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May 2009 Archives

Every new beginning...

Time once again for my weekly podcast, After the Bell, where I try to make sense of what happened in business and the economy. As I thought about the week, a famous quote came to mind: “Every new beginning comes from some other beginning’s end.” The Roman philosopher Seneca said it first, but the pop band, Semisonic, resurrected it about 2,000 years later. It says a lot about what happened this week. You can listen to After the Bell here and subscribe to it here, so it’ll download automatically each week.

Are low, low mortgage rates over?

Yesterday, I mentioned how the bond market was affecting the stock market. Well, of course, it also affects the housing market. This week, mortgage rates hit their highest level of the year, thanks to the tepid buying of Treasury bonds.

Continue reading Are low, low mortgage rates over?

How to get your goat

Like all car companies, Mitsubishi is staying up nights trying to figure out how to actually sell cars. In New Zealand, Mitsubishi has come up with this: Buy a Triton truck, get a lawnmower for free. And by lawnmower, I mean a goat.

Continue reading How to get your goat

What's the word?

In one word, how are you feeling about the economy today? I ask because the New York Times has a new feature which allows you to enter one word once a day describing your current mood about the economy.

Continue reading What's the word?

Morning Reading

Let’s start with a small piece of good news. The economy’s performance in the first quarter wasn’t as bad as first estimated. GDP fell at a 5.7% rate, instead of the 6.1% given earlier. It’s still horrible, but economists say things could look quite a bit better (relative to Q1) when second quarter numbers come out. Some good things to read this morning, starting with GM:

Continue reading Morning Reading

On stocks and bonds (and oil)

If you’re wondering what’s driving the stock market right now, all you have to do is look at the bond market. Yesterday, stocks took a dive because bond sales were slow. But today, stocks finished higher thanks to vigorous activity in the bond market. Here’s the key reason.

Continue reading On stocks and bonds (and oil)

It's in the cards

I found a fun new site where people are posting their old business cards — the ones they could’ve thrown away when they lost their job. Instead, they’re posting them at cardsofchange.com, with a few alterations.

Continue reading It's in the cards

Spy versus Tie

Guess where the CIA is making its latest recruitment push? Wall Street. The New York Post says says the agency has started advertising on Bloomberg radio, hoping to land out-of-work financial suits, like investment bankers and hedge funders. The CIA’s hoping to use their “intelligence for the work of a nation.”

Continue reading Spy versus Tie

Will you Bing it?

Microsoft gave us the name of its new search engine today. Bing. It’ll be up and running by next Wednesday at bing.com. Don’t bother clicking. There’s nothing there. But there is more at discoverbing.com. Anyway, about the name…

Continue reading Will you Bing it?

GM bondholders change their mind

Yesterday, they said no way, we’re not taking a 10% stake. Today, bondholders are apparently okay with 10%, plus a little sweetner. GM has struck a deal with a committee of bondholders that gives them a 10% stake in the “new GM”. It also gives them the potential to buy another 15%.

Continue reading GM bondholders change their mind

Morning Reading

I found it amusing, in more ways than one, that the soccer team with UNICEF on its jersey trounced the one with AIG on its jersey (FC Barcelona over Manchester United for the European Cup). Now, here are some things to tickle your intellect. Or incense it.

Continue reading Morning Reading

Girlfriends have an economic plan

A group called The Nation’s Girlfriends unveiled its own economic recovery plan before Congress today. They say it could save the country $220 billion a year if their boyfriends would simply agree to move in with them. Another lobbying group, The Nation’s Boyfriends Federation, just “feels like it’s too soon.” The Onion has a special report as part of its continuing coverage, Financial Fallout Shelter:

Continue reading Girlfriends have an economic plan

The other Detroit

Not everything about business in Detroit is as bleak as GM and Chrysler. I just read about a program launched in inner city Detroit this year that helps small businesses succeed. It’s a national program from the Small Business Administration called the Emerging 200 initiative.

Continue reading The other Detroit

Small banks vs big ones

We got an update today on the health of the banking system. The FDIC said overall, US banks made $7.6 billion in profit for the first quarter, compared to the fourth quarter’s record loss of $36.9 billion. But as we suspected when the bank earnings first came out, there’s trouble lying in wait.

Continue reading Small banks vs big ones

What's that? A VAT?

One of the more controversial political grenades has always been a national sales tax. But in these extreme economic times, nothing is off the table. So, there’s some talk about touching the untouchable.

Continue reading What's that? A VAT?

