The stock market has been doing better as compared to the same time last year, which was just a month or two after the biggest financial disaster of the decade. However, there have been some bumps along the way. If you look at something that has unfolded over just the past two or three weeks. Dubai was going bankrupt and there looked to be no one to save the country. That is, until today when Abu Dhabi surprised the country with it’s own $10 billion bailout.

With the country accepting a payment like that, it is easy to see why the stock market has kind of shot up today. Investors of the oil rich nation have had their fears calmed regarding the longevity of the emirate.

That is not the only financial news that has helped out the markets today. Citigroup has also announced this morning that it would be paying back $20 billion of bailout money that it has received from the United States government. The move will help put Citi back in control of its own company and will help out the government, which just passed a huge spending bill.

Financial news over the past two weeks has really been overshadowed by the whole “Tiger Woods” debacle. His story has completely caused a media frenzy and no one has mentioned that the Dow Jones has been over 10,000 for a while now. While there is plenty of good financial news to report on, there aren’t many news organizations that are doing so right now (that is, unless you watch cable news which has to report on several different things to fill up the time).

Ever wonder what the difference between bankers and pirates are? This little image I dugg is pretty funny in regards to the topic.

Banks have been letting their own companies fail for the past year and the only thing that saves them every time is the government. Unfortunately, the goverment is nowhere to be seen in the image.

It’s good to have a laugh at the expense of banks and the people who run them because, after all, they are the ones who took our taxpayer money and some (like AIG) won’t ever be able to pay it back. I think that the government should take AIG and split it into a lot of different branches then dissolve the non profitable branches. It would be like firing your under-producing employees, it happens.

Image source: Politico

It looks like the recession has made its way into pop culture. HBO has a new series called “Hung” and in its premier recently, it showed scenes of Detroit factories that were abandoned and had a voiceover talking of how the city has now fallen. The series focuses on a man named Ray Drecker, a guy that many can relate to these days.

Drecker was a star athlete in his younger days and is now having a hard time; he is divorced, behind on bills, and lost his job as a high school football coach because of some budget cuts the school had to perform.

The recession is going into its second year and the economy has found its way into pop culture; movies and tv shows have altered their scripts to put the tones of the recession in the stories. Also, plenty of books are offering frugal ideas and tips.

Long running tv shows like the Simpsons have also started talking about the recession. In one episode Homer and Marge have to sell their house because their mortgage payment had gone through the roof. On 30 Rock the characters had to deal with budget cuts. Even the kids from South Park had to learn a lesson about the recession.

Barry Ritholtz, author of Bailout Nation, said, “On the one hand, it’s good when it becomes part of popular culture because people are talking about it and thinking about it, But on the other hand, it’s bad when people are obsessing about it to the point of absurdity.”

In past downturns, the recession has been a way to escape from the problems, but this time, it seems as though pop culture wants to immerse itself in the current situations everyone is facing.

If you look back to shows like Dynasty, in the 1980’s the show was very popular and featured people with a very flamboyant lifestyle where they would flaunt their money. They also thrived during the 1980’s recession.

During the Great Depression big musicals also became very popular.

“If you’ve got a loved one dying of cancer, you may not want to watch, as your entertainment, movies of loved ones dying of cancer,” Thompson said.

I don’t necessarily enjoy watching people suffer in a recession, but I do really like to know that other people, even those in television shows, feel the same way that everyone else does. It makes me feel like Hollywood is connected to the real world and that at least the writers understand what is going on with the average American.

Art is supposed to imitate life I thought. This would be the best way to do so. People want to find solace, this is not a cancer.

Everyone’s favorite business to hate is now looking to ask the government to pay out $2.4 million in bonuses to executives at the company. This comes after just a few months ago, the company green-lit several hundred million dollars in bonus money that started a huge backlash against the company.

The company is hoping by asking the government to approve the bonuses, it can avoid the public outrage again. I think that right now, the government is not the place where the “public” has a lot of faith right now as far as large corporations go.

