February, 2009
Graphical stimulation
Confused about how $825bn $816bn $819bn might actually be spent in the US?
Well, the Washington Post have a lovely, cascading graphical breakdown of the House stimulus package, as dissected by the nonpartisan Congressional Budget Office.
A friend in need…
(Emphasis ours)
Statement by Irish Life & Permanent plc
Wednesday 11th February 2009.
Irish Life & Permanent plc confirms that it provided exceptional support to Anglo Irish Bank during September 2008 and in particular on the 30th September 2008 following the introduction of the Government Guarantee Scheme.
HBOS: The Moore Memo
MP’s on the UK’s Treasury Select Committee caused quite a stir yesterday when they disclosed that they had been given testimony by Paul Moore, the former head of risk management at HBOS. Testimony in which Moore had identified “a total failure of all key aspects of governance”
Further reading
Elsewhere on Wednesday:
- Reaganomics vs Obamanomics
- It’s official: China becomes the world’s largest car market
- The real problem with securitisation
- Stimulus winners and losers
- The global economic crisis:
The Geithner plan — what the pundits say
It’s not pretty out there, if you’re a newly appointed US Treasury secretary:
Kenneth Rogoff, Harvard professor and former IMF chief economist [via Bloomberg]: The risk is that the market reaction sabotages the plan before it gets under way,
Martin Wolf: Has Obama already failed?
Amid the storm of criticism, the FT’s Martin Wolf asks whether Barack Obama has already failed by leaving so much up to Congress in his crucial financial stabilisation and economic stimulus plans. Herewith a summary:
Pink picks
Comment, analysis and other offerings from Monday’s FT:
Editorial: Son of Tarp
The moment of truth for the Obama administration arrived on Tuesday when Tim Geithner, Treasury secretary, unveiled a plan for rescuing the US financial system,
Snap news
Breaking pre-market news on Wednesday,
- Credit Suisse losses widen to SFr 8bn – FT story, CS statement
- Standard Life reports 4.8% fall in sterling pension fund unit price from “valuation adjustment”,
$2,000bn US bank plan disappoints
US shares tumbled on Tuesday and Treasury yields fell as investors signalled disappointment at plans by the Obama administration to deploy up to $2,000bn to clean up toxic assets in the financial system and restart credit markets.
Haggling starts on US stimulus bills
As US Treasury secretary Tim Geithner unveiled measures to shore up the financial sector, Congress started thrashing out differences between its rival stimulus bills on Tuesday after the Senate approved its $838bn version.
Lex on the US fiscal package
Markets decided that the Treasury’s big plan to help the banking sector was a damp squib, notes Lex. Later, the Senate finally passed its version of Barack Obama’s economic stimulus bill. Can 835bn big ones help turn things round?,
US bank chiefs to apologise
Top Wall Street bankers will on Wednesday confront mounting public anger at their role in the crisis by telling an influential Congressional committee they are using public money to kick-start the economy and lend to companies and consumers.
UBS suffers SFr20bn loss
UBS signalled Tuesday it will retain its investment banking operations despite reporting the biggest loss in Swiss corporate history, a further swathe of job cuts and swingeing bonus reductions. Europe’s biggest casualty of the credit crisis said it lost nearly SFr20bn ($17bn ) in 2008 and would axe a further 1,500-2,000 investment banking jobs,
Chinalco may invest $20bn in Rio debt
Chinalco, China’s biggest aluminium producer, may invest as much as $20bn in Rio Tinto to gain more access to commodities, reports Bloomberg. Chinalco is in talks to buy bonds that will convert into Rio shares and purchase stakes in Rio mines and an announcement is planned for Feb 12 when Rio publishes its annual earnings,
Ex-HBOS chiefs accused on controls
Former HBOS directors faced fresh accusations on Tuesday of ignoring warnings over its rapid growth from an ex-head of regulatory risk at the bank. As former bosses of the UK bank and its troubled peer RBS offered up apologies to a parliamentary inquiry over the near-collapse of the banks,
RBS admits ABN buy ‘a mistake’
The former bosses of RBS, one of the UK’s highest profile banking casualties, admitted to a parliamentary inquiry into the near-collapse of the bank and HBOS that RBS’s acquisition of Dutch rival ABN Amro at the height of the boom in financial markets “a bad mistake”.
GE to inject $9.5bn into finance arm
General Electric plans to shore up the balance sheet of its finance arm, GE Capital, by diverting the remaining $9.5bn in cash from the conglomerate’s stock sale last year. The move, which follows last quarter’s $5.5bn capital infusion,
Sirius XM eyes bankruptcy
Sirius XM Radio, the US satellite radio company, has been working with its advisers to prepare for a possible bankruptcy filing, reports the NYT. With over $5bn in assets, it would make Sirius XM one of the largest casualties of the credit squeeze.
AIG in talks to sell auto unit
AIG, the US insurance group, is in advanced talks to sell its US auto insurance unit to Swiss insurer Zurich Financial Services, possibly for around $2bn, reports Reuters. The auto insurance business is part of AIG’s US personal lines unit,
Crest Nicholson in debt-for-equity swap
UK housebuilder Crest Nicholson will announce a deal with its lenders that will see it exchange £630m of net debt for a 90% stake in the company. The indebted privately-owned company was taken private by a 50-50 venture between HBOS and Sir Tom Hunter,
British Land set for rights issue
British Land is set to become the latest major UK property company to launch a huge rights issue. The company, the UK’s second largest real estate investment trust, has begun sounding out investors to act as potential underwriters to the issue.
Fortis chairman warns on vote
Fortis shareholders will vote Wednesday on whether to sell the Belgo-Dutch group’s Belgian banking operations to BNP Paribas amid warnings of dire consequences if the deal is rejected, as looks increasingly likely.
Blacks Leisure in talks on offers
Blacks Leisure, the UK outdoor goods retailer, has received two approaches for a possible offer, including one from Mike Ashley, the founder of Sports Direct who holds a 29.9% stake. Shares in the company rose 42 per cent to 38p after it confirmed it was in early stage talks with unnamed companies about an offer for the group.
Temasek portfolio falls 31%
Temasek Holdings, the Singapore state investment company, suffered a 31% fall in the value of its portfolio from S$185bn ($123bn) to S$127bn in the eight months to the end of November, the government said Tuesday.
Private equity buys back debt
Private equity groups, struggling to raise money from banks for new buy-out deals, are in some cases buying back debt from companies already in their portfolio. Figures to be published this month by Nottingham University and Barclays Private Equity show a sharp fall in debt levels for buy-outs.
Economists warn on China deflation
China faces a bout of deflation, economists warned Tuesday as data revealed that inflation dropped to its lowest in 2½ years in January and that the price of goods leaving factories fell 3.3% in January.
Overnight markets: Disappointment
Asian stocks fell Wednesday, led by banks and commodity companies, while Treasury yields fell, oil declined and safe-haven currencies rose amid doubts that the proposed US bank rescue will revive credit markets and the US economy.
Wall Street: not impressed
A financial stability plan – $2 trillion
An economic stimulus – $838bn
Watching Wall Street’s reaction – priceless
Geithner’s plan has not impressed. Light on detail and loaded with caveats, it’s also managed to circumvent the thorny issue of pricing toxic assets.
CDS update: Markets boo Geithner
This CDS report was written by Markit’s Gavan Nolan
Investors gave the much-anticipated Financial Stability Plan a resounding thumbs-down after it was published this afternoon. The Markit iTraxx Europe and Markit CDX IG indices widened sharply as details of the new government measures became clear.
