Thread: Bank failure(s)

Even before the government announced its latest efforts to fix the troubled banking industry on Tuesday, executives at Goldman Sachs and Morgan Stanley said they wanted to repay the money quickly. Both banks received $10 billion under the first rescue plan last fall.

Paying back all those funds would be difficult in this tough economic environment. But banking executives worry that the government may intrude further into their businesses as long as they are beholden to Washington.

“We just think that operating our business without the government capital would be an easier thing to do,” said David A. Viniar, the chief financial officer of Goldman. “We’d be under less scrutiny, and under less pressure. Not that we’d be out of the public eye; we’re still going to be in the public eye.”

Some Banks Want to Return Government Money - NYTimes.com

When you deal with the devil don't act surprised when you get stabbed in the a## with his/her pitchfork

Originally Posted by SheepOfBlue

When you deal with the devil don't act surprised when you get stabbed in the a## with his/her pitchfork

The execs don't want to lose their paychecks.

A slightly better Wall Street yesterday, ending up (just). Asia and Europe down 1-3% today. Congress leaders indicated a compromise on the stimulus package could be reached.

A key Bank of England report yesterday produced a -4% growth forecast for the UK economy and indicated it would follow the Fed in going to zero interest rate policy and quantitative easing, including buying government bonds. The Bank of Korea cut rates 0.5% to 2%, its lowest ever.

Pioneer is to withdraw from the TV business by March 2010 and is cutting 10k jobs worldwide. South Africa's Finance Minister says the numbers of people on benefit is unsustainable, having grown by 9.2% pa for five years to 13.5m. US home foreclosures were 275k in January, the 10th month above 250k and the 37th month of year-on-year increases. January was, nevertheless, down 10% on December's peak levels as banks try to ease foreclosure conditions under government pressure. Nevada filings were up 137% year-on-year, Illinois 85% and Arizona 62%.

Modest gains on Wall Street yesterday, Asia and Europe up 1-2% today.

German Q4 2008 gdp declined 2.1% and French 1.2%, Estonia fell 3.5% and Hungary 1%, all quarter-on-quarter. European industrial production fell 12% year-on-year in December. US retail sales in January rise 1%, compared with -1% expectations.

Toyota freezes wages for 2009 in its US plants and offers voluntary redundancy terms.
Edit: Chrysler news http://www.autocar.co.uk/News/NewsAr...llCars/238151/

Originally Posted by oldfogey

Edit: Chrysler news Autocar - Chrysler faces radical shake-up

My local news was making noise today about a Chrysler-Nissan deal? I don't see anything about that in the article.

Originally Posted by oldfogey

Edit: Chrysler news Autocar - Chrysler faces radical shake-up

So, how then, is employing a UAW worker at a GM/Ford/Toyota etc etc plant not employing your competitor to work in your factory?

The lack of detail in Geithner's plan continues to disappoint markets with no further announcements over the G7 meeting weekend. Wall Street off 1% on Friday, Asia and Europe down modest amounts today.

Japan's Q4 2008 gdp dropped 3.3% quarter-on-quarter. In case it wasn't obvious, the number quoted in Friday's entry for European countries and this are actual numbers, not annualised, so the 3.3% = 12.7% annualised.

Mini cuts weekend shift, 850 contract workers laid off. President Obama decides against a "Car Czar" and says Geithner and Summers will be responsible.

Wall Street 1% down yesterday, Asia and Europe down 1.5% today. President Obama is due to sign the economic package today (Tuesday).

Some firms are doing well in the recession: Domino's Pizza in the UK and Ireland has profits up 25% on a 10% increase in sales as people buy takeaway food rather than go out to restaurants. KFC in the UK is adding 9k jobs as it expands the number of outlets.

Fujitsu is to sell its hard-disk manufacturing unit to Toshiba. GM considers closing two Opel factories (Antwerp and Bochum) and closing the Saab factory in Trollhatten if it cannot sell the unit. The Opel factory at Eisenach could be sold to a competitor. The aim is to cut production by 1m units and cut labour costs as part of its plan to US Congress. GM has yet to submit a plan to the Swedish government, seeking subsidies for Saab, that has been accepted.

Japanese Finance Minister Shoichi Nakagawa resigns after accusations he was drunk at the G7 press conference at the weekend. Prime Minister Aso already has one of the lowest approval ratings at less than 10% of the electorate.

Update: http://news.bbc.co.uk/1/hi/business/7893574.stm

GM and Chrysler claim more support today and need to submit plans.

http://news.bbc.co.uk/1/hi/business/7894201.stm

Daimler announces Q4 08 loss, but profit for year 2008.

A sharp down day on Wall Street, down 4%. Europe had already dropped by the close yesterday, ending down 3-4%, so this morning emerging markets are down 4% but Japan is down 1.5% and Europe mixed.