At least they are asking for permission before just handing out millions of dollars to executives. The company doesn’t actually need the permission of Kenneth Feinberg, the overseer of the compensation of top executives of seven of the largest companies that received federal bailouts. The $2.4 million in bonuses would go out to about 40 of the highest ranking execs at AIG.

“Anytime we write a check to anybody” it is highly scrutinized, said an AIG official, who declined to speak on the record because the negotiations with Feinberg are ongoing. “We would want to feel comfortable that the government is comfortable with what we are doing.”

In November, AIG’s top seven executives, including Chairman Edward M. Liddy, agreed to forgo their bonuses through 2009. Then, in March, facing pressure from Treasury Secretary Timothy F. Geithner and other government officials, the company restructured its corporate bonus plans for the remaining top 50 executives. As part of this agreement, the senior executives were to receive half their 2008 bonuses — which totaled $9.6 million — in the spring, with another quarter disbursed on July 15 and the rest on Sept. 15. The last two payments would depend on whether the company made progress in revamping its business and paying back bailout money to taxpayers.

So, here we go, a large corporation going back on their word…are we really surprised? I’m not. Especially when it’s a company that is the epitome of greed and what is wrong with our capitalist system. It’s companies like this that make everyone else look bad. I’m not saying that capitalism or the free market is wrong, but when you have this much wrong with one company…things go very wrong in a big way.

There have been several companies that have changed their names after coming under fire and falling into bankruptcy. Some of the companies that have done that include ValuJet or now known as AirTran, Altria or as you may have once known it, Philip Morris, and Xe, which was once known as Blackwater. Even electronics maker LG has changed its name from Lucky Goldstar to just LG and said that it stood for “Life’s Good” and now it’s doing very well with its sales of consumer electronics and appliances.

These companies have done well with the name change; it is as if they are shedding what they once were and becoming a new company with a shiny, squeaky clean image.

Marketing professionals across the country agree that the rebranding of GM could be a good thing. “If the goal is to try and put this company on a massive diet and just turn it into a smaller car manufacturing operation, I’m not sure there’d be that much harm in rebranding,” said Jean-Pierre Dube, a University of Chicago marketing professor. “The brand isn’t in good shape,” he said, “so they have little to lose.”

The General Motors brand has already become a tarnished brand, with a reputation of building poor quality cars and now with a huge bankruptcy filing under its belt, not to mention what everyone thinks about the company taking all that federal money to keep from having to file for the huge bailout…which they filed anyway.

Of course, right now many GM officials are sticking to their guns and not wanting to rebrand the company. CEO Fritz Henderson said that rebranding wasn’t very high on his list of things to do in the company. Which is possibly a good thing to do considering all the troubles he inherited, but couldn’t rebranding be handed off to the marketing department? After all, GM still has one of those and it really doesn’t have the money to be throwing into high-cost tv spots right now.

Bits and pieces of GM have already begun to be rebranded; GMAC financial services has changed its name to Ally Bank and General Motors Asset Managemnet is now known as Promark Global Advisors.

But, with a company that is as well known as GM could it work?

I don’t see anything wrong with trying to perhaps market the company differently than before, but an entire new brand could be tricky to pull off for the company. I think that the best implementation of rebranding could come from if it were to rebrand some of its subsidiaries such as Chevy or Cadillac.

YRC Worldwide, Inc., a major trucking company that operates as both “Yellow Transportation” and “Roadway,” said that they planned on asking for $1 billion in bailout funds from the government, known as TARP (Troubled Asset Relief Program). Last month, YRC CEO Bill Zollars told the Wall Street Journal that in applying for TARP, dialogue may begin with lawmakers about YRC’s pension obligations to long time employees and retirees.

The company’s pension obligations are roughly $2 billion, considerably more than many employers pay, not counting the heftier employers, such as automakers. Zollars claimed the pension obligations are unfair because YRC must now pay for employees who never worked for the company. Due to the multi-employer plans of which they are a part, they are actually paying pensions to other companies’ employees – some that never worked for YRC. Zollers made it clear that he thought this was extremely unfair and would like to address these obligations with lawmakers.

