|
|
|
|
US increases stake in CitigroupCitigroup agrees a deal which sees the US government increase its stake in the ailing bank from 8% to 40%.Source: BBC News | Business | World Edition | 27 Feb 2009 | 1:00 pm MarketWatch First Take: A new low -- Ryanair's possible toilet charging planTaking discount travel to a new all-time low, Ryanair Holdings is considering charging passengers to use the toilet in flight, the Irish airline on Friday acknowledged in a statement.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 12:53 pm Treasury to take 36% Citi stakeThe US Treasury is to convert some of the preferred stock it holds in struggling Citigroup into common stock, a step that will give it a significant stake in the bankSource: Financial Times - US homepage | 27 Feb 2009 | 12:51 pm Bayer proposes dividend of 1.40 eur per shareFRANKFURT, Feb 27 (Reuters) - Bayer on Friday proposed to pay a dividend of 1.40 euros per share on its 2008 earnings, up from 1.35 euros a year earlier, but slightly less than expected.Source: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:47 pm Stocks point to lower open as Citi confirms deal (AP)
Source: Yahoo! News: Stock Markets News | 27 Feb 2009 | 12:47 pm U.S. takes big stake in CitiWASHINGTON (Reuters) - The Treasury Department announced on Friday it will convert some of the preferred stock it holds in struggling Citigroup into common stock, a step that will give it a significant stake in the bank.Source: Reuters: Business News | 27 Feb 2009 | 12:47 pm U.S. takes big stake in Citi (Reuters)
Source: Yahoo! News: Business | 27 Feb 2009 | 12:47 pm Indications: U.S. stock futures lower on Citi deal, pharma fearsU.S. stock futures dropped Friday as investors focused their gaze on Citigroup, which received its third rescue package from the government, as well as health-care stocks on concerns over government spending.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 12:43 pm Government to boost its stake in Citigroup to 36% in dealBOSTON (MarketWatch) - Shares of Citigroup tumbled almost 30% on Friday after it said the government has agreed to a deal to boost its stake in the company to about 36%, and the firm unveiled another $10 billion in fourth-quarter losses.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 12:42 pm PREVIEW-Genentech to make case for higher purchase price* When: Genentech sets Monday meeting before tender expirySource: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:41 pm I am optimistic because: 'I do what I love'Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 12:38 pm Lloyds falls to $14 billion loss, in asset plan talksLONDON (Reuters) - Part-nationalized Lloyds Banking Group unveiled a 10 billion pound ($14.28 billion) loss for 2008 and said it had not finalized a plan to put billions of pounds of assets into a UK government-backed insurance scheme.Source: Reuters: Business News | 27 Feb 2009 | 12:36 pm UPDATE 2-Sevan Marine, Golar LNG see tough times, weak Q4* Sevan received bid for rig, working to strengthen capitalSource: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:36 pm Stocks set to open lowerStocks were poised to open lower Friday after Citigroup and the Treasury Department announced a deal giving the U.S. government more control of the bank's common stock.Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 12:35 pm London Markets: Lloyds stumbles in weaker London after not clinching dealLondon shares fell on Friday, the last trading session of February, with banks retreating after Lloyds Banking Group failed to clinch an asset insurance deal with the U.K. government.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 12:34 pm UPDATE 1-Magellan Health Q4 profit tops estimates, ups '09 viewFeb 27 (Reuters) - Magellan Health Services Inc , whose customers include corporations and government agencies, posted higher-than-expected quarterly profit, boosted by strong segment growth, and raised...Source: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:33 pm Deal between Microsoft and Yahoo could be back onThe takeover deal between Microsoft and Yahoo could be back on after Yahoo's chief financial officer said he was "not opposed" to selling off his company's search business.Source: Telegraph Finance | 27 Feb 2009 | 12:33 pm Earnings Watch: Updates, advisories and surprisesA roundup of the latest corporate earnings reports and what companies are saying about future quarters.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 12:31 pm Europe Markets: Europe set to end month on downbeat note as banks, pharma fallEuropean shares fell on the last trading day of February, giving back much of the previous session’s advance, as selling returned to the banking sector and drug makers also traded notably lower.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 12:31 pm Stock futures drop after Citi's government deal (Reuters)
Source: Yahoo! News: Business | 27 Feb 2009 | 12:27 pm Stock futures drop after Citi's government dealNEW YORK (Reuters) - Stock index futures turned lower on Friday on news the U.S. government is taking a large common equity stake in embattled lender Citigroup .Source: Reuters: Business News | 27 Feb 2009 | 12:27 pm Stock futures drop after Citi's government deal (Reuters)
Source: Yahoo! News: Stock Markets News | 27 Feb 2009 | 12:27 pm Citigroup (C): A Lifeline And Dilution
And, most of the board will lose their jobs, but less-than-competent CEO Vikram Pandit gets to stay. Citi announced it will issue common stock in exchange for preferred securities, which will substantially increase its tangible common equity (TCE) without any additional U.S. government investment. The transaction is intended to build Citi’s TCE to a level that removes uncertainty and restores investor confidence in the company. Citi will offer to exchange common stock for up to $27.5 billion of its existing preferred securities and trust preferred securities at a conversion price of $3.25 a share. The U.S. government will match this exchange up to a maximum of $25 billion face value of its preferred stock at the same conversion price This transaction could increase the TCE of the company from the fourth quarter level of $29.7 billion to as much as $81 billion, which assumes the exchange of $27.5 billion of preferred securities, the maximum eligible under this transaction. Citi’s Tier 1 capital ratio is 11.9 percent as of December 31, 2008, and is among the highest of major banks. Based on the maximum eligible conversion, the U.S. government would own approximately 36 percent of Citi’s outstanding common stock and existing shareholders would own approximately 26 percent of the outstanding shares. All investors’ new stakes will be determined following the exchange. Dick Parson’s, Citi’s Chairman, made the following statememnt: “On January 16, 2009, I announced on behalf of the Board of Directors that we had determined to ‘reconstitute the board… as quickly as possible.’ I am pleased to announce today the next step in reconstituting the Board: the Board unanimously decided to have a majority of new independent directors as soon as feasible. The Board presently has 15 directors, three of whom have announced that they will not be standing for election at the April Annual Meeting and two of whom will reach retirement age by the time of the Meeting. We are actively conducting a search and expect to announce several new directors shortly.” The US, for all practical purposes, now owns the bank Douglas A. McIntyre Tagged: C      Source: 247 Wall Street | 27 Feb 2009 | 12:23 pm Howard Stringer to assume expanded role at SonySony Corp. announces Friday its Chairman and CEO Howard Stringer will also take on the role of president, solidifying his executive power and handing him direct control over the company's electronics business.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 12:23 pm World stocks mostly lower as economic fears weigh (AP)
Source: Yahoo! News: Stock Markets News | 27 Feb 2009 | 12:22 pm Continued Bankruptcies, Late Payments, Mortgage Delinquencies Kick Off 2009 According to Equifax ReportJanuary Data Portends Continued Weak Economy ATLANTA, Feb. 27 /PRNewswire-FirstCall/ -- The deteriorating economy is evident in recent consumer credit woes as...Source: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:22 pm Talkback: Walk away from your home?Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 12:21 pm U.S. to control up to 36% of CitiCitigroup and the Treasury Department announced a deal early Friday that will give the federal government control over up to 36% of the bank's common stock.Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 12:19 pm U.S. Treasury says to convert Citi shares to commonWASHINGTON, Feb 27 (Reuters) - The Treasury Department announced on Friday that it will convert a significant share of the preferred stock it holds in struggling bank Citigroup to common stock as long...Source: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:15 pm Wales worst hit in 15% house prices fallHouse prices tumbled by 15.1 per cent in the year to January, in the seventeenth consecutive monthly fall that wiped more than £1,300 off the value of an average home.Source: Latest Business News from Times Online | 27 Feb 2009 | 12:12 pm Euro slips versus dollarThe European single currency retreated Friday against the dollar as investors digested tumbling eurozone inflation data ahead of fourth-quarter economic growth numbers in the United States.Source: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:11 pm Sir Fred Goodwin: True cost of pension 'is £30m'Sir Fred Goodwin's £700000 annual pension would cost almost £30m to buy in the open market according to a pensions expert.Source: Telegraph Finance | 27 Feb 2009 | 12:10 pm Citigroup reaches aid deal with governmentCitigroup says it has reached a deal that will give the government up to a 40 percent stake in the struggling bank. The company also says it recorded a goodwill impairment charge of...Source: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:10 pm SNAPSHOT - Financial Crisis - 1200 GMT- U.S. Treasury says to convert up to $25 billion of CitigroupSource: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:07 pm Indonesia's Adaro Energy sees '09 revenue at $2 blnJAKARTA, Feb 27 (Reuters) - Indonesia's second-largest coal producer, PT Adaro Energy Tbk , expects its 2009 revenue to reach $2 billion helped by healthy sales secured in long-term contracts, the firm's...Source: RSS feed - channel BNewsBusiness | 27 Feb 2009 | 12:05 pm Lloyds confirms £10.8bn HBOS lossThe bank is still in discussions with the Treasury about its participation in the asset protection scheme as it reported a £10.8bn loss at HBOS and an 80% fall in pre-tax profits at Lloyds, in line with a warning issued earlier this monthSource: Financial Times - US homepage | 27 Feb 2009 | 11:59 am Beef producers reel as consumers shun steakRead full story for latest details.Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 11:55 am Obama unveils budget planPresident Obama on Thursday pulled back the curtain on his first detailed vision of the federal budget for the next 10 years.Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 11:48 am Don't confuse rhetoric with reformWall Street bashing is all the rage in Washington these days. That's understandable, given that financial excesses played a serious role in starting the recession and that some of the firms that have gotten billions of taxpayer dollars are also paying out billions in compensation.Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 11:42 am Citigroup may raise private capital and change boardThe US Government is set to demand that Citigroup raises private capital and changes its board of directors in an attempt to strengthen the bank, reports this morning suggest.Source: Latest Business News from Times Online | 27 Feb 2009 | 11:39 am Deutsche Telekom posts quarterly loss but beats expectationsDeutsche Telekom, Europe’s largest telecommunications company, on Friday reports a fourth-quarter loss as it writes down the value of its investment on Greek operator OTE, but underlying numbers beat expectations and it raises its 2009 guidance.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 11:39 am FBI makes first arrest in Stanford fraud caseWASHINGTON (Reuters) - The FBI made the first arrest in the $8 billion Stanford Financial Group fraud investigation on Thursday, detaining chief investment officer Laura Pendergest-Holt on federal obstruction charges.Source: Reuters: Business News | 27 Feb 2009 | 11:35 am FBI makes first arrest in Stanford fraud case (Reuters)
