Don't Worry, Be Happy
Strike!!!
The UAW has launched the first nationwide strike since 1970 at General Motors plants...
after the auto maker failed to meet the union's 11:00 ET contract negotiations deadline.
Your dividend is out...
California homebuilder Standard Pacific has eliminated its quarterly dividend to save $10 million and use the cash to reduce debt.
The company also said it plans to sell $100 million in convertible debt.
More on the Dead Pool's Foreign Legion of Dishonor...
Deutsche Bank had been one of the financial backers forced to hold onto more than $10 billion in loans to private equity firm KKR (Kolberg Kravis Roberts)...
for its $23 billion purchase of British retailer Alliance Boots. Deutsche now may have to take a large writedown for its leveraged loan commitments.
Deutsche would normally farm these loans out to other banks, but it has become harder to sell on such debt.
One source familiar with the situation said the bank estimates that the credit is now worth between 4 and 6 % less than face value. Deutsche Bank's Q3 profit could be hit by up to $2.4 billion.
Deutsche, one of the world's biggest M&A banks, is now trying to get clients to renegotiate credit terms or drop deals to shrink the size of the fallout. Since May, Deutsche shares down 20%.
No worries, right???
Lacy Hunt, chief economist at Hoisington Investment Management:
"The economy's mortgage related problems are not behind us today and they're not going to be behind us for a long time to come.
This rate reduction was first of what we think will be quite a few over the next couple of years."
Scott Anderson, senior economist at Wells Fargo:
"The Fed may be a little impotent here because what caused this housing crash was overpriced housing, not mortgages."
Scott Tucker, a mortgage marketing consultant:
"To paraphrase Will Rogers, the banks are not concerned about the return on their money, they're concerned about the return of their money."
No worries what-so-ever...
From the IMF's twice yearly Global Financial Stability Report:
"The global financial system has undergone an important test and the test is not over yet.
Benign economic and financial conditions, weakened incentives to conduct due diligence on borrowers and counterparties.
In the case of complex structured credit products, investors need to look behind the ratings. Downside risks have increased significantly...
and even if those risks fail to materialize, the implications of this period of turbulence will be significant and far reaching,
The coming months are likely to remain challenging for money markets and institutions, and credit conditions are not likely to normalize soon...
and the adjustment process may be protracted and may affect not only prices but also availability of credit.
The adjustment period is continuing, and if the intermediation process stalls and financial conditions deteriorate further...
the global financial sector and real economy could experience more serious negative repercussions.
The chances of a more severe tightening of credit conditions cannot be dismissed.
The impact on global growth from the credit crunch and re pricing in credit markets will be felt in 2008 and the United States will most likely be hardest hit.
Risks have increased that the reduction in growth will be more important in the United States because this tightening of financial conditions will join the housing issue."
The UAW has launched the first nationwide strike since 1970 at General Motors plants...
after the auto maker failed to meet the union's 11:00 ET contract negotiations deadline.
Your dividend is out...
California homebuilder Standard Pacific has eliminated its quarterly dividend to save $10 million and use the cash to reduce debt.
The company also said it plans to sell $100 million in convertible debt.
More on the Dead Pool's Foreign Legion of Dishonor...
Deutsche Bank had been one of the financial backers forced to hold onto more than $10 billion in loans to private equity firm KKR (Kolberg Kravis Roberts)...
for its $23 billion purchase of British retailer Alliance Boots. Deutsche now may have to take a large writedown for its leveraged loan commitments.
Deutsche would normally farm these loans out to other banks, but it has become harder to sell on such debt.
One source familiar with the situation said the bank estimates that the credit is now worth between 4 and 6 % less than face value. Deutsche Bank's Q3 profit could be hit by up to $2.4 billion.
Deutsche, one of the world's biggest M&A banks, is now trying to get clients to renegotiate credit terms or drop deals to shrink the size of the fallout. Since May, Deutsche shares down 20%.
No worries, right???
Lacy Hunt, chief economist at Hoisington Investment Management:
"The economy's mortgage related problems are not behind us today and they're not going to be behind us for a long time to come.
This rate reduction was first of what we think will be quite a few over the next couple of years."
Scott Anderson, senior economist at Wells Fargo:
"The Fed may be a little impotent here because what caused this housing crash was overpriced housing, not mortgages."
Scott Tucker, a mortgage marketing consultant:
"To paraphrase Will Rogers, the banks are not concerned about the return on their money, they're concerned about the return of their money."
No worries what-so-ever...
From the IMF's twice yearly Global Financial Stability Report:
"The global financial system has undergone an important test and the test is not over yet.
Benign economic and financial conditions, weakened incentives to conduct due diligence on borrowers and counterparties.
In the case of complex structured credit products, investors need to look behind the ratings. Downside risks have increased significantly...
and even if those risks fail to materialize, the implications of this period of turbulence will be significant and far reaching,
The coming months are likely to remain challenging for money markets and institutions, and credit conditions are not likely to normalize soon...
and the adjustment process may be protracted and may affect not only prices but also availability of credit.
The adjustment period is continuing, and if the intermediation process stalls and financial conditions deteriorate further...
the global financial sector and real economy could experience more serious negative repercussions.
The chances of a more severe tightening of credit conditions cannot be dismissed.
The impact on global growth from the credit crunch and re pricing in credit markets will be felt in 2008 and the United States will most likely be hardest hit.
Risks have increased that the reduction in growth will be more important in the United States because this tightening of financial conditions will join the housing issue."
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