The folks at Citigroup have gone and ruined an awfully lucrative, awfully simple arbitrage. Read more »

You’ll get yours in due time, provided your record turns up clean/you didn’t do any favors for any big boys. Read more »

  • 11 Dec 2008 at 10:47 PM

Dealbreaker Afterdark: Big Auto In Big Trouble

The Senate compromise looks dead at the moment. CNN is reporting that bipartisan talks have collapsed and the Senate bill looks dead.
The pressure actually falls back to Pelosi now, who played a bit of legislative brinkmanship with the Senate and has now lost (baring some miracle tomorrow).
GM will likely be the first victim, and the news will likely step up counterparty pressure on GM tomorrow.
GM is running out of options quite quickly.
UPDATE: Fox News is reporting that the sticking point was with the UAW, who were to take wage cuts to put them in line with Japanese rivals.

Republican Sen. George V. Voinovich of Ohio, a strong bailout supporter, said the United Auto Workers was willing to make the cuts, but not until 2011.

UPDATE 2: This has to be the best bit of nonsense I’ve heard on the topic courtesy of Senator Jim DeMint wherein he speculates that a bailout would equate to riots.
UPDATE 3: CSPAN: By a vote of 52 to 35 the Senate voted not to proceed to a bill to aid the U.S. automobile industry. Related?: The Dollar has hit a 13 year low v. the Yen.
Hopes that GM will last until the birth of the Obama administration are dimming, despite some pretty desperate cost cutting:

Factory supervisors who are seldom at their desks have had their landline phones and voice mail yanked. Elevators and escalators are shut down at night at GM’s headquarters towers in Detroit.
The slimmed-down choice of pens in office supply cabinets: one each of black, red and blue.

Perhaps just the red would have done fine.

  • 05 Dec 2008 at 11:29 AM

No One Likes A Know It All

The days of lecturing China may be over for the moment. But, really, how perfectly did you want them to embrace capitalism just now?

The head of China’s sovereign wealth fund says he’s lost the confidence to invest in U.S. banks, while China’s central bank governor Zhou Xiaochuan didn’t even stay in town. Instead, he flew to an international meeting chaired by Mr. Paulson’s intended successor, Timothy Geithner.
Preceding Mr. Paulson’s arrival was a sudden depreciation of the yuan against the dollar — provoking concern in some quarters that China is prepared to backtrack on one of Paulson’s achievements.

One does start to get nervous at hearing Geithner’s name everywhere as well, doesn’t one?
A Mixed Ending for Paulson in China [The Wall Street Journal]

  • 05 Dec 2008 at 10:57 AM

Fed Searches Control Room For More Buttons

Gentle signs of Japa-nic are beginning to show, don’t you think? What with the Fed poking around and toying with things like buying up Treasuries (drives the yields down you know) and convincing the Euro folk that “cool kids lower rates.” (New Zealand is very unpopular right now).

In another sign of its focus beyond conventional policy, Mr. Bernanke on Thursday called for aggressive new actions by the government to help homeowners avoid foreclosure. One approach, he said, could involve having the U.S. buy delinquent mortgages and refinance them.
He called for revisions to a federal program called Hope for Homeowners that might encourage more participation. It is designed to help borrowers refinance with the help of the Federal Housing Administration.

Fed Weighs Its Options as Europe Cuts Rates [The Wall Street Journal]

  • 24 Nov 2008 at 9:13 AM

Barclays Investors Approve Shareholder Dilution

It was touch and go there for a while but Barclays Plc shareholders have given the British bank the go-ahead on a 7 billion pound ($10.44 billion) capital raise. The fractional owners had been ticked off about not being asked what their feelings were on the round of fundraising beforehand (there was also a matter of Qatar and Abu Dhabi investors getting better terms than existing shareholders). Congrats to all.
Barclays Chairman Says Investors Back Fund-Raising [Reuters]

  • 13 Nov 2008 at 8:33 AM

Opening Bell: 11.13.08

Picture 172.pngCiti Considering New Chairman? (Reuters)
The BOD, dissatisfied with the performance of the company, may be moving to seek new leadership. The majority of this article is blatant conjecture, so we’ll skip the thriving analysis and just jump to the point: replacing the chairman at this point would probably send a strong signal to shareholders.
UBS Numbers: 1 Broker, 20,000 people, 20B (WSJ)
You have to really, really try to help 20,000 people dodge taxes on 20 billion USD. Not only does it take talent, my friends, but the level of commitment is unreal.
[Indictment, via WSJ]
Lower Oil Prices Drive Russia And Kuwait To Craig’s List For Money (Bloomberg)
“Oil, Russia’s chief export, has fallen 63 percent since the July-high of $147. The ruble has plunged 21 percent against the dollar in the past four months, even as the central bank sold 16 percent of its currency reserves in an attempt to arrest declines. Reserves dropped $9.2 billion last week to the lowest this year at $475.4 billion, central bank said today. ”
Historically, when Russia has been faced with tough times they’ve chosen to go one of two routes:
1) Nationalize everything, execute dissenters, and form food lines.
2) Start a War.
Given the recent trends in Russia’s social strata I wouldn’t be surprised if a bit of both happened this go round. Leadership has been excising anyone with power and money that could plausibly stand in their way and they’ve excited the people – there’s now wealth and pride, and that’s something Russians have been without for decades. The war comes in when you realize that you can’t just “make” money to keep all this BS alive, you actually have to have economic fundamentals to support it. So who do they take over (or try to take over)? Not a clue. I hear there’s money on the interwebs. You should take over the interwebs, Russia.
Insurers Set For Failure (NYT)
Life Insurers have thus far remained relatively unscathed by the recent trends in finance, but there’s strong signals that that’s about to change. It looks as though Life Insurance companies have been quietly lining up at the Government tit waiting for TARP money to sweep in and save their collective asses. What makes insurance companies so much fun is that they’re state counter-insured, such that if the insurance company goes out of business the state places the standing contracts with another insurance company that’s approved to operate in that area. Now, the issue with this is that they have to see to the contract fulfillment, but they haven’t taken any of the premiums to offset the risk of having to pay. Effectively, they’re getting screwed. But, states can’t afford to eat the money themselves, so if this happens on a wide enough scale, we could see a domino effect – that is until Pelosi buys the Insurance sector on behalf of the American People. Then we’ll be fine.

Read more »