Source: Yahoo! News: Business | 27 Feb 2009 | 11:35 am Lloyds shares drop fails to agree on asset insuranceLloyds shares fell after the bank confirmed it's in "advanced" talks to dump toxic loans in the Government's asset protection scheme but failed to reach agreement on the terms.Source: Telegraph Finance | 27 Feb 2009 | 11:27 am Wet basement? 6 simple fixesDo you dread going into the cellar during a hard rain? You just know you're going to see puddles on the floor or get a sneezing fit from the musty air. A wet basement - a problem that plagues about 60% of homeowners, according to the American Society of Home Inspectors - is not a situation to ignore.Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 11:26 am Dell (DELL) Earnings: Has The PC Had Its Day?
But, the demise of the PC may not simply be because of the recession. Consumers and businesses may turn to other devices to write, create documents, send data and access the internet. Right now, they are handheld smartphones and netbooks. They have drawbacks which may be going away. The first disadvantage smaller electronic devices have is their computing power. Processors for these products don’t match those in PCs. But, Intel (INTC) is among the companies working on high-powered chips for small devices. It knows that as PC sales falter, its current business of providing x86 chips will start to fall apart. The other drawback to handhelds and netbooks is connection speeds to the internet. When they are linked up to WiFi, they can take advantage of broadband. But, out of range of those signals, they have to rely on slower 3G. The cellular industry is in the midst of solving that problem with a build-out of “4G” networks which will run as fast as the fastest landline broadband. The advantages the PC had in the past are quickly going away. Douglas A. McIntyre Tagged: AAPL, DELL, HPQ, INTC      Source: 247 Wall Street | 27 Feb 2009 | 11:25 am Movers & Shakers: Friday's most active stocksAmong the companies whose shares are expected to see active trade in Friday’s session are Citigroup, Gap Inc. and Dell Inc.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 11:23 am Australasians in Asia trade pactSouth East Asian economy ministers sign a free trade deal with Australia and New Zealand that aims to boost their combined economies.Source: BBC News | Business | World Edition | 27 Feb 2009 | 11:22 am World Bank, others pledge $31.2 billion aid for Eastern EuropeAt a time of growing concern about the region's economic prospects, the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank pledge up to $31.2 billion to support Eastern Europe’s banking sector and to fund business loans.Source: MarketWatch.com - Top Stories | 27 Feb 2009 | 11:17 am East Europe banks set for €24.5bn loanA group of multilateral lenders has pledged to support crisis-hit eastern Europe with up to €24.5bn in equity, loans and guarantees for the region's troubled banking sectorSource: Financial Times - US homepage | 27 Feb 2009 | 11:09 am In Weakened Car Industry, Toyota (TM) Still Dominate Quality
Research about car consumer satisfaction shows that keeping market share may be hard for US car firms in both a recession and better times. According to Dow Jones, “Toyota (TM) dominated Consumer Reports’ annual review of what it considers the best cars and trucks, while Detroit automakers captured only a single category.” Whether the measurement was of large cars, small cars, SUVs or small pick ups, the US companies lost out. Where did an American company “win”? In large pick-ups which no one buys. The Chevrolet Avalanche took the crown there. Douglas A. McIntyre       Source: 247 Wall Street | 27 Feb 2009 | 11:08 am Sony clears out 'old guard' in board shake-upSir Howard Stringer, the head of Sony, today announced a series of senior management changes and restructuring moves aimed at finally ridding the Japanese group of its “old guard” better to fight the grim realities of a global consumer slump.Source: Latest Business News from Times Online | 27 Feb 2009 | 11:04 am NZ signs free trade agreement with 10 Asian countriesNew Zealand and Australia have signed a free trade agreement (FTA) with 10 Asian countries representing a market of more than 500 million people. Trade Minister Tim Groser, who tonight signed the agreement in Hua Hin, Thailand,...Source: New Zealand Herald - Business | 27 Feb 2009 | 11:00 am Saving Private Ryan: Sending The Financial World To Save Eastern Europe
The Latin America crisis nearly took Citibank under. The mobilization to bail out Eastern Europe has begun in earnest. Accordingto MarketWatch, “The World Bank, the European Bank for Reconstruction and Development and the European Investment Bank issued a joint pledge Friday to provide up to 24.5 billion euros ($31.2 billion) in aid to support Eastern Europe’s bank sector.” That is almost certainly only the beginning of the process. As ratings agencies begin to downgrade the debt of several Eastern European nations, the concern has emerged that Ukraine, Lithuania, and Romania may have trouble with that debt obligations. The IMF says it is not worried about defaults, but it does not hold large amounts of the notes issued by these countries to fund their budgets, which have begun to post substantial deficits. The US government is in the process of “stress testing” banks by making assumptions that the American economy could collapse and that unemployment could move to 10% with housing prices could fall another 20%. None of that “testing” take into account what happens if the financial status of Eastern Europe worsens. Maybe that should go on the check list to determine which banks are healthy. The answer would probably be “none.” The financial world is too small for defaults on national debt not to have a tremendous ripple effect. Douglas A. McIntyre       Source: 247 Wall Street | 27 Feb 2009 | 10:57 am A pound to spend a penny as Ryanair mulls charge for toiletsThe Irish budget airline says it is considering charging passengers for using the toilet while flying.Source: BBC News | Business | World Edition | 27 Feb 2009 | 10:55 am Lloyds sees HBOS loss of £10.8bnLloyds Banking Group says its subsidiary HBOS made a pre-tax loss of £10.8bn in 2008, while profits at Lloyds fell 80%.Source: BBC News | Business | World Edition | 27 Feb 2009 | 10:47 am Lloyds locked in Treasury row over debt deal feeLloyds Banking Group is locked in a row with the Treasury over how much it is prepared to pay to place £250 billion of assets into the Government’s toxic debt insurance scheme.Source: Latest Business News from Times Online | 27 Feb 2009 | 10:45 am Ryanair may charge £1 for lavatory useRyanair is considering charging passengers £1 1.40 to use the lavatory on its flights according to chief executive Michael O'Leary.Source: Telegraph Finance | 27 Feb 2009 | 10:39 am Eurozone jobless queues lengthenUnemployment across the nations that share the euro rises again to its highest level in more than two years, as more firms lay off staff.Source: BBC News | Business | World Edition | 27 Feb 2009 | 10:36 am Is It OK To Fire Citigroup’s (C) Board
Since Citigroup needs more money, it is not in a position to dictate terms. According to The Wall Street Journal, “As a condition, the government is demanding that the New York company overhaul its board of directors, the people said. Treasury will call for Citigroup’s board to be comprised of a majority of independent directors.” Since the government is instrumental in overhauling the board, it is fair to question how “independent” these new directors will be. The action by the government could be viewed as a violation of shareholder rights. The bank is not holding a special meeting for shareholders to approve the new slate. It is not clear how they will be picked. The fact that they will be picked at all is troubling. The move by the government is insidious and clever. The notion that US banks will be nationalized has disturbed the Fed and many members of Congress. A nationalization of Citi could lead to its bondholders taking huge losses. Since many of those holders are insurance companies and pension funds, a collapse in the value of Citi’s debt would trigger another round of government rescues. But, no matter how it gets expressed, Citigroup is not run by its board, and shareholders have lost their voice. Douglas A. McIntyre Tagged: C      Source: 247 Wall Street | 27 Feb 2009 | 10:35 am Eastern Europe banks get bail-outCentral and Eastern Europe banks are to get a 24.5bn euro rescue package to support them in the economic crisis.Source: BBC News | Business | World Edition | 27 Feb 2009 | 10:26 am Blame shifts to Brown's City minister in RBS uproarA former City executive recruited by Gordon Brown to help sort out the banking crisis came under political pressure today to explain his role in the boardroom deal that saw Sir Fred Goodwin walk away from the Royal Bank of Scotland with an annual pension worth almost £700,000.Source: Latest Business News from Times Online | 27 Feb 2009 | 10:12 am DoCoMo halts BlackBerry Bold sales due to overheating (Reuters)Reuters - NTT DoCoMo Inc, Japan's biggest mobile phone operator, said on Friday it has halted sales of Research In Motion's BlackBerry Bold because the phone can overheat while the battery is being recharged.Source: Yahoo! News: Business | 27 Feb 2009 | 10:09 am DoCoMo halts BlackBerry Bold sales due to overheatingTOKYO (Reuters) - NTT DoCoMo Inc, Japan's biggest mobile phone operator, said on Friday it has halted sales of Research In Motion's BlackBerry Bold because the phone can overheat while the battery is being recharged.Source: Reuters: Business News | 27 Feb 2009 | 10:09 am Who Stole The Numbers From The Budget?
