The Markets

Many years ago, while all our peers were reading comics
 We were busy studying at Higher Economics
 We grasped the fundamentals very fast
 We always understood the way the markets operated
 While other people find its workings hugely complicated
 And the terminology leaves them aghast
 Warren Buffet says our fiscal lectures are the tops
 He likes the way we analyse the niceties of swaps
 So if you're sitting comfortably we hope you will forgive it if
 We start at the beginning with what's known as the derivative
 We hope you will forgive it if
 We start with the derivative
 We hope you will forgive it if
 We start with the derivative
 We hope you will forgive it if
 We start with the derivative-ative
 Hmm, sounds vaguely familiar...
 Derivatives are monetary instruments, that puts it very neatly
 But unlike stocks and shares the actual
 value comes from something else completely
 The value of derivatives derives, you see, from value underlying
 And are often used to lessen risk
 Now value can be notional, a market and its values never meet
 In addition only market value gets recorded on the balance sheet
 Oh, and a sell is not a sell it's
 called a put, just as a buy is called a call
 And thus anything you call you'd
 better put before the prices start to fall!
 Oh the markets, the markets, the dollars and the dimes
 How lucky we all are to live in interesting times
 The markets, the markets, it takes a lot of skill
 To make your lifetime's savings worth absolutely nil!
 And there you have it,
 clear as crystal. Any questions? No, right, moving on.
 To another complex concept that has been much in the news lately,
 and Adele has made a lifetime's study of this particular subject,
 so Adele, would you give us,
 in 8 rhymed lines without hesitation,
 deviation, or repetition: short selling.
 Short selling is another term which many people find a bit confusing
 You could say it's a way of losing money without actually losing
 Say I, let's call me A,
 acquire some futures at a price that's rather high
 Then you, we'll call you B,
 will ask to borrow them without explaining why
 Thus, B aquires A's futures which he
 doesn't own and sells them at a loss
 The markets panic, prices plunge,
 but B is a calm and doesn't give a toss
 Since B will now repurchase them at
 half the price when A will get them back
 And B then trousers all the profit
 from the loss and ends up in the black!
 Oh, the markets, the markets, are not for the faint-hearted
 A fool and his investments are very quickly parted
 The markets, the markets, you've really got to hand it
 To the traders who designed it so that you won't understand it
 Very impressive, Adele.
 Thank you.
 Now, shall we have a quick Q&A?
 No cheating. Was Adele A, or was she B?
 A!
 Oh, yes, well we're all very smart now,
 aren't we. And did she make a profit, or a loss?
 Oh, er, she didn't make a profit or a loss,
 she simply got back her original investment.
 The profit was made by B - yes, that's you. Do try to keep up!
 Yes, well, as I say it would help if you made some notes. Oh,
 look at all their little frightened faces! Oh people, people, come on,
 we're getting to the easy part now!
 Liza is going to guide you through hedge funds,
 futures, and that old chestnut: arbitrage. Liza?
 Thank you.
 A hedge fund, as its name suggests,
 will spread the risk to better hedge its bets
 They will buy distressed securities
 from companies who struggle with their debts
 In fundamental growth or sector funds they will opt for long positions
 And through many types of arbitrage
 they'll build up an array of aquisitions
 Now arbitrage itself as an effective fiscal tool has much attraction
 As in when a hedge fund makes a
 killing in a clever synchronous transaction
 Say they see the price of carrot
 futures lower on the FTSE than the Bourse
 They buy in London, sell in Paris,
 make a pile and Froggie comes off worse!
 Oh the markets, the markets, they lead us to despair
 What with bankers talking bull, and the cupboard's nearly bare
 The markets, the markets, each trader's a magician
 If his dealings lead to losses he still gets his commission
 In summation...
 So what, I hear you ask,
 exactly is the reason for the credit crunch? Adele?
 The fault lies with the banks,
 whose senior personnel are frankly out to lunch. Liza?
 They'd invent new ways to borrow,
 so that we could borrow more to keep on spending. Dillie?
 Then they'd borrow from each other to
 facilitate their unsupported lending.
 So now the government will bail them
 out with money that it simply doesn't have
 It's just the same as if they took our
 bloody taxes and then flushed them down the lav
 With the result that we in future
 generations will be forced to work like hoolies
 So if you ever meet a banker it's
 your duty to divest him of his goolies.
 Oh the markets, the markets, diseased with debts like cankers
 Which leads us to conclude that the bankers are all wankers,
 The markets, the markets, they're complex and obscure
 Because no-one is accountable we're all in the manure
 The markets, the markets where the likes of Bernie Madoff
 Have created lots of paupers and caused thousands to be laid off
 The markets, the markets, where did it all go wrong?
 It began with sub-prime mortgages
 But that's another song!