Dimon And Rubin To Skip Bonus Season (Reuters)
Rubin's opted out of even requesting a bonus, but (and this may come as a shocker) Pandit hasn't. If public outrage over compensation structure is at a two right now, we can fully expect to see that bitch lit up if Pandit elects into a bonus structure on the heels of $306B.
Dimon opted out, which really makes me lift brows. J.P. Morgan is one of the few banks that has made it through the past 6/12 months in decent financial shape, yet the head bows out of something he rightfully deserves for keeping things solid. So here's the question: is Dimon bowing out of his bonus because of public sentiment and the need to do right, or is he bowing out because in days of future passed the bank is going to face some hard times? Could J.P. Morgan be sitting on some assets that, when they go bad, people will question why in the hell Dimon took his bonus if he knew this was coming?
Deutsche Bank Faces Strike Over Refusal To Pay Bond (FT)
DB (the other DB) has recently come forward to say that they are not going to pay $1.42B bond that's due in January, which has people shocked and pissed. Strikes are looming.
Possible Survival Loans For Auto Industry (Bloomberg)
So, we're talking what? About $16B (realistically)? Here's an objection to that: even if you can stay above water for the next 14 weeks, you're fucked after that. Chrysler is paying its workers while its shut down is extended, because the UAW contracts stipulate that it does so - which is such a ridiculous inefficiency I think it caused one of my ears to start bleeding.
White House Doesn't Rule Out Bankruptcy (NYT)
We've done this before, you know where I stand. Tear it down, build it back up: pensions, UAW, and management all go.
To the point in the article that a bankruptcy would kill sales: it would. That's why this should be sold as a restructuring, with the full faith and credit (what's left) of the US government behind it. It's important to note though, that can only happen after the UAW is out - if the UAW knows that the government can and will support the car companies ad infinitum, then there's no hope of a net positive balance sheet.
GE's Outlook Lowered By S&P (Reuters)
S&P should have its dead corpse dragged behind an automobile. I'll leave it at that.
You Bastards: The Man Was Just Trying To Help (CNBC)
What's the world coming to when a guy can't tell his wife who tells another guy (or 20) about something coming down the pipe? People have yachts to buy here people. This is just dumb.
Japan Cuts Key Rate (FT)
Not to be outdone, Japan lowered its overnight rate to .1%. Other moves by the JFED:
"The BoJ also moved to increase its outright buying of Japanese government bonds to Y1,400bn ($15.7bn) a month from Y1,200bn. The central bank will also add floating-rate, inflation-linked and 30-year bonds to its buying operations, and will also temporarily buy commercial paper outright."
Italian Bovine Czar Sentenced To Prison (NYT)
Parmalat's founder and CEO was sentenced to prison overnight for his involvement in "market rigging and other charges" (one can only wonder).
I know you don't give a shit about cows, here's the good part: "Seven other people, including three former Bank of America employees, were acquitted."
After a little research, we come to an article at the BBC where we see that this little conspiracy to take down the mega moo that is Parmalat doesn't stop with BofA:
"Other financial institutions facing legal action from Parmalat include UBS, Deutsche Bank and Credit Suisse First Boston."
My God: what in the hell is happening in the Italian Dairy market that we don't know about?
--William Richards
Posted by guest , Dec 19, 2008 8:42AM
Don't be stupid. JPM is solid because they got two huge gifts this year: BSC and Wamu. There were tons of embedded value in those two - way more than the liabilities they actually took on.
Dimon is being smart, keeping his reputation burnished. He knows he's the golden boy right now and he'll cash out writ huge later.
We should be far more worried about Citi if Pandit is so desperate for cash this year (after all he collected last year including that $900mm they spent on Old Lame?!) that he's willing to make an ass of himself by asking for a bonus.
Will Pandit be around next year? Will Citi?
Posted by VOL IS KING , Dec 19, 2008 8:44AM
I told you GE was a bank. GE Market Cap must be <= Cummins ($5bn) + Citi ($40bn) + CBS ($5bn)
$167bn - $50bn = $117bn of cluster fuck left to "short".
Fuck, I accidentally did some analysis.
Posted by guest , Dec 19, 2008 8:48AM
So the Trobled Asset Recsue Plan has morphed into the Terrible Liability Acquisition Program. Brilliant.
Posted by guest , Dec 19, 2008 8:50AM
Um...oh, yeah, agree with your sentiments about S&P, but they did not lower the ratings on GE.
The lowered their *outlook* on GE, which means maybe one day they'll lower their ratings on GE. Or maybe not.
What's clear is that S&P and their brethren are a bunch of no-talent ass clowns.