The most prominent parts of the document have already been overexposed in the press. If the budget as it has been presented is voted into law, the US will have a deficit of $1.75 trillion, which is about 12% of GDP. That is the highest ratio since WWII, but no one seems to understand why that bit of trivia matters. For this year, the federal government will spend $3.6 trillion. A great deal of that money will go to lifting the economy out of its dire condition. The most important part of the budget which is not in the budget per se is that the Administration’s assumptions about future revenue and expenses are based on an economic contraction this year and GDP expansion of 3.4% next year, and 4% and 4.6% in the two years that follow. Japanese economists who lived though the “lost decade” would probably dispute the validity of those forecasts. They are, without question, astonishingly optimistic. As a matter of fact, there is no chance whatsoever that the economy will bounce back that quickly. The government has an odd way of contradicting itself in public, often over extremely short periods of time. The “stress test” program being applied to banks to check their financial viability assumes that unemployment could rise to 10% and housing prices drop another 20%. No one seems to have pointed out that the Treasury is using one set of pessimistic numbers to examine banks while the budget office is claiming that within a year the US economy will hit one of the most glorious periods in history. So, before getting to the first page of the new budget, it is worth noting that most of the assumptions on which it is based are flawed. Most accountants and business school students would, when asked to point to an example of a budget, come up with a document with figures showing expenses, income, profits and losses. It might even have a balance sheet and cash flow statement. The budget as it has been passed out to Congress and the press looks nothing like that. A long march through the document, which will be replaced with an even more detailed version in a few weeks, turns up almost no hard figures until the very end. The great majority of the space is devoted to wish lists, which offer very little concrete information about how the nation would be governed if these proposals were to be approved by Congress. An excellent case in point is the section on the National Aeronautics and Space Administration, NASA, which is everyone’s favorite government agency with good reason. The Department of Commerce does not oversee fiery launches of large rockets and the EPA has never put a man on the Moon. NASA gets two pages in the budget, only two. That is to run an arm of the federal government which the Administration proposes will spend almost $19 billion next year. The descriptions of how the money will be used are a bit broad. The most eye-catching is that the money NASA gets “Funds a robust program of space exploration involving humans and robots.” It is noteworthy that the budget does not say how the money should be split between humans and robots. That may have to be determined by a hand of poker in which the robots would have a clear advantage. The document does say that the US plans to return to the Moon by 2020, but that is the most detailed portion of the NASA section. The way that the Budget has been put together makes debating the budget difficult. Arguing over expressions is easy. Arguing over numbers is hard. But, since most members of Congress do not have degrees in mathematics, that may be for the best. There will be a huge fight over what happens to the budget, how much of it is changed, and how much will make it into law. This budget starts by saying “there are the years that come along once in a generation, when we look at where the country has been and recognize that we need a break from a troubled past, that the problems we face demand that we begin charting a new path.” With a credit card and $26 anyone can get a copy, but they won’t find much in the way of solid figures to find out where the money goes. Douglas A. McIntyre       Source: 247 Wall Street | 27 Feb 2009 | 10:05 am The Bank Leper List
The reason that releasing the figure is without purpose is that none of the banks are mentioned by name. The FDIC’s argument is that if the public knew which institutions were in trouble, customers would withdraw money so quickly that the firms would be out of business in a day. That would put a large burden on the FDIC because it insures the deposits at each of those banks, which have combined assets of $159 billion. When discussing the new list, FDIC Chairman Sheila Bair said she expected her agency to pay out $22 billion in insurance this year. On the back of an envelope that number would seem to indicate that the banking industry will not have such a bad year. The FDIC may not even have to go to the Treasury for the extra capital that might be needed as problem banks fail. During the savings and loan crisis in the late 1980s and early 1990s, 747 banks and S&Ls failed. Taxpayers pay to protect bank customers’ money, as is true with any bank failure involving FDIC-insured deposits. A taxpayer with $100,000 of insured cash in his local bank might get lucky. If the firm goes under and his deposits are saved by the FDIC, his years of paying taxes will come back to him with a profit. Last year, the omnipresent economist, Nouriel Roubini, told Barron’s that 1,400 banks would fail during the current economic crisis. Investment bank RBC Capital puts the figure at 1,000. Since there is no way to know how large the deposits at any of these institutions are, the amount of exposure the FDIC faces is impossible to forecast. But, it will be more than the $22 billion prediction. If 500 banks fail, which are fewer than those that failed in the S&L crisis, the figure is probably ten times that. The reason that the FDIC is releasing any number at all remains an enigma. It may be that the agency wants taxpayers to think it is doing a good job counting heads. Chair Sheila Blair is shameless in her courting of the media. She would like to be viewed as an equal to the Fed Chairman and Secretary of the Treasury. Maybe if she appears at enough press conferences, her dream will come true. Perhaps the main reason that people lose faith in their governments is that they believe the people in charge are either incompetent or dishonest. The average person must wonder whether anyone is in charge when the forecasts of bank failure rates are unbelievably low at the same time that the Administration is debating whether it may have to nationalize Citigroup (C) or Bank of America (BAC). Douglas A. McIntyre Tagged: BAC, C      Source: 247 Wall Street | 27 Feb 2009 | 9:57 am Rail ticket staff to go on strikeTicket office staff with a rail service operating between London and Essex are to go on strike in a dispute over holiday pay.Source: BBC News | Business | World Edition | 27 Feb 2009 | 9:57 am Obama forecasts $1,750bn deficitPresident Barack Obama unveiled the most expansive blueprint for federal government involvement in the US economy in more than a generation in a ten-year budget outline that showed this year's deficit quadrupling to $1,750bnSource: Financial Times - US homepage | 27 Feb 2009 | 9:56 am Ford to reopen Cleveland engine plantFord Motor Co. (F) will begin building its next generation fuel-efficient engine at a Cleveland plant the auto maker idled in 2007. The move is expected to create about 250 jobs.Source: Business and financial news - CNNMoney.com | 27 Feb 2009 | 9:54 am William Hill looks to raise £350mUK bookmaker William Hill looks to raise £350m in a rights issue as it addresses a deterioration in its credit markets.Source: BBC News | Business | World Edition | 27 Feb 2009 | 9:40 am Indian economy in sharp slowdownIndia's economy grew by less than expected in the last three months of 2008, official figures show.Source: BBC News | Business | World Edition | 27 Feb 2009 | 9:25 am Sir Fred Goodwin: Pensioners struggle as exbanker gets £650000 a yearSir Fred Goodwin may be enjoying a £650000 a year pension but thousands of other pensioners have seen their retirement income dive as a result of the problems caused by the banking crisis.Source: Telegraph Finance | 27 Feb 2009 | 9:22 am Boss shake-up at struggling SonyThe president of Sony - set to report its first annual loss in 14 years - is to step down from the firm.Source: BBC News | Business | World Edition | 27 Feb 2009 | 9:12 am William Hill to raise £350m to cut debtWilliam Hill, the bookmaker, is to raise £350 million through a rights issue, it said this morning.Source: Latest Business News from Times Online | 27 Feb 2009 | 9:12 am Profits soar at Rightmove as advertising moves onlineProfits at property website Rightmove jumped 41pc last year despite the collapse in the housing market as advertisers sought cheaper space online.Source: Telegraph Finance | 27 Feb 2009 | 8:55 am Media Digest 2/27/2009 Reuters, WSJ, NYTimes, FT, Bloomberg