In a letter sent yesterday to employees, also for distribution to customers, YRC said it “has no current intentions of applying for TARP funds,” but that they “want to address the structural inequities created by multi-employer pension plans.” YRC sent a fact sheet with yesterday’s letter in which executives claim the company contributes about $540 million each year to 36 multi-employer pension plans “supporting hundreds of thousands of retirees who never worked for YRC or our subsidiaries.” Those retirees worked for companies that are now out of business, but due to the obligations in the multi-employer pension plans, they are stuck with pensions of retirees from those companies. “With the multi-employer pension plans, when one employer fails, the obligations shift to surviving union companies. It is the ultimate penalty for success,” that letter went on to say.

YRC also indicated a search for government support to address their concerns with the pension issue in the letter. YRC indicated ongoing discussions with its union pension plans, but that the issue is not with pension funds paid to its own employees and that it remains committed to funding those plans. So far, YRC has laid off thousands of workers, negotiated sizable pay cuts with remaining employees and drastically cut costs in other areas as the trucking industry, along with the rest of the economy and business in general, suffers from the worst drop in business and revenue earnings in decades.

YRC stock shares finished yesterday up 11 cents, or 4.5 percent, at $2.58. (Expect them to continue going up as they negotiate those pension plans and prove they really do not need TARP money.) So far, AP, Reuters, and other miscellaneous news reporting organizations have been attempting to get a further comment from a spokesperson at YRC but to no avail.

Republicans say that the Federal Reserve threatened to oust Bank of America CEO Kenneth Lewis if they did not follow through with the plans to overtake Merrill Lynch & Co. This came after they reviewed investigation documents. They also said that there was evidence that the government withheld information related to the merger from the public, directly violating the Freedom of Information Act. Thankfully, there was no evidence that the government tried to get Bank of America to hide Merrill’s losses from shareholders.

The House Oversight and Government Reform Committee is currently looking into preliminary claims that several top government officials, including then Treasure Secretary Henry Paulson and Fed Chairman Ben Bernanke, tried to get Kenneth Lewis to go through with the Merrill acquisition and not disclose to shareholders how horribly Merrill Lynch was doing financially. Lewis is supposed to be testifying in front of the committee today.

Bank of America has received $45 billion in bailout funds, but as reported here a week or so ago, they have been working on raising capital to become independent of the government assistance. So far, they have sold $17 billion or more in extra stocks and raised at least that in liquidation funds. Some of the federal assistance was supposedly going to defer the losses they would incur by acquiring Merrill Lynch.

Republicans claimed in a memo that Paulson and Bernanke “put a gun to the head” of Lewis and the board of directors at Bank of America to force the merger between Bank of America and Merrill Lynch even though CEO Lewis supposedly “felt it was hi duty to his shareholders to try his luck in the legal system and back out of the deal.” Republicans refer to several documents including an e-mail by an employee at the Richmond Federal Reserve who said that Bernanke made it clear that if he backed out of the deal, “management is gone,” as proof of the threats.

Just a few weeks after the deal was completed, Bank of America released their fourth-quarter report where they reported a $2.39 billion loss whereas Merrill Lynch reported a loss of over $15 billion. So far, Merrill Lynch has fallen further in the depths of ‘no man’s land’ while Bank of America has been curbing losses with brilliant financial decisions and sales of company interest.

Nineteen of the country’s largest banks that were involved in the recent stress tests have shown interest in paying back the funds given to them by the government. Payments from the banks could start as soon as June.

Currently the Federal Reserve is supervising the largest banks. It is requesting additional information from those banks to see if they are, in fact, ready to begin repayment. Under the current rules that oversee the bailout fund, the banks that have received assistance can begin making repayments as long as they can prove to their primary regulator that repaying the government’s money won’t put them in a situation where they could end up in bankruptcy once again. The banks also have to prove that they can replace the funds by raising capital without guarantees from the FDIC.

