Magpie

Sunday, October 19, 2008

How come this story isn't on the front pages of US newspapers?

From today's UK Guardian:

Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.
Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government's cash has been poured in on the condition that excessive executive pay would be curbed.
Pay plans for bankers have been disclosed in recent corporate statements. [...]
The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers has collapsed.

Why oh why am I not the least bit surprised to find out that the bailout is going directly into the personal pockets of the same people who made the bailout (allegedly) necessary?

Read the whole thing here.

Thanks to The Sideshow for the tip.

Labels: Bailout, Corruption and Graft, Economy, Politics as usual, Wall Street

| | Posted by Magpie at 1:39 PM | Get permalink

Sunday, September 28, 2008

Five reasons to vote against the latest version of the Wall Street bailout plan.

David Sirota's got em.

Pay particular attention to #4. If I were a member of the House or Senate, I'd think at least twice before I voted for the bailout.

Labels: Bailout, Economy, Elections, Politics, Wall Street

| | Posted by Magpie at 4:22 PM | Get permalink

Will the Wall Street bailout fix the ailing US economy?

Nope, says an excellent piece by McClatchy's Kevin Hall:

A principal risk now for the American economy is that the spate of bad news will feed on itself, creating a downward spiral.
For example, the wave of bank failures and mergers is sure to lead to large layoffs in the financial sector, and already computer makers like Dell and Hewlett Packard have announced job cuts in the expectation of a worsening sales environment.
As the number of jobless grows, the number of delinquent home loans grows larger. And defaults on car loans rise. More consumers will fall behind on credit card payments, restaurants will shutter their doors because of fewer diners, and fewer restaurants will cut demand for farm and processed food products. It's all inter-linked and becomes a spiral.

Kinda like the spiral already caused by the collapse of the housing bubble. Which, of course, many of the architects of the current bailout plan didn't see as a problem.

You can read the full article here.

Labels: Bailout, Economy, Incompetence, Wall Street

| | Posted by Magpie at 3:57 PM | Get permalink

Saturday, September 27, 2008

Make the bastards pay for their own bailout.

It doesn't take an MBA or degree in economics to figure out that people in the US are pissed off at the possibility that they'll have to shell out hundreds of billions of dollars to bail out the big financial institutions responsible for the current economic disaster. Given this, you'd think that the Dems could come up with a response to the Dubya administration's bailout plan that relieves the average taxpayer from paying the costs of any bailout, wouldn't you? But no. Democratic leaders in Congress are instead settling for minor tweaks to Dubya's bailout—tweaks that leave most of us holding the financial bag.

This magpie isn't a financial genius, but I've been paying attention to proposed solutions that some really smart people are making. Here are some of those ideas:

Put a 0.25% tax on the transfer of stocks, bonds, and other financial instruments. According to estimates I've seen, this could raise US $160 billion each year—enough by itself to pay for a bailout on the scale of what Dubya's administration is proposing. This tax should be made permanent.
For at least five years, put a 10% income tax surcharge on any individual whose pre-tax income is US $500,000 or more.
Instead of lowering the capital gains tax (as proposed by right-wing Republicans), add a 25% surcharge to the existing tax for any individuals whose pre-tax income is US $500,000 or more. This capital gains surcharge should last at least five years.
Lastly, impose a windfall profits tax on the obscene profits being made by the oil industry. No, this isn't directly related to the bailout. It's a good idea, though, and one that would be broadly supported—especially if the proceeds from this tax were used to help taxpayers meet the high cost of heating oil and gasoline.

This 'modest proposal' to the Democrats puts the cost of the bailout on the people and institutions responsible for—and who have reaped financial benefits from—our current economic problems. Just as importantly, it prevents the Republicans from tying Barack Obama and the Democrats to Dubya's unpopular bailout plan.

What do you think?

Labels: Bailout, Economy, Politics, Wall Street

| | Posted by Magpie at 11:51 AM | Get permalink

Wednesday, August 22, 2007

Adding injury to injury.

If you think things are bad when your mortgage goes into foreclosure, just wait until the Internal Revenue Service gets done with you.

Via NY Times.

Labels: Bastards, Bubbles, Economy, Housing, Taxes

| | Posted by Magpie at 12:01 AM | Get permalink

Tuesday, August 21, 2007

Batten down the hatches!

Unless we are very lucky, a global recession is in the cards.

As this excellent post explains, the US housing bubble is really just a symptom of a more widespread problem that is currently battering the world's financial markets. (And, yes, Dubya's administration bears some of the blame.)