GM boggles the mind

It’s hard to comprehend what’s happening with this car company. I don’t know what’s going on behind closed doors, but to the public, the outcome of this bankruptcy appears ominous: Soon, the government will be the controlling stakeholder in GM. The UAW isn’t signaling much faith in the company’s future value. And the bondholders who kept the company alive are getting fleeced.

Continue reading GM boggles the mind

Morning Reading

It looks almost impossible for GM to avoid bankruptcy, now that bondholders have rejected a government offer that would keep the company on life support a little longer. More on that to come. Some other items I thought you might find interesting:

Continue reading Morning Reading

Zero interest... for years

Those Fed meetings we used to watch so closely because of interest rate decisions may be pretty uneventful for a long time. A top Federal Reserve economist says the Fed will probably need to keep its key interest rate near zero, not for months, but for years.

Continue reading Zero interest... for years

Scientology on trial in France

The US considers Scientology a religion and gives it tax-exempt status. France considers Scientology a dangerous, money-grubbing sect that preys on people. This week, a French court is hearing arguments in a case that could kick the E-meters out of France for good.

Continue reading Scientology on trial in France

If you're happy and you know it...

The number of the day is consumer confidence. The Conference Board says its Consumer Confidence Index shot up 14 points in May to 54.9. It was 40.8 in April. It’s at its highest level since September. I have three questions. Why? Why? Why?

Continue reading If you're happy and you know it...

Loan mods don't mean much

One strategy to keep people in their homes is changing the terms of their loans. It isn’t working. The Wall Street Journal cites a Fitch report coming out later this week: 65% to 75% of modified subprime loans will redefault.

Continue reading Loan mods don't mean much

Morning Reading

My favorite headline of the morning comes from CNBC. Depression Likely, but Buy Stocks: Strategist. Alrighty, then. Other things that caught my eye:

Continue reading Morning Reading

Rules of the road

My weekly podcast, After the Bell, is now available. You can subscribe to it, so it’ll download automatically each week, right here. It’s free. Every Friday, I try to make sense of what happened in business and the economy. This week was all about making new rules, from fuel standards to carbon emissions to credit cards. I get help, musically, from Incubus, Son Volt (one my favs) and Tom Cochrane. Thanks to producer Phyllis Owens, associate producer Fiona Ng and engineer Andrea Jackson-Gewirtz.

Ed Liddy, we hardly knew ya

The captain of the Titanic — I mean, AIG — is leaving his job as soon as possible, while life rafts are still available. Since he’s quitting after just eight months, does that mean he only gets 66 cents of his $1 a year salary? Somehow, I think he’s making out fine.

Continue reading Ed Liddy, we hardly knew ya

Taxpayers to lose again?

As you know, several banks are trying to get out from under the Treasury’s thumb by repaying their TARP money. In the process, it looks pretty likely that the banks will escape with more of your money. Consider this analysis from Bloomberg:

Continue reading Taxpayers to lose again?

Morning Report

How’s this for an economic indicator? The International Energy Agency says global electricity demand is expected to fall for the first time since 1945. The IEA’s chief economist says “This shows how deep a recession we are in.” Some other interesting things to read this morning:

Continue reading Morning Report

Haiku time

A few days ago, for some odd reason, I was thinking of writing haikus about the recession. I got busy and didn’t do it. Then today, I see that Planet Money is inviting recession haikus, so I was re-inspired. And you’re welcome to join the economic blog haiku party.

Continue reading Haiku time

Mexico's on sale

If you’re looking for a cheap vacation, you can hardly do better than Mexico right now. In an effort to lure back tourists, resorts and airlines are offering serious discounts. Some companies are even putting it in writing that you won’t get the Swine Flu.

Continue reading Mexico's on sale

Too little, too late for carmakers

The news out of Detroit is that GM and the UAW have agreed to contract changes that’ll help GM cut labor costs and reduce obligations to a retiree health care fund. That’s nice, but it doesn’t really matter now.

Continue reading Too little, too late for carmakers

The fat lady sings for newspapers

To those still hanging on to a shred of hope that print newspapers aren’t finished, renowned investigative reporter Seymour Hersh says wake up, “the game’s over.” But there is hope for investigative journalism, and it just landed in Boston.

Continue reading The fat lady sings for newspapers

Dumpsters full of 1040s

I know tax revenue is down, but seriously, you’d think the IRS could afford a few shredders. A report from the Treasury today says sensitive documents about US taxpayers were found in trash cans outside every IRS office visited by investigators.