At this time, the “unnamed source” from the AP hasn’t named any of the institutions that have made the request to pack back their share of the TARP fund. However, another source has claimed that Goldman Sachs and Morgan Stanley have asked to repay the funds to a combined $20 billion.
There were ten banks that needed more capital after the stress tests. The largest of the ten were Citigroup and Bank of America; they have until June 8th to develop a plan to repay the loans and have it approved by regulators.

I’m so glad to hear that there are banks that are looking to repay the loans that they took out from tax payer money. There are so many people out there who believe that the government should have never given those banks the money in the first place, so to see that there are some banks that are looking to go ahead and begin repaying the loans is a pleasant surprise.

When the banks give some of the money back to the government, perhaps the government can use that money to help out the auto industry. While I know that many people still have a serious problem with the government just giving money to the auto industry, at least the money coming from the banks would be money that wouldn’t have to come out of extra bailout money or, worse, the budget. There is, of course, more legislation and regulation that has to deal with billions of dollars being given to anyone in the form of a loan, especially from the government (there are so many strings attached to that money).

Again, if these banks begin paying back the money, perhaps they can replace some of the trust that was lost when the banks were deemed “too large to fail” and began taking the bailout funds. However, they were all still FDIC insured for their customers.

Goldman Sachs and Morgan Stanley have formally asked the Federal Reserve for permission to repay their shares of $20 billion combined bailout funds out of the $700 billion made available last year to ailing financial corporations. Goldman Sachs, Morgan Stanley, and JPMorgan Chase & Co. have been in talks for weeks about formally applying to repay. The requests are pending, and in true government fashion, no decision has been made or implied, nor is there promise of an expedited agreement.

The companies are hoping to repay the received bailout funds in an attempt to sever ties with the entire bailout program (Troubled Asset Relief Program), allowing them to operate free of restrictions. All media sources spoke on a condition of anonymity due to the ongoing process of the requests. In a more formal note, the companies themselves have declined to comment to any media outlet. The Treasury Department has not even commented on whether or not they had received repayment proposals from either Goldman Sachs or Morgan Stanley.

Goldman Sachs, Morgan Stanley, and JPMorgan & Chase were among nine large financial firms that split the original $125 billion before we ever heard of the TARP as it is now known. If their requests are approved, these two corporations would be the first two of the original nine bailout recipients to repay bailout money. This would also be the first time a company returned more than $1 billion independently. Twelve smaller banks have returned a combined $1.2 billion. Of course, this is just a small step to independence from bailout funds as over 570 banks and countless corporations all across the board have received uncountable amounts.

The issue of paying back TARP funds is sensitive. On one hand, paying back TARP money would be a significant sign of strength. On the other hand, the government is afraid that it would put other banks at a disadvantage. They are also concerned that high level employees of TARP recipients could seek employment with banks that have already repaid the funds. Banks that repay bailout money must be able to replace it by raising capital not guaranteed by the FDIC. Government “stress tests” on the nation’s nineteen largest banks found that only nine had enough capital raised to survive after paying back the bailout money, two of which were Goldman Sachs and JPMorgan & Chase.

The Treasury Department has said it expects $25 billion of repayments in the next year. The Obama Administration has indicated that repayments will be used for new “injections” into banks.

Last week we saw the most promise in the economy since the recession began. Wall Street totals began to spike over the last two months and everything seems to be in place for a rise. Unfortunately, traders were so cautious that the spike was misleading that they under sold and the Dow Jones industrial average dropped 156 points. The four banks the government said were strong enough to survive a worse economy just turned to Wall Street to sell extra stocks in order to pay the government off, and they are going to trade well, strengthening the financial institutions.

Some analysts believe this is a small retreat after a big run, a good sign in a recovering economy. In fact, a healthy economy jerks up and down the scale a little bit as investors and traders get comfortable again. Despite the mistakes the government has made and the large, failing companies, the economy does seem to getting better. One key point is that as currency loses value and becomes less safe, gold becomes the alternate investment, and prices skyrocket. It is no secret the price of gold hit record highs during this recession. Gold prices are now going down.

