We’re pretty sure we don’t know anyone who actually thought the Pound was going away (well, aside from a few newly minted INSEAD students we met at an Irish pub somewhere or another) but it was always good for a speculative laugh, or to tease the Germans about. Still, we thought we’d report the news anyhow: Clever investigative reporting reveals that Britain isn’t adopting the Euro.
All rejoice!
Britain’s respected Institute of Fiscal Studies, giving its traditional post-budget summing up of U.K. fiscal policy, said on Thursday that Britain faces “two parliaments of pain” living with the bitter taste of excess borrowing. It will take 20 years, the institute says, before national debt falls back to the 40% of GDP that the Labour government previously said was the maximum acceptable.
Even as a non-member of the single currency system that started in 1999, the U.K. plays a key role in European Union psychology — as a sometimes positive, but also a negative example for other countries.
The survival of the system requires countries’ continued willingness to submit to economic discipline. This applies both to current members and to candidates wishing to join from central and eastern Europe, such as Poland, Hungary and the Baltic states.
Alone because of this reason, the European Union could in no way afford to let in countries such as Britain now sitting in a dramatically exposed way in the fiscal sin bin.
Sort of scary when your country is mentioned in the same paragraph as the words “fiscal” and “Baltic states,” no?
Britain sticking with the pound [Marketwatch]
To: Colleagues in NYC
From: Citi Security & Investigative Services
Sent: Monday, April 27, 2009 11:20 AM
Subjec: U.S. Air Force Authorized Flyover in NYC
The US Air Force is conducting an authorized photo-shoot in the air space above lower Manhattan. During the shoot, a large airliner escorted by several fighter jets is flying at a low altitude over NYC, including in the vicinity of several of our downtown locations. There is no reason for concern, and the photo-shoot will conclude later this morning.
Earlier: Do Not Be Alarmed: Low Flying Jet Just A Military Drill/Vanity Project
“Listen people, we’ve got to turn up the heat. I want enough cash to pay back the TARP, get our warrants back, retire the FDIC insured debt, fill the bonus pool, buy Bank of America and dismantle it, acquire Gulfstream from General Dynamics to vertically integrate our corporate aviation needs, and elect Hank Paulson President in the next cycle. Get to work people. Especially you folks at the trading desks.”
Goldman Sachs’s so-called value-at-risk, the amount the New York-based bank estimates it could lose from trading in a day, jumped 22 percent to $240 million in the first quarter, twice what Morgan Stanley stands to lose, company reports show. VaR climbed 2.8 percent in the same period at JPMorgan Chase & Co. and dropped 14 percent at Credit Suisse Group AG.
Goldman Sachs Boosts Risk-Taking at Fastest Pace on Wall Street [Bloomberg]
A bunch of people have emailed about employees being evacuated from Merrill Lynch and Goldman Sachs, and the WSJ was previously all “run for your lives!” but apparently, according to an update, that “commercial-size jet seen flying low over Hudson River was part of scheduled test.”
Federal Aviation Administration spokesman Jim Peters said the Defense Department is conducting a photo op that involves deploying two F-16s and escorting a Boeing 747 in the vicinity of Lower Manhattan and the Statue of Liberty. Mr. Peters says the maneuver was not an emergency and was coordinated in advance with the FAA and state and local officials. “They’ll do two or three spins … and be done by 10:30,” Mr. Peters said.
According to Fortune, it’s about a “50-50″ chance that the former Bear CEO will be anointed a Master of the Universe just in time for the summer season at Ulysses. Supposedly Alan “Bear is awash with liquidity” Schwartz will enter the firm as a partner managing director, where his responsibilities will include “cooking up deals in the media, telecom and healthcare sectors and being an all-around senior banker and executive,” as well as filling a void left by Buffett banker Byron Trott and former co-president Jon Winkelreid. No word on this being a two-for-one deal, but we do have it on good authority Jimmy Cayne has been rallying hard for Schwartz to “score me a little something something” or at the very least put in a good word for him.
From the “lost in the weekend noise” file:
The President has 100% confidence in Secretary Geithner Mr. Rattner Chairman Bernanke.
Emanuel Says Obama Has ’100% Confidence’ in Fed Chief Bernanke [Bloomberg]
The party line is that Lewis was well on his way to dumping the Merrill merger via a Material Adverse Change clause and dumping (one assumes) the now empty dancecard holding bank into bankruptcy. If you want to add nuance, you can append “unless you give us some cash” to the end of that particular party line. Sure, Lewis is making quite a lot of noise about this being forced into marriage with Merrill thing now that push comes to shove, but did Lewis really have an option? A look at the merger agreement gives us some interesting hints:
…a “Material Adverse Effect” shall not be deemed to include effects to the extent resulting from (A) changes, after the date hereof, in GAAP or regulatory accounting requirements applicable generally to companies in the industries in which such party and its Subsidiaries operate, (B) changes, after the date hereof, in laws, rules, regulations or the interpretation of laws, rules or regulations by Governmental Authorities of general applicability to companies in the industries in which such party and its Subsidiaries operate, (C) actions or omissions taken with the prior written consent of the other party or expressly required by this Agreement, (D) changes in global, national or regional political conditions (including acts of terrorism or war) or general business, economic or market conditions, including changes generally in prevailing interest rates, currency exchange rates, credit markets and price levels or trading volumes in the United States or foreign securities markets, in each case generally affecting the industries in which such party or its Subsidiaries operate and including changes to any previously correctly applied asset marks resulting therefrom… (Emphasis added).