Continue reading Dumpsters full of 1040s

Morning Reading

Stocks are down this morning seemingly because the economy isn’t all better yet. I’m starting to think our short attention spans lead to irrational expectations about recovery. It takes time. And by time, I don’t mean a few Twitter cycles. You can’t look at the numbers coming in from other countries or the unemployment figures in this country and seriously have a conversation about green shoots or jello shooters or whatever people are saying now. Read on:

Continue reading Morning Reading

Brown leaves are more like it

A couple months ago in a 60 minutes interview, Fed Chairman Ben Bernanke used the phrase “green shoots” to describe those small signs the economy may be recovering. Since then, the phrase has been repeated a bazillion times. But today, the Fed released the minutes of its April meeting, and while I wouldn’t say all the leaves are brown, the sky is still gray.

Continue reading Brown leaves are more like it

Something to distract you at work

If you want life to slow down for a minute, I have just the ticket. I’ve spent the last half-hour watching things in extreme slow motion. It’s cool as all get-out, even if you’re not a tech geek. Wired has a story about these new hyper-speed cameras that capture the tiniest of movements, like a hummingbird’s wings, a rattlesnake’s tail or a guy getting hit in the face by a water balloon. The Discovery Channel has a whole new show about it.

Continue reading Something to distract you at work

Big states face a backlash

California voters sent a clear message to the state yesterday — get your act together, we’re not bailing you out. In the same vein, New York is about to lose a billionaire’s tax payments. He’s fed up with state government too, and he’s voting with his feet. I mean, his private jet.

Continue reading Big states face a backlash

Say that 946 times fast

Just wanted to let you know your tax dollars are hard at work in Washington. Republicans have threatened to force a reading of the entire climate bill, all 946 pages, all aloud. They obviously don’t want it to pass. In response, Democrats have hired a speed reader.

Continue reading Say that 946 times fast

Morning Reading

If you’re looking for people with banking experience, you might want to avoid bank boardrooms. Bloomberg has an analysis of banks’ board of directors. It finds that less than 15% of directors at the country’s 10 biggest banks have actually worked in banking. In hindsight, that doesn’t seem surprising. Other interesting reads:

Continue reading Morning Reading

Credit cards and guns

The Senate voted 90-5 today to pass new rules on credit card terms. The House has already passed its own bill, and it looks like this thing will become law by the weekend. What’s in it? Oh, you know, limits on raising interest rates and late fees, new rules on notifying customers and signing up people under 21. And in the Senate version, a provision to allow loaded guns in national parks.

Continue reading Credit cards and guns

We know you want to quit

Google is working on a mathematical formula to predict which of its 20,000 employees are most likely to leave the company, according to the Wall Street Journal. It’s still in the test stage and crunching data is certainly Google’s forte, but other companies might go down this path too.

Continue reading We know you want to quit

Garage sales for the rich

A recent survey found that almost a third of millionaires lost their millionaire status last year. What are they doing about it? Well, some of them are having giant garage sales, and let me tell you, there are some deals. I mean, if you’re still a millionaire, that is.

Continue reading Garage sales for the rich

Win-win-win-win?

There’s a group hug today about the President’s announcement of new fuel economy standards. The carmakers like it because they don’t have to worry about 50 state regulations. Environmentalists like it because it means getting the equivalent of 177 million cars off the road or shutting down 194 coal-fired power plants. That reduces the dependence on foreign oil, which the government likes. As for drivers…

Continue reading Win-win-win-win?

If I had a bulldozer

It should come as no surprise that housing starts hit a record low last month. There are so many unsold homes, foreclosed houses and empty apartments, that new construction should be zero. I’m amazed that construction of new single-family homes actually ticked up in April. The record low came mostly thanks to the lack of apartment building.

Continue reading If I had a bulldozer

Morning Reading

Car emissions and housing starts lead the news this morning. More on those shortly. In the meantime, here’s what caught my attention:

Continue reading Morning Reading

The reverse collection plate

I have a positive story for you… with a twist. The pastor of a non-denominational church in Texas passed around the collection plate recently but told his congregation to take money from it. Well, maybe some people did, but the plate came back full of cash, the church’s biggest offering ever.

Continue reading The reverse collection plate

Maybe some Madoff investors weren't duped

US prosecutors are digging into an obvious question in the Bernie Madoff case — how could none of his victims ever figure out what was happening? The Wall Street Journal says at least eight people are being investigated for what they knew and when.

Continue reading Maybe some Madoff investors weren't duped

A left toin at Albuqoique?

Stocks are up strongly again today, which makes me think of Bugs Bunny. Remember the episode where Bugs is trying to dig his way to a carrot festival and instead he pops up in the middle of a bull fight?

Continue reading A left toin at Albuqoique?

