New Jersey’s move to take out a short-term $2.25 billion loan to pay its bills is symbolic of how difficult state and municipal financing will be in the year ahead, analyst Meredith Whitney told CNBC Tuesday…she said these types of moves will be mere warning shots as states approve their spending plans for the fiscal year ahead—running from July 1 to June 30—and balance those budgets by cutting local aid. “That’s what’s really going to hurt. So the pain of the states is just upon us,” said Whitney. “What you’ll see now is as the states are submitting final budgets, you’ll see the real pain at the municipal level start happening July 1. That will intensify and that’s where you’ll see the fallout.”"That’s what’s really going to hurt. So the pain of the states is just upon us,” said Whitney. “What you’ll see now is as the states are submitting final budgets, you’ll see the real pain at the municipal level start happening July 1. That will intensify and that’s where you’ll see the fallout.” [CNBC]
Archive for June 2011
When one is serving a 150 year sentence for running a massive Ponzi scheme, he tends to find himself with time on his hands to think about things. Take Bernie Madoff, for example. He has a job in the joint (working in the commissary) and he gets in daily walks on the track but other than that, the hours are usually spent reflecting. His reflection time over the last couple years has lead to a few big conclusions and chief among them? That he’s been on the receiving end of a bum rap, in more ways than one, which he’s mentioned during several stops on his Legitimate Years Tour. In February, he griped to New York:
“Does anybody want to hear that I had a successful business and did all these wonderful things for the industry?” Bernie continued. “And got all these awards? And so did my family? I did all of this during the legitimate years. No. You don’t read any of that.”
Last month, he reminded New Yorker reporter Jeffrey Toobin that he “was worth a billion dollars before any of this nonsense started” but does anyone ever mention that? No they only care about the net worth accrued from his ill-gotten gains. On the same tour stop, he also suggested that he should be getting credit for his later work (the legitimacy of which is still an open-ended question in his mind), if only for the fact that its complexities could only be understood by the most sophisticated of investors (him).
Still, he speaks about his financial acumen with unmistakable pride. “The strategy that I was using for them, whether it was real or not, was not something that anyone would understand if you were not an expert,” he said. As he put it in an e-mail, “Fred was not [at] all stock market savvy and Saul was not really either. They were strictly Real Estate people. Although I explained the Strategy to them they were not sophisticated enough to evaluate it properly, nor were most of my other individual clients. They were not in a position to perform the necessary due diligence and did not have access to necessary financial info or records.”
Which leads us to Berns’ latest. In an interview with the Times he reasons that he got such a raw deal because the judge, like all of his feeble-brained haters, doesn’t understand how “the industry” works. Read more »
Get in the hot tub and let him prove you wrong. Read more »
Last Thursday evening, President Obama held a fundraiser at Daniel as part of his reelection campaign. There was Vodka Beet-Cured Hamachi with Horseradish Cream. There was Zucchini Pomponette with Fontina and Tomato Confit. There was Vanilla-Raspberry Gelée. But there was no Lloyd Blankfein and there was no Jamie Dimon, and there was no Dick Parsons. Some people interpreted the lack of JD and LB and other banking chiefs as indication that Wall Street is done with Barack Obama. Sure, he still has some big names backing him (like Daniel attendees Marc Lasry, Robert Wolf and Mark Gallogly) but the absence of Lloyd and Jamie, who, ironically, Obama was once so close with that his pet name for was “zucchini pompette,” seemed to suggest a broader trend and evidence that the rumors Wall Street had “abandoned” Mr. President were true. And while some big names, like Dan Loeb and Steve Cohen, who previously backed Obama in ’08 have made no secret about dropping him (and over the weekend likely inspired others to join them), others apparently continue to support BO. They just don’t want anyone to know about it.
Behind the scenes, it seems that many bankers are not running away from the president as quickly as some might suspect. While many of the biggest name financiers feel that they can’t publicly support Mr. Obama through campaign contributions the way they did in 2008 — “it would be bad for business,” one brand-name chief executive of a major bank acknowledged — some still plan to vote for him.
