February 2009
85 posts
Job Cuts 2/27/09
The night draws to an end and I realize that I haven’t gathered my job cuts for the day. I had a couple, and found a few more. Here are the headlines for today:
NiSource Gas Transmission Unit to Cut Up to 380 Jobs — NiSource was always a good natural gas trade. They were the “safe” trade you went to when other things went to hell. Everyone is in trouble.
GM’s Brazil...
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Bank Failure Friday
It’s Friday, and two banks have been added to the FDIC failed bank list:
Security Savings Bank, Henderson, NV — An estimated cost of $59.1 million to the FDIC fund.
Heritage Community Bank, Glenwood, IL — $41.6 million.
Not too bad.
GDP Just Shy of Expectations, -6.2%
The low side of the consensus reported by Bloomberg was -6.1% annualized (which is interesting, because expectations were down to -6.5% when the preliminary report was released). The BEA report came in at -6.2%. Remember that the preliminary report estimated -3.8%, beating expectations. This is a rather significant revision. From the official report:
Real gross domestic product — the...
U.S. GDP Drop of 10% ‘Conceivable’ This Quarter,... →
— I think it is fair to say that the chief US economist at Deutsche Bank is more pessimistic than the worst-case scenarios being used in the bank stress tests. Those assume a 3.3% decline in 2009 and a 0.5% growth in 2010 (from the FAQ). These stress tests are kind of a waste of time anyway. We’ve already been assured that the banks are well capitalized.
Japan Recession Deepens as Factory Output Plunges... →
— Manufacturing is not doing well in Japan.
Job Cuts 2/26/09
There are a lot of articles here, but they’re pretty spread out around the globe:
Rocky Mountain News closing after Friday edition — Denver paper from 1859 to 2009. The editorial staff is 230 (10 will be hired by a rival newspaper). The total number of jobs lost is unclear.
Limited Predicts First-Quarter Loss, Cuts 400 Jobs — Victoria’s Secret is that nobody is buying...
Weapons, subsidies, loopholes among budget cuts -... →
squashed:
At first impression, I’m pretty happy with these cuts. Some of them—like the cut in farm subsidies—are going might have a rough time in Congress.
Did you just hear Obama’s speech on this (as in, 10 minutes ago)? I have to say, it was pretty encouraging. I realize he may have had to dig, but he brought forward a program—an academic mentoring program at that—and said...
Unemployment Still Bad, "Recordbreaking"
It’s Thursday, and time for the weekly unemployment insurance data. The AP and Bloomberg headlines were both pretty tame. I watched CNBC claim that everyone was being a bit of a Cassandra for calling the numbers recordbreaking given that the labor pool has grown 50% since the prior (higher) high in 1982. It should be no surprise that CNBC had the scary headline: Jobless Claims Hit New...
Job Cuts 2/25/09
Today a job cut headline made the front pages again. I guess Nortel ranks high enough to warrant some space. Here are the big headlines from today:
Nortel Networks to cut 3,200 more jobs — 10% of their workforce. This is in addition to 1,800 already announced. It’s not clear where (US, Canada, elsewhere) these jobs will come from.
Advantest to Cut Workforce 26% After Forecasting...
Germany CDS Spreads Widening
Conditions are deteriorating wordwide (although the headlines from Australia are mixed). Eastern Europe is on everyone’s watch list. I found this via Naked Capitalism today. The Telegraph reports German CDS debt spreads hit record as economy crumbles:
Credit default swaps measuring risk on five-year sovereign debt touched 90 basis points on Tuesday and looks poised to rise above French...
My Kindle2 Just Arrived
Job Cuts 2/24/09
Tonight was a good night for me. I was able to hang out with my buddy from Ireland. He’s visiting for the week, but he was only free tonight. So, where did we go? We met at a local Irish pub. It’s not that bad; his brother-in-law built the back bar, so it’s somewhat of a custom. We discussed the rotten Irish economy, the rotten American economy, the rotten … well, you get...
