That project is closer to a thesaurus in the sense that it returns synonyms for a word (or short phrase) query, but it also returns many broadly related words that aren't included in thesauri. I made this tool after working on Related Words which is a very similar tool, except it uses a bunch of algorithms and multiple databases to find similar words to a search query. So in a sense, this tool is a 'search engine for words', or a sentence to word converter. It acts a lot like a thesaurus except that it allows you to search with a definition, rather than a single word. The engine has indexed several million definitions so far, and at this stage it's starting to give consistently good results (though it may return weird results sometimes). For example, if you type something like 'longing for a time in the past', then the engine will return 'nostalgia'. It simply looks through tonnes of dictionary definitions and grabs the ones that most closely match your search query. And because the scheme is so vague, the bill could run into hundreds of billions.The way Reverse Dictionary works is pretty simple. There’s a danger that the Treasury’s scheme - just like AIG - could be rather a costly capital sump.'Ī costly capital sump or a blank cheque? In practice, taxpayers will find there's very little difference.īy insuring the banks' toxic assets, Mr Brown is forcing taxpayers to make a further huge gift to bank shareholders. The most qualified names in finance have had their fingers burned touching CDOs. The Treasury intends to assess submissions on “a case-by-case basis”, which is plainly mad.

The problem is that modelling the value of most structured credit products is extremely difficult. The difference in risk weightings implied are huge.Īs with AIG’s business, in principle, the scheme could be very lucrative. a bank could thus own a security rated BBB but using sufficient hedging - with, in this case, HMT, (but previously, someone like AIG) - treat the security as if it was rated AAA.

But risk-weightings can be offset by credit risk mitigants: insurance. The amount of capital which must be set aside against each asset varies according to those assets’ “risk weightings”: which are calculated according to a host of different models prescribed by the Basel accord. Under Basel, banks hold regulatory capital as a cushion against potential losses from their assets. That is, provide regulatory capital relief. 'The new scheme will effectively do what AIG - and other insurers, like the monolines - did for the banks back in the heady days. The fee, “first loss” amount to be borne by the institution and residual exposure will be set accordingly.' - Translation: we have no idea how much we'll charge, what the 'excess' levels will be, or how risk sharing will workĪs Alphaville points out, taxpayers are now entering the very business that made mega US insurer AIG go bust: 'In setting the terms under which protection will be offered, the Treasury and its advisers will take into account their estimation of the performance of the assets of the institution to be included in the Scheme.subject to appropriate investigation by the Treasury and its advisers in order to assess the probability of future loss' - bearing in mind that this will be tens of thousands of loans/investments, many of which are so complex nobody has been able to fathom them, and nobody has a clue what future losses may be For each asset, HMT will somehow make 'an assessment.

There is no stated upper limit on how much we'll be insuring.Pretty well any asset may be eligible for insurance, including assets denominated in foreign currency - which as we've blogged previously, loads a huge additional layer of risk onto us because our government does not have a foreign currency printing press.So we turned to the excellent FT Alphaville, which reproduces what HMT has put out to the people it considers important. We've been trying to access HMT's detailed release on how it's actually going to work, but as per, nothing has yet been made available to mere taxpayers, apart from this sketchy press notice. But he couldn't, because the charge is spot on.įor taxpayers, the most worrying bit of of a worrying package is the insurance we'll be providing on the banks' existing holdings of toxic debt (eg see this blog). If it isn't true, surely Brown could have simply swatted Bradby away with some chapter and verse. He growled menacingly at ITN's Tom Bradby that he should be 'very cautious' about suggesting such things. Watching the Brown/Darling news conference on their latest massive bank bailout, it was interesting to see how Brown reacted to the Blank Cheque charge. Of course we'll insure your toxic onions -why not?

Blankety blank chequebook