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Thursday, January 29, 2009

FT front page roundup: Customer Service Wisely Avoids My Wrath Edition

The International Monetary Fund and the International Labor Organization, who secretly hate each other, are in agreement that the world economy will rape everyone and their pets this year.

The IMF slashed its global growth forecast by 1.5 percentage points, from the nothing it was forecast to grow anyway. Furthermore, it revised total global credit losses from $1.4 trillion to $2.2 trillion. The ILO is predicting 18-30 million job losses, with a chance of 50m if we're lucky. Fucking buzzkills, dude.

Bank stocks soared when tax delinquent Tim Geithner played down the possibility of nationalization. Instead he's probably going to buy their worthless assets and then compensate the banks for any lost capital as a result of the sale, which means banks haven't bothered to try valuing these things correctly, because they'll end up getting nationalized. This is pretty much what Hank Paulson was going to do a year ago until the smarts said it was a bad idea to overpay for a shit sandwich. But now it isn't, apparently.

Wells Fargo reported a $294m loss because clients defaulted when Bernard Madoff took all their monies.

Bank of America is planning to defer bonuses for its employees this year in response to a sexy probe from the NY attorney general into BofA acquisition Merrill Lynch's Bonus for Losers scheme. In times like these, a story like this...
BofA insiders said that the deferral of payments would be a particular problem for executives who have constructed a lifestyle around the near-certainty that there would be some kind of bonus each February.

They said that this could lead to departures beyond the 3,000 or so job cuts expected in the unit this quarter.

"This is going to cause an uproar," says one BofA executive familiar with the matter. "There will be cash-flow issues for families."

...would normally warrant a well-deserved "boo fucking hoo hoo." But recall that BofA employees are being forced to tuck in because of losses at Merrill, whose employees aren't. And some of those BofA bonuses would have been shitty already because Merrill has weighed so heavily on their share price. Haha, so everyone at BofA hates Merrill, and we can expect office pranks to soon escalate into horrible violence. They will be the Crips and Bloods of finance.

Chinese premier Wen Jiabao castigated the US an anonymous country for pursuing "inappropriate macroeconomic policies" and an "unsustainable model of development characterized by prolonged low savings and high consumption". This is accurate, but funny, because China's prolonged high saving and low consumption has necessarily been the mirror of the US's savings profile. Additionally, he said China had "the confidence, conditions and ability to maintain steady and fast economic growth and continue to contribute to world economic growth", which is true because making up GDP figures in a dictatorship is really easy.

Also, he said it while wearing his headphones upside down. Ha, dingleberry.

IMF chief economist Olivier Blanchard meanwhile is trying to play Dr. Phil to the US/China currency dispute, as if we didn't have enough to deal with already.

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