Archive for August 2007

Write-Offs: 08.31.07

$$$ Banks set to cut 10-15% of staff as markets take toll on revenues [FT]
$$$ Dow Jones Up: Mission Accomplished! [Jeff Matthews]
$$$ WeatherDesk: Happy Ending [The Beach]
$$$ The only man in America who will give you a loan [WallStrip]

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Barclays announced today that it “rescued” a $1.6 billion debt fund run by Cairn Capital after it was unable to raise money in the credit markets, a situation that Barclays would undoubtedly take credit for, if only creating a discredited market were something to brag about (which, in some circles, it is, just not those in which the Barclettes move). Separately, the bank, blaming the proverbial “technical breakdown,” borrowed a sizeable amount of money (£1.6bn ) from the Bank of England yesterday, for the second time in two weeks.
Barclays claims that “[the bank] itself is flush with liquidity.” But does its appeal that everyone “quit your bitching and leave us alone or someone’s going to get hurt” (actual statement: “In these challenging times the dramatisation of such situations is of no help to markets, their members or their customers”) seem a bit defensive for an organization that doesn’t have a care in the world? Some think the lady doth protest too much and are demanding answers. James Harding would care to know:

Why was it just Barclays that found itself scrambling for funds? Why could Barclays not find lenders in the commercial market? And why was it that, if the Crest settlement system was to blame, other banks did not also go running to the Bank of England?

It’s getting kind of late in the day and we’re about to close up shop for the weekend, otherwise we’d obviously provide groundbreaking answers (and more) to all those questions. For now, we leave you with one of our own, that might actually put this thing to bed– substance abuse? (Don’t act like it’s not the logical conclusion.)
Barclays Rescues $1.6 Billion Cairn Capital Debt Fund [Bloomberg]
Barclays admits borrowing hundreds of millions at Bank’s emergency rate [The Guardian]
Barclays and the interbank market [Financial Times]
Transparent lack of transparency [Times Online]

  • 31 Aug 2007 at 11:06 AM
  • Fed

Bernanke and Bush: Bailout?

The entire week has been a prelude to this morning’s speech by Fed chairman Ben Bernanke. But late last night we learned that President George Bush would upstage Bernanke by announcing a new policy just an hour after the release of Bernanke’s speech.
Rather than pretend we know what this all means, we’re just going to open this thread up to comments from our readers. You’re smarter than us anyway.

Britain’s largest bank announced today that it will not be implementing a plan to make money by charging interest on graduate overdrafts, because Facebook.com asked it not to. HSBC caved after catching wind of a group on the social networking site called “Stop the Great HSBC Graduate Rip-off,” whose 5,756 members requested that the financial institution *not* charge them interest, referred to the bank as a “spin machine,” and encouraged friends and family to go elsewhere out of spite. (One member, Martin Deakins, posted on the group’s wall: “YEAH see HSBC you cant just f**k us over as and when you feel like it.” Another, Michael Dean Anderson, perhaps a mole sent by the banking giant, wrote: “You all really need to get over yourselves and just pay it back. Fucking freeloaders: hate ‘em. Much love.”)
The reversal marks a victory for grads who would sooner opt to have money versus not have money, and a new low for the bank (next, Goldman Sachs’s GEO will slash fees from 2/20 to 0/10 to 0/0, under pressure from a group formed by a bunch of Stern kids pushing their luck). Some might also regard it as accomplishment for the Facebook family, though it disappoints us greatly to see something that was created soley for the purposes of stalking classmates and/or getting laid to be used for such constructive means. Stuff like this was never in Adidas flip-flop boy’s business plan.
HSBC submits to online student protest [Times Online]
Can HSBC Really Be Just That Dumb? [myvestauk]

  • 31 Aug 2007 at 9:46 AM
  • FOREX

Russia Strengthens Its Arsenal

arsenal.jpg Who needs the best striker in the world (Thierry Henry) when the real power in English Premiership football is in getting backed by a Russian oligarch? From DealBook:

Russian mining magnate Alisher Usmanov has acquired a stake in Arsenal from David Dein, the club’s former vice-chairman and a close ally of manager Arsene Wenger. The sale of the 14.6 percent stake for 75 million pounds ($152 million) may fuel speculation that Mr Usmanov, who has made much of his fortune in the steel industry, may eventually mount a takover bid for the north London club.

