World economy talk

[Monseratto]

That is why nobody has faith in the financial system. Lack of disclosure. One second their "healthy", the next they're gone.

[tidus1203]

Sabi nga ni idol Jim Rogers "I am short Citibank, by the way"

[uls]

What is bankers' worst fear?

rising unemployment

http://online.wsj.com/article/SB1232...googlenews_wsj

Despite all the pain in the financial sector, bank executives' biggest fear has yet to materialize. Now, it is rearing its ugly head.

Bankers' worst nightmare is the unemployment rate climbing toward 10%, a level at which credit losses could balloon unpredictably because of high defaults among people with previously strong credit histories.

Right now, bank balance sheets don't appear in a position to deal with unemployment moving sharply higher from its current 7.2% rate.

Building up bad-loan reserves to deal with a 9% to 10% rate could produce enormous losses and pulverize capital when banks are trying to preserve the thin cushions they have. And fear of rising unemployment could deter lending when the government wants banks to expand credit.

[tidus1203]

The ideas of overextension and over leveraging is collapsing right in front of our face, Be prepared for a new culture of frugality.

[uls]

Starbucks to Cut 6,700 Jobs After Earnings Fall 69%
http://www.bloomberg.com/apps/news?p...UBM&refer=home

Jan. 28 (Bloomberg) -- Starbucks Corp., the world’s largest chain of coffee shops, said it will cut 6,700 jobs and close 300 more stores after reporting first-quarter profit that fell more than analysts estimated.

The company plans to close 200 locations in the U.S. and 100 overseas, in addition to the 600 Starbucks said it would close last year. The workforce reduction will eliminate 6,000 café positions and 700 corporate jobs, the Seattle-based chain said today in a statement.

[tidus1203]

Hahahaha nice one uls. No more bucks to buy overly expensive coffee.

Personally I was never a part of that Starbucks craze myself.

[uls]

eto na sinasabi ko last year

watch the bond market

sa sobra lakas ng issuance ng treasuries (for stimulus, bailouts) ---

there's just too much supply...

demand is now thinning

treasuries price falling, yield rising

10-year:

[tidus1203]

Yep we should short long term bonds, the short terms like 90 days are still red hot and I sense a bubble in the short term T-bills. You might want to short it too if you're brave but I am not so iwas pusoy ako dun. I am still short and continue to be short of 10 year and 30 year US Treasuries.

[uls]

next thing the Federal Reserve will do is buy treasuries to keep the yield down

[uls]

it's either the bottom has been reached or it's only halfway to great depression 2 hehe

Note: the Great Depression crash is based on the dow, the three others are S&P 500

[Monseratto]

Obama is already making policies based on populist perception.

Dismay on Wall St over Obama pay cap

NEW YORK — Wall Street and the business community gave a lukewarm response Wednesday to the US administration's plan to cap executive pay, fearing it may lead to a talent exodus and delay recovery in the finance sector.

The reaction came after President Barack Obama announced that executives of finance firms taking government bailouts would have their annual salaries limited to $500,000, a move aimed at protecting taxpayer interests.

The salary limit is "still a hefty sum to be sure, and the spirit of the order certainly has popular appeal, but it's a slippery slope when the government puts restrictions on how much an individual can earn in the private sector," said Patrick O'Hare of the independent research firm Briefing.com.

"Also, the order itself strikes us as a disincentive for financial firms to reach out for aid, which will just prolong the recovery for the sector and the economy."

Douglas McIntyre at the financial website 24/7 Wall Street said the limits could make it more difficult for troubled banks to retain their best executives.

"Wall Street may keep most of its bankers if they face pay cuts, but it is the top five or 10 percent who make these companies really profitable, and they will soon be on their way to greener pastures if this measure is enacted," McIntyre said.

[tidus1203]

I am 50-50 on that proposal. While it is right that anyone who seeks bailout should have some kind of limits, but then again you can't buy a decent bank CEO for $500,000. I assume magkakaroon ng resignation or even greedy CEO's will avoid seeking taxpayer bailouts in order to secure their high salaries and just resign before the company collapses

[tidus1203]

Not really. I am like that all my life. Frugal that is... But I do hope the OTHERS stop being frugal

[uls]

Pay cap will scare away talent

Whitney Calls Pay Wall Street’s ‘Motivating Factor’
http://www.bloomberg.com/apps/news?p...00Y&refer=home

By Bradley Keoun and Margaret Popper

Feb. 4 (Bloomberg) -- Oppenheimer & Co. analyst Meredith Whitney said banks and other financial firms shouldn’t ditch annual bonuses because the best employees would leave.

“No one goes into Wall Street to save the world,” Whitney said today in an interview on Bloomberg Television. “Compensation is the motivating factor.”

Wall Street pay is getting scrutiny after New York banks and securities firms paid $18.4 billion in bonuses for 2008 while the six biggest New York-based financial companies lost a combined $42.4 billion and got $90 billion in government bailout funds. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said yesterday that “pay got a little exuberant.”

