CDS and their perils

Interesting article by Prof. Figlewski and Prof. Roy Smith on Credit Default Swaps or CDS and how they wrecked the system. Prof. Smith often talks in class about how these instruments were supposed to diversify risk and be good for the system, only to be abused and misused beyond repair.

Reproduced in verbatim from the Forbes.com

Commentary
Credit Default Swaps Are Good For You
Stephen Figlewski and Roy C. Smith, 10.20.08, 12:55 AM EDT
What is dangerous is their misuse.

Warren Buffett has said that "derivatives are financial weapons of mass destruction," and in a credit crisis like the one we're in, many people think he wasn't kidding.

Recently, an auction was held to determine the size of the settlement on "credit default swaps" (CDS) that were written on the outstanding debt of Lehman Brothers. Each of these swaps was a contract between one party wanting to insure against the risk of a Lehman default and another willing to sell that insurance. (Lehman had nothing to do with the contracts, but the over-$600 billion of debt for which it was responsible had attracted about $400 billion in outstanding swap contracts).
About 350 different counterparties to the Lehman CDS contracts attended the auction, where it was determined that Lehman's debt would be worth only 8.62 cents on the dollar in bankruptcy. Those who sold insurance against Lehman's default (the "protection sellers") therefore must pay out 91.38 cents for each dollar of debt they insured. This is the largest payout ever in the $55 trillion credit default swap market. After netting out offsetting positions, cash payments will be approximately $270 billion, a huge amount even for this crisis, which has seemed to know no limits on the size of write-offs. And all this for just one default!
What Buffett didn't say was that while derivatives come in many sizes and shapes, every one of them is a zero-sum game for the users--for every loser, there is always a counterparty who wins an equal amount. Such contracts don't eliminate risk, and they don't increase it. They just transfer risk from one counterparty to the other. But this enables those who bear a risk to protect themselves against it, and considering the huge volume of risk-taking that occurs daily in financial markets, the ability to redistribute risk has to be seen as very useful.

Receiving the payments on the Lehman CDS contracts (which offset losses they had insured against) were a number of banks, brokers and other financial intermediaries. They had extended credit to Lehman but wanted to hedge the risk that it might default, an unlikely event at the time perhaps, but one with serious consequences if it occurred.

On the other side of the contracts, making the payments, were end-user investors such as insurance giant AIG [NYSE: AIG], PIMCO, the world's largest bond fund, and Citadel, a large hedge fund group. They took on the Lehman credit risk in exchange for a regular quarterly payment that seemed at the time to be a fair premium for insuring a default that probably would never happen.

For diversification, protection sellers maintain large portfolios of credit default swaps, just as an automobile insurance company insures a lot of cars. They lose on those that crash, but make it up on those that don't. Apparently none of these insurers have been buried by their Lehman exposure. But if there had been no credit derivatives and the banks and other intermediaries had been unable to hedge the risk, they would either refused to lend to Lehman at all or, more likely, they would now be adding these losses to the others they have already endured in this unusually difficult credit cycle.

Banks and investment banks function as both market makers, which requires them to carry inventories of risky securities for brief periods, and also as proprietary investors. They manage credit exposure in a number of ways, including hedging with credit default swaps. This transfers the risk to other investors, often outside the banking system (whose safety and soundness may benefit). A competitive market in credit default swaps contributes to the transparency of price-setting and thus to the efficiency of the whole process. This lowers the cost of financial risk management in general.

The vast majority of transactions in the credit default swap market are straightforward, insurance-type transactions. But losses on ordinary insurance contracts are sometimes much higher than expected, for example, when an unusually severe storm causes a lot more damage than was provided for when the homeowners insurance premiums were set. Such a storm may wipe out the insurer's reserves and even its capital, as appears to be AIG's unfortunate experience with its financial products insurance business. But that's the risk of providing insurance on events with low probability of occurring, but which result in large losses when they do.
A big problem in the over-the-counter credit derivatives market is the risk of counterparty default. The protection seller may be unable to fully cover the loss it is insuring against. To mitigate this risk, the protection seller may have to post collateral, but amounts and terms are negotiated between the counterparties and not standardized. When AIG's credit rating was cut from AAA to A in mid-September, it was suddenly obliged to post more than $14 billion in collateral against its CDS positions. This is what drove them over the edge. When Bear Stearns was teetering on the brink, the Fed examined the extent to which the firm was connected to other firms through their extensive web of OTC derivatives contracts and decided that it would be too disruptive for the market to let Bear fail.