The newest bookstore

Today, the document-sharing site, Scribd, opens an online bookstore that’s kind of like iTunes. You can buy whole books or parts of them. Scribd is counting on the publishing world to join in and avoid what happened to the music industry with piracy.

Continue reading The newest bookstore

Morning Reading

For the first time, we could have a Triple Crown jockey without a Triple Crown horse! Calvin Borel won the Derby on Mine that Bird, but Saturday, he rode superfilly Rachel Alexandra as she beat the boys in style. The plucky MTB was a close 2nd. Alright, back to business, starting with the scary chart of the day:

Continue reading Morning Reading

Dream on

It’s time once again for After the Bell, my weekly podcast on what the heck happened in business and the economy. This week, I tie into the theme of our series, The Next American Dream because the news wasn’t so great for the pillars of the Dream. But there’s still inspiration in the podcast, from a dream “coach” and from the Cranberries, Eurythmics and Aerosmith. You can get it right here.

Stimulus for dead people

The government’s sending out 52 million stimulus checks to Americans on Social Security. Unfortunately, some of the people getting checks have passed away. I suppose that’s bound to happen on rare occasion… except that there are thousands of cases, and some of these people died decades ago.

Continue reading Stimulus for dead people

The school aid stand

When states and counties cut their budgets, school districts usually lose funding. And of course, that’s happening across the country right now. I’m sure there’s plenty of screaming at school board and PTA meetings, but some schools and communities are focusing their energy in a different way. They’re raising the money themselves.

Continue reading The school aid stand

NY Times to become public radio?

In the next month or so, the New York Times is expected to make a decision about how it will charge people for content. At a meeting this week, Times’ executive editor Bill Keller told staff that two proposals are at the top of the list.

Continue reading NY Times to become public radio?

Morning Reading

Gas prices are up 12% in the last three weeks. Could be a sign of demand bouncing back? I’m skeptical. There are too many other signs of demand in the dumps. Plus, gas prices always go up ‘round this time of year. Some good reading this morning:

Continue reading Morning Reading

Give us a song, then

One of the signatures of the Marketplace programs is, of course, the music that’s played when we do “the numbers.” If the Dow, the Nasdaq and the S and P 500 are all up, we play “We’re in the Money.” When stocks are down, it’s “Stormy Weather.” And when the results are mixed, it’s time for “It Don’t Mean a Thing (If it Ain’t Got that Swing).” However, this recession has prompted us to innovate, musically speaking. After all, raise your hand if you’re feeling in the money?

Continue reading Give us a song, then

America's most depressing places

Yeah, I thought you could use some cheering up. Clusterstock ranks the most depressing towns and cities in slideshow format. It’s not one of those unemployment multiplied by foreclosures divided by vacancy rates kind of things. It’s more anecdotal, and I think you can guess who’s number 1.

Continue reading America's most depressing places

Stress testing the Fed

A couple months ago, Congressman Ron Paul introduced a bill that called for the Federal Reserve system to be audited. At first, there wasn’t much support for the idea, but now the bill has about 150 co-sponsors. Paul believes if the Fed gets audited, there might be an outcry to shut it down.

Continue reading Stress testing the Fed

Paying to be a blogger

If you really, really, really want to be a blogger, the Huffington Post has a deal for you. HuffPo is auctioning off a 2-3 month internship at one of its blog factories, New York or Washington. Before you get too excited, let me tell me how much you’ll have to bid.

Continue reading Paying to be a blogger

Goldman settles a phantom case

Earlier this week, Massachusetts announced a $60 million settlement with Goldman Sachs over the bank’s “involvement” in subprime loans. Marketplace PM reported on this Monday. But one thing we failed to mention that I find very interesting is that Goldman agreed to the settlement without being accused of anything.

Continue reading Goldman settles a phantom case

Morning Reading

Oh, for crying out loud. California wants TARP money. The S and P says the banking crisis has “merely entered a new phase” and might go on until 2013. And… I just poured orange juice on my cereal. It’s one of those days:

Continue reading Morning Reading

Why your office should clean the fridge

You don’t want this to happen. Seven workers at an AT&T office in downtown San Jose were hospitalized because one of their co-workers finally decided to clean out the fridge. The gesture made 28 other people nauseous. All 325 people in the building were evacuated. A hazmat team was called in.

Continue reading Why your office should clean the fridge

Craigslist, a brothel no more

Today, the Connecticut attorney general said Craigslist will get rid of its “erotic services” ads. Instead, there will be a new adult category, closely monitored by Craigslist staff, in order “to bar flagrant prostitution and porn” on the website.

