyway I expect.

To my surprise who should have wandered past me on the Desk this morning but Shriek herself. I've been lucky enough to never meet her before, and so it took somebody to point her out. In this world of globalisation, it is quite impressive how daily working relationships can be by voice alone, such that you can pass that person without even recognising them. Fortunately that worked both ways, as Shriek does not seem to know me either. She is a real oddity, with bright red (dyed) hair, and seems to have a botox habit judging by the size of her lips. In person, she seems quite different from the aggressive avatar I have known through various phone arguments, and appears to whisper rather than speak.

As such I made a sharp exit from the office before anybody noticed - the last thing I wanted to do was get dragged along to lunch with her. Obviously the 'dodgy dossier' being compiled against her can't be too serious if they've authorised travel expenses for her over to London this week.

I have been asked to take part in some graduate recruitment for the bank. As the Boss explained, this cannot impinge upon market hours, and so instead he seems to be looking for me to show enthusiasm by giving up free time on this. If the cull had already taken place, I might be tempted to show my true colours - instead I said I would be thrilled to make a positive contribution.. saracasm missed.

These are certainly tough times for graduates entering the job market for the first time in 2009. The cut back in graduate employment is in a range of sectors, and it goes without saying that banking is no exception. Many graduates interviewing with top firms now, who would have been a shoe-in for jobs in the past, are unfortunately going to get the 'small envelope' reply. That's the one which reads: 'Thank you for attending the interview, regrettably we will not be pursuing your application further at this time.'

Before feeling too sorry for graduates, they might just be the luckiest generation since the City 'talent drain' first began after Big Bang. They have a genuine chance to ask themselves that all-important question: 'what should I do in life?', without the financial opportunity cost that tempted so many of us to the devil's path.

"Why exactly do you want to go into finance?" is often my first question in interviews. I have interviewed many grads over the years, and the response is usually vague; at best recycling meangingless PR waffle from the corporate website, at worst you might get a grunt from the less communicative ones.

As somebody on the inside, I would suggest that graduates strongly consider other options. They will probably have no choice in many cases anyway - including L's little brother, who is actively looking now. Although financial services will undoubtedly recover, it is likely that compensation will take years to ever regain the levels previously seen, and a whole shake-up of the bonus culture is underway. As such, graduates today face working longer hours for less reward, which doesn't make sense to me.

As I mentioned in my first ever post, I am really looking to find a way out of this industry sooner rather than later and have always dreamed of setting up my own business. On that subject, I have a web-based business idea brewing that seems to be an excellent synergy between my skill set, experience and where there might be future demand. It's just finding the time to turn that into reality that is the biggest challenge right now.

A Glimmer of Substance Behind The Rhetoric

After my tongue-in-cheek, but undeniably slightly malicious, rumour spreading regarding the date for the next round of job cuts here, various people have wandered past my desk this morning looking both relieved and pissed off that my 'source' (aka 'my imagination') was wrong. Hey, I might still be right - I did say cover myself by saying today *or* tomorrow...

Well since I've got rather more of a sense of job security than them, L and I have opted for some sunshine in Sharm El-Sheikh in Egypt for a spring break next month. Frankly the unrepentent drizzel of London rain, and bad news from the press, are enough to make even an optimist like me start to contemplate whether it is time to pack it all in and buy a beach hut.

There has been some interesting announcements from the new US Treasury Secretary, Tim Geithner, relating to the proposed $2 trillion update to the TARP (now rebranded the Financial Stability Plan, presumably to reassure us by removing horrible words like 'troubled').

"It's been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come..."

Exactly as I expected, the programme so far seems to be a direct implementation of the skilled rhetoric with which Barack Obama has stormed the global political stage in the last 15mths. Broad in scope, inspiring hope, but with few actual specifics. However people, I think we can all quite definitely say that change has come.

Quite why the markets were expecting some kind of all-encompassing answer to this wide range of problems so soon is beyond me. Desperation most likely. The Financial Stability Plan was only a framework when the bill passed through the Senate a couple of days ago. Those buying in to capitalise on some kind of bounce are a fine example of why many lose money on the markets: were I into short selling, I would have been fully loaded up before yesterday.

