Friday, February 15, 2008

Over There

Here at Proxyland I leave heavy number-crunching to the experts. Which is good, because some numbers in the 4th quarter 6-K that UBS (UBS) filed yesterday are painful to look at, including this one: $13.7 billion in mortgage-related write-offs.

So I'm just skimming through the company’s narrative, which turns out to contain some intriguing words and phrases, e.g.:

"Monoline exposures" - In happier times, the word “monoline” could have had a nice career as a brand name for a 1950s vacuum cleaner, or some such thing. Sadly, however, it refers to monoline insurers, so called because they insure a single industry. Here, the industry we’re talking about is securitization (if you can call that an industry), and the monolines are poor unfortunate bond insurers like FGIC and Ambac.

The phrase “monoline exposures” ought to be oxymoronic. These are insurers. They’re not supposed to be exposing your ass; they’re supposed to be covering it, right? Yet here comes UBS with a nifty chart of its monoline exposures, which add up to (holy cow) $3.6 billion.

The word “monoline,” of course, never appeared in any UBS filing until yesterday.

Devastating" - This one jumped out at me from the letter to shareholders signed by Chairman Marcel Ospel and CEO Marcel Rohner, who sheepishly admitted there had been a “devastating development in our Investment Bank’s US residential mortgage business.”

Being European, Messrs. Ospel and Rohner may not realize we Americans aren’t used to hearing corporations use words like "devastating" when delivering bad news. Les Deux Marcels really should be more culturally sensitive to our delicate ears. What, do they not know about headwinds over there in Switzerland? I believe they do know something about cows, so if UBS looks down it may find a softer word for what it has stepped in.

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