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Job Cuts 2/23/09
Today’s financial news headlines were generally about topics other than job cuts. Still, I didn’t have to dig deep to find these headlines:
Micron to Cut as Many as 2,000 Jobs at Idaho Plant — 500 in the near future and the other 1500 in the next 6 months.
Vodafone Said to Plan Hundreds of Job Cuts at U.K. Division — More details tomorrow when the official plans are...
U.K. Should Build Homes to Escape Recession, BOE’s... →
— I’ll be honest, this headline caught me by complete surprise.
AIG in talks with U.S. government for more funds →
My current concern with an RTC-style (or FDIC style) clearinghouse for the dead banks (which I still think is the best available option) is that the government was supposed to do the same thing with AIG: chop it up and sell it with minimal losses to taxpayers. It now appears as if AIG is a black hole for US funds.
More on Citi Drama
Yves at Naked Capitalism has two posts worth reading on the Citi saga:
Now It’s Official: Stress Test Results Pre-Determined — This is really about the bank stress tests in general, but there’s a great anecdote about Citi.
Citi Endgame Nigh? — This is a fun read on this equity conversion Citi is pushing for.
Calculated Risk posts WSJ: Citi and U.S. Government in...
Citigroup in Talks That May Raise Government’s... →
Let’s do some math: $45 billion cash injection - 40% of $10 billion market cap = $41 billion in free money for Citigroup from the US taxpayer. That’s what has stock futures up right now. The $45 billion cash that was supposedly going to be paid back with interest could be converted into $4 billion in stock. But hey, it’s “a transaction that wouldn’t cost taxpayers more...
Job Cuts 2/20/09
I don’t know if today was a great day for job cut announcements or if everyone was just too focused on the market to bother making the headlines. I found one headline, and it sounds worse than it is:
Nissan Cuts U.S. Auto Planning Team; Mazda Trims Jobs. Actually, let’s just quote the article since there’s only one today:
Nissan Motor Co. is chopping its California-based...
Bank Failure Friday
I’m heading out to dinner soon, but there’s been one bank added to the FDIC Failed Bank List.
Silver Falls Bank in Silverton, OR failed, with an estimated cost of $50 million to the FDIC fund. It had total deposits of $116.3 million, so once again, this represents a bank that was a little beyond insolvent.
The night is still young, so there may be more.
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You Think It's Bad Here, Russia Edition
Russia isn’t looking so hot right now. If this is a crisis of confidence, it is going to be a lot harder for Russia to pull out of it. Bloomberg reports Russians Retrench as Crisis Evokes Memories of 1998 ‘Nightmare’:
Russia has lurched into reverse after 10 years of uninterrupted growth driven by revenue from oil, gas, metals and consumer spending. While almost half of all Russians...
Job Cuts 2/19/09
Were any job cuts actually announced today? You’d think there were with headlines like this: Feb. could be worst month yet for jobless claims. Let’s check the headlines:
U.K. Shoe Sellers Stylo, JJB Cut About 3,000 Jobs — Retail jobs aren’t safe in any country.
Brazil Posts First January Job Loss in Seven Years — The BRICs are about to start dropping like one.
...
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Unemployment Holding Steady
It’s Thursday. That means that the Unemployment Insurance Weekly Claims Report is out. Sadly, it didn’t really make headlines today. Bloomberg had a rather gloomy take on the report with U.S. Jobless Benefit Rolls Reach Record 4.99 Million (emphasis mine):
The number of Americans collecting unemployment benefits jumped to 4.99 million two weeks ago, breaking a record for a fourth...
Watch— A buddy of mine just sent me this. It’s a pretty good explanation of the credit crisis, and some nice animation work. The only place I take issue is on the “Turning Point.” I think there’s a good chance the problem could have been self-correcting if the Fed hadn’t held interest rates low while bank demand for credit was increasing. The higher rates would have...