Reuters reports that the government and Citigroup (C) has worked out an equity conversion deal that will give the government a large stake in the bank. Reuters reports that the attorney general in NY wants a list of the top bonuses from Bank of America (BAC) Reuters reports that American reaction to the Obama budget was mixed. Reuters reports the Lloyds posted a $15 billion loss. Reuters reports that Dell (DELL) sees a sales contraction in Asia. Reuters reports that Yahoo! (YHOO) reorganized its top management. Reuters reports that the CFO of Microsoft (MSFT) sees tough times ahead. The Wall Street Journal reports that the FDIC will double fees charged to lenders. The Wall Street Journal reports that Fannie Mae (FNM) lost $25 billion. The Wall Street Jouranl reports that GAP (GPS) had a 13% sales drop. The Wall Street Journal reports that data shows the recession is deepening. The Wall Street Journal reports that Buffett is still taking the long view on his investments, but his shareholders may not agree. The Wall Street Journal reports that heavy discounting hit Sears. The Wall Street Journal reports that Cablevision posted a big loss. The Wall Street Journal reports the China bought a big Canadian oil company. The New York Times reports that GM (GM) reduced it fuel economy estimate. The New York Times reports that insurance companies worry they will not get bailout money. The New York Times reports that the CEO of Sony (SNE) pushed out the president and took his job. The FT reports that Fannie Mae will draw another $15 billion from the government. Bloomberg reports that the government wants Citigroup to get private capital and change its board. Bloomberg reports that the US is working with troubled car company suppliers. Douglas A. McIntyre Tagged: BAC, C, CVC, DELL, FNM, GM, GPS, MSFT, SNE, YHOO      Source: 247 Wall Street | 27 Feb 2009 | 8:50 am Serco sees profit rise 19pc as outlook remains strongBritish government services firm Serco Group said its pretax profit rose 19pc in 2008 to £136m as long term contracts boosted it outlook through to 2012.Source: Telegraph Finance | 27 Feb 2009 | 8:23 am Asia Markets And US Open 2/27/2009
The Nikkei rose 1.5% to 7,568. The Hang Seng dropped .2% to 12,874. The Shanghai Composite dropped 1.8% to 2,083. At the open in Europe, the FTSE was down 1.5%. The Dax dropped 1.2% to 3,897. The CAC 40 fell 1.5% to 2,705. Data from Reuters and MarketWatch Douglas A. McIntyre       Source: 247 Wall Street | 27 Feb 2009 | 8:22 am Stanford executive to appear before US courtLaura PendergestHolt the chief investment officer of Stanford Financial Group is scheduled to appear before a magistrate judge in Houston later on charges she obstructed an investigation into an alleged 8bn financial fraud.Source: Telegraph Finance | 27 Feb 2009 | 8:08 am Mortgage giant Fannie Mae seeks $15.2 billion in government aidFANNIE MAESource: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am John Corrigan appointed Times business editor, Mary Braswell named weekend editorThe promotions, effective immediately, fill vacancies created by the forming of the paper's new arts and entertainment department. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am Coen brothers' TV ad ridicules 'clean coal'The Oscar winners, known for their sardonic style, directed the spot for an environmental coalition as a media battle warms up over the role carbon fuels should play in America's energy future. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am Weak healthcare stocks drag market lowerShares of HMOs and pharmaceutical firms are battered as Obama releases his budget. Healthcare stocks were hammered...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am Facebook offers users a greater voiceThe social networking site pledges to put decisions to an online vote and reaffirms users' rights to their personal data. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am Federal regulators ignored problems at IndyMac, report findsThe Treasury Department's inspector general says the Office of Thrift Supervision missed key signals pointing to shaky loans, leading to the mortgage lender's collapse last summer. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am Cost of banking industry rescue could doubleThe White House includes a $750-billion reserve fund in its budget outline to be used in case conditions worsen. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am GM posts $9.6-billion quarterly lossThe troubled Detroit automaker also says it lost $30.9 billion for all of 2008 -- its second-worst year on record. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am AIG could be broken upThe insurer reportedly could be split into at least three government-controlled units in an effort to save the business. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am Asian vehicles top Consumer Reports auto ranking -- againHonda is top automaker for the third year in a row. Toyota's Lexus LS 460 is best overall vehicle. Only one American vehicle, the Chevrolet Avalanche pickup, leads a category. ...Source: RSS feed - channel BNPaperBusiness | 27 Feb 2009 | 8:00 am William Hill to raise £350m in rights issueBritish bookmaker William Hill said it plans to raise £350m through a rights issue and has scrapped its final dividend as it looks to reduce debt.Source: Telegraph Finance | 27 Feb 2009 | 7:44 am Aust dollar closes flatThe Australian dollar closed little changed on Friday, and was stuck in recent trading ranges ahead of next week's central bank board meeting and interest rate decision. At 1700 AEDT, the Australian dollar was trading at US$0.6455/60,...Source: New Zealand Herald - Business | 27 Feb 2009 | 7:39 am Top N.Y. legal officer demands bonus list from BofA CEONEW YORK (Reuters) - New York's top legal officer on Thursday demanded Bank of America Corp Chief Executive Kenneth Lewis provide names of Merrill Lynch executives who received 2008 bonuses, and how much they got, before the bank's takeover of the firm in January.Source: Reuters: Business News | 27 Feb 2009 | 7:32 am Top N.Y. legal officer demands bonus list from BofA CEO (Reuters)
Source: Yahoo! News: Business | 27 Feb 2009 | 7:32 am Lloyds reports 80pc fall in profit set to put £250bn in asset protection schemeLloyds Banking Group reported an 80pc fall in profit at its Lloyds TSB business in 2008 while the troubled HBOS division suffered a £10.8bn loss.Source: Telegraph Finance | 27 Feb 2009 | 7:32 am Aust stocks close slightly lowerMELBOURNE - The Australian share market closed steady on Friday, dragged back from earlier highs after falls from Woolworths, QBE and Telstra. At the close, the benchmark S&P/ASX200 index was one point, or 0.03 per cent, lower...Source: New Zealand Herald - Business | 27 Feb 2009 | 7:06 am Sony chief Stringer to double as presidentSony unveiled a sweeping shake-up of its businesses aimed at better integrating its hardware and software operations and giving Sir Howard Stringer more control of the group's struggling electronics businessesSource: Financial Times - US homepage | 27 Feb 2009 | 7:02 am Dell sees 2009 contraction in Asia amid sales slumpTAIPEI (Reuters) - Dell Inc expects its Asia revenue to fall this year, amid heated competition and the global slowdown, but it still expects to pick up share in the PC markets in China and India, a top executive said on Friday.Source: Reuters: Business News | 27 Feb 2009 | 6:46 am Big ideas come out of job summitA nine day working fortnight that would see workers undertake a day of training on the tenth and a co-fund between banks and the government are the two major proposals to come out of today's Job Summit. The brainstorming sessions...Source: New Zealand Herald - Business | 27 Feb 2009 | 6:41 am NZ market closes with flourishThe New Zealand share market had a fairly lacklustre day but managed a spurt higher ahead of the close. The benchmark NZSX-50 index closed up 24.884 points, or 0.996 per cent, at 2522.317, after initially opening weaker on...Source: New Zealand Herald - Business | 27 Feb 2009 | 6:18 am NZ dollar quiet in heavy sessionThe New Zealand dollar had a heavy feel today and it drifted down toward support levels. The jobs summit is not a market mover so the focus in the currency market was, as usual, on global events and movements in equity markets. The...Source: New Zealand Herald - Business | 27 Feb 2009 | 5:31 am Satyam keen to sell 31 percent new stock to bidder: reportNEW DELHI (Reuters) - India's fraud-hit Satyam Computer Services wants to offer no more than 31 percent in new shares to a strategic investor, the Mint newspaper reported on Friday, citing a company source familiar with the matter.Source: Reuters: Business News | 27 Feb 2009 | 4:21 am Charlies reports interim lossCharlies Group Ltd, the drinks company fronted by celebrity Marc Ellis, reported an interim loss after encountering problems with its information technology system. The company said the $661,000 loss in the six months to December...Source: New Zealand Herald - Business | 27 Feb 2009 | 3:51 am New Image reports profit and sees growthNew Image Group Ltd, a seller of colostrum and other health products, reported a strong profit and said it is selling its first infant formula product in Asia. The company had earlier signalled a strong interim profit and today...Source: New Zealand Herald - Business | 27 Feb 2009 | 3:16 am Who got bonuses? BofA subpoenaedSource: Business and financial news - CNNMoney.com | 27 Feb 2009 | 3:08 am English: Taxpayers will decide on job summitFinance Minister Bill English today said it would ultimately be up to taxpayers to decide whether today's job summit in Auckland was a "talk-fest or a do-fest". Mr English, who delivers his first Budget on May 28, said...Source: New Zealand Herald - Business | 27 Feb 2009 | 2:15 am GPG reports $142m full year net lossGuinness Peat Group (GPG) reported a full year net loss of £50 million ($142.6 million), but chairman Sir Ron Brierley described the figure as "largely meaningless for present analytical purposes". "A number of portfolio writedowns...Source: New Zealand Herald - Business | 27 Feb 2009 | 2:10 am SEC alerted about Stanford in 2003A whistleblower contacted US regulators more than five years ago with allegations that Sir Allen Stanford's businesses were involved in an "illegal Ponzi scheme", the FT has learntSource: Financial Times - US homepage | 27 Feb 2009 | 1:32 am Microsoft CFO sees tough years aheadSEATTLE (Reuters) - Microsoft Corp's chief financial officer forecast at least another year of tough trading in all areas on Thursday, as the economy shows no immediate sign of recovery.Source: Reuters: Business News | 27 Feb 2009 | 1:29 am Yahoo CEO reorganizes companySAN FRANCISCO (Reuters) - Yahoo Inc Chief Executive Carol Bartz on Thursday took the wraps off a broad reorganization plan designed to dismantle what she called the "silos" that had slowed down the Internet company.Source: Reuters: Business News | 27 Feb 2009 | 1:24 am Dell profits drop as business takes batteringThe US personal computer maker reports a steep decline in sales and profits amid the global recession, but still beats earnings expectations through cost cuttingSource: Financial Times - US homepage | 27 Feb 2009 | 1:22 am Fannie Mae posts huge 2008 loss, seeks new bailout (AFP)
