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A French 31-year involvement in the case of Goldman Sachs

Saturday, April 17th, 2010

Goldman created a financial product

Since 2004, Wall Street has found a new Eldorado, CDOs (collateral debt obligation). These financial products assembled from scratch, called "synthetic" because they only reflect the value of other real assets, they, as loans granted to low-income households, the famous subprime. In 2007, Goldman Sachs creates such mass-produced and dubbed "Abacus".

The needs of a large customer

Paulson & Co is the time a small hedge fund. It will become one of the biggest thanks to its bet on the decline in U.S. housing. In the year 2007, his boss will cash alone a profit of some 3.7 billion dollars and will save 15 billion to its customers! The SEC in 2006, Paulson & Co has the right intuition that the subprime market is fragile. He put on his fall.Its Paris can take two forms: buy CDS (credit default swaps), the "insurance" against default that will naturally grow in value when the risk will increase, or "short" CDOs, that is ie sell futures without holding them.

A French in the loop

Paulson & Co. is not alone in feeling the wind change on CDOs. At Goldman, you think too. This is particularly the case of a young French – the "Frenchies" are highly respected in the business of structured finance – Fabrice Tourre. The banker of 31 years, citing the SEC's complaint, went on the benches of Henri IV and Louis-le-Grand, has joined Goldman Sachs after Stanford and Central Paris. It is he who makes and sells the Abacus series. On January 23, 2007, he sent an email to a friend: "more and more leverage in the system.Any building can fall at any moment now … only surviving potential, the fabulous Fab, standing amid all these complex transactions, (…), exotic we've created without necessarily understanding all the implications of these monstrosities. "

Fraud

The fund Paulson wants to "short" of CDOs, the most fragile, if possible. Goldman is going to create. According to the SEC investigation, the investment bank has simply made the model 2007-AC1 Series Abacus according to the wishes of his client. Paulson has directly participated in the selection of loans that this CDO would be representative. The bank was then entrenched behind an independent firm, ACA. This firm, which appear to have selected the credits of this CDO when it will be sold to investors.

Goldman said that "ACA has selected the benchmark portfolio, omitting any mention of the fact that Paulson, an actor whose interests were contrary to those of investors, had played a significant role," says the SEC to justify its accusation of fraud.

In fact, few investors have bought shares knowing that a heavyweight like Paulson urged to Paris on their fall! ACA would for his part acted in good faith.While representatives from attending meetings Paulson – "surreal" by Fabrice Tourre – with those of Goldman, but suggesting that hedge funds also invest in shares of CDOs.

Victims

SEC's complaint cites two main victims of the banks handling it denounces the German IKB, the subprime crisis has brought to its knees and the Dutch ABN Amro, fully nationalized today … The first would have lost 150 million, almost all of its investment. As for ACA, it is off … "Investors of Abacus 2007-AC1 lost more than one billion dollars. The opposing positions on CDS Paulson reported a profit of approximately one billion, "says the SEC.

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Tidjane refuses the offer by Societe Generale

Saturday, March 20th, 2010

The announcement of the ambition of Societe Generale to enter the boss of iconic Prudential to its Board of Directors has made much noise on the Paris market. The leader of the British insurer eventually declined the offer of the French bank yesterday, twenty-four hours after Societe Generale said it had offered a seat on its Board of Directors.

Tidjane was "very flattered to have been chosen for the post of independent director at Societe Generale," calling the bank "remarkable company."He justified his decision by the challenges it faces today: "My priority is to continue to focus on achieving strong results for our shareholders, and the success of the strategic transaction with AIG, and the 'integration resulting payday advance .»

More than a personal choice, his refusal would have been motivated primarily by strong opposition from shareholders of Prudential to this project. These are indeed alarmed at the proposal of Societe Generale, fearing that Tidjane not dispersed at the crucial moment of the acquisition by Prudential's Asian operations of AIG.

"PORTRAIT – Tidjane breaks through glass ceiling

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Released crisis: OECD insists on reducing deficits

Friday, March 12th, 2010

When and how to get out of recovery plans without jeopardizing the fragile economic recovery? If Obama Administration believes the time has come to reduce public spending, the Europeans are driven by the market to tighten their belts. A timetable for ending the crisis is the agenda of the next Ecofin. The OECD can only be welcomed.

In a report presented Wednesday, the Organization for Cooperation and Economic Development calls for post-crisis "progressive" and "contact" who favor reducing deficits, without neglecting the structural reforms essential to future growth. "The global recession has left deep scars," said Secretary General Angel Gurria. The OECD estimated at 3% of GDP the impact of the crisis on the potential long-term growth."The only way to begin to heal the wounds is to take steps now that will allow our economies to regain their lost growth potential," added Angel Gurria.