Further to the carmakers' plans yesterday, GM plans do not include production cuts for GM Daewoo in Korea which now produces 20% by volume of GM's cars. 60% of the unit's exports are branded Chevrolet.
GM, Chrysler seek nearly $22 billion more U.S. loans | Reuters
http://www.carmagazine.co.uk/Communi...ability-Plans/

The German Finance Minister admitted yesterday that European bailouts within the EU could extend to nations as well as companies, admitting that some of the countries' finances were in difficulty. He named Ireland, but Greece is also having problems and Poland could yet precipitate further issues. Poland recently stated that the conditions were not right for it to join the Euro, following recent market weakness for the zloty. 60% of mortgages issued in Poland in recent years have been denominated in Swiss Francs or Euros (lower interest rates) so the effect on the housing market, personal bankruptcies and the banking system of a further devaluation would be huge. The Zloty has already fallen 25% against the dollar in 2009, as has the Hungarian forint. Austria earlier this week tried to canvass a loan to the Eastern European EU members but Germany turned it down.

Allen Stanford has been charged with massive fraud, in an echo of the Madoff case.

Originally Posted by oldfogey

Further to the carmakers' plans yesterday, GM plans do not include production cuts for GM Daewoo in Korea which now produces 20% by volume of GM's cars. 60% of the unit's exports are branded Chevrolet.

I missed this nugget while skimming yesterday...

Originally Posted by oldfogey

Fujitsu is to sell its hard-disk manufacturing unit to Toshiba.

That (hard drives) is a brutal business.

Wall Street ended flat and Asia and Europe are mixed today, +/-1%.

US industrial production was down 1.5% in January month-on-month, down 10% year-on-year. Industrial capacity utilisation is at a post-WWII-low. Russian unemployment reached 8.1% in January, a four-year high, and industrial production is down 16% year-on-year.

The Bank of England has asked the Treasury for permission to issue more money to buy government and corporate bonds (quantitative easing). The Bank of Japan similarly announced plans to buy $11bn of corporate bonds. The EU Commission announced a list of countries that will have to go through the procedure of explaining that fact that their budget deficits have exceeded 3% of GDP and their plans to get back "on track". Nobody thinks this is anything other than a formality. The World Bank has publicly requested that the EU coordinate assistance for the Eastern European nations in trouble.

Hewlett Packard announces it reduced revenue expectations for 2009 by $14bn from $130bn to $116bn on upper-range forecast.

Edit: It looks like Saab is going into the local equivalent of Chapter 11:
http://news.bbc.co.uk/1/hi/business/7899244.stm

Another drop on Wall Street reflected in Asia and Europe today. Wall Street down 1-2%, Asia the same, Europe 3% this morning. The Euro has had its worst week against the dollar ever and the yen is also weakening against the dollar. Markets are now generally trading close to their lows hit in November 2008.

US Philadelphia Fed index fell to -41.3 in February, worse than expected. Semi equipment orders in January fell 25% and book-to-bill was at 0.48, equalling previous record lows. The UK budget surplus in January, tax-paying month for companies and individuals, was the lowest for 14 years. European purchasing managers' index for industry and services in February fell to all-time lows, reversing a January improvement.

Saab's filing for protection from creditors was confirmed. GM's unit Opel is rumoured to be asking for $2.5bn from the German government to prevent closure. Anglo American, the mining company, suspended dividends and buybacks and announced 19k job cuts globally. Japanese brewer Kirin buys a 43% stake in San Miguel, the Philippine brewer, for $1bn.

Thank heavens for the stimulus bill signed on Tuesday. Has the Dow gone up one tick since??

Originally Posted by BizJetGuy

Thank heavens for the stimulus bill signed on Tuesday. Has the Dow gone up one tick since??

Patience, young Gen Xer. Some things take time.

Originally Posted by seamus

Patience, young Gen Xer. Some things take time.

More a snide remark than insightful commentary...

Originally Posted by seamus

Patience, young Gen Xer. Some things take time.

And some things take an undefined period during which there will have perceived emergencies that require ever more actions to achieve non-measurable goals.

I have to say, Sheep, that is one of your better avatars.

1% up on Wall Street Friday, today Asia and Europe mostly up, range -1% to +3%.

EU conference over the weekend aimed to steady nerves but also agreed to increase regulation on markets, credit agencies and hedge funds. The German Finance minister indicated Germany might be willing to bail out some of the weaker EU nations. Asian nations agree $120bn pool of reserves to support currencies. US January CPI on Friday was flat year-on-year for the first time since 1955.

No big news over the weekend on the banks, but lots of official rumours on additional support for particular banks in the US (Citi) and UK (Northern Rock, RBS) and progress on bad bank / good bank division. It looks like the US will create an institution for the bad bank while the UK is insuring assets on a bank by bank basis. RBS announced 20k job losses. A Japanese bank lending to smaller companies defaulted (SFCG) leading to a fall in Japanese financial share prices. Nomura announced a $3.2bn share issue.