Source: Yahoo! News: Business | 27 Feb 2009 | 12:55 am Hedge fund in talks with Target on board seats (AP)AP - Activist hedge fund manager William Ackman is in talks with Target Corp. about naming potential directors to the discount retailer's board, according to a Securities and Exchange Commission filing on Thursday.Source: Yahoo! News: Business | 27 Feb 2009 | 12:54 am Fannie to draw further $15bnFannie Mae said it would draw more than $15bn of assistance from the US Treasury after a sixth consecutive quarterly loss – $25.2bn in the fourth quarter – drove its net worth below zeroSource: Financial Times - US homepage | 27 Feb 2009 | 12:54 am Apartment Buildings Can Be A Value Buy, But Weigh The RiskBuying a small apartment building as an investment may look attractive now, with prices down and more people needing to rent. But size up any...Source: Investor's Business Daily: BUSINESS | 27 Feb 2009 | 12:43 am Business Briefs - ThursdayKohl's tops, but lowers guidance. The department store chain said after hours that Q4 EPS fell 16% to $1.10, beating views by 7 cents. Revenue...Source: Investor's Business Daily: BUSINESS | 27 Feb 2009 | 12:43 am Trends & Innovations - ThursdayEateries let diners name their priceSource: Investor's Business Daily: BUSINESS | 27 Feb 2009 | 12:43 am In Brief - ThursdayWarnaco (WRC), an apparel maker, said its Q4 EPS fell 31% to 29 cents ex items, beating views by 14 cents. Revenue fell 4.4% to $445.9 mil. Shares...Source: Investor's Business Daily: BUSINESS | 27 Feb 2009 | 12:43 am Airline Takes Passengers From The Cold To The WarmAllegiant Travel is an airline like no other. It doesn't hedge fuel costs, sticks to small markets with no rivals and flees if one comes to town.Source: Investor's Business Daily: BUSINESS | 27 Feb 2009 | 12:43 am After The Close - ThursdayFANNIE MAE (FNM), the mortgage giant, posted a Q4 loss of $25 bil or $4.47 a share. It said it's requesting $15.2 bil from the Treasury Dept....Source: Investor's Business Daily: BUSINESS | 27 Feb 2009 | 12:43 am Fannie Mae seeks $15.2B in US aid after 4Q loss (AP)AP - Fannie Mae said Thursday it needs $15.2 billion in government aid though that figure is expected to grow because it lost nearly $59 billion last year as the foreclosure crisis mushroomed.Source: Yahoo! News: Business | 27 Feb 2009 | 12:12 am OFT can rule on bank charges, say judgesAn end to hefty bank charges for unauthorised overdrafts moved closer yesterday with a Court of Appeal ruling that the Office of Fair Trading can decide if such charges are fair. But the decision that fees levied on personal current account customers can be regulated could also herald the end of free banking.Source: Latest Business News from Times Online | 27 Feb 2009 | 12:00 am Royal Bank of Scotland rescue plan could be a winnerThe Government came up with a good, if highly complex, plan to stabilise RBS yesterday. Then it went and spoilt things with some bad, if easy to understand, political posturing.Source: Latest Business News from Times Online | 27 Feb 2009 | 12:00 am Carol Bartz aims to sharpen Yahoo! with new approachYahoo!'s chief financial officer is leaving the company in a management shake-up instituted by Carol Bartz, the new chief executive. Blake Jorgensen, who had been Yahoo!'s CFO since June 2007, will relinquish his duties as soon as a replacement is found, the company said.Source: Latest Business News from Times Online | 27 Feb 2009 | 12:00 am Need to know: Diageo signs deal ... BASF decline ... Hunting risesView video and Need to Know interactive heatmapSource: Latest Business News from Times Online | 27 Feb 2009 | 12:00 am How the Dow Jones industrials fared Thursday (AP)
Source: Yahoo! News: Stock Markets News | 26 Feb 2009 | 10:43 pm BAT lifts dividend after 20% increase in profitThe tobacco industry has secured its reputation as a safe haven after the second-biggest cigarette company reported an increase in pre-tax profits as revenues grew by a fifthSource: Financial Times - US homepage | 26 Feb 2009 | 10:36 pm New Autodesk Earnings Trends: Losses (ADSK)
Autodesk used to give much longer-term guidance. It noted the current uncertainty of the economy as the reason it is only providing guidance for the next quarter. Here is where this gets tricky…. The stock closed down 1.7% at $14.06 today and is down at $13.65 in the after-hours session. The fact that the 52-week trading range is $12.45 to $41.68 is not the point. The company doesn’t really dwell on “quarterly losses” here, but that is what it is telling you it will see on a net-net earnings basis. The past quarter had a loss of -$0.40 EPS, so next quarter will mark “another one” against the company. Charges happen and are not part of the non-GAAP measurement that traders and tech analysts like to use, but for quants and for screeners out there it will matter. Unfortunately, no one is used to seeing any “-” signs in front of its results. Jon C. Ogg       Source: 247 Wall Street | 26 Feb 2009 | 10:24 pm For Responsible RentersRuss Roberts is no fan of the Obama administration's economic policies. The George Mason professor and Planet Money guest says the stimulus is an outsize answer to a recession with employment still below 8 percent. He says the government ought to let some of the faltering banks fail. And when he looks at the particulars of the $787 billion stimulus plan, he notes one provision that strikes him as deeply, deeply wrong: an $8,000 tax credit for home buyers. On his blog, Cafe Hayek, Roberts headlined his objection "They never learn." "This is unbelievable," he told me. "It's like, 'We got into this problem by trying to let people buy houses they couldn't afford -- let's keep it going!' It's an extraordinary thing." Roberts argued that people who chose to rent rather than stretch their resources to buy homes were now in the position to take advantage of falling prices and become owners. "Let's let them," he said. And never mind the tax credit, he argued -- the responsible renters won't need it. "Let's let somebody buy the house who can afford it and has some skin in the game," he said. Bonus: Russ Roberts' EconTalk podcast » E-Mail This » Add to Del.icio.us Source: NPR Blogs: Planet Money | 26 Feb 2009 | 10:20 pm President Obama's budget'The really striking thing is the scale of the red ink here'Source: Financial Times - US homepage | 26 Feb 2009 | 10:17 pm Nasdaq OMX Group profit falls on special charges (AP)AP - Stock exchange operator Nasdaq OMX Group Inc. said Thursday its fourth-quarter profit plunged 53 percent primarily because of asset impairment charges and losses on foreign-currency contracts.Source: Yahoo! News: Stock Markets News | 26 Feb 2009 | 10:11 pm Write-Offs: 02.26.09$$$ Buyout, Hedge-Fund Managers Could Pay $24 Billion More in Taxes [Bloomberg] $$$ Beware False Bottoms in Home Prices [MoN] $$$ SEC alerted about Stanford in 2003 [FT] $$$ Elie Wiesel Has an Idea for How to Punish Madoff [Daily Intel] 
Source: Dealbreaker | 26 Feb 2009 | 10:10 pm Up Against The WallWhat is mostly amazing is that it took so long, but the head of Iceland's central bank, having refused to fall on his sword, is expected to be shown the door tomorrow. The United States is somewhat rare in isolating the head of its Central Bank from political removal- though I suspect if Congress really wanted to remove a Chairman badly enough, it could be done. In this case, however, Oddsson (the Central Banker in question) may be something less than culpable. Iceland's parliament passed a bill Thursday that will oust the country's central-bank chief, David Oddsson, who is widely blamed for a banking-system collapse that has wreaked havoc on the island's economy. Ironically, and as the Journal article points out, much of the central bank's decision making power was legislated away some years ago, but when someone has to go, they have to go. It's cold outside in Iceland nowadays too. Given Oddsson's claim that he warned repeatedly that banks were severely overextended, it is probably worth reflecting on the wisdom of introducing the whim of political accountability to central banks in light of Iceland's case. Iceland Parliament to Oust Central Bank Chief [The Wall Street Journal]
Source: Dealbreaker | 26 Feb 2009 | 9:46 pm Layoffs Watch '09: JPMOh hey, just messin' with ya about those job cuts from the House of Dimon earlier. Though Bearpont Morgan Mutual said this morning that cuts from the WaMu acquisition would clock in at about 12,000 total, that number was apparently revised to 14,000 this afternoon. NBD.