Continue reading Craigslist, a brothel no more

The little state that could

Delaware is about to become the only state east of the Mississippi to offer legal gambling on sports. I have a feeling Delaware’s neighbors (and most states for that matter) are writhing in jealousy. But, in a glaring case of hypocrisy, the NFL and NCAA are trying to stop Delaware.

Continue reading The little state that could

AIG: What's my destiny, mama?

It’s been a while since we talked about AIG, but there’s plenty to talk about today. First, CEO Edward Liddy testified before Congress this morning about the company’s plan for paying back the taxpayers. The “secret” plan is known as Project Destiny. They may have to rename it Project Futility.

Continue reading AIG: What's my destiny, mama?

Looks like they're going to need it

This morning, Treasury Secretary Tim Geithner told a group of community bankers that the government will take the bailout money repaid by big banks and give it to small ones. Based on what’s happening in the commercial real estate market, the small fish may desperately need the capital.

Continue reading Looks like they're going to need it

Morning Reading

Retail sales stink. What else is new? Well, foreclosures are ridiculously high. I said, what else is new?

Continue reading Morning Reading

Will get naked for work

On an encouraging note, recessions do tend to inspire creativity, tenacity and a little bit of healthy (?) marble-losing. Case in point, out-of-work copywriter Lawson Clarke. He hasn’t given up on his chosen career. No, sir, he’s proud of his, uh, work.

Continue reading Will get naked for work

Sugar, sugar

A Senate committee is hearing proposals that would help pay for the President’s $1.2 trillion health care plan. As you may have heard, one of them is a tax on soda. It would include certain fruit drinks, energy drinks, sports drinks and ready-to-drink teas. It would not include most diet drinks.

Continue reading Sugar, sugar

You know things are bad when...

The federal government loses money in April. The budget had its first April shortfall since 1983. For the first seven months of the fiscal year, the deficit was $802 billion. That compares to $153 billion for the same period a year ago.

Continue reading You know things are bad when...

When piggy banks fly

We’re broke. Let’s fix it. That’s the catch phrase for a new project called Indebted from MTV U and the Peter G. Peterson Foundation. The goal is to get college students to think more carefully about their debt burden. And apparently, one way to do that is to offer a highly-addictive video game about a pig on water skis.

Continue reading When piggy banks fly

The Next American Dream

Today, Marketplace launches a special report, “The Next American Dream.” We’re looking at four pillars of the American Dream and how they’re changing — home ownership, education, opportunity and mobility and retirement.

Continue reading The Next American Dream

Morning Reading

The stock market is kind of eh, so far this morning, after yesterday’s big sell-off. The question people are asking is — has this been a sucker’s rally? Andy Kessler at the WSJ points out — “You can have a jobless recovery, but you can’t have a profitless recovery.” Analysts in Britain are asking the same questions. Plenty of other good material this morning:

Continue reading Morning Reading

Lawsuits that don't sound promising

A former Bear Stearns executive has sued the investment bank to get a $2 million bonus he says he’s owed. Mark Reback says even though Bear Stearns was on the verge of collapse, he helped make millions of dollars for the Wall Street firm.

Continue reading Lawsuits that don't sound promising

A girl among boys

If you watch the Preakness this Saturday, you might very well see a girl beat a bunch of boys. But the filly was almost kept out of the race by a soap-operatic sequence of events involving the owner of the feel-good 50-1 longshot winner of the Kentucky Derby.

Continue reading A girl among boys

Goldman pays tip jar-sized settlement

Today, Massachusetts announced a settlement with Goldman Sachs over Goldman’s involvement in the subprime loan business. The bank will give $10 million to the state and up to $50 million to homeowners. All totaled, that equals about a day’s worth of revenue for Goldman during the mortgage boom.

Continue reading Goldman pays tip jar-sized settlement

Here come the tiny payments

The Wall Street Journal plans to charge per article starting this fall. It would be the first major newspaper to try a micropayment system. The consensus reaction seems to be — there’s no way in hell it’s going to work.

Continue reading Here come the tiny payments

Will Obama save his suits?

Workers at a Chicago-area suit manufacturer are voting this morning on whether to hold a sit-in. They would just stay at their factory positions and refuse to leave. They’re protesting the fact that bailout recipient Wells Fargo may force parent company, Hartmarx, into liquidation. The workers make suits for President Obama.

Continue reading Will Obama save his suits?

Morning Reading

Let’s start the week with SNL, shall we? The bank stress tests were the subject of the opening sketch on NBC’s Saturday Night Live, as Treasury Secretary Geithner gave the results of the “written” portion of the tests. Sample question: “For every $10 million in commercial loans outstanding, a bank should have…”

JP Morgan’s answer — Knicks tickets.