Of most interest to my GGP trade is that the plan now includes the proposed relief for the Commercial Real Estate sector. In theory it will provide a means for lenders to either receive capital specifically for refinancing distressed REIT's, or roll those loans into some kind of 'bad bank' fund that reduces their own risk and exposure. Either way, once the market stops sulking, it actually has some potential to help unlock a situation where otherwise viable businesses are on the verge of bankruptcy due to the frozen commercial mortgage-backed security (CMBS) market.

Anyway, I have a fabulously quiet afternoon in prospect at the office. One of the final round interviews I had lined up with another bank was supposed to be later, but that has just been cancelled due to new hires currently not being 'commercially viable at present'. That translates into the bank realising they cannot really justify hiring when they are about to fire more employees.

Either way, given I am lucky enough to seemingly be secure for the foreseeable future I couldn't care less.. now which hotel in Sharm El-Sheikh shall I go for...

Political Posturing For The Cameras

The politically self-serving vitriol from politicians of all sides continues on Evil Banker today. With Average Man On The Street convinced that every aspect of his current woes are down to overpaid bankers, it provides politicians with the perfect excuse to continue deflecting their attention from the real questions.

Both Brown and Cameron are continuing to spout populist soundbites, for the primary purpose of further exploiting this to their own advantage while pandering to their support base. Of course that is hardly surprising given that this is what 90% of modern politics is all about.

However the reality is that both political parties can sit there making demands of the banks all they like, but they have less leverage when it comes to negotiations than you might think - not least because the country needs successful banks. Additionally the UK government has no actual stake in Barclays and HSBC, they just borrowed funds. And both will happily give them the two fingers and quietly threaten to rebase abroad should there be any sort of meaningful attack on their competitiveness, such as enforcing salary rates.

Even Sir Fred Goodwin, the former CEO of RBS dragged in front of the camera's for some token contrition today, and who made the biggest mistake of all in his ridiculously overpriced takeoever of ABN Amro, had to point out the truth by saying: "..if bankers felt they were not paid enough, they would leave."

And here lies the crux of this particular issue. Bankers salaries are already falling, and falling fast. Banking is a capitalist system that is a hell of a lot more efficient at setting pay levels than the public sector - take a look at politicians and civil servants. Banks are busy laying off thousands of people, most of whom are not rich, just hard working victims like those in other areas of the economy. The banks are cutting back discretionary bonuses now, and new joiner wage packets on thousands more bankers lucky (or good) enough to find work. In short, the industry is busy doing precisely what is being asked of it in terms of reassessing the worth of its workforce.

Interfering with that process by enforcing lower than current market rate salaries for some banks is a ridiculous idea. All it will do is begin an immediate talent drain from those with salary caps, and increase the competitive advantage of the others. Unless this could be imposed at the industry level, which it cannot, this idea of playing up to populist opinion for the cameras will ultimately damage Britain's two weaker banks even more significantly in the long run.

It's like this other meaningless drivel by Gordon Brown that people should waive bonuses. All well and good Gordon, but how about you lead by example? If we work out how much you have cost the country from just a couple of decisions, I'd say you should pay every penny you ever earn on the lecture circuit once we get the chance to boot you out in two years time.

Let's not forget that Gordon sold off a large part of the country's gold reserves 11 years ago, which is estimated to have cost the country over £5bn. His other decision 11 years ago to abolish tax credits on pension funds, bleeding £5bn a year from pensioners, has lead to an appalling funding deficit, with companies being forced to plug that each year from profits - an effective tax - all while the demographics mean ever more pensioners are needing money.

All I can say is, go right ahead Gordon. You can't touch me, and having just written you a £35,000 cheque for capital gains last year, you can fuck right off if you want to try and tax me further. There's plenty of places in the world I can choose to work, and if you don't see net contributors like me as an asset, then you'll soon find out - sadly it will be to the detriment of Old Blighty.

Compensation Tube-erculosis

I think my journey into the City this morning was divine retribution for last Monday. Ah, that wonderful snow and slacking off, it was such a delight. All manner of Tube lines had problems today, with the requisite passengers falling ill, and in my case a woman going into labour at Holborn station.

Am I the only person to question what is wrong with the British 'stiff upper lip' in these circumstances? It is one thing to show steely resolve to pull through a situation like the Blitz. It is quite another to accept crap public services as the norm and without raising sufficient uproar and objections.