Source: Dealbreaker | 26 Feb 2009 | 9:29 pm Fuss Says Treasury Needs to Issue `a Lot' of BondsSource: Bloomberg - All Podcasts | 26 Feb 2009 | 9:03 pm Forecast: Sunny?Yesterday we blogged about the economic scenarios the government will be using to "stress test" the banks. Simon Johnson of Baseline Scenario says he finds the government's baseline scenario of 2.1% growth in gross domestic product next year optimistic. Today the Wall Street Journal considers another scenario, from the Congressional Budget Office. The Journal calls it "rosy." The CBO forecasts that GDP will drop just 2.2% in 2009, followed by 1.5% growth in 2010. By the time 2011 rolls around, the CBO expects major improvement -- 4.2% GDP growth. In terms of unemployment, the CBO's projection and the stress test's baseline are roughly in line, with each predicting joblessness to rise to more than 8% in 2009 and nearly up to 9% in 2010. As you can see in this chart, it's not as if the CBO sees an easy road ahead. » E-Mail This » Add to Del.icio.us Source: NPR Blogs: Planet Money | 26 Feb 2009 | 9:00 pm The Case For A Sin Bailout
Of course, these devastating effects are a direct result of Congressional and executive branch scorn: The negative publicity associated with Las Vegas is spurring cancellations across the city, already hurt by the U.S. recession, Wynn Resorts Ltd. Chief Executive Officer Steve Wynn said earlier this week. The chairman of "one of the healthiest companies" in the U.S. paid a $3.3 million fee to scrub a $5 million sales training event, he said. Cancellation fees won't last forever. We aren't sure what solution there is but to provide a sin-bailout. In these desperate times it is only fair, after all- particularly to those employees working their way though college now that subsidies will be undergoing upheaval. Bank of America Moves Health-Care Event From Vegas [Bloomberg]
Source: Dealbreaker | 26 Feb 2009 | 8:47 pm Agrium Cut to `Neutral' at UBSSource: Bloomberg - All Podcasts | 26 Feb 2009 | 8:13 pm Ross Says TALF Will Widen Credit Availability For Auto LoansSource: Bloomberg - All Podcasts | 26 Feb 2009 | 8:07 pm Where's Dick Bové When We Need Him?Does it frost anyone else's cookies that the FDIC comes out with a "list" of 252 "problem banks" (up 47% from the third quarter) but refuses to name names? Really, what's the point? (Yes, we're aware of the potentially dire consequences of calling banks out but this is about entertainment value.) Anyway, since SheBair insists on keeping it under wraps, let's decide here who's on it, or should be. Hopefully a note from the woodland creature will be forthcoming. Related: "Who Is Next?"
Source: Dealbreaker | 26 Feb 2009 | 7:37 pm Daiwa's Moran Calls U.S. Employment Reports `Troubling'Source: Bloomberg - All Podcasts | 26 Feb 2009 | 7:36 pm Dachille Says TALF Designed to Re-Start Consumer Lending MarketSource: Bloomberg - All Podcasts | 26 Feb 2009 | 7:27 pm It Is Probably Going To Hair Extinguishing Devices
The Securities and Exchange Commission is expected to receive a 13% funding boost next year, bringing its 2010 budget to about $1.02 billion. SEC May Get 13% Funding Increase [The Wall Street Journal]
Source: Dealbreaker | 26 Feb 2009 | 7:12 pm Down, Out In Rural U.S.December was a tough time for making a living in the heartland. The Daily Yonder reports that the rural unemployment rate was half a percentage point higher than the urban rate. In the first 12 months of the recession, rural counties lost just under 15,000 jobs, compared to 282,000 in December 2008 alone. Any given place lost jobs for its own reasons, from the RV shutdown in Elkhart County, Ind., to the houseboat collapse of southeastern Kentucky. And then there's this: In Deschutes County, Oregon, the unemployment rate has nearly doubled in the past year even as the number of jobs has increased. The problem in the fast-growing area around Bend is that more people are moving into the region than there are jobs being created. "The phenomenon we've seen here is what happens all the time, is they move here without jobs," said Roger Lee with Economic Development for Central Oregon. » E-Mail This » Add to Del.icio.us
Source: NPR Blogs: Planet Money | 26 Feb 2009 | 7:00 pm Price of health care plan is a doozyPresident Obama is proposing to set aside $634 billion for health care reform over the next 10 years by raising taxes on the wealthy and cutting Medicare costs. Janet Babin reports.Source: Marketplace | 26 Feb 2009 | 6:18 pm Budget-weary states cut green fundingThe stimulus package is devoting billions of dollars to alternative energy projects. But while the federal government is spending more on green, debt-burdened states are pulling back. Sarah Gardner reports.Source: Marketplace | 26 Feb 2009 | 6:09 pm So you want to start a franchise?As job losses mount, some people with the entrepreneurial spirit are considering franchising. Is that a good idea? Cash Peters reports from a franchising expo in Los Angeles.Source: Marketplace | 26 Feb 2009 | 6:05 pm Detroit's not feeling so alone anymoreLuke Bergmann, author of a book about Detroit, says the Motor City has reason for optimism: After years of feeling alienated from the rest of the country, it now shares in many of the nation's economic concerns. He talks with Kai Ryssdal.Source: Marketplace | 26 Feb 2009 | 6:04 pm Commission for budget a bad ideaSome in Washington want to create a commission to draft a balanced budget proposal. Commentator Lawrence Haas argues that lawmakers should do it themselves because that's why we elected them.Source: Marketplace | 26 Feb 2009 | 6:04 pm U.S. may take a large stake in CitigroupThe government has already spent $45 billion to prop up Citigroup. Now the U.S. may take a nearly 40% stake in the troubled financial giant. Jeremy Hobson reports.Source: Marketplace | 26 Feb 2009 | 6:04 pm Something's got to give to trim deficitPresident Obama wants to trim the nation's debt by trillions of dollars. But he's also planning to spend trillions more. What has got to give to get those savings? Ronni Radbill reports.Source: Marketplace | 26 Feb 2009 | 6:04 pm Presented By:Source: Dealbreaker | 26 Feb 2009 | 6:03 pm Sallie Mae PlungesAs you know from the Opening Bell, change is in the wind for student loans, but not exactly in the way we expected. Sallie Mae is down 40% today on the news that subsidies for student loans may well be a thing of the past if Obama's budget gets its way. It will come as no surprise that we are hardly fans of subsidies, but we are hard pressed to find a subsidy we like better. True, this may have the effect of deflating the bubble in higher educational costs, but Sallie is only about a fifth of the size of Fannie. This isn't exactly the place we'd look to shock the system just now. (Now that we think of it, however, it would get a bunch of those snotty college kids and MBAs into the workforce filling potholes). Hmmm. Dumb the country down. Reduce the number of property owners. This way we could make millions of jobs building dams and manufacturing solar panels by hand. Could work. Obama Calls for End to Loan Subsidy for Sallie Mae, Citigroup [Bloomberg]
Source: Dealbreaker | 26 Feb 2009 | 6:03 pm TSF Returns
For those of you who need a refresher, TSF was introduced decades ago (actual time: April '08), after a hero named Oyster Boy successfully downed 244 oysters in one hour at Ulysses (we started by sending OB a congratulatory cheesesteak from Delmonico's and from there it escalated into sending lunch to any old financial services hack each week). We had a good run, but with the summer's close and the world falling off a cliff last fall, the sandwich welfare program fell by the wayside (I blame Fuld). Now feels like as good at time as ever as to bring that shit back. Know someone who you think deserves a visit from The Sandwich Fairy? Send your nominations to tips at dealbreaker dot com. We'll start tomorrow, and do this weekly, perhaps upping it to daily if I get ambitious. (Please be advised that while TSF loves you all, she only makes stops in NY/NJ/and CT. And do us all a favor and review TSF Guidelines.)