The global economy cannot survive for long on the traditional credit creation process, and unless Wall Street can revive confidence in its securitization process almost immediately, a global recession starting later this year is a high likelihood. Wall Street might have a chance if it could make public very soon the nature and extent of the problems with its credit creation process. But this is one of the key differences between the two processes – problems in the commercial banking system are quicker to surface, and there are regulators ready to intervene. Not so with the complex, sprawling, opaque, and unmanaged Wall Street process, whose raison d’etre seemed to be to generate fat bonuses for many involved, with little thought to the systemic and economic risks being created.

We shall see what good the Fed and other regulators can do with interest rate cuts and any other interventions they can think of, but the problems are so large and unwieldy that no one should hold out much hope. The implosion of the Wall Street credit creation process is unprecedented in its depth and international scope, and the global economy will be fortunate indeed to avoid severe and prolonged damage.

I highly recommend reading Numerian's whole post at The Agonist. It's the best explanation of what's going wrong in the economy that I've seen.

Labels: Bubbles, Credit, Economy, Greed, Wall Street

| | Posted by Magpie at 12:16 PM | Get permalink

Friday, April 27, 2007

Yet another way Wal-Mart is evil.

The more your company sells to Wal-Mart, the smaller your profit margin.

On balance, firms that derive less than 10% of its sales through Wal-Mart averaged 39.1% in gross margin, or the percentage of profit realized before items like fixed costs and interest expense are considered. For those falling between 10% and 20%, gross margin falls to 36.2%. Above 20%, and margin dips a little bit more, to 35.4%. The trend is most pronounced in the apparel & accessories category, where average gross margin drops from 48.7% for companies generating less than 10% of its sales through Wal-Mart, to 28.7% for those selling 20% or more. Food & beverage also shows a big disparity, where the same breakdown shows average gross margins dropping from 39% to 22%.

In all, only 25 of 333 companies managed to beat its sector gross margin average while generating at least 10% of their revenue through Wal-Mart. Only seven that sold over 20% there did it. And the numbers show that company size has little to do with Wal-Mart dependency, at least once you get past the top handful....

You can read the whole thing here.

Via Forbes.

Labels: Economy, Wal-Mart

| | Posted by Magpie at 9:56 AM | Get permalink

Tuesday, April 24, 2007

Happy (?) Equal Pay Day!

If you're a working woman in the US, you've finally worked enough additional days this year to catch up with what your average male co-worker made during 2006. And, just think, you only have to work until sometime in August 2008 to earn what that co-worker will be paid this year.

You can find more info about pay equity (and the lack of it in the US) if you go here.

Labels: Economy, Equal rights, Pay equity, Sexism, Women

| | Posted by Magpie at 10:14 AM | Get permalink

Wednesday, April 18, 2007

The world according to Wal-Mart.

According to where Wal-Mart buys the stuff it sells, that is.

Via The Consumerist.

Labels: Economy, Wal-Mart

| | Posted by Magpie at 10:34 AM | Get permalink

Thursday, April 12, 2007

What was that sound I just heard?

It was the sound of the US housing bubble popping. Check out this prediction:

The National Association of Realtors thinks the national median price for existing homes will drop this year for the first time since the organization began keeping records in the late 1960s.

If a group that will find any possible way to put a positive spin on the problems in the housing market can't do any better than predict a price drop, you know that thing are really bad.

Via Housing Bubble Blog.

Labels: Bubbles, Economy, Housing

| | Posted by Magpie at 8:54 AM | Get permalink

Wednesday, March 28, 2007

We're ~~Number One~~ Number Seven!

The US has lost its place as the planet's new-technology powerhouse, according to an annual survey by the World Economic Forum. In the latest edition of the organization's Networked Readiness Index, the US has tumbled to #7 on the list of 122 countries. In the previous five surveys, the US had held the top position.

A deterioration of the political and regulatory environment in the US prompted the fall, the report said.

The top spot went for the first time to Denmark, followed by Sweden.

Countries were judged on technological advancements in general business, the infrastructure available and the extent to which government policy creates a framework necessary for economic development and increased competitiveness.

As near as we can tell, the WEF was too polite to cite the hijacking of US science and technology policy by the religious right as a reason for the US slide. Just another one of the many presents that Dubya's administration has given the country ...

Via BBC News.

Labels: Economy, Technology

| | Posted by Magpie at 11:23 AM | Get permalink