As L commented to me on the way in this morning (aside from asking when we are going to make good our escape to the countryside), is that if this had been anywhere else in the world, senior management would be flooded with complaints. Expectations would be such that they took action to improve service. However Transport for London is a woeful public sector institution, which revels in a monopoly position, and appears to learn nothing from its continual failures.

What most rankles many people are the Tube drivers. Not many such unskilled jobs have a huge waiting list to become one, which says immediately that something is wrong. It's a bit like why there were queues of illegal immigrants and an entire camp at Sangatte in France set-up to help them make their way across the Channel to the UK.

In the case of Tube drivers, that waiting list is because of the abuse of power by that socialist dinosaur Bob Crow, leader of the RMT union. I think unions frequently serve as an important counterbalance to big business, and fighting to ensure employee rights are upheld (and increased to appropriate levels in the past). However as the 1970's proved, that balance can be abused both ways, and Crow is an absolute disgrace.

Rather than acting in the best interests of we the people of London, Bob Crow shamelessly cites health and safety concerns for all manner of initiatives, many quite reasonable (such as improving the efficiency of the system which, shockingly, might lead to some job cuts), and holds the people of London to ransom at regular intervals with strikes - usually to ensure completely undeserved, over-inflation pay rises for his leeching, overpaid members. As with Norman Tebbit back in the 1980's, this is one particular union that needs to be faced down - the problem here is that London cannot function without its public transport, so would lose billions. Instead the problem perpetuates, and drivers steadily get more overpaid.

There is no doubt that anybody who pushes a lever back and forth to speed up and slow down a train, (oh and stops at red signals if we're lucky), is amongst the least skilled in the workforce. Nor do they work long hours. So how they deserve to be paid twice that of a hard working nurse is beyond me. Bear in mind this is public money, which is what makes it so outrageous.

The irony of a banker criticising such modest earnings is not lost on me, and is quite deliberate. I am, however, pointing out a truth - that the whole system of public sector remuneration needs immediate reform and to be shaken up every bit as much as banking.

On that note, the public reaction to investment banking continues to be highly entertaining. It is in part a knee-jerk reaction from many, who are simplistically assigning blame based on what they have heard in the press. Many do not really understand the large numbers of different groups, people and other factors globally over a long time period that has fuelled the situation we are now in. Do they even understand the role of China in all this? Instead, better to latch onto a fashionable, pantomime villain known as 'Evil Banker'. That is helped because governments are busy laying into us as well, and as usual with politicians, that is not to better inform the public but to deflect attention from their own gross failings - in this case with regards to previous spending and regulating the financial and housing sectors.

Just take a look at this article from the Motley Fool today. I don't normally read it, but some of the vehement responses from its readers illustrate what I am talking about. Pious, righteous indignation without a willingness to take on board anything from the article. It reminds me of the bizarre, national lynch mob hysteria fueled by the Daily Mail surrounding Jonathan Ross and Russell Brand a few months ago.

One interesting fact never noted by such people is that none of the senior bankers on the boards of any of the major banks have taken any bonuses this year.

I suspect many do not even know that, but it all started from something called 'Lloyd Watch', back at the end of last year. The entire industry was closely watching for the decision by Lloyd Blankfein, CEO of Goldman Sachs and the most successful bank. The board decided that on principal none of them should take a bonus that year despite the bank still making profits. A commendable attitude, but it does not mean that key people within GS will not receive large bonuses.
The justification of bonuses needing to be paid by the writer of the above article is largely that due to banking being a capitalist and highly competitive sector, should a bank lose its best performers it is like a football team underpaying its star players compared to the market rates and watching them walk. You might save £10m for the first couple of years, but quickly will find yourself relegated and losing vastly more for being so short-sighted.

This is not really a defence but more an explanation of why the part-nationalised banks are so desperate to pay bonuses now, and others are looking to pay back government money. In the end, when you put this crisis into perspective, it will pass and the banks need to retain their top talent. That means educated, experienced, hard working staff, prepared to do more than push a lever back and forth for a living.

Banking on Bankruptcy

The situation with my GGP trade is continuing to progress (slowly), and looks to be gradually moving towards some significant news. That will bring a resolution to this period of financial limbo, which has seen continual loan extensions that only prolong the uncertainty and depressed share price.

On Friday, GGP announced that they were cancelling their quarterly analyst call outright, and postponed their earnings release by a fortnight.