If gold can stabilize where it was when the economy was better, life will be beautiful. Watch the gold prices. If gold goes down any further, especially in a constant downward motion, it is time to sell and invest in stocks, because the stock market is rising up the opposite direction. If anyone has invested in gold, now is the time to sell it, because gold is still technically at a record high, whereas the stock market is at record lows. Sell your gold and/or begin investing in the market again. A multitude of buyers and eager activity strengthens the economy, and if you get in on the ground floor, you can ride it up, like the wise investors you are. Bonds are also getting stronger. Keep an eye on both stocks and bonds, especially if you have gold to sell. That’s the way to ride the market back up.

At the same time, economies have always seen high points and gone right back where they were. No recession is finished until the afflicted economy has shown a habit of much higher numbers and job recreation. Right now, we still have an average unemployment of around eight or nine percent. The high point here is that we have been holding a steady unemployment rate and the economy has essentially bottomed out. When the only way to go is up, that is likely what you will do, If the economy does revive soon, it will be in spite of the efforts of Wall Street, corporate America, and even the government.

Director of derivatives investment strategy for WJB Capital Group in New York, Scott Fullman, noted that the Dow has risen about 30 percent since March, about twice as much as the market might do in a full year of strong gains. “To take a break here is healthy,” he said. Enter disagreement from Christian Bendixen, director of technical research at Bay Crest Partners LLC in New York, who said the economy remains troubled beyond what many analysts concede and that he expects the market will tumble again and perhaps breach the lowest levels of early March.

In trying times such as these, America deserves fiscal responsibility and a united society bent on resurrecting the market. America has yet to see either. The government is giving away tax money like it is indispensible, and that is hurting the market. It is likely that the economy would be much more promising without the ‘bailouts’ last year and early this year. Every time a financial bill was passed, the economy was sink lower in anticipation. The greed of the corporations has not helped either. In the words of country music artist John Rich, in his new song, “They’re selling make believe and we don’t buy that here.” When America doesn’t buy rhetoric from the lawmakers and economic “powers-that-be,” the economy suffers. That’s why the economy is still so bad and America is latching onto any glimmer of a reviving stock market, whether it is a sound movement toward prosperity or a candle in the wind.

]]> http://www.thelucrativeinvestor.com/beating-your-head-against-wall/feed/ 0 http://www.thelucrativeinvestor.com/general-motors-bankruptcy/ http://www.thelucrativeinvestor.com/general-motors-bankruptcy/#comments Tue, 12 May 2009 01:58:14 +0000 Jeremy http://www.thelucrativeinvestor.com/?p=1121

At the risk of bringing on more bad economic news, the experts have been saying that General Motors will probably be heading to Chapter 11 bankruptcy since the economy began to unravel last year. This comes right after competitor Chrysler LLC filed for bankruptcy protection as well. More then ever, the experts who are “in the know” are screaming it. Despite the rescue payments in late 2008 and early 2009, they claim that General Motors is just in too deep.

In order to make it through, outside of the rescue payments, General Motors will have to somehow swindle its bondholders out of $27 million of debt for 10 percent of their stock, which is arguably the riskiest it has ever been since the invention of the automobile. On top of that, they will have to work out deals with the union, who has an ironclad contract, close more factories, cut or sell brands, and force hundreds of independent GM dealers out of business.

Bondholders are reluctant to take the deal because the government and UAW are getting far bigger stakes in the company, said Kevin Tynan, an industry analyst for Argus Research in New York. Tynan also made sure to comment that he thought bankruptcy is ‘inevitable’ for the Detroit-based automaker.

The worst part about all of this is that they have to make it work in just three short weeks. They face a June 1 deadline the government set as part of the ‘bailout’ agreement. “I just don’t see how it’s possible, given all of the pieces,” said Stephen J. Lubben, a professor at Seton Hall University School of Law who specializes in bankruptcy. Although GM intends to restructure out of court by making deals and changes, experts say they are all but in the trap now, and will soon have to restructure supervised by the courts. GM has also thrown around the idea of selling out 62 billion new stock shares, 100 times the 611 million currently on the market.