President Barack Obama called bonus payments at banks getting rescue funds “shameful,” and today he announced a cap of $500,000 on compensation of top executives at companies that get aid in the future.

“In order to restore our financial system, we’ve got to restore trust,” Obama said at the White House. “In order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.”

Failure to pay employees well would drive away “the best and the brightest,” Whitney said.

“If you can’t compensate your employees, they’re going to go somewhere else,” she said. “You’re going to get a different variety of folks who are going to come in.”

Citigroup Inc. lost a record $18.7 billion last year, while Merrill Lynch & Co., which was acquired by Bank of America Corp. on Jan. 1, lost $27.1 billion. Lehman Brothers Holdings Inc. lost $6.2 billion last year before declaring bankruptcy in September. JPMorgan reported net income of $5.61 billion, down 64 percent from the prior year.

[uls]

Gen. Miting:

who needs starbucks, ang sarap ng coffee ng 7-eleven. vanilla capucchino or caramel machiato. pareho lang lasa ng starbucks

di daw kasi sosy mag coffee sa 7-11

bad trip nga eh, halos anyone i know puro kakuriputan na lang ang nasa isip. even customers compute and compute. grabe ngaun parang sobrang nagbibilang lahat ng tao. it's so unhealthy

pero alam nyo ba yun KFC bucket meal na 21 pcs at 1,050. grabe sobrang worth as in you can have 21 meals at 1,050 + rice expenses na lang. ganyan ginagawa ko

oookaaaay

araw araw KFC chicken ang ulam

[emanzano]

Obama is already making policies based on populist perception.

Dismay on Wall St over Obama pay cap

NEW YORK — Wall Street and the business community gave a lukewarm response Wednesday to the US administration's plan to cap executive pay, fearing it may lead to a talent exodus and delay recovery in the finance sector.

The reaction came after President Barack Obama announced that executives of finance firms taking government bailouts would have their annual salaries limited to $500,000, a move aimed at protecting taxpayer interests.

The salary limit is "still a hefty sum to be sure, and the spirit of the order certainly has popular appeal, but it's a slippery slope when the government puts restrictions on how much an individual can earn in the private sector," said Patrick O'Hare of the independent research firm Briefing.com.

"Also, the order itself strikes us as a disincentive for financial firms to reach out for aid, which will just prolong the recovery for the sector and the economy."

Douglas McIntyre at the financial website 24/7 Wall Street said the limits could make it more difficult for troubled banks to retain their best executives.

"Wall Street may keep most of its bankers if they face pay cuts, but it is the top five or 10 percent who make these companies really profitable, and they will soon be on their way to greener pastures if this measure is enacted," McIntyre said.

I fully support this. What exodus are they talking about? As if they have anywhere else to go!

And besides, they were the captains of the ship when they ran they're companies to the brink of bankruptcy. So what on earth makes them think they deserve a bonus?

These wall street boys....

[uls]

with those conditions, if i was a bank, i would just turn down TARP funds

hehe

[tidus1203]

And then resign before it collapses and still have the golden parachute and make the stock holders eat ****!

[uls]

haha

i'll turn down TARP funds

short the stock

buy put options

let the bank fail

hehehe

[uls]

Flood of treasuries coming

di pala flood

TSUNAMI

Treasury in plans for record debt sale
http://www.ft.com/cms/s/0/bdf4ee70-f...0779fd2ac.html

The US Treasury on Wednesday opened the floodgates of government bond issuance, revealing plans for a record debt sale in February and more frequent auctions in the months to come.

The announcement came amid growing fears about US government deficits and sent the yield on the benchmark 10-year Treasury note rising to 2.95 per cent, up from just over 2 per cent at the end of December.

The rise in Treasury yields has been pushing mortgage rates higher, complicating efforts to revive the economy. The US Federal Reserve said last week it was “prepared to” buy Treasuries if that would be a “particularly effective” way of reducing private borrowing costs.

“The Fed has to be troubled by the fact that mortgage rates have been rising and the buying of Treasuries by the Fed may come sooner than the market expects,” said William O’Donnell, UBS strategist.

The Treasury said it would sell $67bn (£46bn) in new securities next week, the largest ever quarterly refunding, beating the last peak in August 2003. It may also start monthly sales of all its benchmark Treasury securities.

At the end of February, the Treasury will start selling seven-year notes every month for the first time since the issue was discontinued in 1993. Sales of 30-year bonds will double to eight times a year and the Treasury will say in May whether the bond will be sold every month.

For Barack Obama’s administration, the step-up in borrowing costs comes as it is fighting to secure an $800bn-plus fiscal stimulus, and is likely to need many hundreds of billions more to fund a banking sector clean-up.

The Treasury Borrowing Advisory Committee expressed concern on Wednesday over the sharp jump in net borrowing needs – which market analysts estimate could reach $1,500bn to $2,500bn for the 2009 financial year.

Traders are particularly concerned about the appetite for Treasuries among foreign investors, who hold more than half the outstanding $5,500bn in Treasury debt.

if the market cannot absorb the new issuance (shown by low price/high yield)

expect the Fed to buy treasuries to hold down rates