There are a range of possibilities why, but this article gives some detail into one - namely the expiry this week on a forebearance agreement (this is an effective extension to a loan while the lender promises not to force a default and the borrower negotiates and is unable to comment in public). If GGP were to file for Chapter 11 this week, its quaterly earnings becomes "a sideshow" by comparison.

Hopefully GGP will file for Chapter 11 bankruptcy protection. As I have said before, I believe this scenario will also work well for GGP and its shareholders. It just may take 3-12mths before I start to realise the gains, which is unfortunate but as I have said - a key rule of investing is patience.

As this article illustrates in some detail, the prospects from an REIT going under are considerably different from a normal company - particularly one with assets that exceed liabilities. To quote an unnamed source from a Reuters article: "General Growth has problems with liquidity [i.e. servicing refinancing its debts] rather than solvency [i.e. operating cashflow]." With assets that exceed liabilities on its balance sheet (ignoring marking to market that should improve that further), and a positive cashflow, it all points to this being very profitable for shareholders when it emerges from Chapter 11 in the future.

Two interesting quotes:

"Bankruptcy experts, however, say that many of the worries may be unfounded. The sector may not have been tested by a big bankruptcy yet, but enough is known about how the companies are structured and how a bankruptcy proceeds that experts think the industry should emerge fine, even from a series of bankruptcies. Further, there is reason to believe that because REITs control a tangible base of assets through large portfolios of real estate, these firms may be more likely to survive bankruptcies than other companies that’s value is harder to pin down or could be subject to liquidation."

"Experts say REIT shareholders are more likely to retain some value simply because of a REIT’s underlying assets. “Most shareholders get nothing in a bankruptcy because most companies have no assets, and that’s not the case with REITs,” Jerome says. “It all comes down to valuation of the real estate assets. Even if those valuations have decreased, it’s going to come back up. And, if the REIT has to go into bankruptcy, it’s not the end of the story for shareholders as long as the company still has something of value.”"

I remain confident that GGP is hugely undervalued. Its share price is so depressed at present due to shareholder fears that Chapter 11 would wipe out the value of their holdings. However given that GGP ought to have a share price of around $20/share by my valuation (half what it was at its peak in the summer), and is currently at a mere 80 cents, you get a sense of just how low it is right now. Certainly $10/share within 2 years is very realistic.

Therefore it will not require even much excess value of assets versus liabilities to remain on its balance sheet for common shareholders to see a huge increase in the stock price and their returns. Another possibility would also be that GGP is bought out during the process, which again would mean big returns for me as it would doubtless be at a share price upwards of $7/share. To put that into context, I would be looking at a £250k profit in such a scenario.

There are other factors to stir into the mix - opportunisim and political. There remains a distinct possibility that one of its rivals will take advantage of the huge discount to merge (or buy outright) GGP. One candidate would be Developers Diversified Realty Corp (DDR), which has a market capitalisation approximately twice that of GGP at present, due to it having less issues around solvency. A combined entity would instil all-importance confidence in lenders and would realistically lead to GGP shareholders receiving a shareprice in the $5-10 range I would estimate.

The political element comes from the extension of the TARP for funding commercial real estate lending, and the progress of Barack Obama's current funding bill through the Senate. I need to complete more research into this as I am not particularly up to date, but it is possible that lenders are receiving indications that funding will be made available at some point in the future, which would enable refinancing.

That would certainly explain why there have been continual extensions without apparent resolution - an effective delay until the TARP situation is clarified, as that is obviously the preferred solution for all parties. If so then there may be another extension again with regards to loans due on 12 February for the two Las Vegas malls mentioned in the Forbes article.

So much to consider, and all you can do with a trade of this complexity is complete analysis, stick to your strategy and remain detached from emotion throughout. If I were to lose my entire stake on this trade (around £80,000) then so be it and I will have learned a huge amount along the way. However all my analysis points towards my acceptance of this risk yielding a significant reward in the future.

Inside Information Brings Relief

We are all privy to inside information throughout our lives. The most high profile and frowned upon (read: illegal) relates to trading. Let me just say that everybody knows it goes on all the time in the City still, but is indefensible as what is often forgotten is that there is a victim on the other side of all those trades. However most inside information is harmless, and can be obtained by pure random chance - or capitalising on a situation with some covert research.