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SEC Uncovers Ponzi Scheme Targeting Deaf Investors →
— This is appalling. This scam is only $4.4 million.
UPDATE: My terse comments can be easily misread (and has resulted in some minor ridicule by my coworker). Read it as two separate statements. The “only” bit is in reference to the fact that other recent scams have been much larger, but that $4.4 million is still a lot of money.
Monetary Policy Problem
My Milton Friedman books on monetarism have yet to be cracked (I’m busy reading other things). This is sad because I’m fairly certain he thought of this particular problem. Right now, the government is trying to inflate (expand the money supply). They are battling against a tremendous contraction in credit (which dominates the money supply). Friedman would, I believe, argue that this...
Job Cuts 2/18/09
Today Obama announced a homeowners rescue package, and the Fed announced that things are worse than they anticipated. There were also some job cut announcements. Here’s the headlines:
Disney to Reorganize U.S. Theme Parks, Eliminate Jobs — No numbers, but theme park profits are down 24%.
Goodyear Posts $330 Million Loss, to Trim 5,000 Jobs — They had 75,000 employees at the...
Principle Reduction
Principle reduction is a tricky business. A bank can estimate how much money it will lose by foreclosing on a delinquent borrower. It can then choose to split the difference with the borrower. This is motivated by bank’s own self-interest. The catch is that if the bank is too loose with its screening process for a principle reduction program, then it encourages people to become delinquent....
Job Cuts 2/17/09
Today’s big announcement was from GM. That alone would qualify today as a bad day. The headlines:
Nearly 800 Jobs Axed at Delphi’s Steering Division — Auto industry jobs lost over the long weekend.
GM Seeks Up to $16.6 Billion in Aid, 47,000 Job Cuts — In case you haven’t figured it out (because Congress clearly didn’t), the money is for debt payments, not jobs.
...
Watchboutofcontext:
Say what you will about Geithner’s fitness for Treasury during this crisis, he’s way more reassuring than Japan’s Finance Minister, Shoichi Nakagawa, who appears to have saki-bombed the G-7 press conference. [Nakagawa-san resigned following this Hasselhoffian performance.]
Wow, Japan just feeds these “You think it’s bad here…” posts.
Plans
southpol:
I got to agree with Kevin Drum regarding Tim Geithner realizing at the eleventh hour that their plan was crap:
Say what? After nearly two years of crisis and weeks of work, they suddenly discovered that buying up toxic assets from banks was problematic because the assets were expensive, hard to value, and risky for taxpayers? That’s not exactly rocket science.
Get it together...
Bankruptcy Trends?
I just thought of this because of number 4 in southpol’s post. I don’t know where to find current data, but it used to be that the leading cause of bankruptcy in this country was due to unexpected health care costs. See here and here. I’m curious if things have started to change because of this economic crisis. Not that fewer bankruptcies from health care should occur, but...
Anyone Who Cares About the Debate over the New... →
(via jeffmiller)
There are other ways that the statistics have been manipulated that are not mentioned. For example: the definition of unemployment has changed a number of times, yielding a lower number each time. This makes many historical comparisons of unemployment numbers an apples/oranges problem. There are also complicating factors specific to that time: the mass migration due to the dust...
Japan Economy Shrinks 12.7%, Steepest Drop Since... →
— More of the “You think it’s bad here…” Japan was late to this party, but they’ve caught up in a big way. To stretch the metaphor, they pre-partied by themselves for a long time before coming out to join the rest of us.
Japan is the poster child for how not to do things. To the Keynesians, Japan didn’t spend enough fast enough. The correct course of...
Bank Failures -- FDIC Failures?
I was drunk Friday (wine-tasting followed by drinking downtown). I forgot to check the FDIC failed bank list. Yesterday was Valentine’s day, which was mostly mimosas and video games (I bought my girlfriend Da Blob and Boom Blox for the Wii). The day ended with an event at a winery. That’s my excuse. So, here’s the Sunday edition of Bank Failure Friday:
Pinnacle Bank of...