These problems are significantly reduced for exchange-traded derivatives like futures and options. The exchange and its Clearing House establish high standards for the contracts, provide a centralized marketplace for them, establish and enforce rules on posting collateral and making payments and act as a guarantor that trades will be money-good and that users will not have to rely on individual counterparties to pay what they owe.

The over-the-counter credit default swap market needs such an exchange. Over-the-counter markets are too fragile, too loosely regulated and too opaque for such an important financial derivative as credit default swaps. What makes these swaps dangerous is misuse; an orderly exchange would help make them safer.
There have been informal efforts by the industry to organize such an exchange, which would have to operate globally in view of the size and breadth of the market, but so far, the effort has not been successful. It would benefit greatly by having the governments of the leading banking countries--which will soon be taking up a broader regulatory framework for banks after the current crisis--to require one to be established and regulated banks and broker dealers to participate in the credit default swap exchange.

Stephen Figlewski and Roy C. Smith are professors of finance at the Stern School of Business at New York University

No to Detroit?

Interesting article by Prof. Yermack on the auto industry and his perspective on the same. Academically sound and theoretically the right thing to do. Practically, impossible that Democrats will allow anyone to go down this road, especially after all the promises that have been made to this effect.

As usual, a question that I ask: Why did they not think when Lehman Brothers was going under. It could have saved them so much grief.

Produced below in verbatim from the Wall Street Journal.

NOVEMBER 15, 2008 Essay
Just Say No to Detroit
Given the abysmal performance by Detroit's Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack.

Before Michael Moore became famous for documentaries like "Fahrenheit 9/11" and "Sicko," his first big success came in 1989 with "Roger and Me." In that film, Mr. Moore followed General Motors chairman and chief executive Roger Smith with a camera crew, asking him why the company was closing plants and producing low-quality vehicles. Mr. Smith looked flustered and inartfully avoided Mr. Moore's camera crew while it lingered outside his country club or GM's executive offices.

Debating the Bailout "Roger and Me" was entertaining, but it missed the real story about Roger Smith, who turned out to be a forward-thinking genius. Mr. Smith made big investments in information technology and satellite communications, acquiring Electronic Data Systems in 1984 for $2.5 billion and Hughes Aircraft in 1985 for $5.2 billion. Mr. Smith's successors divested those businesses at huge profits -- EDS was taken public in 1996 for more than $27 billion, and Hughes, renamed DirecTV, went public in 2003 for more than $23 billion. (The man who sold EDS to Roger Smith at a bargain price was H. Ross Perot, who then convinced many people that the experience qualified him to be president.)

Mr. Smith understood all too well that GM shouldn't continue investing in its failing automobile business. That was 25 years ago. Today, our government is being asked to put tens of billions of dollars in GM, Ford and Chrysler, but we would be much better off if Washington allowed these companies to go bankrupt and disappear.

In 1993, the legendary economist Michael Jensen gave his presidential address to the American Finance Association. Mr. Jensen's presentation included a ranking of which U.S. companies had made the most money-losing investments during the decade of the 1980s. The top two companies on his list were General Motors and Ford, which between them had destroyed $110 billion in capital between 1980 and 1990, according to Mr. Jensen's calculations.

I was a student in Mr. Jensen's business-school class around that time, and one day he put those rankings on the board and shouted "J'accuse!" He wanted his students to understand that when a company makes money-losing investments, the cost falls upon all of society. Investment capital represents our limited stock of national savings, and when companies spend it badly, our future well-being is compromised. Mr. Jensen made his presentation more than 15 years ago, and even then it seemed obvious that the right strategy for GM would be to exit the car business, because many other companies made better vehicles at lower cost.

Roger Smith, who retired as chairman in 1990, seemed to understand that all too well, and so did Chrysler's management, which happily sold their company to Daimler Benz for $30.5 billion in 1998. That deal, one of the savviest corporate divestitures ever, ended very badly for Daimler, which essentially paid Cerberus a few billion dollars (by agreeing to retain pension liabilities) to take Chrysler off its hands in 2007.

Over the past decade, the capital destruction by GM has been breathtaking, on a greater scale than documented by Mr. Jensen for the 1980s. GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998.

As a society, we have very little to show for this $465 billion. At the end of 1998, GM's market capitalization was $46 billion and Ford's was $71 billion. Today both firms have negligible value, with share prices in the low single digits. Both are facing imminent bankruptcy and delisting from the major stock exchanges. Along with management, the companies' unions and even their regulators in Washington may have their own culpability, a topic that merits its own separate discussion. Yet one can only imagine how the $465 billion could have been used better -- for instance, GM and Ford could have closed their own facilities and acquired all of the shares of Honda, Toyota, Nissan and Volkswagen.

