don valley brickworks, fall 2008

new necklace from etsy for fall

a compromise between wide-legged and skinny

October 30, 2008

Economist: The stance of both executives and the rating agencies suggests that insurers will avoid an avalanche of emergency capital raising, although some will cancel dividends and tap governments if the terms are favourable. The problem for investors is the sheer opacity of insurance solvency models. In today’s markets, “trust me” just doesn’t cut it.

October 27, 2008

Thursday, a little depressed sitting in the greyish Terminal B at Bradley Airport. On the shelves of the convenience store, a novel caught my eye. Son of a witch. Elphaba always cheers me up. But it is hard to read this without thinking about how the US allowed Ethiopia to invade Somalia and destroy its hope for peace.

Saturday afternoon, after the rain, I went for a jog along the dirt trails on the west side of the river. The slopes of Warden Woods were entirely dressed in textured gold while the branches retained shades of susurrous chartreuse, as if painted by Gustav Klimt. I stopped, rolled around in the leaves and watched a tiny snake quiver by.

Monday, no more treadmill for Vendy. I'm staying across the street from the capital building this week. From the hill, Hartford looks like a city. I ran past the latino neighbourhoods, past the cementaries and found a pretty spot to watch the sunset.

Economist: Some institutions and bankers, including the chairman of Shinsei—once known as Long Term Credit Bank, which was nationalised a decade ago—have urged regulators to suspend accounting rules that force the banks to value assets at present market value. The use of “mark-to-market” standards may force firms to write-down the value of their assets painfully, even though the trough may be temporary. As it stands, banks must subtract around 60% of their paper losses from their core capital. The government has signalled that it may be willing to ease the rules. The government may also request that pension funds and life insurance firms buy equities to support the market, though whether they would respond remains to be seen.

October 25, 2008

Economist: When introducing her at a recent event in Washington, DC, the host reminded her audience that Christine Lagarde, France’s finance minister, had once been a member of the French national synchronised-swimming team. Synchronisation, he suggested, was a useful experience in handling the current financial crisis. To which Ms Lagarde added, without missing a beat: “You also have to hold your breath.” Formerly global head of Baker & McKenzie, in Chicago, where she specialised in labour law and antitrust, she has the disarming tendency of saying what she thinks.

Economist: To understand just how much Nicolas Sarkozy has upturned French diplomacy, try inserting the name Jacques Chirac into the following report. The French president invited himself to Camp David (see picture), where he appeared alongside “dear George”, spoke warmly of “the great American nation” and called for a special summit of G8 countries to “refound capitalism” soon after the American presidential election. The Americans should host it, he declared, “because the crisis took off in New York”.

Economist: The biggest brigade in the Obamacon army consists of libertarians, furious with Mr Bush’s big-government conservatism, worried about his commitment to an open-ended “war on terror”, and disgusted by his cavalier way with civil rights. There are two competing “libertarians for Obama” web sites. CaféPress is even offering a “libertarian for Obama” lawn sign for $19.95.

October 24, 2008

Economist: Basel 2 is looking less relevant by the day. Government recapitalisation of the banking industry continues apace. On October 19th ING announced that it was taking a €10 billion ($13 billion) dollop of cash from the Dutch government. The following day the French government allocated €10.5 billion of capital among six of its banks. BayernLB become the first German bank to request money from a state fund on October 21st. One curious result of all this intervention, says one Basel buff, is to make it hard to work out just how risky assets are now that the state is underwriting the system.

Basel 2 certainly does a better job than its forerunner, particularly in areas such as banks’ off-balance-sheet exposures. The new accord’s framework also has the great merit of being flexible. Among its three main components, or “pillars”, is one that allows national supervisors to turn the screw on capital as necessary. As for the unfortunate effect on Wall Street, the regime was not designed to be used by investment banks that only had mark-to-market trading-book exposures. Even opponents of the accord say that the American firms’ regulator, the Securities and Exchange Commission (SEC), ought to have been much more careful in moving banks on to the new rules.