Given the importance of the impending cull, I have been naturally keen to confirm that my neck is not going to be on the block when the big day comes. It makes a few spending decisions such as my Spring holiday that bit easier to decide - will it by Cyprus or Great Yarmouth?

Whenever I am the last one in the office, which is a frequent occurrence at present even when not that busy (now is a time to be 'seen', which is bullshit I know, but is the way it works), I often take a moment to go around and turn off some people's monitors. I have a strong green streak within me that hates to see energy wasted, even when I am not paying for it.

To my surprise, when I glanced into my Boss' office last night, he had clearly left for the day, but had left his PC on and completely unlocked. What would you do? Perhaps you would feel an ethical dilemma - wanting to respect privacy and not take advantage. To do unto others as they would do to you.

I on the other hand had no such conflict, given that my Boss probably browses our mails, and would stab any of us in the back in a second to save his own well-endowed behind.

So after moving the mouse to ensure his PC did not auto-lock, I quietly went back to my desk for another 15mins to ensure there was no return. I then scouted around the office to confirm nobody important was still around. After that, I completed a highly efficient turnover of his office and mailbox that would have made a professional burglar proud. Let me add I did not look for or read anything personal - none of my business and frankly I have no interest in his family life. There was no wasting time on anything other than a search for those small items of interest.

It took all of about 30 seconds to open his various folder trees and locate the Budget --> Resourcing --> 2009 folder that was most of interest. There was nothing too obvious apart from a locked spreadsheet attached to one mail - a quick search in other mails in the folder revealed the password. So within a minute, to my surprise I had come across a breakdown of what my entire team earned in 2008 (base and bonus), along with base for 2009.

That only made me feel better because I am amazed how little some of them are earning. If ever you needed proof that a strategic move or two throughout your early career - along with renegotiation on the way - pays better than serving your time at the same bank, then I have it. Put it this way, I won't be complaining too much going forwards. What it did *not* do was answer the more important question: so besides taking a print out to browse for my own amusement on the Tube home, I closed that and sifted his folders. Nothing in there I could see of relevance either, and then I found his notebook under some papers on the desk.

Sure enough a number of pages back from the most recent was a header scrawled 'Resource Review'. Here I could see the Boss had listed the entire team's names (except his own, naturally) with a couple of comments. These seemed to be justification (or otherwise) for keeping each of us - perhaps during a roundtable session with other Desk managers to discuss headcount reductions, who knows? Next to mine were the words "business critical work, high experience", which sounded nicely like a justification. Others had similar comments, and by contrast several others who were in my own 'bottom 5' assessment had comments such as "low experience, low impact", "project coming to end", "issues working with xxxx".

It felt rather like a conspiracy reading through those notes, but I am 90% sure I found what I was looking for. It was further confirmed when I noticed a black line next to the left of two of the names. That would tie in with my view of the percentage reduction required for the cull but he might have been idly doodling I suppose.

One is a nice chap who has just joined in January to backfill a voluntary leaver - for me he was only taken on to keep up our numbers and so is prime cannon fodder. The other was the junior trader who has just quit under those somewhat mysterious circumstances. I have also confirmed the date of the cull through a source, but am not going into any details.

Anyway, suffice to say that I am feeling about as relaxed as anybody in the firm can be right now, knowing not only that I am almost certainly safe (this time), but seem to be doing relatively well on the cash front compared to most of my colleagues. Disgraceful I know, I'll down an extra shot of Ruski tonight with my Hail Mary's.

From Ruski With Love

I had a night out with some colleagues at the bank last week who were over from Moscow, and opted to take them to an excellent Russian restaurant over in Chelsea called Nikita's. It's rather like taking an American to the Texas Embassy Cantina I suppose, but I couldn't resist getting their opinion on London's alleged best for Russian cuisine. Sadly none of this is on expenses anymore - a tragic sign of the times.

Actually we had an excellent evening, and I was introduced to their nectar of choice - a fantastic vodka called 'Ruski Standard Platinum' (aka 'Russian Standard' over here). Apart from eating the finest beef stroganoff I have ever tasted, on the recommendation that "it will make it easier for you in the morning" (presumably because it is such a heavy, rich dish), we polished off two full 75clr bottles of Ruski between the four of us, and it took restraint not to order a third. [note: I have just ordered 4 bottles - a couple as gifts I might add]
To my surprise I not only slept fine, but woke up without the slightest hint of a hangover. This could be my new tipple of choice now that I'm getting a bit too old for beer. Let's face it, lager in particular is devil's piss by comparison to fine wine and spirits, and with the added bonus that it wakes you up throughout the night to continually empty your bladder.