For rich countries, priority will be to reduce the deficit while fighting against unemployment. The equation means that reforms focusing on the rate of employment rather than productivity. Each state must first stop gradually according to budgetary margins and recovery, the outstanding public support, including aid industry as the premium breaks or the financing of major infrastructure works cheap payday advance .

Carbon tax and VAT

To reduce deficits, we must act on spending and taxes. "We recommend targeted actions," said chief economist Pier Carlo Padoan.Be careful not to touch the most productive expenditure in education and health research and development.

On the fiscal side, the OECD recommends that taxes do not jeopardize the long-term growth, such as the carbon tax to "encourage the development of a more sustainable economy and contribute to the well-being of citizens."

Another tip: it is better to tax consumption rather than labor income or corporate profits. And act quickly. "If we want fiscal consolidation in 2011, policy measures must be taken now," says the chief economist of the OECD Pier Carlo Padoan. The most indebted countries, like Greece, are requested to take urgent and radical action, to borrow at lower cost.The OECD has welcomed yesterday the plan of austerity Portugal, who combined tax increases and wage freezes for staff.

On the monetary side, the OECD recommends withdrawal of the measures "Unconventional" credit assistance, but without higher interest rates in the short term because there is "no inflation pressures in countries more industrialized.

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Hartz IV: "Germany must reduce its spending"

Wednesday, February 10th, 2010

LE FIGARO. – Ruling of the Court puts it into question the whole system "Hartz IV"?

Niels Diederich. – No. The decision of the Court concerns only the welfare of minors. In the system of "Hartz IV", children whose parents are unemployed or who are raised in single-parent families, indirectly affect the state aid. However, they receive only 70 to 80% of the amount awarded to an adult. In 2005, the legislature had found that children have lower needs than adults and had applied a standard reduction. The judges felt that we can not calculate the social benefits attributed to children on the same basis as for adults. They require the development of a new scale of separate calculation, so that their needs are taken into account.The government will soon review the text to make its corrections.

The competitiveness of German companies is in danger?

Not because this decision they will not carry more loads, it does not hurt German exports. The companies co-finance the system of unemployment insurance by 50%. But it is a separate mechanism. The system "Hartz IV" is funded through taxes. But the state has pledged not to raise taxes. It will therefore reduce expenditure to finance the surco?t.La Court is often accused of conservatism.

That shutdown threat does not modernization of Germany?

Politicians always moan against the Constitutional Court. Created after the Nazi era to serve as a safeguard against the state, it has, indeed, enormous powers. But judges do not prevent the country's modernization.On the contrary. In 1949, when the conservative party (CDU) had held that in cases of dispute over the education of children, the man still had the last word on the woman, the Court ruled that the law contradicted the principle of equality between citizens. Since the 1950s, it required that disputes be settled by a judge, thus laying the foundations of the principle of equality between men and women in the country.

Soon a collective bonus for staff

Monday, February 8th, 2010

This is the latest fashion at Bercy: invoke the former communist ministers of the Public! After recalling qu'Anicet Le Pors was established in 1984 the possibility of dismissing a government official denied a position, the enclosure Eric Woerth said that Thorez had included the idea of "collective performance bonuses in the general status of civil service in 1946, which are both unions.

The idea is tantamount. The government will send in the coming days with officials from unions the final version of its draft "collective bonus, negotiated for several months. A framework agreement will be declined by the department and implemented in public functions and territorial hospital.It provides for the payment of a premium service that is most evidence of "effort" or "collective performance.

On what criteria? At each terminal to determine its unions, but they will involve improving service to users, cost control, improvement of working conditions (decline in the number of accidents …) or environmental (savings water, energy …).

Outside agents whose "incompetence" has been pinned and will be deprived of premium, all agents of service – or contract holders, bottom or top of the scale – will receive the same amount. But no question that all services receive a government allowance each year. Only those who have reached goals or made significant progress will be rewarded."The idea is to create emulation, no dusting," says a close associate of Minister of Budget and Public Administration, ?ric Woerth.

"The degree to functional access"

The government had already launched in late 2008 the prime function and results ", she rewards individual merit. It applies to much of the category A agents (managers) and is being extended to categories B.

"We are opposed to this project, because all that will be consistent with payroll, those premiums will therefore replace collectively increasing fears Jean-Marc Canon (CGT). We are also suspicious of the criteria. Where such mechanisms already exist, we saw they were in doubt: the number of PV in the police, for example, payday loans guaranteed no fax