Continue reading Morning Reading

Podcast, get your podcast here

On Marketplace After the Bell, I look back on the week in business and economy and try to make sense of it. Sometimes, trying to make sense of it is like trying to do a Rubik’s Cube with one hand. But by golly, I did it. My theme this week is poker, baby, poker. In the high-stakes game of the economy, this week was definitely the flop. You can get the podcast here. Thanks to producer Phyllis Owens, associate producer Fiona Ng and engineer Stephen Colon. Have a great weekend.

Ships going nowhere

This falls into the picture-says-a-thousand-words category. The International Economy magazine features a Google Earth photo that makes the coastline of one of the world’s busiest ports look like a parking lot. It’s not a good sign for world trade.

Continue reading Ships going nowhere

Chrysler creditors call it quits

The Chrysler lenders who were putting up such a fight over the bankruptcy and Fiat deal have decided to throw in the towel. The creditors withdrew their protest today after a couple of the big players in the group abandoned the fight because the “financial and political costs were too high.”

Continue reading Chrysler creditors call it quits

The banks move fast

A couple of the stress test banks that need to raise capital have already done so. Wells Fargo sold $7.5 billion in stock. Morgan Stanley raised the same amount selling stocks and bonds. What’s really interesting here is that all the banks think the government is way underestimating the banks’ future profits.

Continue reading The banks move fast

Companies looking like boobs

Two PR blunders worth mentioning, and they both involve breasts. KFC has reneged on a coupon for a free grilled chicken meal because hordes of people were beating down KFC’s doors to cash it. Marks and Spencer is reversing its new bra pricing policy because hordes of big-breasted women were threatening to storm the British retailer.

Continue reading Companies looking like boobs

Morning Reading

Good news, bad news on the job front this morning. The economy lost 539,000 jobs last month . That’s the lowest monthly total since October. But the unemployment rate shot up to 8.9%, which is the highest rate since September 1983. The reason? Job numbers for February and March were revised upward. Other things to read:

Continue reading Morning Reading

The leaks were right on

The bank stress test results are in. Citi needs $5.5 billion, Bank of America, $34 billion, Wells Fargo $15 billion — the same numbers reported earlier this week. Huh. I wonder where the leaks came from?

Continue reading The leaks were right on

Damn it, Manny

The 50-game suspension of LA Dodgers star Manny Ramirez may have ramifications beyond the baseball field. First of all, I’m a Dodgers fan, so… (expletive.) Secondly, businesses like JetBlue will take a hit. AND the stock market’s now tanking. It’s all Manny’s fault.

Continue reading Damn it, Manny

What's wrong with this photo?

This is too priceless not to post. It’s a screen shot from CNN’s website last night. I found it at consumerist.com. Look carefully:

Continue reading What's wrong with this photo?

Starbucks is punch-drunk

Starbucks and McDonald’s are locked in hand-to-hand advertising combat, and Starbucks is getting pummeled. Apparently, the clown has one helluva right hook. Starbucks clawed back today with a full-page ad in today’s New York Times. After reading it, I’m pretty sure the ad people have had way too many carmel macchiatos.

Continue reading Starbucks is punch-drunk

Twitter ups the ante

CNET says Twitter is about to change its search function in a way that could make it at least a semi-competitor for Google. Right now, a Twitter search only turns up a bunch of random tweets (short conversations) on a topic. But Twitter will soon begin crawling the links included in tweets and index that content.

Continue reading Twitter ups the ante

Morning Reading

The bank stress tests are expected to be released at 5 pm ET today. Treasury Secretary Tim Geithner says they will lift the “fog of uncertainty” over the banking sector. But I doubt they will dissipate the cloud of skepticism over the parameters for the tests. You can read Geithner’s explanation in the New York Times of how they were conducted. Other items that grabbed my attention:

Continue reading Morning Reading

Getting paid not to teach

Wasting taxpayers’ money certainly isn’t the special province of the Treasury Department. The LA Times reveals that 160 teachers in the Los Angeles public school system are getting paid to do absolutely nothing. They’ve all been accused of some kind of misconduct, but at least one of the teachers whose case is unresolved has been getting paid for seven years.

Continue reading Getting paid not to teach

Who's Behind the Financial Meltdown

Here’s a fact — the banks getting bailed out by the government were irrefutably a key reason for the subprime lending crisis. I say irrefutably because the Center for Public Integrity just released an in-depth study of 7.2 million subprime loans made between 2005 and 2007. And here’s what they found:

Continue reading Who's Behind the Financial Meltdown

Online gambling ban might come down

Today, Congressman Barney Frank introduced a bill that would roll back the Bush Administration’s ban on Internet gambling in the US. Right now, banks and credit card companies aren’t allowed to process bets for online gambling sites (with the exception of horse racing).