Last week, new GM CEO Fritz Henderson basically said that they will file for bankruptcy in an expeditious fashion if the need for bankruptcy presents itself. This is all assuming that the threat of bankruptcy is not a brilliant ruse to make the stock-debt swap more appealing. After all, they need a 90% bondholder agreement to make a move that was not government agreed. GM reported a $6 billion loss for the first quarter alone, as more of a reminder that bankruptcy is still in the list of top choices, and maybe the only viable option. After all, consumers have been avoiding purchasing from a corporation that has been flirting with bankruptcy for nearly a year.

At this point, GM needs to resolve the uncertainty and get in and out of bankruptcy as quickly as possible, Lubben said. Under chapter 11 bankruptcy, General Motors can continue business without interruption while restructuring under supervision of the courts. Cutting dealers also remains a huge hurdle, with GM hoping to shed 2,600 of its 6,246 dealerships by 2010. Dealers are protected by state franchise laws, and trying to shed them outside of bankruptcy would result in either millions of dollars in payments or multiple lengthy lawsuits, according to Lubbin. GM has also begun to temporarily close 13 assembly plants for up to 11 weeks through mid-July in an effort to control inventory, ultimately controlling spending.

At the beginning of the ‘bailouts,’ this author was less than optimistic that the government, or anyone else would be able to help General Motors out of their problem because they are too deep in debt and unrealistic contracts they cannot keep. Not only is bankruptcy inevitable due to these factors, but if the economy is supposed to come back strong at all, bankruptcy is best for everyone. General Motors will renegotiate contracts, especially with the UAW, time will be allowed to strengthen assets and new automotive prototypes will be designed. When General Motors comes out of court supervision, they will be stronger than ever. How can the economy come back any stronger than that?

Among the 10 banks that need to raise more capital, Bank of America Corp. needs by far the most — $33.9 billion. Wells Fargo & Co. needs $13.7 billion, GMAC LLC $11.5 billion, Citigroup Inc. $5.5 billion and Morgan Stanley $1.8 billion.

Among the banks that the government did not ask to raise more capital were JPMorgan Chase & Co., brokerage house Goldman Sachs Group Inc., insurer MetLife Inc. and credit card companies Capital One Financial Corp. and American Express Co.

The 19 banks that were tested represent 2/3 of the outstanding loans in the country today.

The government has given the banks that need to raise more capital one month to come up with a plan to raise money on their own or to get money from investors.

The test was meant to help alleviate some uncertainty in the markets and the results were overall good.

“Our results in the first quarter reflected the extremely difficult business environment and weak demand for autos around the world,” CEO Alan Mulally said in a statement.

The revenue for the company dropped to $24.8 billion from $39.2 billion because of the first quarter U.S. vehicle sales fell 44%. Ford also hasn’t earned an annual profit since 2005 and last year’s $14.7 billion net loss set a record for the company.

Ford actually may come out the American winner in this recession, while GM and Chrysler are talking about bankruptcy (with Chrysler filing as early as next week) Ford seems to have the upper hand in this Big 3 crisis.

Anyway, on the website you can enter a “promo code” for any coupon that you may have (or stumble across on the net *try SWEET sometime*).

Monday someone stumbled across a promo code that was supposed to be scrapped by the company in December. The code was Bailout and it was good for a free medium pizza with no other purchase required.

Well…thanks to Domino’s boo-boo, 11,000 pizzas were ordered and delivered or picked up before the company was able to shut the code off.

Of course what happened is the code swept the internet and almost every Domino’s was bombarded by people who wanted a free pizza (and who can blame them?).

The bonuses totaled $218 million, $53 million more than the $165 million previously reported.

• At least 78 people received bonuses totaling at least $1 million.
• 5 people received bonuses over $4 million.

The news is sure to just fuel the fire that has been burning within the American public regarding the outrageous bonuses following a taxpayer bailout of over $180 billion.

I am personally offended that this corporation isn’t allowed to go out of business, because I honestly think this one should be out of business.

