[CWS via clusterstock]
In case you needed the entirely transparent model broken down for you: DK says the reason the network encourages (requires) its talking heads to screech at each other (and at commentators) in a pitch only dogs can hear, and get into faux fights, is because you people won’t pay attention to or understand today’s business news unless it is packaged with “conflict, drama and struggle.”
Archive for May 2009
Forget the Case Shiller Index. Baltic Dry Index? Old news. Hemline analysis? Forget it. For real, serious metrics you have to think out of the box (so to speak). You have to consider the plight, for instance, of Latvian hookers. Yes we are serious. So is Bloomberg.
When the economy starts to lift itself out of this recession, what will be the leading indicator that tells us we have turned the corner?
Some people track the price of shipping to gauge the health of global trade. Others look at the supply of freshly minted money pouring out of central banks. A few will say that signs of life in the housing markets are evidence of a recovery.
Forget them all. The one lesson we can draw from the global credit crisis is that all the traditional ways of measuring the state of the economy are about as useful as a bottle of suntan lotion in a snowstorm.
So here are two benchmarks we should all be monitoring more closely: extramarital affairs and the price of Latvian hookers. Both are telling us that there is still plenty of trouble ahead.
Now that we think about it, Spitzer’s “great matter” did sort of coincide with the beginning of the end. Really, for the details you should probably go to the original article:
Latvian Hookers Signal No Recovery for Economy: Matthew Lynn [Bloomberg]
Dick Cheney Didn’t Anticipate Government Interference He Started Going This Far, Mostly Because He (Et Al) Didn’t Really Think This Thing Through
By Bess LevinOops! But what can you do. Not my problem is what I always say. For some reason, Dick Cheney sat down with CNBC’s Larry Kudlow earlier for a good bitch sesh.* Hopefully we’ll get the full interview soon, but so far we just have a tease from The Call. According to Kudlow, he led the witness with, “You started all this government interference, did you not?” To which the former VP conceded, “Yes, we did.” Kudlow, really nailing the guy to the wall, pressed on. “Did you realize you were going to exert this kind of control and having the government end up owning GM?” The answer: “Yeah, we didn’t really think that through.”
Earlier: NBC Cracking Down On CNBC Obama Bashing?
*Most likely as a prelude to holding each other in this time of need.
From the front lines: “We’re told the printers will not be removed today, but they took everyone’s cables and left those pretty pink stickers.”
Earlier: State Street’s War On Printing
The most striking part about this particular development is how totally unstriking it is anymore:
Some banks are prodding the government to let them use public money to help buy troubled assets from the banks themselves.
Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government’s Public Private Investment Program.
[...]
The lobbying push is aimed at the Legacy Loans Program, which will use about half of the government’s overall PPIP infusion to facilitate the sale of whole loans such as residential and commercial mortgages.
In some circumstances, recursive patterns are considered elegant and deft. Signs of some fundamental harmony in nature or the universe. Finance is just not one of those disciplines. This is going to (start, endure and) end in tears.
This is priceless doublespeak:
Allowing banks to have it both ways would give them added incentive to sell assets at low prices, even at a loss, the banks contend. They claim it also would free up capital by moving the assets off balance sheets, spurring more lending.
Handing them billions of dollars with no expectation of repayment would accomplish the same goals.
Banks Aiming to Play Both Sides of Coin [The Wall Street Journal]
Bank of America said Wednesday that it was “well on its way” towards raising the nearly $34 billion in capital that government regulators said it must do earlier this month to have a buffer for future loan losses.
The beleaguered banking giant said it has raised almost $26 billion since the government announced the results of its so-called “stress-test” program, including $13.5 billion through a stock sale.
Bank of America Has Raised $26 billion [CNN Money]
Yeah, probably not, though Page Six claims it so. Supposedly Lar, who took a nice nap last month during a meeting with credit card industry officials, got some shut eye last week during a private meeting with the President. We’re a bit skeptical about this one because a) there were no reporters there, and who is leaking details of one-on-ones* with the Prez and b) after Summers’ penchant for catching a few winks on the job made Obama’s roast during the White House Correspondents Dinner, you’d think he’d be pumping himself full of amphetamines prior to making stops at 1600 Pennsylvania Avenue.
*It’s unclear if the meeting was just Summers and Obama, or if others were there, but the point remains. Unless Joe Biden was on hand, in which case, why didn’t we hear about this sooner?