Continue reading Online gambling ban might come down

The worst company in America?

Consumerist.com is having a little poll/tournament to decide the worst company in America. The Final Four was AIG vs Ticketmaster and Bank of America vs Comcast. Can you guess who’s in the championship?

Continue reading The worst company in America?

Confusion reigns

I’ve been on the hunt on this morning for an explanation about Bank of America. I’m at a loss to explain why word leaks out that B of A needs $34 billion in capital and then its stock goes up. Not only that, but to raise the money, B of A will likely convert $45 billion of government-owned preferred shares to common shares, thereby diluting current shareholders. Here’s what I found:

Continue reading Confusion reigns

Morning Reading

The word about Bank of America’s stress tests is that the bank needs $34 billion in capital. B of A might have to raise the money by converting its $45 billion in federal money to common shares. So, why is B of A’s stock up this morning? I don’t get it. Under that likely scenario, current shareholders get diluted and the government owns a third of the bank. Wanna explain that one?

Continue reading Morning Reading

First insider trading case on CDS

The SEC has charged a former manager at a hedge fund and a salesman for Deutsche Bank with insider trading on credit default swaps. It’s the first SEC enforcement involving CDS.

Continue reading First insider trading case on CDS

Happy Ben

The Fed Chairman sounded downright cheery about the economy today, compared to his recent assessments. Mr. Bernanke told Congress he’s hoping for positive GDP growth by the end of this year. At Marketplace, we debated how to interpret this. Does it mean we’re still in the “things are getting crappy more slowly” phase? Or are we about to enter the “things are getting better, but they’re still crappy” era?

Continue reading Happy Ben

I vote for some imagination

I was just thinking what the economy really needs is a little creative spark. More original thinking. Maybe even some crazy ideas. There’s too much listening to the same old talking heads say the same old boring things. And lo and behold, there’s a column in the New York Times that gets at exactly what I’m talking about.

Continue reading I vote for some imagination

A literal financial security blanket

How’s this for recession art? An out-of-work artist based in Toronto took his last $208 in cash and sewed it together to make a blanket.

Continue reading A literal financial security blanket

You will take a smoke break!

A county in China’s Hubei province came up with an ingenious plan for mitigating the tax drain of cigarette smuggling and counterfeiting. It told county employees, including teachers, they had to smoke 230,000 packs of cigarettes a year. Local brands, of course.

Continue reading You will take a smoke break!

Morning Reading

Good morning! Back from vacation. Thanks to Paddy Hirsch for a great job filling in on the blog. I see the banks are supposed to get their official stress test results today. Reuters says about 10 of the 19 banks will be told they need to raise more capital. Let’s hope it isn’t taxpayer capital. Some good readin’ this morning:

Continue reading Morning Reading

Pass the torque wrench, Steve

So, Chrysler expects to emerge from bankruptcy protection in July. This according to the company’s bankruptcy filing. Nine weeks. Forgive me if I sound skeptical. The Obama administration doesn’t appear to have convinced the requisite number (or representative dollar amount) of top lenders to Chrysler that it needs to get the proposal through the court, or even to trigger a cramdown. In fact, the holdouts filed an objection to the plan to sell assets worth $2 billion to Fiat.

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Looks like Steve Ratner and the rest of his auto task force have got some tuning up to do.

Continue reading Pass the torque wrench, Steve

Time to jump back in?

Many of the conversations I had over the weekend revolved around the question of whether its a good idea to start buying stocks again. A lot of people seem convinced that the rally in the markets is more than just a bear market bounce. They point to lower jobless claims, increased consumer confidence, a lower-than-expected drop in first-quarter corporate profits and the 9.4 percent April rise of the S&P 500 index (its best showing since March 2000) - and say all these factors are beginning to add up.

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My gut tells me to stay in cash for now, but if my gut had its way my cholesterol count would be around 400. So I thought I’d shop around for some other opinions.

Continue reading Time to jump back in?

Deja vu, anyone?

Filene’s Basement files for bankruptcy.

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It’s the second time in ten years that the discounter has asked for court protection from its lenders.

Continue reading Deja vu, anyone?

I'm gonna make him an offer...