WatchThis was emailed to me by a friend. Though I watched it, I haven’t done any additional research or looked into it with any depth. The person who emailed it to me would not normally praise Republicans—actually, he wouldn’t praise Democrats all that much either. He’s kind of a curmudgeon (he accused me of being an unruly drunk, so this is an acceptable label).
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Job Cuts 2/13/09
Well, today was a great day as far as job cut headlines go. It was a lousy day as far as economic reports go. First, the job headlines:
Air France to Cut 2,000 Jobs After EU505 Million Loss — Ok, this one was terrible. 3% of the unit’s workforce. I’m not at all certain how many units Air France has, but 3% doesn’t sound so bad given the dismal conditions of every other...
Job Cuts 2/12/09
Now that I’m no longer keeping an arbitrary score, I’m not going to bias against foreign companies. I’ll let the news sites do that for me. The headlines:
Virgin, Ryanair Cut 800 Jobs as Slump Squeezes Travel — Didn’t I just see Branson in drag? Yes, yes I did. Jackass. Laugh and moon the camera because you open a new route … while you cut 600 jobs. The...
Americans aren't against bailouts and stimulus
barthel:
In the comments to the previous post, CNJ said, “The vast majority of Americans were against the bank bailouts.” In fact, as of two weeks before it passed, they approved of the package by a 2-to-1 margin. By the time it passed, they were evenly split. And for what it’s worth, the available evidence says that they support the stimulus package that’s about to become law. According to...
Dynamist Blog: Regulatory Glamour--and Its... →
jeffmiller:
Please read this. We’re putting small businesses out of business and there’s no reason for it. It’s regulatory insanity, and it couldn’t come at a worse time.
… but think of the children. (In case you don’t go any deeper, this is about how the new lead testing regulations are too broad, and will cost small clothing makers tens of thousands of dollars in testing fees,...
Late to the Debate
I have no idea why this just occurred to me (actually, it was this short post by dandrews and previous exchanges with barthel). What do we pay our taxes for? I mean, where do we think our money goes? When I was little, at some point taxes came up in a discussion with my parents (probably because I wanted to buy a toy for a dollar and didn’t know why it cost more than a dollar). Of course,...
Unemployment Improving?
It’s Thursday, and the DOL released the Unemployment Insurance Weekly Claims Report. Once again, let’s start with some random news headline. Yahoo Finance has the story U.S. jobless claims dip but by less than expected:
The department said initial claims for state unemployment insurance benefits slipped 8,000 to a seasonally adjusted 623,000 in the week ending February 7. Analysts...
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Another Day of Job Cuts
Done waiting! It took almost a month, but today was a pretty good day for job cut announcements. Maybe I’m getting a little numb to the announcements. I’m not counting California state cuts, because they are old news, and it isn’t an official announcement. Today’s headlines:
Putnam Investments to cut 260 jobs — This isn’t the best news. Roughly 11% of their...
Sim Economy
This was in my inbox today:
cnj,
is there a Sim Economy game like Sim City? something more banking / financing focused?
Do you really want to know what kind of dork I am? I’ll tell you: when I was younger, I played a stock market simulation game. The market ticker would scroll by, and news events would appear in a terminal. Occasionally someone would offer you an insider tip for...
About Bailout Nation . . . →
— (via Naked Capitalism) I pre-ordered this book (it’s still listed as available for pre-sale at Amazon). I was really looking forward to it. NB: you should not try to publish a book with McGraw Hill if you want to be critical of the ratings agencies.
The Bailout in Monopoly Terms
squashed:
You know that slow point in a game of Monopoly where you’ve spent all your money on property and need to pass Go a few more times to start building houses? That’s sort of how the recession works. People want to spend the money to make the game exciting again. People have things to spend the money on (and would love to jump start the realestate market.) But the money is gone and there...
Selling AIG to Scarce Buyers Is Mission Impossible... →
— I just mentioned this last night. Thank you Bloomberg.