Tuesday, January 15, 2008

Bush Boom

Bloomberg is just loaded with the good news this morning (01.15.07):
"Sales at U.S. retailers unexpectedly fell in December, capping the weakest year since 2002."

U.S. Retail Sales Unexpectedly Declined in December

Did that suck? Yep. "A sustained slump in consumer spending brought on by falling property values and rising unemployment would mean the end of the six-year expansion, economists say. The report underscores Federal Reserve Chairman Ben S. Bernanke's concern that risks to growth are intensifying."

"'Growth stalled out at the end of the fourth quarter and into the new year,' Joshua Feinman, chief U.S. economist at Deutsche Asset Management in New York, said before the report. 'The economy will narrowly be able to avoid recession.'"

Our friends, the bankers. Bloomberg (01.15.08):

"Citigroup Inc. posted the biggest loss in the U.S. bank's 196-year history as surging defaults on home loans forced it to write down the value of subprime-mortgage investments by $18 billion."

Citigroup Posts Record Loss on $18 Billion Writedown

The hotshots at Citi "racked up record losses as [they] misjudged the depth of the mortgage crisis. The writedown for subprime home loans and related securities was almost double what the company expected as recently as November. The bank also said it set aside $4.1 billion more in the fourth quarter of 2007 to cover loan losses."

And what does the future hold? "'Things are still bad out there for financials, and there's more bad news to come,' said Jon Fisher, who helps oversee $22 billion at Minneapolis-based Fifth Third Asset Management. 'The balance sheet is a mess, they've got to raise capital, and the charges keep going up every day.'"

Citi's markdown is the biggest so far, "exceeding the $14 billion reported by Zurich-based UBS AG, Europe's biggest bank", so at least they've got that going for 'em.

Bloomberg (01.15.08):

"Merrill Lynch & Co., the U.S. bank battered by subprime mortgages losses, raised $6.6 billion by selling preferred shares to a group including the Kuwaiti Investment Authority and Japan's Mizuho Financial Group Inc."

Merrill Lynch Gets $6.6 Billion From Kuwait, Mizuho

See if you can get this kind of deal anywhere. "The mandatory convertible securities carry a 9 percent annual dividend and a 17 percent conversion premium."

From the Through Clenched Teeth Department: "'We look forward to our relationship with Kuwait Investment Authority providing Merrill Lynch with additional opportunities to grow its presence there,' Merrill Chief Executive Officer John Thain said in today's statement."

Merrill also said the "investors won't have a say in how [it] is run", but who are they kidding.

Thank goodness the lawyers are doing well. Bloomberg (01.15.08):

"State Street Corp., the world's largest money manager for institutions, said fourth-quarter earnings fell 28 percent after setting aside $618 million to settle legal claims stemming from losses on subprime mortgages."

State Street's Earnings Fall 28% on Legal Fund Costs

And such a sweet sound it is, lawyers making money.

Labels: , ,


Blogger schpatz said...

I hear on MarketPlace (on NPR) that one things companies should do (and may be doing), given the financial climate, is basically air everything in there earnings reports. This will essentially clear the air and get all the bad news out. So the losses from mortgages (which have been tough to really determine due to the intertwined nature of the funds) may not be quite as high, but they banks are just dumping in all their fuck-ups from the last few years.

Might not be true, but wouldn't surprise me, either...

12:49 PM  
Blogger knobboy said...

Yeah, that's probably a pretty good idea, get it all out in the open as soon as possible.

On the other hand, what also seems to be happening is just as they think they're getting a handle on how bad things are, they get worse. And worse.

Though I bet they sure had fun while it lasted.

3:29 PM  

Post a Comment