A spat’s brewing about the government’s allegedly aggressive lobbying of those holdout non-TARP lenders to Chrysler. In case you’ve missed it, the government’s plan to get Chrysler in and out of bankruptcy at lightning speed depends on the co-operation of a number of lenders. But they’re holding out for what they believe could be a better deal.

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Tom Lauria of White & Case represents the Chrysler holdouts. He was interviewed on News/Talk WJR by host Frank Beckmann, and told how one of his 20 clients was strongarmed.

Lauria: One of my clients was directly threatened by the White House, and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence.

Beckmann: Was that Perella Weinberg?

Lauria: That was Perella Weinberg.

But Perella Weinberg is now denying this.

Continue reading I'm gonna make him an offer...

Morning reading

Still stressing about those tests.

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The debate over the stress tests continues. We’re due to hear some of the results this week although how much information we’ll get remains uncertain. Over at the New York Times, David Leonhart says the tests may bring hope more than fear.

The administration is expected to make the case that the needs of the troubled banks can be met with the bailout funds that Congress has already approved.

“None of these banks are insolvent,” said a senior government official, who did not want to be identified before the public release of the test results. The official added: “These are manageable losses.”

Continue reading Morning reading

So, who really calls the shots?

Chrysler’s bankruptcy is shaping up to give us all a terrific window on Washington, and who really holds power there.

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Senator Dick Durbin said yesterday that the banks “are still the most powerful lobby on Capitol Hill. And they frankly own the place.” But President Obama has his game face on. He came out swinging against the holdouts to the Chrysler reoranization plan yesterday.

While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting.

Stirring stuff, but Obama’s got his work cut out.

Continue reading So, who really calls the shots?

Mortgage lenders turn turtle

The Senate may have tossed out Obama’s cramdown legislation, but too late for Thornburg Mortgage and Accredited Home Lenders.

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Thornburg filed for bankruptcy protection in Baltimore. If you’re getting that sense of deja vu, it’s not because there’s a disturbance in the matrix. The Financial Times notes the company originally announced its decision to seek protection from its creditors on April 1. But the company didn’t actually do the business, leading many to hope it just might be an April Fool’s joke.

Some joke. And no such luck.

Continue reading Mortgage lenders turn turtle

Confidence trick

The Reuters/University of Michigan final index of consumer sentiment is out, and Bloomberg reports confidence among U.S. consumers rose to its highest level since November.

Record low mortgage rates, cheap gasoline and surging stock prices are providing some relief to the beleaguered American consumer in the face of mounting unemployment and tumbling home prices. Improved confidence may keep consumers spending, helping to pull the economy out of its slump in the second half of the year.

Well, let’s have a look at that. Will mortgage rates stay low? Will stock prices keep surging? Will gasoline stay cheap? Well, maybe, if the stars continue to align, and financial institutions continue to monkey with their numbers. But it doesn’t look as though unemployment has stopped falling or that house prices have stopped sliding (not in those key FL, CA, AZ and NV neighborhoods, anyway. Not to mention MI).

There are plenty of people calling recent stock movements a bear market rally. As Henry Blodget over at Cluster stock puts it, pundits agree: It’s a new bull market. So be very afraid.

Why this is a bad sign

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Businessweek reports even in this recession, there are approximately 3 million jobs that employers are actively recruiting for but so far have been unable to fill.

It’s evidence of an emerging structural shift in the U.S. economy that has created serious mismatches between workers and employers. People thrown out of shrinking sectors such as construction, finance, and retail lack the skills and training for openings in growing fields including education, accounting, health care, and government. At the same time, the worst housing bust in decades has left the unemployed frozen in place. They can’t move to get work because they can’t sell their homes.

As bad as it is now, the mismatch will create bigger problems when the economy begins to expand again, the report contends.

Morning reading

Looks like the stock market is set to tick higher this morning, following both Europe and Asia. We’re waiting for manufacturing data from the Institute for Supply Management, as well as data on factory orders, consumer sentiment and vehicle sales. Economists have high hopes for the ISM number - manufacturing has been contracting steadily as the recession has gathered pace, but economists reckon this latest month will show that contraction is slowing down. Fingers crossed.

Still lots of chatter about Chrysler and how its bankruptcy might shape up. Dealbook at The New York Times has a neat primer on the filing, as well as a short history of the company.

Reuters notes Fiat also wants to to pursue an alliance with General Motors European unit Opel, but says that could be a bridge too far.

Citigroup announced it is selling its Japanese brokerage business to Sumitomo Mitsui Financial Group. Bloomberg says Sumi’s paying $5.5 billion; the Financial Times says its $7.9 billion, but it’s including a payment for Japanese-listed securities held by Citi.

Continue reading Morning reading


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