Source: Dealbreaker | 26 Feb 2009 | 5:40 pm 'Do More With Less'In a report for Morning Edition, our own Chana Joffe-Walt traces the austere history -- and anxiety-inducing present -- of four words you'll all recognize: Do more with less. We're all hearing that catchphrase these days, the lucky ones of us who are still working after colleagues have been laid off. Joffe-Walt finds that do more with less goes all the way back to America's early days. "By diligence shall we do more with less perplexity," said none other than Benjamin Franklin. Somehow, I don't think he was quite envisioning the 21st century workplace when he came up with that. And whatever happened to the "perplexity" part? Now we're just supposed to do more with less, period. How's that working out for you. » E-Mail This » Add to Del.icio.us Source: NPR Blogs: Planet Money | 26 Feb 2009 | 5:33 pm Someone Get Me A Telemarketing Flow Chart
Accused fraudster and Texas billionaire Allen Stanford has been making calls to his Caribbean base of Antigua to try and gain support and allies, CNBC has learned. Stanford Makes Calls to Antigua to Gain Support [CNBC]
Source: Dealbreaker | 26 Feb 2009 | 5:19 pm London shares fall (AFP)
Source: Yahoo! News: Stock Markets News | 26 Feb 2009 | 5:08 pm Poterba Says U.S. Has Ability to Run Big DeficitSource: Bloomberg - All Podcasts | 26 Feb 2009 | 5:00 pm Interview with Unemploymentality(John & Tania) 1. How’d you come up with the idea for Unemploymentality? What was the context, what happened, why this blog, now? Tania and I were work friends and laid off on the same day. A week or so later we found ourselves obsessing over the details of what had happened. Tania and I were g-chatting and she mentioned how she wasn’t really inspired to write anymore. So we sort of acknowledged that we spend all our time obsessing about being unemployed, so why not use that as our inspiration. So we hashed out the unemploymentality concept right then and there and just ran with it. Additionally, we were let go as part of a fairly large layoff, and I saw a lot of very creative and talented people get the axe with us. So for me, I felt the blog was a way for us to take control of our situation and turn it into something positive - an outlet for that talent and creativity. We’ve already had a few contributions made to the blog from some of our former co-workers and fellow layoffees, and I hope that continues. 2. Does Unemploymentality employ you? As in, do you make any money off the blog? Or is it just a productive way to use your time? We make a tiny bit of money off of google adsense and pay pal donations, but nothing that’s going to support either of us. It may cover administrative costs and hopefully cover some research if we ever wake up early enough to cover any real stories. But if our traffic continues to grow like it has, I don’t see why we wouldn’t be able to attract a few advertisers…of course who really wants to advertise on an unemployment blog? Probably just liquor companies and Off Track Betting. In the meantime, it is indeed a great way to not only stay busy, but be productive and express ourselves. I’ve also learned alot about emarketing, SEO and even coding thanks to the blog, so I get the sense that it’s helping me grow professionaly as well. 3. Do you think about unemployment all the time? Does it depress you? How do you escape the mindset? When I think about how many jobs are being lost everyday - that depresses me, as it probably does everyone. And job searching sometimes seems futile, so that’s depressing too. I wouldn’t say I think about unemployment all the time, definitely don’t spend a lot of time thinking about my own unemployment. But it has become this weird additional layer of consciousness that informs how I interpret the world around me - that’s the unemploymentality and it’s so new to me that I actually find it pretty entertaining most of the time. Hell, it’s where I get all of my material. But ask me again in five months when I still don’t have a job and I think my answer would be quite a bit different. 4. What do you hope to accomplish with Unemploymentality? We’d like to see more people getting involved so it becomes a self sustaining community. Even when the economy turns around, there will still be unemployed people, there will still be people that feel like they can’t get a leg up in the corporate world, so hopefully this site will continue to be forum for these types of discussions and more. 5. How many readers, roughly, do you get? We get about 1,000 a day and that’s been growing. Plus our picture ended up prominently in the Reuters database, so every so often we end up in a newspaper or website and our traffic spikes (we love it when that happens). a) Laugh right in its face. 7. Any advice for unemployed people? Hmmm…well, I think the hardest thing for me at first was wondering if it was personal. It’s not. And even if it was, it really doesn’t do you any good to obsess over it. Move on. Secondly, don’t drive yourself and others crazy looking for a new job. Now that doesn’t mean you shouldn’t go out and network, call around and put a lot of time and effort into your job search, but pace yourself. Extend your day to allow yourself to take advantage of your newfound freedom from cubicles and spreadsheets. Take your time in the morning, take a longer lunch, ride your bike or pick up your kids and play with them. You’re not punching a clock - you can write a cover letter at 10pm just as well as you can at 10am. Source: Business Pundit | 26 Feb 2009 | 4:57 pm Herrmann Says Pace of U.S. Unemployment 'Terrifying'Source: Bloomberg - All Podcasts | 26 Feb 2009 | 4:55 pm Don't Fall For ItYou know those Internet ads for help finding a personal slice of the Obama stimulus package? The Big Money's Chadwick Martin saves you a trip by running down the scam: All of the blogs tell you to use the free software to get the $12,000 grants. To order that software, the blogs link off-site to a variety of Web sites filled with testimonials about how great their free grant-finding software is. What they don't say is that if you fail to cancel your subscription--a subscription the sites don't reveal exists outside --they'll charge your credit card until you discover their scheme and tell them to stop. » E-Mail This » Add to Del.icio.us Source: NPR Blogs: Planet Money | 26 Feb 2009 | 4:46 pm Eizenstat Says U.S. Auto Viability Plans `Sustainable'Source: Bloomberg - All Podcasts | 26 Feb 2009 | 4:17 pm Garrity Sees Diversification in Apple's ProductsSource: Bloomberg - All Podcasts | 26 Feb 2009 | 4:11 pm Nixon Sees `Enormously Precipitous' Declines in U.S. EmploymentSource: Bloomberg - All Podcasts | 26 Feb 2009 | 4:10 pm 10 Deceptive Business Models That WorkThe 2008 subprime crisis was characterized by deception. Optimistic homebuyers received mortgages that were then rebundled as assets and sold for profit. Nobody knew the practice would cause the economy to implode, but the fact remains that the process was deceptive. Many other deceptive business models thrive in our country. Some are subtle, but most are downright dirty. Here are ten deceptive business models that work: 1. Oil Speculation/Manipulation
There is a legitimate way to hedge against or above the futures contracts on oil. However, speculation turns to manipulation when traders “bang the close” by amassing large positions just before markets close. This forces prices up, at which point traders quickly sell their positions to drive prices back down–and pocket the difference. Some of these traders will have a ‘put’ (basically a short-term insurance bet on whether the price of a commodity or equity will rise or drop extremely) on both the high price and the lower price, effectively making money on both ends of the trade. Realize that ‘oil’ is a misnomer; there are no less than 161 different internationally traded crude oils and every one of them is probably a little crooked.
May I interest you in some volcano insurance in Vermont? How about an earthquake policy in Chicago? Most single-purpose insurance policies, including auto collision insurance, auto medical, and cancer insurance, are a bad deal financially. In some cases, they are downright fraudulent. However, it is still not illegal to sell someone “peace of mind,” even it if is written on a worthless piece of paper. 3. Light or Mild Cigarettes
They don’t contain less nicotine, carcinogens or additives, but the packaging sure is pretty. Even though this myth has been pointed out countless times, “Light” and “Mild” cigarettes continue to sell. Worse yet, as many as 62% of smokers believe they are “a reduced risk and better for you.”