Posted by guest , Dec 19, 2008 8:52AM
that bond is not "due"
Posted by guest , Dec 19, 2008 9:04AM
@ 5, correct.
@ Billy Dick, the parmalat comment, joking or in the dark?
Posted by VOL IS KING , Dec 19, 2008 9:06AM
@5:
Exactly, Deutsche Bank chose not to call the bond as is their OPTION. Who the fuck writes an option and then gets pissed when the other party exercises it (or doesn't). If you wanted to be paid in full in Jan 2009 you should demanded a shorter maturity.
I'm seriously beginning to think everyone in Europe is retarded too, those accents had me fooled.
Posted by William Richards , Dec 19, 2008 9:11AM
@5/@6 article intimates that the money was due in January - I didn't look up the issue for details.
@6 It was a joke.
Posted by guest , Dec 19, 2008 9:13AM
Toyota is paying its idled workers in the USA.
Honda shut down its UK plants for 2 months and kept workers at full salary.
Posted by guest , Dec 19, 2008 9:15AM
@9 So is your argument that because other people are doing it it's not inefficient?
Posted by Anal_yst , Dec 19, 2008 9:17AM
How the flunk is, as 9 alludes to, the global automotive industry such a back-asswards clusterf*ck in terms of labor relations?
If they have non-union employees (presumably) why the hell are they still paying them? Its not like they can up and go work for another firm and never come back. WTF?!?
Posted by VOL IS KING , Dec 19, 2008 9:21AM
@ William Richards.
WRONG. The article intimates the fund managers expected Deutsche Bank to call the debt, which the Bank had no obligation to do. And now the fund managers have their panties in a punch.
Bond holders don't go on "strike" when they have legal recourse, they go to court. Whiny olde english bitches, go on "strike" when they have no recourse against a superior German pincer formation.
no body expects THE GERMAN INQUISITION.
Posted by guest , Dec 19, 2008 9:25AM
Re: Dimon. Maybe he just figures he doesn't deserve a bonus when shareholders are down 30% in spite of his adroit dealmaking.... Nahhh, that's crazy talk.
Posted by guest , Dec 19, 2008 9:28AM
@VOL
"on Wednesday when it became the first big bank to say it would not repay the €1bn ($1.42bn) bond as expected in January"
How does that not intimate that the money was due, and that it wasn't paid?
Richards doesn't say shit about who the money was owed to, or how they could expect to recieve compensation. You're an idiot.
Posted by VOL IS KING , Dec 19, 2008 9:39AM
@14:
because it says "as expected in January" instead of "when its due in January"
You can also tell because there're no headlines about DB going bankrupt and the financial system imploding. One default would cross trigger all the other debts and we'd all be living in tents by now.
William's, Bill? Will? His mistake is reasonable. But clearly it cannot possibly be the case.
Posted by guest , Dec 19, 2008 9:45AM
I think VOL is right, but I didn't take a look at the issue itself. Looks like bond-holders were expecting DB to call the bond at that point in time, in which they pay par + a call premium. These bond holders would still receive their coupon payments, as they are contractually obligated to pay as a solvent company. Ridiculous assumption by the fund managers that a bank or any financial institution strapped for cash would take the option of calling a bond with favorable terms to DB just because it's the status quo. These aren't normal times, and it sounds like someone didn't read the fine print.
Posted by guest , Dec 19, 2008 9:46AM
Jamie Dimon is cute.
Posted by guest , Dec 19, 2008 10:29AM
The DB is basically a corporate version of an ARS. Sure, the IBs who who were the agents on those deals "told" investors that they would always backstop the auctions, but legally they had no requirement. Thus when the auctions started failing, and the IBs didn't step up, idiots who thought they owned weekly or monthly paper realized, sacre bleu, they owned a 30 year bond tied to student loans or Walla Walla Waste Facilty #4. These morons bought a medium duration bond that they "expected" would be called 5 years before due, despite DB having no obligation to do so.
As VOL said, if these dopes wanted a short term piece of paper, buy a f*cking short term piece of paper. But what they really wanted was yields of long term paper, with duration of short term paper. Sorry guys, you got got.
Posted by guest , Dec 19, 2008 12:13PM
I agree 110% "to something he rightfully deserves for keeping things solid" He should get a bonus.
But the comment on whether something will unfold in the future... so he opted out. My only conclusion is, if things are or should get really bad in the near future I doubt the board would consider giving bonuses to the other 'rightfylly deserved' mgmet at J.P. Morgan. Just a thought.
The board should give Dimon a bonus for a job well done!
Posted by guest , Dec 19, 2008 12:47PM
DB - classic. That's the DB I know.
S&P - f*cktards.
Pandit - this guy's a genius at making money for himself and no one else...