In fact, the entire MAC clause is pretty restrictive. It becomes pretty easy to see that this was a pretty tight document.
This brings up the question: How could Paulson fallen for such a bluff? He is (was), after all, a savvy banker. Did he just not read the document? Did Lewis forget to have a staffer review it for him and give him the cliffnotes over a box of Boone’s Farm Strawberry Hill? Or did someone (or someones) pull a fast one?
Agreement and Plan of Merger [SEC.gov]
Does anyone out there have anything they’d like to say to Vikram Pandit’s face but have found it difficult to get past security at 399 Park? Perhaps you’re a shareholder, upset about the stock price, or the Treasury Secretary, just feeling the need to remind the Citi CEO that you could’ve had his job and, and this is not a threat just a fact, could still have his job? You’re in luck. Geoffrey Raymond, the greatest artist of our time, will be in front of the building today with his latest, The Annotated Citi. In the event you can’t make it, let us know here what you’d say to VP, given the opportunity to get up in his grill, and Raymond will add it to the canvas. Interested in having Pandito all to yourself? Bidding starts at 30K.
Geithner Could’ve Been Citi CEO (NYT)
“Mr. Geithner met frequently with Sanford I. Weill, one of Citi’s largest individual shareholders and its former chairman, serving on the board of a charity Mr. Weill led. As the bank was entering a financial tailspin, Mr. Weill approached Mr. Geithner about taking over as Citi’s chief executive.
But for all his ties to Citi, Mr. Geithner repeatedly missed or overlooked signs that the bank — along with the rest of the financial system — was falling apart. When he did spot trouble, analysts say, his responses were too measured, or too late.”
Sex, Lies And Videotape: The Bank Of America Experience (WSJ)
Doesn’t tell us anything we didn’t already know but it’s nice to see his name back in print. “In an effort to restore his sullied reputation, the 53-year-old Mr. Thain is striking back at Bank of America Corp. He claims the bank lied about its role in the giant bonuses and losses at Merrill Lynch & Co. that cost Mr. Thain his job in January, after Bank of America bought the troubled brokerage.
“Getting fired is one thing. But nobody has the right to say things that they know aren’t true,” said Mr. Thain, who had been Merrill’s chief executive, during one of a series of interviews with The Wall Street Journal.”
Head of UBS Investment Bank Unit Steps Down (NYT)
Jerker Johansson– out.
UAW Reaches Deal With Chrysler, Fiat And US (WSJ)
“Immediate terms of the deal were not released, but the agreement is believed to include about a 50% reduction in the amount of cash Chrysler owes a $10 billion health-care fund that was set up in 2007. The auto maker is also expected to have won at least hundred of dollars in per-car labor savings from the UAW.
The UAW will likely get cash and equity in Chrysler in exchange for its concessions. A deal with Chrysler is a stepping stone toward avoiding bankruptcy protection, according to a person familiar with the matter. Still, “a lot of work remains in order to get the good case scenario.”
Fiat SpA, which has been positioning itself as a potential equity-alliance partner with Chrysler, had demanded that the UAW make significant concessions before agreeing to a deal. The Treasury Department, which has pumped $4.5 billion into the auto maker, also demanded givebacks by the union.”
Wall Street Pay Bouncing Back (NYT)
While it’s true that there’s considerably less of us gainfully employed, those of us that have managed to hold on to jobs are going to be earning considerably similar salaries to pre-meltdown, which has to chap some asses. According to the article Goldman should turn an average income of around $570k this year, which JP Morgan weighing in at $510k.
Bea Arthur Passes Away At 86 (Reuters)
The Golden Girls seductress will be missed.
Bloomberg To Expand Despite Terminals Threat (FT)
“Bloomberg is planning a sustained investment in its technology and news operations, arguing that it can gain market share even as sweeping changes in financial markets pose the biggest threat to sales of its data terminals in its 27-year history.
Peter Grauer, chairman of the company controlled by New York mayor Michael Bloomberg, told the Financial Times that it had seen a fall of just over 2.5 per cent in terminal numbers since they peaked in November, implying about 7,500 net cancellations from a subscriber base of about 300,000.”
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