The implications of this story for Washington policy makers are obvious. Investing in the major auto companies today would be throwing good money after bad. Many are suggesting that $25 billion of public money be immediately injected into the auto business in order to buy time for an even larger bailout to be organized. We would do better to set this money on fire rather than using it to keep these dying firms on life support, setting them up for even more money-losing investments in the future.

Two main arguments are being raised to justify a government rescue of the auto industry. First, large numbers of jobs may be at stake, perhaps as many as three million if one counts all the other firms that supply the Big Three. This greatly overstates the situation. Americans are not going to stop driving cars, and if GM, Ford and Chrysler disappear, other companies will expand to soak up their market share, adding jobs in the process. Many suppliers will also stay in business to satisfy the residual demand for spare parts even if the Detroit manufacturers go under. If the government wants to spend $25 billion to protect auto workers, it would do better to transfer the money to them directly (perhaps by cutting each worker a check for $10,000) rather than by keeping their unproductive employer in business.

Second, it is suggested that the failures of the U.S. financial industry, which have cost us something like $700 billion, justify bailouts of other sectors of the economy. This makes no sense. If the government diverts our national savings into businesses that have long track records of destroying investment capital, eventually we'll end up with an economy like France's -- or Zimbabwe's.

Other arguments are on the table as well. Some see the troubles at GM and Ford as opportunities to retool the auto industry to produce environmentally friendly cars. Given their long track records of lobbying against fuel economy standards and producing oversized gas guzzlers, this suggestion seems ridiculous, sort of like asking cigarette companies to help with cancer research.

Not many of my students today remember "Roger and Me" (many confuse the film with another picture from the same era about the cartoon character Roger Rabbit). However, Roger Smith's example casts a long shadow over the auto industry today. It's time to cut our losses and let society's scarce investment capital flow to an industry with more long-term potential to create jobs and economic value.

David Yermack is a professor of finance at New York University's Stern School of Business.

Scrap the car

Interesting article by Ed Altman on what he thinks to be the future of General Motors and how it should be handled.

I had an interesting discussion with Prof. Roy Smith after my Global Banking class on what he thought to be the way forward for General Motors. I am happy to have access to professors such as him who have a thorough and indepth understanding of the matters at hand. I am sure that he will soon publish his views in the press and hence will not divulge the details of our conversation.

Financial Crisis explained

If you could read patiently and understand, it's a great knowledge!

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.

- There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.
- B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.
* The net asset of the country now = 3 dollars.

- Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.
* A has a loan to C of 1 dollar, so his net asset is 1 dollar.
* B sold his land and got 2 dollars, so his net asset is 2 dollars.
* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
* Thus, the net asset of the country = 4 dollars.

- A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.
* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.
* The net asset of the country = 5 dollars. A bubble is building up.

- B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.
* As a result, A has got his debt cleared and he got the 2 coins.. His net asset is 2 dollars.
* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
* C loaned 2 dollars to B, so his net asset is 2 dollars.
* The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.

- Everybody has made money and everybody felt happy and prosperous.

- One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."

- A also thought the same way.

- Nobody wanted to buy land anymore.
* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
* The net asset of the country = 3 dollars again.

- So, who has stolen the 3 dollars from the country ? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.

- B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.
* A owns the 2 coins, his net asset is 2 dollars.
* B is bankrupt, his net asset is 0 dollar.. (He lost everything)
* C got no choice but end up with a land worth only 1 dollar
* The net asset of the country = 3 dollars.

There is however a redistribution of wealth.
A is the winner, B is the loser, C is lucky that he is spared.

A few points worth noting
- When a bubble is building up, the debt of individuals to one another in a country is also building up.

- This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.

- An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.

- When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.

- If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land goes up and down like a see saw.

- When the bubble was in the growing phase, everybody made money.

- If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A ) and take part in the game. But you must know when you should change everything back to cash.

- As in the case of land, the above phenomenon applies to stocks as well.

- The actual worth of land or stocks depend largely on psychology

Source: Email forward

Using knowledge Effectively

Over the past one year, I have learnt a lot at business school. As a Finance and Accounting major, obviously those aspects of the business. Besides that, I have also learnt a lot about Business Strategy, Marketing and Operations. However, that knowledge is useless, unless you know how to use it effectively. Here is an account of the one chance that I got to use this information for personal gain.

I needed to transfer cash from my home country. I have an education loan that takes care of living expenses and I replenish it periodically depending on my own needs. Close to more than a month back, I saw that my funds were dipping low and I needed to get some more money. I also saw that the exchange rate to the dollar was much higher than it was in recent memory.