As usual, once we had got through the first bottle, we moved away from tedious work discussions such as the Desk performance (bad), and rumours about job cuts (very bad, for an emerging market heavily reliant on commodities for revenue), and onto the requisite exchange of office stories that can only ever be passed on verbally. On the subject of job cuts, it has already occurred to me that I cannot refer to any details around the timing of the impending cull, because it will be too indicative of where I work. As such I shall likely write some entries at the time but not publish them until some time afterwards.

The best story of the night for me was finding out that one of the senior traders I know on the Moscow desk, whom we call Shriek due to her piercing voice, has a husband known in the office for his odd behaviour that verges on psychosis. He apparently calls Shriek at the office 30 times a day, and it has got to the extent that her team has learned his number and filters it out where possible.

It is presumably jealousy, as Shriek's psycho husband even went so far as accusing her of having an affair with one of my colleagues (at Nikita's with me that evening). Shriek's husband had 'proof' - namely that my colleague's wife "told him of the affair". Since both Shriek and my colleague knew this was utter fantasy, rather than her assuming she had a husband who was bonkers, she decided it was a plot by my colleague to ruin her marriage - and aggressively confronted him in the office.

It ended up escalating until even the regional head MD got involved.. before being hastily covered up. From what I hear, they are now quietly compiling a dossier on Shriek for a range of her own odd activity. This one will doubtless be tucked away in her HR file for use at an appropriate time. Like a round of job cuts for example.

More Baracking Gets A Reaction

I am a firm believer in the need for regular, institutional change at the highest level; you only have to look at how power corrupts over time, or leads to grotesque complacency of the worst kind. For examples in politics, you need only think back to the detachment from reality of Margaret Thatcher towards the end, or New Labour now, and of course George W Bush for the last.. 8 years. Okay he's a special case but you take my point.

With institutions such as banks, that complacency (and in some cases corruption - you know who you are Bernie), has had longer to fester right up to the top. As we all know, it has been spectacularly laid to bare in the last year, what with the problems requiring vast government bail outs to save many financial institutions. A recent point of major angst with the politicians and public at large are the continuing ramifications from the presumption of bonus payments as some kind of right by many at the top of those banks which have performed worst.

One point on that is to note that some are indeed contractually guaranteed - particularly the rainmakers that bring in vast sums for a bank and could walk to a competitor in a second. However, that is a small percentage of the overall pot so it is not an excuse.

However an interesting development today was Barack Obama's latest announcement that all banks that have received bail outs will need to cap executive pay to a mere $500,000. I think that I can safely disclose that we are one of the 90% of banks that have received some kind of financial package from a government. The reaction here at the bank has been impressive - faced with the prospect of having their pay limited to such trifling levels, the order has come from the very top to immediately investigate ways to pay back the government.

It is hilarious how the moment executives at the top find the trough being emptied, they're squealing with indignation and looking for ways to get their snouts back in. So let me see - your priority is helping fund all those businesses suffering as a direct result of the systemic failure of which you have to accept a proportion of responsibility? No, it seems to be working out how to squeeze internally through the coming cull, or externally via recalling loans, to ensure we remain fully independent of the US government.

Away from the subject of bonuses, it is interesting to see that momentum is building up through the press for the strong case of investing in gold as a good option for 2009. I continue to recommend placing significant funds into a gold ETF and moving some away from Sterling and the US dollar this year, but the linked article gives a good summary with some options.

Otherwise I have found out some interesting office rumours from a recent night out, as well as confirming whether I am to be included in the coming job cuts. Both can wait for another entry.

Investing for a Recession (Part II)

Having outlined how I have made some useful money from the recession to date, it would be worth now moving to my current main investment at present, so that there is some context when I update on this going forwards.

Apart from putting a proportion of my funds into a gold ETF, which is an excellent hedge both against recessionary worries, a devaluing dollar and future inflationary concerns from all the quantitive easing taking place, I have also placed a significant sum into something that is much less obvious in these turbulent times: US commercial property.