Which normally would’ve stung but this time around is all well and good with the President and his team, ’cause it goes the same way. They don’t want anyone to know about Obama’s relationship with Lloyd, Jamie, et al either. They don’t even want to risk Obama being tagged in a picture with LB, for fear of the message it might send. Read more »
Cuts have begun at the Swiss bank this morning. Read more »
Dollar seen losing global reserve status (FT)
The US dollar will lose its status as the global reserve currency over the next 25 years, according to a survey of central bank reserve managers who collectively control more than $8,000bn…UBS surveyed more than 80 central bank reserve managers, sovereign wealth funds and multilateral institutions with more than $8,000bn in assets at its annual seminar for sovereign institutions last week. The results were not weighted for assets under management. The results are the latest sign of dissatisfaction with the dollar as a reserve currency, amid concerns over the US government’s inability to rein in spending and the Federal Reserve’s huge expansion of its balance sheet.
Greek unions start Athens austerity protests (Reuters)
Thousands of demonstrators began gathering in front of the Greek parliament on Tuesday at the start of a two-day strike to protest against painful cuts demanded by international lenders as the price for more financial aid.
EU has Plan B if Greece rejects austerity (Reuters)
The sources said planning had been going on for several weeks and was designed to ensure Greece gets the liquidity needed to avoid default in the absence of the next, 12 billion euro tranche of its emergency loan package, due by mid-July.
Ailing Greece Tries National Tag Sale (WSJ)
For the taking: four wide-body Airbus jets, a state lottery, a state horse-racing concession and sports book, stakes in a casino, several ports, a national post office, two water companies, a nickel miner and smelter, a munitions maker, electricity and gas monopolies, a telecommunications operator, shares in a half dozen banks, hundreds of miles of roads, a defunct airport, old Olympic venues and thousands of acres of land, including magnificent stretches of Greece’s famed coast.
U.S. Money Funds Risk Losses From Europe Crisis (Bloomberg)
U.S. money funds eligible to buy corporate debt had about $800 billion, or half their assets as of May 31, in securities issued by European banks, Fitch Ratings estimated. European lenders held more than $2 trillion at year-end in loans to Greece, Portugal, Ireland, Spain and Italy, the most indebted European countries, the Bank of International Settlements estimated.
Debt deadline unlikely to deviate much (Reuters)
U.S. Treasury Secretary Timothy Geithner is not expected to significantly shift the August 2 date when the government will have exhausted all of its emergency measures to stave off default, a source familiar with the administration’s efforts said on Monday.
Credit Suisse CEO owes ex $750K for late payment (AP)
Brady Dougan owes his wife more than $750,000 in interest for being 12 days late with a $7.5 million divorce-related payment, the state Supreme Court ruled Monday. The high court unanimously upheld a section of the Greenwich resident’s divorce settlement dealing with interest on late payments that he argued shouldn’t be enforced. Justices noted that Dougan is a “financially sophisticated” businessman and had agreed to the terms. Read more »
$$$ Obama confident US debt deal can be struck (Reuters)
$$$ “I think keeping it low key is impossible in my position,” Swiss model/JPMorgan Tchoumitcheva tweeted Friday. (NetNet)
$$$ European Banks Near 70% Greek Rollover Deal (Bloomberg)
$$$ The Los Angeles Dodgers, J.P. Morgan and a Pawn Shop Loan (Deal Journal)
As you may have heard, Goldman Sachs, like a bunch of other banks, is bracing for some upcoming layoffs. But there is heartening news yet! Should you get the ax and not be able to imagine working for any other firm (after waking up each morning with the possibility of interfacing with, brushing up against, gazing at from across the room, or simply being on the receiving end of one of his Lloyd’s firm-wide voicemails, anything else would be a let down), your chances of getting rehired just skyrocketed, assuming you’re willing to relocate. Read more »
The province’s tar sands cover an area larger than the United Kingdom and contain most of the world’s supply of bitumen, a particularly sticky form of petroleum that must be heated or diluted before it can be pumped. Because it’s so unwieldy, it’s only been in recent years that large-scale development of the tar sands have taken place. The steep rise in global oil prices has set off a boom in the region, with all that naturally follows (prostitutes have reported incomes as high as $15,000 a week). [TNR via BI]
He’ll be lecturing at the University of Chicago’s Harris School of Public Policy Studies and heading up “an independent center that will specialize in relationships involving the United States and China” which shall be called the Paulson Institute. Read more »