Remember the glory days of music buying, when you taped a penny onto a postcard and marked the 10 albums you wanted Columbia House to send you? And after that, they’d send you another junky album, complete with a bill if you didn’t ship it back in time? While the practice itself may not be illegal, the lack of disclosure indicating that you must say no (take a Negative Option) to stop them from billing you is. 5. Bottled Water
It certainly is convenient to have a closed container of water to throw in the minivan or carry while walking. Just note that it is probably well-packaged, overpriced tap water. If you can’t stand to be without water and don’t mind the prospect of landfills overflowing with Aquafina containers, just make to avoid claiming it’s “healthier” or “safer” than tap water. 6. Pyramid Schemes
Multilevel pyramid schemes actually work–for the people at the top. Those who ‘get in’ late pay the bulk of the fees and make the fewest profits, but, just like in a Ponzi scheme, the early birds actually do get a return on their investment. The trick is to know a lot of people who a) want to buy stuff and b) want to sell stuff and c) be good enough at it for you to make a living, not just an extra $40 a month. 7. Click Fraud
There are two flavors of “click fraud”: Vanilla Ice Cream and Sour Grapes. The first happens when you place a revenue-shared ad on your website, then hire someone to click on that ad over and over. The advertiser pays a blind bill from Google and you get your free money. The latter happens when you get your people to bombard a competitor’s pay-per-click ads with clicks until it stops showing up. Google sends them a bill either so high that your competitor has to pull his ad, or that he cannot afford any more advertising based on the inflated cost. 8. Funeral Services
There you are, sitting in a plush, quiet room, facing a funeral director who smells like an Italian cologne maker and looks like a Wall Street stockbroker. As you leaf through brochure after brochure, you can’t help but wonder why the cost of a casket for your uncle–who will be cremated–is so expensive, or even necessary. The truth: It isn’t necessary at all, but smarmy funeral directors frequently try to illegally upsell unnecessary items.
“Auto Warranty Processing Services” sound legit, but are anything but. Direct mailers and telemarketers contact anyone who has ever owned an auto warranty and try to scare them into purchasing a new one. Their favorite tag line is that “your warranty has expired (or is about to expire).” Older people who take good care of their vehicles often fall pray to this scam. 10. Cell Phone Services
Cell phone complaints ranked as the most popular grievance to the Better Business Bureau in 2008. Rate plans, mysterious fees, long-term contracts, number transfer delays, early termination charges, and horrible customer service make the cell phone industry downright shameful. Yet they manage to keep up the shady service, because nobody can survive without a cell phone. Extra Credit: Pay only shipping and handling claims: Free products are rarely free–because of exorbitant, non-refundable S&H charges. Often the “handling” far exceeds the cost of the product itself. Source: Business Pundit | 26 Feb 2009 | 4:00 pm Why You Should Always Keep an Eye on Your EmployeesShouldn’t these guys have been working?
Source: Business Pundit | 26 Feb 2009 | 3:46 pm Out Of Financing In Boston
One big hole. Kalun Lee
Kalun Lee sends this image from Boston. She writes: This is a picture I took yesterday of the One Franklin development in the Downtown Crossing neigborhood of Boston. The empty space that you see is what used to be Filene's and Filene's Basement department stores. Filene's Basement is where the "running of the Brides" originated. One Franklin was intended to have luxury condos, retail and offices when it broke ground early last year. The developer tore down the building, dug a hole in the ground and then ran out of financing for the project. The tragedy is that there were a lot of small businesses at street level that were evicted for the development and Filene's Basement was a great place for close-out suits and inexpensive socks and underwear--things that I think are needed now more than ever. Kalun's note struck a personal chord with me -- I remember when that Filene's Basement closed just before I left Boston in 2007. It was sad, but at the time it seemed like the area had a bright future ahead. » E-Mail This » Add to Del.icio.us Source: NPR Blogs: Planet Money | 26 Feb 2009 | 3:43 pm In Case You Were Worried About Getting to Work on Time…
Source: Business Pundit | 26 Feb 2009 | 3:38 pm What An Economist HearsPeople are debating whether Treasury Secretary Tim Geithner delivered fluff or substance in yesterday's interview with Adam Davidson. Simon Johnson, former chief economist of the IMF and a Planet Money regular, heard this: The bottom line is that the government will support the credit system a great deal and in many innovative ways, but Treasury will try really hard to avoid FDIC-type takeovers/reprivatizations of large banks. This is quite striking, and presumably the hope is that a big "no nationalization" rally in the price of banks' common equity will turn the tide more generally. » E-Mail This » Add to Del.icio.us Source: NPR Blogs: Planet Money | 26 Feb 2009 | 3:16 pm Obama Budget: Higher Taxes, Healthcare, and a Deficit MysteryPresident Barack Obama presented his budget plan to Congress today. CNN reports on the Obama budget: One high-profile proposal involves closing the loophole that has allowed some Wall Street investment managers to pay lower tax rates than their low-paid assistants. Wall Street lobbyists have fought such changes in the past and won, but the current political environment is so sour on financial executives that the proposal could garner more support now. On agriculture, the Obama administration is aiming to save $9.8 billion over 10 years by phasing out direct payments to farmers with sales revenues of $500,000 or more per year. On education, the administration is considering elimination of the Federal Mentoring Program created by the previous Bush administration to save nearly $50 million. On defense, the administration’s list suggests it will target expensive weapons systems but does not specify which programs will be cut or how much money will be saved. The list did contend the Pentagon’s new weapons programs are “among the largest, most expensive, and technically difficult that the Department has ever tried to develop. Consequently, they carry a high risk of performance failure, cost increases and schedule delays.” Obama is also proposing a $634 billion health care “reserve fund” aimed at reforming the system, according to senior administration officials. In order to fund it, Obama will ask wealthy Americans to deal with a tax increase and wealthy seniors to pay higher Medicare premiums. Obama is pretty much acting as expected here. The only confusing facet is his concurrent plan to halve the deficit by 2013. Why the tight timeline? I’d like to hear an explanation of a) why it’s necessary to act on the deficit so quickly, and b) how, exactly, he plans on reducing it. Source: Business Pundit | 26 Feb 2009 | 2:20 pm 'No Sector Is Safe'Unemployment claims have hit a 26-year high. Calculated Risk brings the cool charts. Me, I'm taking the news straight up -- thanks to the morning note from High Frequency Economics' Ian Shepherdson: Jobless claims jumped 36K to 667K, a 26-year high and above the consensus 625K. Last week's claims were revised up 4K to 631K. The consensus forecast of a small dip in claims always looked like wishful thinking. The trend in claims is sharply upwards, reflecting the depth of the recession, and we see no reason for it to peak anytime soon. Indeed, adjusted for population growth claims are still well short of the peaks seen in the mid-70s and early 80s; to match them now would require the weekly numbers to breach the 1 million mark. We fervently hope that does not happen but we are not confident. Companies are throwing in the towel as they recognize that no sector is safe. On the back of these data we have to expect the rate of fall of payrolls to rise further; 750K monthly declines are looming. » E-Mail This » Add to Del.icio.us Source: NPR Blogs: Planet Money | 26 Feb 2009 | 2:04 pm
|
Citigroup (C) may not have picked up much in its deal with the federal government. It shareholders will get crammed down. Tax payers will own more of Citi, about 36%, which is not necessarily a win.
Dell’s earnings dropped 48% last quarter and now it will probably fire more people. The numbers were not a surprise. Independent research shows PC sales falling around the world as the recession sets in. Earnings from Hewlett-Packard (HPQ) and Lenovo have confirmed that. There is even concern that sales of the popular Apple (AAPL) Mac may drop.
American car companies can always hope that as the economy emerges from recession and car sales pick up that they will have a reasonably good chance to keep market share and return to being profitable businesses.
It has begun to occur to the financial industry and the central banks of the G7 and a number of smaller Western European countries that if some of the nations in Eastern Europe default on their debt, the world may look as it did three decades ago when several Latin American nations struggled to make payments on their sovereign obligations.
It is a corporate governance issue as much as anything else. Can one shareholder essentially “fire” most of a public company’s board without the approval of other shareholders? That it what the federal government proposes to do with Citigroup (C) and it raises the issue of whether the board has lost de jure control of the company.
The proposed budget that the Administration released yesterday runs 184 pages, if the sections called “Notes”, which are blank pages for calculations and thoughts, and the order page where anyone can put in a credit card and get a hard copy for $26, are left out. There is also a bar code on the last page so that the Budget can be scanned at a grocery store like a can of peas.
Once a quarter, the FDIC does something which seems to have little purpose. It releases its list of “problem” banks. These are institutions which face a high risk of failure because of their balance sheets and business prospects. The agency keeps a particularly watchful eye on them because it could be called on at any moment to take them over. The list for the final quarter of 2008 had 252 banks on it. This figure was up nearly 50% from the previous quarter, but given that some of the nation’s largest banks seem to be on the brink of failure, the number 252 seems unexpectedly low.
According to Reuters, Obama is prepared to put up to $750 billion into banks.
Markets in Asia were mixed.
Autodesk, Inc. (NASDAQ: ADSK) is trading lower after its earnings, or at least after its losses. The software and design assistance company did beat expectations with $0.31 EPS as revenue dropped 18% to $49 million. First Call had consensus estimates at $0.21 EPS and $484.5 million in revenue. The good news stops there.