October 23, 2008

Wednesday, Josh and I discovered decent sushi in Hartford at Feng, a Chinese restaurant. Favorite billboard: Hartford Steam, we don't sell insurance, we sell comfort.

Friday, landed in Orlando. There is nothing other than outlet mall and disney world around my hotel, so I chose the lesser evil. Bought three dress shirts, two pairs of dress pants, one work jacket and one winter jacket for 270 at ann taylor. Not bad for my first ever outlet mall experience.

Monday, delivered presentation on hedge strategy optimization.

Wednesday, running on the treadmill accompanied by Lipstick Jungle. Wow. I can actually relate to a female character on prime time television. And her name is Wendy.

Given the recent events in the financial markets, I wrote an email to Sam and told him that he was right: everyone is greedy. He wrote back and expressed concern over the looming central control of financial institutions. I am also very concerned. Risk management is taken seriously when it provides a competitive advantage. Risk management provides a competitive advantage when the markets are volatile. Regulation that creates an artificially stable environment will also create financial institutions that do not take risk management seriously.

October 15, 2008

Avinash Persaud: Where assets are funded with short-term liabilities, then whatever the perceived liquidity or intentions of the asset owners, it is appropriate to mark the value of that asset to market in case funding dries up and the assets need to be sold tomorrow. But where assets are funded with long-term liabilities or set against long-term liabilities, then marking asset values to market is not appropriate and can lead to an artificial view of risk and investment decisions based on a risk that is not important to the holder.

October 14, 2008

Monday, running on the treadmill accompanied by gossip girl.

Tuesday, running on the treadmill accompanied by previleged.

Why are normal people obssess with rich people? Why are certain small American cities circled by highways and therefore are awful for outdoor running?

My last Kiva loan was repaid so I can loan it out again.

"Mrs. Moeurn Huch is a pig breeder in Trapaing Krasang Village in Takeo Province. Since this business is going well, she wants to expand it, so she decided to ask for a loan to buy more piglets for breeding; if there is any money left over, she will use it to buy pig food. Mrs. Moeurn Huch is a 37-year-old widow with three children, one of whom is a construction worker; the other two are still attending the local school."

Her field partner, Angkor Mikroheranhvatho Kampuchea (AMK), has a five star risk rating.

October 13, 2008

Two thousand and eight has been an important year in my personal history. On my twenty-fifth birthday, I realized that I needed change. I thought about moving to Hong Kong. I thought about moving to Shanghai. I thought about moving to New York. The streets of these cities are crowded with too many people wanting too much.

In the end, I realized that the change I needed was a place to call home. I moved back to Toronto three months ago. Weekdays are not very different: wake up at 9, run, show up at work at 11, leave the office at midnight, read, sleep at 2. Weekends, on the other hand, feature shrimp dumplings, piano lessons and hiking with Mum + Dad. The frenzy in the markets highlights the few things in life that I can count on: close relationships with family, friends and myself.

October 12, 2008

Saturday, beautiful day. Mum + Dad + Vendy decided to hike around Cheltenham Badlands, soft rock tinted with red and green iron oxide. Given the exotic appearance of the surroundings, Stephen and I performed moon walk. He is much better than me.

Economist: Now all hope that Japan might remain aloof is gone. Overseas hedge funds have been panic sellers of shares. Even cast-iron Japanese government bonds are being shunned in favour of cash—leaving questions about how the government is to refinance a lot of debt coming due over the next month or more.

Not only are buyers of stocks conspicuously absent, but much of the selling is forced. All agree that there will be no meaningful recovery until the credit markets are unclogged. The rates at which banks lend to each other are still at or near records. The rate at which companies can borrow over short periods is starting to fall, but only slightly. Longer-term borrowing markets are still mostly shut.

October 9, 2008

Thursday, team dinner at Jump to celebrate the end of the project. The miso-glazed cod melts my heart.

Two things Vendy needs to work on.

1. Don't put too many charts in the body of the deck and confuse yourself. Throw the not 100% necessary ones in an appendix.

2. Deliver the key message first when you go to a slide. Then assess the audience response and provide as much details as necessary.

