Swiss Miss(step)

European’s have been making a mess of things in the America’s since the 16th Century. Cortez, Coronado, De Soto, Wuffli.

Wuffli?

OK, equating a botched experiment by a Swiss banker with the ruthless atrocities practiced by Spanish explorer’s might be politicaaly incorrect.  But try consoling the scores of traders and analysts fired by UBS over the last few weeks. After years of producing more than $1 billion in profits annually for the bank, and making money every quarter for eight years, the team was unceremoniously booted from the firm after one bad month. Seems rather harsh to me. But that is life in the jungle.

And if you have been looking for casualties of the sub-prime debacle, your quest stops here:

The final straw came later in March, when Dillon Read joined the list of investors burned by bets on the U.S. mortgage market. The UBS account hemorrhaged as defaults surged on so- called subprime home loans to people with poor credit histories or high debt burdens, forcing Dillon Read to mark down the value of its mortgage bonds. The losses more than obliterated the account’s trading profits for January and February.

Costas said he immediately phoned John Fraser, chairman and CEO of UBS Global Asset Management, to report what happened, hopeful that UBS would tolerate a single month of losses after so many years of successful trading. Instead, Costas said UBS gave him two options: return the bank’s capital and stay in business managing the fund for outside investors; or let UBS take over its account at Dillon Read and cash out clients with their gains intact. He chose the latter.

``If this other plan doesn’t work I have to liquidate that portfolio,’’ Costas said. ``Funds don’t take well to liquidation.’’

Hedge Fund Loss Ensnares Wuffli With Debacle Reprising LTCM
Bloomberg

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