You might think that is insane, and is totally contrary to what everybody else is putting their money into at the moment. But part of investing is looking for value, and sometimes that means looking beyond the conventional wisdom. I have bought into something called a Real Estate Investment Trust (REIT) - these are essentially US commercial property companies, which by and large have plunged by enormous amounts in the last 6 months.

As such, several are rumoured to be on the verge of bankruptcy, and one in particular is down a staggering 97% since the summer of 2008. When you factor in a fall of that magnitude, you have to start looking at the price and ask why, and whether this is rational or fueled by other factors. The underlying reason is the credit crunch, combined with investor fear of a Chapter 11 bankruptcy filing.

To give some background here, REIT's have by and large used a previously acceptable business model, whereby they were highly leveraged and routinely took out large levels of debt to increase their asset base and buy up more property. They then serviced this debt, steadily paying it off while periodicially refinancing this - without problems in a normally functioning credit market. Of course, everybody now sees US property as having been in a huge bubble, and all associated loans as necessarily toxic. As such, suddenly some enormous commercial property companies are on the brink of bankruptcy - including the particular REIT I have invested in called General Growth Properties (GGP).

To put it into context, GGP is the second largest mall owner in the US. That is not an insignificant statistic in itself, and should it fold there would be enormous ramifications for the US retail sector, not to mention a political backlash. I would actually not mind if it did file for Chapter 11 within the next few weeks, for reasons summarised well in this Reuters article.

Estimates suggest that GGP's assets exceed liabilities on the balance sheet by several billion dollars already. Additionally it has no problems servicing its actual debts, just refinancing them. In effect the problems of GGP are not with solvency, as with normal bankruptcy risk, but liquidity - this is a direct result of the banks own liquidity issues that have made them more risk averse.

What is most interesting with GGP is also that the balance sheet is not fully marked to market, which means that if its assets are valued at today's prices instead of when purchased there will be a change. Many properties on its books were bought years ago and have never been revalued, so it is reasonable to expect many will be worth more than marked, even with the current woes of the US property market. As such, assuming GGP were to go bust, what does that mean for ordinary shareholders? Normally it is a disaster and means no money, but in this case it should mean that the US courts would order the banks to agree refinancing terms, after which GGP would emerge out on the other side without that perceived stigma. Meantime the shares will continue trading on the stock exchange.

Since the Reuters article, all indications are that GGP will not file for Chapter 11 however, with its banking consortium of lenders bending over to give multiple loan extensions (including one over the weekend through to mid-March). There are many factors at play in whether full refinancing of the loans due in 2009 will take place - that is what would remove the market risk of bankruptcy that has so severely depressed the share price.

The main sticking point for lenders is several billion dollars of loans that are currently unsecured (i.e. have no assets backing them up), which are due for refinancing. Understandably the banks want assurances they would have some collateral to offset should GGP go under at a later date, and at present the unsecured loans are not acceptable to them. As such GGP is looking to either sell assets to pay those off, or negotiate terms. Both are possibilities, but at this stage it is unclear which is the more likely.

Another factor is the recent extension of uses for the Troubled Asset Relief Program (TARP) by Barack Obama, to now explicitly include money for Commercial Real Estate. This bill has passed through congress, and the campaign is continuing - again it provides political pressure on the banks to lend and not push under a company as significant as GGP.

Once terms are agreed, or GGP manages to sell off a number of assets to enable refinancing, I expect there to be significant upwards movement on the stock price. I have gradually increased my long position on GGP from $1.61 down to $1.03 in the last 2 months, although it is worth adding that a recent sell off last week on fears ahead of the loan deadline (prior to extension again) lead to a sharp fall back to around 55 cents a share. As of yesterday, GGP's share price bounced up 30% on the news of the loan extension, and is now currently at around 80 cents a share as I type.

So I am sitting on an unrealised loss at present. Since I bought into this REIT in December, the share price has risen by 80% at its peak, and fallen by 50% from where I entered at its lows. I turned down the chance to cash in a £50k profit in early January because I am more interested in the bigger picture here. That's how trading works - I have a strategy which does not include day trading this stock, because I do not know when the news will be announced that will make the crucial difference.