October 6, 2008

Thursday, team dinner at Ki to celebrate second last week of the project. Mmm ... sashimi.

Friday, Durgesh's first day in the Toronto office. Family-style firm dinner at Gio Rana's Really Really Nice Restaurant featuring really really fresh pasta.

Sunday, decorated with pink ribbons, the Oliver Wyman team participated in the run for the cure.

Dominic D'Alessandro: “One of the benefits that we've had here in Canada is we've been able to run our business constantly with the view as to what is the best economic decision, not what is the best accounting decision,” Mr. D'Alessandro said. “And we've been able to hold assets and invest our policy holders' money in a blend of assets which over the long term has delivered substantial value to them. Well, under the new accounting rules that have been foisted upon us, I'm not sure that's going to be possible going forward.”

“The consequences are that, ultimately, consumers will pay a lot more for insurance, they'll be getting less value. Because if insurance companies, which have 30- and 40-year liabilities can't, because of the accounting model, invest in equities, or invest in long-term assets, or assets whose value goes up and down … It's just nuts.”

September 29, 2008

Saturday, 65k ride with Steven Young from Burlington to Niagara. So relaxing to drink wine and walked between the grape vines.

Fitch projects a significant deterioration in variable annuity results driven by deferred acquisition cost write-downs, declining asset balances, increased reserving for guaranteed benefits, and higher hedging costs.

A select number of life insurers have material liquidity exposures via large debt maturities, reliance on commercial paper, short-term bank letters of credit, securities lending programs, short-term funding agreements or ratings triggers on products such as municipal GICs. These insurers are most susceptible to sudden changes in their creditworthiness and financial strength, as well as multi-notch ratings downgrades, should their liquidity pressures heighten.

However, most life insurers have limited liquidity exposures, which should mitigate the impact of current market illiquidity across the industry. In addition, a vast majority of life insurers avoided investments in collateralized debt obligations backed by residential mortgage backed securities, and most have little or no activity in the credit default swap market.

September 25, 2008

Economist: it seems certain that professional social networks are here to stay as independent entities—something that cannot be said of their mass-market counterparts. As Mr Hoffman, LinkedIn’s founder, puts it: “Most users of social networks have a lot of disposable time, but not much disposable income. With professionals it is the other way around.”

September 22, 2008

Scott McDonald sent out an email today that basically says don't blame ibankers. Despite everything I have said about ibanks in the last five years, I really have nothing against ibanks, just people (a particular coop advisor) that claim it is the best industry to work in without regard for the fact that the best is relative to the environment and the environment can change rapidly.

The last time I visited the New York office, I picked up a copy of the evolution of financial services by Niall Ferguson and Oliver Wyman. It applies neo-darwinian thoughts to the lives/deaths of financial institutions. I definitely agree that diversity is key. The last thing I want to see is a world where every bank is a universal bank.

September 21, 2008

Saturday morning, first meetup meeting in Toronto. Stephen Fung and I joined "Conscious Toronto Discoverers, Adventurers & Travelers" for Canada's first bike-powered dance party at Brickworks. Mandarin/clove coffee. Beautiful place. Lovely people.

Saturday afternoon, revisited Brickworks with Mum + Dad.

September 13, 2008

Tuesday, dinner with Rach at Le Papillon. The duck pate and duck breast was so so. I need to stop obssessing over duck. The curried lamb crepe had wonderful texture and flavor. Apparently, watching the Olympics twelve hours a day is really tiring. After dinner, she took the Greyhound to Waterloo to visit Xi, even though she is leaving for Chicago on Wednesday.

Friday, internal meeting in New York where various consultants presented recent insurance projects. One story goes like this. The marketing department and the pricing department at a client needed external help to resolve a conflict. The marketing department wanted to hire McKinsey and the pricing department wanted to hire an actuarial consulting firm. They compromised and hired OW.

Mike Poulos: new consultants talk a little (because they don't know what to say) while somewhat experienced consultants talk a lot (because they don't know what not to say).