The US dollar has been appreciating since the FED rates have been dropping in this country [the US]. This has also been accentuated in a way by the increase in interest rates by the central bank in my own country as it attempts to fight the rising levels of inflation in the country. Inflation there is currently higher than it has been in recent memory, a classic case of the workings of supply and demand. The demand for food and foodgrains has increased, and has not been met with corresponding supply in recent times. A drop in supply, combined with astute [and illegal] black marketeering by business(wo)men have ensured that inflation is significantly high.

Then there is the effect of oil prices. Oil has ensured that the local inflation rate in my country has gone higher. This also indirectly affects other prices as it shoots up transportation costs at all levels of the marketplace. Oil prices has also ensured that the demand for the US dollar is higher and that has appreciated the dollar even further, making it more expensive to buy.

When I thought about asking for money, I astutely [in my belief] thought that this was a bubble waiting to burst. Oil prices were at unsustainable levels. With the winter arriving, there was no way that the US could afford to go into a oil-guzzling-heater weather at such expensive levels. There had to be a decrease. Also, with the price of gasoline at such high levels, demand had predictably dropped as people moved to restricting its usage. Ford and GM, promoters of the guzzlers in the US reported huge drops in demand for their SUVs and vans as the US general public moved to cleaner, greener cars.

The OPEC also noticed a sudden drop in the demand for oil. This was accompanied by loud rhetoric to explore and exploit alternative sources of energy which would reduce the dependence on oil, bring prices down and be more environmentally friendly. Suddenly you had Barack H. Obama, John McCain and even Paris Hilton commenting on their green policies. You saw legendary investor T. Boone Pickens coming out with the PickensPlan with a strong focus on wind energy as the source of the future.

Having followed companies in the alternative energy industry space myself, I saw the importance and relevance of solar, wind and other alternative energy companies. The OPEC saw it too. They saw this as a potential drop in the demand of their mainstay product. This warranted even Hugo Chavez, the Venezualian premier who has been trying hook, nail and sinker to ensure higher prices of oil, to comment that oil prices were not sustainable at these levels.

As you must have guessed, I predicted with fair certainty that oil prices were almost certainly going to drop. Levels were not real and then had to get to a sense of normalcy. Midway through the time that elapsed, economists at major investment banks and financial gurus began to chant this mantra as well. I followed USO, an ETF on the American Stock Exchange [AMEX:USO] very closely and found it to be behaving as previously predicted.

I was of the belief that if oil dropped as was predicted [and corroborated by the gurus], this would reduce the demand for the US Dollar. This would also drop the inflation rates in my country [to some extent, this could be lagging or stuck in govt. bureaucracy]. The net effect would be a depreciation of the US dollar to my own local currency and that would buy me more dollars for the same amount of money.

I held out, not telling my parents the real reason. I also thought that it was unlikely that the dollar would appreciate any more than it currently had. It was unlikely to go any stronger. In a way, I did take a bet; a bet in a situation that I should not have taken one [ as a debt ridden b-school student, you dont want to take one]. Yet, as I saw it, it was better to do this than to leave myself to chance. In a normal situation, I would have taken the prevelant rates and transferred the money without giving it a second thought. Atleast this way, I was better informed that there was a higher likelihood of the prices going lower than going higher.

The bet paid off. I waited until I could no longer hold out and needed the money. After that, I asked for the money to be transferred. A net gain of 400 basis points. Not a lot some would say, but then again, it was something. You really cannot expect to make that much of a bet on such non-volatile instruments in such a short period of time anyway.

I am just happy that the knowledge at business school is helping me think like a real business leader who makes his/her decisions based on the prevelant conditions in the market.

For all those undecided, take the plunge. B-school will be the single best investment that you can make in yourselves [ short of getting married rich :-D ]

Lessons in Management

Some interesting lessons in people management.

Retail Sector in India

Here is a short presentation on our take on the future of the retail sector in India!
This was for the final project in the Global Economy class that I took this semester.

Banking Jokes

Heard a lot of banking jokes! Saw this cartoon and thought I should share it.

Reproduced from Christian Baxter's website



I obviously don't subscribe to the view. But, its nice to laugh at oneself once in a while.

C'est la vie!

My fortune reads:
You are soon going to change your present line of work



I find that interesting given that I am going to interview tomorrow for a function that I am not particularly keen on doing. Yet, it is something that I have gotten myself into.

I didnt apply. They called me and asked me if I would be interested. I told them where my interests lay. They were persuasive. They said they didnt mind being my second option. I said... 'What the hell!'

I have been running around to ask people to consider me. And here I was in a situation where people were calling me and asking me if I could come along. That even after I told them what was on my mind.