Comp Watch ’09: Citi And BoA Probably Base Raising Pay, JPMorgan And Goldman Calling Your Bluff
By Bess LevinThe Journal reports that in order to get around that pesky matter of not be allowed to give bonuses employees have become accustomed to in year’s past, Citi and Bank of America are “expected” to raise base salaries for investment bankers “soon.” This shouldn’t come as much of a shock to Ken Lewis’s underlings, as it’s been expected for some time (and may have actually already begun).* Of course, the banks could’ve been simply leaking maybe we’ll do this, maybe we’ll do that, maybe we’ll offer deeply discounted pony rides stories to the press in order to jerk the chains of their employees, so it’s nice to get a little confirmation from Bank of Amerillwide spokeslady Jessica Oppenheim (who said that “pressures in the investment-banking and capital-markets businesses continue to be intense” and that BAC would “take the steps necessary to retain key employees”) and to see Vikula possibly getting on board.
In related news, JPMorgan and Goldman are not worried about their employees leaving to go work at the two greatest banks in all the land (league table trainwreck edition), despite what must be highly amusing threats to the contrary, and are therefore, supposedly, not considering an increase in base pay. Which could also possibly be explained by the fact that a raise in base pay at JPM/GS is unnecessary ’cause it’ll be business as usual when bonus times comes around again, and the government can suck it. Thank you and good night.
*Nor should it be cause for celebration, since it most likely won’t translate to increased comp overall. Although perhaps it’s comforting to know total compensation won’t be coming out to a ten spot and an autographed headshot of Lewis or Pandit, which many legitimately thought would happen. In which case, party on.
GM Bondholder Offer Disappoints (WSJ)
“General Motors Corp. said it won’t repurchase any of the $27.2 billion of notes sought by the ailing auto maker, saying bondholder interest was far below the 90% threshold the company was seeking.
GM was seeking support for an effort to swap the debt load for a 10% stake in a restructured company that is on the brink of filing for bankruptcy.”
Roubini Comments On Recession Ending (NYT)
“We are not yet at the bottom of the U.S. and the global recession,” said Roubini. “The contraction is still occurring and the recession is going to be over more towards the end of the year rather than in the middle of the year.”
“There is still too much optimism that a recovery is just around the corner,” said Roubini, a professor at New York University’s Stern School of Business and chairman of RGE Monitor, an independent economic research firm.”
US Debt Downgrade Possible? (FT)
With the downgrade of British debt, the FT is looking into whether or not the United States could be next. While a downgrade is highly unlikely, recent events have proven just about anything is possible.
“Standard and Poor’s decision to downgrade its outlook for British sovereign debt from “stable” to “negative” should be a wake-up call for the US Congress and administration. Let us hope they wake up.
Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.”
$$$ Scenes From the Hiring Front: ‘I’ll Work for Free‘ [Cityfile]
$$$ Lazard Predicts Close Call in Target-Ackman Battle [Dealbook]
$$$ From (Morgan Stanley) banker to yogi by way of skinny boyfriend [SC]
$$$ “Secured bank lenders to General Motors would get a full recovery on $6 billion in loans made to the auto maker, under the bankruptcy plan being finalized this week by the U.S. Treasury.
The Treasury plans to inject a fresh $50 billion in various financings to back a GM workout, most of which would take the form of company equity.
The hope is that a reorganized GM would have only about $10 billion to $12 billion in debt once it emerges from bankruptcy.” [WSJ]
Can you imagine the urgency with which Goldman will now seek to emerge from under the TARP?
UBS AG, the Swiss bank which received government assistance, will stick to a policy of paying market wages after being criticized for raising salaries at its investment bank, Chief Executive Officer Oswald Gruebel told employees.
“We have to pay our employees in line with the market,” Gruebel said in an internal memo to staff today. “We will stick to this stance, even if it is criticized in the emotional debate over salaries.”
UBS is boosting salaries for senior bankers at its investment bank by an average of 50 percent to stem defections, three people with knowledge of the matter said earlier this month. The bank cut its bonus pool by 78 percent in January after amassing the biggest loss in Swiss corporate history in 2008 and turning to the Swiss government for help.
Our favorite part has to be “UBS AG, the Swiss bank which received government assistance.” Which government, how much assistance and when received seem details that either escaped the notice of Elena Logutenkova and Ambereen Choudhury, or didn’t seem to matter that much when it came time to email the copy editor and head out for a 90 minute Frappuccino.™ We can’t say we blame them much. Pointing an ugly finger at banks that have “received government assistance” is a full time job. But, be that as it may, UBS is the place to be. Obviously. Well, there is the little matter of all those Eastern European mortgages denominated in Swiss Franc, but… that’s for later.
UBS Will Stick to Market-Level Salaries, Gruebel Tells Staff [Bloomberg]