Image Source: Reuters

]]> http://www.thelucrativeinvestor.com/more-details-about-aig-bonuses/feed/ 0 http://www.thelucrativeinvestor.com/house-passes-bill-to-tax-bailout-bonus-receivers/ http://www.thelucrativeinvestor.com/house-passes-bill-to-tax-bailout-bonus-receivers/#comments Fri, 20 Mar 2009 01:45:30 +0000 Jeremy http://www.thelucrativeinvestor.com/?p=890 After giving $160 million in bonus money to executives and derivative traders, AIG has been in the forefront in the “what not to do” category. The execs had already run the business into the ground and then were able to insult the taxpaying public more by paying out our taxpaying money to employees who didn’t deserve them

Now the government has taken steps to assure that it doesn’t happen again. Today lawmakers voted to impose a 90 percent tax on bonuses paid by AIG as well as other bailed out companies.

The House of Representatives voted 328-93. The Senate has introduced similar legislation and the president gives general support for the bills.

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

Source

At the same time, he refuses to give out the names of those employees that received the bonuses to begin with. He says that their safety is more important than giving out their names.

Liddy has said that he and AIG has been receiving death threats toward the employees getting the bonuses.

Today at the congressional hearing where he was a witness, he reiterated that he would have never allowed the bonuses be paid out if he was CEO at the time.

In other bailout bonus news a judge has ruled that Merrill Lynch bonus information must be disclosed from Bank of America. Bonuses were paid out to execs of Merrill Lynch days before BofA’s acquisition of the company.

Some of the domestic banks had even received their own share of government bailout money.

Eighty percent of AIG is owned by the U.S. government and the taxpayers. It has received over $170 billion inn bailout money and was one of the firms that was “too large to fail.”

Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks — France’s Societe Generale at $11.9 billion, Germany’s Deutsche Bank at $11.8 billion, and Britain’s Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.

The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.

Other banks receiving between $1 billion and $3 billion from AIG’s securities lending unit include Citigroup Inc., Switzerland’s UBS AG and Morgan Stanley.

Source

Citigroup will be accepting a $25 billion bailout loan with the stipulation that the government take up to a 36 percent stake in the company. This is proably one of the main reasons for Citigroup’s decision to help out people who are losing their jobs.

The government’s stimulus bill will be changing mortgage terms for some mortagage borrowers that they may actually benefit from.

From the Washington Post:

Unemployed homeowners who may qualify for assistance from Citigroup under the Homeowner Unemployment Assist program include those that are 60 days or more past due on their mortgages or in foreclosure and can pay the reduced amount. Customers must also have a first mortgage loan that is owned and serviced by CitiMortgage Inc. and conforms to government sponsored enterprise limits. The house must also be the customer’s primary residence, with homeowners meeting all insurer and guaranty requirements.

“Our Homeowner Unemployment Assist program is intended to serve as a bridge toward a longer-term solution, helping homeowners stay in their homes and in their communities while they get their feet back on the ground,” CitiMortgage Chief Executive Sanjiv Das said in a statement.

The administration decided to restructure the bailout package for Citigroup again in the hopes that converting $25 billion of preferred shares into common stock would give investors more confidence the bank has sufficient capital reserves to withstand mounting losses on its holdings of mortgages and other loans. While the conversion to common stock will dilute current shareholders’ investments, a wider equity base could calm investors since there would be more reserves in place to guard against further losses as the economy sours.

Besides a stronger capital base, the company is getting a critical boost to its cash flow as it forgoes its 4 cent annual dividend on its common shares. That is giving Citi an additional $2.18 billion a year.

However, the bailout does not help out Citi’s real problem, failed or failing mortgages.

Source

The Associated Press found out about the conference and reported that starting Friday, it was scheduled for 12 days. However, once word got to Congress, Wells Fargo decided to cancel the event.

The conference is a Wells Fargo tradition. Previous all-expense-paid trips have included helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 of the company’s top employees and guests.

“In light of the current environment, we have now decided to cancel this event as well,” the company said Tuesday night in a news release that also said the it had never planned to use taxpayer bailout money for the trip.