I was happy to hear that since so many college students think that over-confidence is good for consulting. What do you think happens when a 23 year old acts like he knows the client better than the client? Personally, I prefer to manage people that are slightly under-confident because they respond better to feedback. As they learn, their confidence grows and that makes both of us feel great.

Friday 11 pm, Brish + Zoey + Me caught desir at South Street Seaport. Lights floating on water swirling beneath the three bridges (Brooklyn + Manhatten + Williamsberg) is always a mesmerizing sight, but not as mesmerizing as showgirls, soldiers, courtesans and maharajahs, suspended in mid air.

Saturday, Zoey's birthday BBQ. She needs a friend that works in the fashion industry. I'm happily reading the Sartorialist.

September 7, 2008

Friday, chatted with Trevor and Laura, who is writing an article on ERM for Investment Executive. ERM is becoming a hip word for non-financials. Earlier this year, I actually thought about working in corporate risk. However, I imagine that it's a lot easier to convince a financial instituition that risk management is a strategic issue.

Saturday, lunch with Steven Young at Prohibition, who just came back from Laos/Cambodia. He was the fourth person hired by his firm, R^2 Financial. Conversations with college friends often lead to the question, "What would we do if we can do it all over again?" Steven's profession of choice is sniper. I wanted to be a teacher when I was young.

Among analytical people, my people skills are decent but this certainly is not my competitive advantage in a general sense. If I ever get to a point where I feel my people skills are as strong as my analytical skills, maybe I will start a coaching business. Unlike teaching at a school, you have the opportunity to meet new people everyday. Also, since you are working with individuals with plenty of work/life experience, you can learn so much about so much.

I'm reading Fierce Conversations by Susan Scott. It's common sense, but beautifully-written common sense, which makes all the difference in the world. Here is my favorite quote so far.

He wonders, Why are we talking about this again? I thought we settled this. Couldn't we just have one huge conversation about our relationship and then coast for a year or two? Apparently not, because here she is again. Eventually, if he is paying attention, it occurs to him that "the conversation is not about the relationship. The conversation is the relationship".

Watched episode 20 of SATC. Miranda meets Steve. Aww :)

Weird sentence of the day: This time the election was widely expected to be peaceful, and the prospect of renewed conflict is almost certainly nil.

September 4, 2008

Tuesday, Ilya's first day at work. We will be working together for the next five weeks.

Wednesday, pre-planned lunch with Ali at Thai Island, my fav lunch spot right now. He joined the Toronto office earlier this year from Boston, where he was involved with theoretical physics. Since people are out of the office most of the time, I have to schedule lunches with them ahead of time.

Thursday afternoon, project kick-off meeting. Thursday night, dinner with Andrew at Sushi Inn. Flashback: when I worked at Manulife, I used to go there with June all the time. He spent a week in Cuba and is determined to make his post exam life as relaxing as possible.

Economist: This is no time to be striking off in bold new directions. Both Allianz and Commerzbank have decided to keep their business mix focused on what they do best. Dresdner’s investment bank will not be the only one to slim down riskier activities such as proprietary trading. Perhaps most intriguing was the presence of a Chinese bidder, reportedly China Development Bank, in the race for Dresdner. Not long ago, people would have scoffed at that prospect too.

Economist: The ban on speculation means that Islamic transactions must be based on tangible assets, such as commodities, buildings or land. Observers say that exotic derivatives in intangibles such as weather or terrorism risk could not have an Islamic equivalent. But in the Middle East, at least, the supply of assets is limited. “Lots of companies in the Gulf are young and don’t have assets such as buildings to use in transactions,” says Geert Bossuyt of Deutsche Bank. This limits the scope for securitisation, a modern financing technique that is backed by assets and is thus seen by sharia scholars as authentically Islamic. There are not enough properties to bundle into securities.

Oil-rich governments in the Gulf have little need to issue debt when they are flush with cash. That is a problem. Sovereign debt would establish benchmarks off which other issues can be priced. It would also add to the depth of the market, which would help solve another difficulty: liquidity.