English football is becoming like Battle-Bots (or one giant pissing contest) for Russian magnates, as Chelsea has been annoyingly good since Roman Abramovich bought the team in 2003.
(Pictured – The Arsenal SLR-105, a Bulgarian AK variant)
Russian Steel Magnate Buys Arsenal Stake [DealBook]

  • 31 Aug 2007 at 9:27 AM
  • women

Women Are Powerful

power women.JPG
Do you agree with Forbes’ list of the 100 most powerful women? Merkel is #1, fine, but Oprah below the CEO of Rite Aid (the logic here is that America’s housewives need their prescription refills to tolerate the massive emotional swings required of an Oprah viewing without lighting themselves on fire)? Ruth Bader Ginsburg below the CEO of Sara Lee (deliciousness is never un-constitutional). Hillary Clinton below ‘I am important in my own special and deserved way’ Melinda Gates? Queen Elizabeth II at #23 (ok, we don’t know if we’d put her higher or lower, but we love the fact that her occupation is “Queen”). The ghost of Nina Wang conspicuously absent from the list? No Melanie Griffith’s character from “Working Girl”? No Rosie the Riveter?
Forbes’ List of Most Powerful Penis-Lackers Contains Some Unexpected Surprises [Defamer]
The World’s 100 Most Powerful Women [Forbes]

Baidu and Yahoo China, two of the most popular search engines in China, facilitate the country’s near 100% rate of downloaded music that is stolen. That’s right, almost all music downloaded in China is stolen (more proof that the Chinese are smarter than us). Other search engines in China, like Google China, don’t have a built-in mp3 download tab, and are pissed that they can’t gain search engine market share.
The International Federation of the Phonographic Industry (and the world of tomorrow), a consortium that includes reps from Sony BMG, Universal and Warner, is on the case, suing nearly everyone in China. The organization reportedly wins 90% of its lawsuits, but loses suits against the big boys like Baidu, which entrenches the current search engine pecking order by crippling the little guy… with slaps on the wrist. Since the averages damages awarded per lawsuit amount to $130 (yes, dollars), getting sued isn’t that big of a deal to a budding search provider. The IFPI spends about $13k per case, which is a bold profit shucking initiative that only the record companies could dream up.
In other search engine news, Google and Yahoo have teamed up with Mercedes to allow each search enginge’s map services to be sent to your car, if your car is a Mercedes. You know the state of auto-navigation is in trouble when car GPS systems are Google mapping a destination. The service will be available on the S-class, CL-class and entire 2008 C-class lineup.
Deaf to Music Piracy [BusinessWeek via Valleywag]
Google, Yahoo to direct your Mercedes [News.com via Valleywag]

Opening Bell: 8.31.07


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bushbernanke.jpgBush to Expand Government Role to Deal With Subprime (Bloomberg)
Well, so much for that whole ‘Bush is an Austrian let the chips fall where they may’ thing. The prez has established a new plan whereby the federal government will insure mortgages for delinquent, subprime borrowers, allowing them to refinance at better rates. And while they’re at it, maybe they can extend the life of their mortgage to 70 years, just to get the monthly payment down to something manageable. It’s almost tiresome to cry ‘moral hazard’ at this point, but what the heck “Moral Hazard”! Anyway, we wanted a compassionate conservative, so this is what we got.
McGraw-Hill replaces president of Standard & Poor’s (Reuters)
Despite the fact that S&P has performed absolutely flawlessly during this whole credit debacle, with all blame resting on some faulty models (bad models, bad!), McGraw-Hill has decided to replace the unit’s President. You might, however, be tempted to call the move window dressing, since the new president is another top S&P executive. This is not quite what’s meant when they say ‘change starts from within’.
Dell reports 2Q earnings jump (Thomson Financial)
Thank god for the laws of physics. Eventually things fall so hard, with so much crap hitting so many fans, that things will reverse themselves, at least a little. Over the past couple years, Dell has been hit by accounting scandals, desisting threats, terrible customer satisfaction, exploding batteries, product lameness, questions about stock buybacks, et. al. ad nauseum. So, eventually the company had to come through with a decent quarter. That they did, beating analyst estimates on the back of respectable (but by no means amazing) sales growth. Hats off.
Mexico Prepares to Allow U.S. Trucks to Cross Border (Bloomberg)
We must’ve been on a different planet for the past 12 years, because we were under the impression that this is what NAFTA was all about. Apparently that part was blocked. Anyway, good news for free traders and truck lovers. Now, about that privately-owned highway connecting Mexico to Canada…

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