To give you an idea of the potential rewards at stake here, if the share price were to rise back to just $3.50, where it was in October, I would make in the region of £150k from the trade.

I should add a cautionary note that this is considered a speculative play. I am speculating on the most likely outcome based on extensive research - what makes this unusual is that there appears to be significant upside regardless of whether GGP files for bankruptcy protection or not. To me the share price of GGP is significantly undervalued, and at some point the market is going to realise that.

Most people are not prepared to accept this level of risk, and that is entirely right, although it is worth pointing out that you can take a zero off the figures and it could easily be you making (or losing) these amounts. In my case, if everything goes as well as I expect, I could make over £1 million from the trade. Admittedly that is unlikely and would require me holding for a couple of years. I am looking at cashing in £250k as a more realistic profit, but it gives you an idea of how risk vs reward works in the markets.

I will keep you updated on the progress of this particular hot potato in the coming months. Anyway back to work.

Winter Wonderland

Well, I for one took advantage of the heavy snows last night. Knowing the UK's spectacular inability to handle autumnal leaves, much less a few inches of snow (in particular southern England), it was obviously going to lead to a widespread shut down of travel services and provide the perfect opportunity for all of us with remote log-in access to avoid going into work.

As such I extended the party we were having with our neighbours into the early hours, and after a snowball fight out in the street, we got back and I popped open the bubbly to celebrate. Definitely time well spent - an impressive two people from my team were naive enough to make it into the office this morning, while the rest are all 'working from home'. L is back in bed having an extended lie-in, after a gleeful wriggle when she discovered no buses or Tube services were working.

I've cleared my calendar, delegated what little I needed to do to a couple of grunts in the Middle Office, and am going to grind some fresh coffee and put my feet up. After all there's the fascinating competition on Sky News between the UK Prime Minister Gordon Brown and his Chinese counterpart Wen Jiabao over who has the least charisma.

Wedding Heaven

L seems to think that planning a wedding together is supposed to be an amazing, joyous experience, and is upset with me that I am not as enthused. Or to put it another way, that each time we discuss her plans for spending thousands on this and that, I am raising an eyebrow at where her original 'affordable' and 'low cost' wedding plans have gone. The amount she is proposing for a photographer and band are a great example.

I want to make sure that it is a wonderful day, so let me say it's not that I don't want to get married or don't care. But I really do not understand where this hideously commercialised industry has sprouted from in the last 50 years. It seems to have evolved specifically to fleece couples of as much money as possible, while delivering nothing more to make the day any more memorable or special than it was before all this was a social expectation. So what if the photo's are airbrushed with fake lighting and remove the zit which appeared on the morning of the wedding?

Perhaps it is because I am inherently one of those people who is careful with money. When I spend on something, I want to know it is good quality and will last so that I get value for money. I don't like frittering money away on something that lasts a single day and will pass in a blur.

I'll try to convince myself it's because I understand what money is all about - namely for getting us a family home, and eventually providing well for the next generation, not pissing it away because of social expectations. If truth be told, I would happily marry without all this pomp in a registry office and let my love show in other ways - not to mention the large diamond ring I got for her in last summer. That was actually part of our unofficial deal: the ring will last for the rest of her life, so I could justify spending on that, but it was in exchange for a lower key wedding. Of course, that agreement with L seems to have now completely gone out of the window - too much time watching the Wedding Channel methinks.

It's not helped by her father being a useless waste of space who has never provided for her, and so certainly won't be contributing a penny towards her wedding. In fact, I will be surprised if somebody doesn't end up paying to fly him out for the ceremony.

So anyway, this last week since L got back from seeing her family has been a mild stand off between her broaching the subject of confirming various details, and then me pointing out the huge cost and asking what other options we have available.

It's interesting from talking to my colleagues of both genders further on in life about all this. The men nod knowingly, and tell me that the same happened to them and that they felt powerless to resist. The women usually say that the costs are ridiculous, and several have admited they got carried away as well - probably with some context they can see now what a few thousand quid extra would do for their children. Anyway that's my minor rant over about weddings.

L is sulking with an extended lie-in this morning, because I am heading out all afternoon to see a football game with a former colleague from the bank. Sorry, they were corporate tickets so I couldn't say no darling... and anyway, he has has recently defected to a rival - always a good opportunity to find out the sorts of details that were going on in his area that couldn't be revealed at the time...