Source

Ford said today that even with the loss, it will not seek government bailout money. Instead, it will be borrowing the remaining $10 billion of its secured credit line, not to be used for operating expenses.

It looks as though Ford is looking to the future pessimistically, which could be the key to survival in the long run. Ford, along with other car makers, thought this year would have a slow start and perhaps a recovery in the second half of the year. However, using the credit for something other than operating expenses makes it appear as though Ford isn’t as optimistic as it was when the 2009 outlook was posted.

If Ford can’t do something to turn the company around, it will be down to its minimum amount to operate the company of $10 billion by August…

Citi execs obviously got the message about their “unacceptable” purchase and released a statement saying they would not accept delivery of any jet.

Now if we could get full disclosure on all the money being dealt out by the government…I’m not asking for full press releases every time a dollar is spent, but what about a little website that says where my money is going? That’s all….

From the AP:

Congress laid the foundation for President-elect Barack Obama’s economic recovery plan on Thursday with remarkable speed, clearing the way for a new infusion of bailout cash for the financial industry while majority Democrats proposed spending increases and tax cuts totaling a whopping $825 billion.

Obama has said that he wants the rest of the bailout money to go to troubled mortgages and “main street” like he promised in his campaign.

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From the AP:

SABMiller said lager volumes fell 1 percent in the three-month period that ended Dec. 31, compared with the same period a year earlier, because of the economy.

“Consumer demand has been affected by the current global economic slowdown, and has continued to weaken in many of the group’s markets,” the company said in releasing its quarterly trading update, which does not provide financials.

So I suppose this means that beer is not recession proof, however sales of beer haven’t declined as fast as sales of other consumer goods…and I don’t see Budweiser asking Congress for a bailout either.
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Larry Flynt and Joe Francis sent out a press release saying that the porn industry is losing money and that jobs are going to be lost unless they are bailed out. So, how much are they asking for? $5 billion.

I can’t honestly think of one good reason why the government should bail out the adult entertainment industry. You don’t see Harrah’s going and asking for money…I just think this is an obvious an ridiculous publicity stunt.

Last year, Linens-N-Things, KB Toys, Mervyns, Bombay & Co., Aloha airlines, The Sharper Image, all went bankrupt.

This year we could see any of the Big 3 automakers fail. Even with the bailout, they are still in trouble unless they change drastically. They aren’t the only companies that are in trouble, after closing over 100 stores, Circuit City is hanging on by a thread.

These are just big companies and chains. That doesn’t include all the “mom-and-pop” style local shops or even small, regional brands and chains.

Plenty of banks are still in trouble too. This year isn’t expected to be a great year when millions more residential and commercial adjustable rate mortgages reset. While the mortgages may not reset to the outrageous rates they were last year and the year before, hundreds of thousands of people are losing their jobs and won’t be able to afford the extra interest payment.

green (as in “going green”)
carbon footprint or carbon offsetting
maverick (I suppose this means Sarah Palin impersonations will have to cease?)
first dude
bailout (I’m sure you’ll all still hear this one plenty of times on this blog)
Wall Street/Main Street
monkey (really??)
<3
icon or iconic
game changer
staycation
desperate search
not so much
winner of five nominations
it’s that time of year again

There were around 5,000 nominations this year, too bad “Joe the Plumber” didn’t make the list.

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How? Well, he was CEO of Merrill Lynch for a total of 3 months and received a $25 million bonus during that time. I think I could manage run a company into the ground in three months and I’d take a percentage of that, I’d be happy with $100,000! At that price I’m a bargain as a CEO for a failing investment bank.

So after taking the money and leaving the company, he and his wife decide to buy an apartment. A very expensive one on Park Avenue in New York. The price tag for such an apartment is nearly $37 million.

Here’s the source for this entry along with pictures and a floor plan for such a lavish apartment.

Before it got the bailout money, GMAC was unable to offer low interest rates (or zero percent like its rivals) because it just didn’t have the funds available. It said it will begin offering auto loans to those with a credit score of 620, as opposed to a minimum of 700 which was imposed two months ago.