I didn't apply and yet they invited me for an interview. I was surprised. So were a lot of other people. I didn't have much of an interest and that was obvious given my lack of interest in the whole profile and the firm. A firm that is a great firm in its field of expertise. A field that a lot of people are dying to get into. Good for them. That is what they want. That is not what I want. It is not a bad field. It is infact a great career to have. It is just that it is not a career that I wish for myself.

I have long believed in doing what my heart tells me. I go by what my instincts say. And my instincts tell me that I should pursue what I am currently pursuing. The road looks tough and there are a lot of obstacles in the path. But that is okay. It is what interests me and it is what I want to do. It is what I want to see myself doing. Why do you ask? Interesting question. A fair one too.

I have never worked in the field before. As much as I have tried to understand and learn about the field, the fact remains that I have not worked in it. Hence, it is not likely that I truly and fully know what it is all about. Yet, it is in a field that is an area of interest. It involves a challenge that is hard to pass. It is a challenge that few other profiles can offer. I dont know any other profile that comes nearly as close. It will give me great exposure and access. Tangile results that make the news... for the right reasons.

But first and foremost, it offers a challenge. A challenge to work in an environment where you start with knowing nothing and learning everything there is to know. And I am not talking about a lifetime. I am talking about one task. It is the challenge of learning, understanding and performing in such an environment. The power and ability to make a difference in such a manner that few people can imagine, being twenty something guys.

The money is there too. It is obvious and I won't deny it. But, I will add that I don't do things that are necessarily for the money. Ofcourse, nobody works for charity and I am not nobody. But, I also do not work for the money. It is a criterion, but it is not the criterion for me. Satisfaction is more important for me. At the end of the day, I need to know and understand that what I am doing is something that is important, critical and I am making one hell of a difference to what I am doing.

And yet, destiny chooses to play hide-n-seek. It offers things that I don't want and denies things that I don't have and want badly. C'est la vie!

I just hope that the fortune that I mentioned does not come true. I hope that I get where I want to be... I dont mind the pitfalls and the hardships (before or after).

A whole circle

Life has come a whole circle around. My last post was about an interview. This one is about one too. The previous one was a good one.

Somewhere in between
 I was admitted to NYU Stern!
 I quit my job!
 I flew to the US!
 I stood around in circles!
 I went through the recruiting!
 I did not slept!
 I drank a lot!
 I connected well with people!
 I got my a** kicked at a few banks!
 I prayed to make it to yet another event!
 I heaved a sigh of relief when i was invited!
 I screamed with joy when I got my first invite!
 I was content with the invites that I had!
 I spent sleepless nights for the exams!
 I partied 14 hours on the trot after the exams!
 I took a couple of days off!
 I started studying for interviews!
 I did my first MBA1 mock!

That is briefly what I did... will try and fill you up with a background as I try to start getting this blog alive again!

Today was the first MBA1 mock that I did. I may be later than a few. I am earlier than most. It was a guy in my group. Wanting to set the tone for the interview, I acted as the interviewer.

- Tell me your story!
- Questions on the story and grilling on possible loopholes!
- Grilling on why MBA and Stern!
- Grilling on why not the other school in the city!
- Why not asset management?
- Why not consulting?
- Do you have an experience working in global environments?
- Do you think you will fit in within ACME Inc.?
- What are you strenghts?
- What are you weaknesses?
- Why should I hire someone like you, when I could hire a 20 guys who are just as good if not better?
- Why ACME Inc.?
- Where else are you recruiting with?
- What if another firm offers you more money?
- Rapid fire round of 6 questions (Yes/No) on ethics, integrity etc

I had decided to act as an a**-hole. The intent was that if I did so, I would be preparing him and myself for interviews such as these. There is a misconception that Investment Bankers are a*-*holes. If you have met all the people that I have, you would think otherwise too. A dear friend often tells me that I am too good a person to be a banker. I tell her that she is sadly mistaken!

It was good to see that he took it really well. He answered decently, but faultered a lot as well. Initial blues.

He liked the approach. He found it interesting as it was exactly like an actual interview. So smiles and no brownies. I asked he do the same for me.

We started off well. The story went off as usual. He asked questions on the same lines. He didnt seem to like a few of the things that I said. Need to work on them. He also said that I was too long winded and need to be succinct. He cut me short at many questions to unsettle me. I did well at that.

It was nice to do the mock. Shows us where we stand and shows us where we need to work. Also, I may have a few things in my head. But to word them correctly and succinctly is the key.

I take this as the reference for all interviews.

On the right track...
Yet way to go Jack!