Honda announces new President: Bloomberg.com: Asia

So, confidence cracked without the US Bank plan details and in face of the onslaught of negative economic news. Wall Street down 3.5%, Asia down between 1% (Australia) and 5% (China), Europe down 1% this morning, having closed down sharply yesterday on Wall Street's early decline. The yen is at a 12-day low against the dollar in a reversal of the trend since the November lows.

Lonmin is closing a platinum mine in South Africa and eliminating 5,500 jobs after the sharp drop in demand (on lower car sales). Anglo Platinum is reducing jobs by 10k. The platinum price has halved since its high last March. Ford announced a deal with the UAW where half of the payments due to its VEBA fund will be paid in Ford stock. Ford owes $13.2bn to its VEBA fund, of which $3.2bn is due in 2010. GM owes $20.4bn and Chrysler $10.6bn to their VEBA plans.

Canada's December retail sales fell 5.4% month-on-month and car sales 15%, giving a 23% year-on-year decline in December car sales.

I have to admit my confidence is close to cracking. I hate to get out at the bottom but And I can see the current spend and spend policy will be followed by spend and tax the producers more soon. I cannot see anyway that people with $$ will soon be demanding higher rates for it leading to inflation. I really hope I am wrong but I just keep seeing the return of the Carter years on more and more fronts

http://dshort.com/charts/bears/four-...nded-large.gif

Originally Posted by ND4SPD

http://dshort.com/charts/bears/four-...nded-large.gif

Speaking of confidence...that sharpish piece in the middle speaks volumes...

Could Canada actually been doing things right???






Canada, No Bailouts in banking, No Bailouts for businesses, The Greatest Banking System in the world.Please read on.

NEWSWEEK - Published Feb 2009, by Fareed Zakaria

Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, Britain's 44th.

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn't grown in size; the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1-compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking.

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn't deductible up north. In addition,
home loans in the United States are "non-recourse," which basically means that if you go belly up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours. Ah, but you've heard American politicians wax eloquent on the need for these expensive programs-interest deductibility alone costs the federal government $100 billion a year-because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership?
It's 68.4 percent.

Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing, unlike our own insolvent Social Security. Its health-care system is cheaper than America's by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; "healthy life expectancy" is 72 years, versus 69. American car companies
have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America's largest car-producing region.

I could go on. The U.S. currently has a brain-dead immigration system. We issue a small number of work visas and green cards, turning away from our shores thousands of talented students who want to stay and work here. Canada, by contrast, has no limit on the number of skilled migrants who can move to the country. They can apply on their own for a Canadian Skilled Worker Visa, which allows them to become perfectly legal
"permanent residents" in Canada-no need for a sponsoring employer, or even a job. Visas are awarded based on education level, work experience, age and language abilities. If a prospective immigrant earns 67 points out of 100 total (holding a Ph.D. is worth 25 points, for instance), he or she can become a full-time, legal resident of Canada.

Companies are noticing. In 2007 Microsoft, frustrated by its inability to hire foreign graduate students in the United States, decided to open a research center in Vancouver. The company's announcement noted that it would staff the center with "highly skilled people affected by immigration issues in the U.S." So the brightest Chinese and Indian software engineers are attracted to the United States, trained by American universities,
then thrown out of the country and picked up by Canada-where most of them will work, innovate and pay taxes for the rest of their lives.

If President Obama is looking for smart government, there is much he, and all of us, could learn from our quiet-OK, sometimes boring-neighbor to the north. Meanwhile, in the councils of the financial world, Canada is pushing for new rules for financial institutions that would reflect its approach. This strikes me as, well, a worthwhile Canadian initiative.

Canada The Greatest Place on Earth.






This is a quote...not my own writing but for some reason I cant get it to appear correctly so I just copied and pasted.

"I could go on. The U.S. currently has a brain-dead immigration system. We issue a small number of work visas and green cards, turning away from our shores thousands of talented students who want to stay and work here. Canada, by contrast, has no limit on the number of skilled migrants who can move to the country. They can apply on their own for a Canadian Skilled Worker Visa, which allows them to become perfectly legal
"permanent residents" in Canada-no need for a sponsoring employer, or even a job. Visas are awarded based on education level, work experience, age and language abilities. If a prospective immigrant earns 67 points out of 100 total (holding a Ph.D. is worth 25 points, for instance), he or she can become a full-time, legal resident of Canada."

This is total unadulterated bull$hit. My sister has been trying to achieve permanent resident staus in Canada for 4 years. She holds a masters degree in Architechural Design, is financially independent, owns (outright) a large home and property in Nova Scotia and has full coverage health insurance from her husband's trust. The Canadian immigration department has repeatedly refused her application for permanent resident status claiming she will become a "drain on the Canadian economy".. She has stated in writing that she will waive any Canadian social program benefits and is willing to pay whatever taxes they feel appropriate, but they have stonewalled her with this same story since 2005.

She has personally put several hundreds of thousands of dollars into the Canadian economy and she is treated like a criminal.

Sorry, but that quote just sent me over the top . . .