AllupInyourBiz » Banking

Visualize Debt

Ted Swenson — Thu, 12 Mar 2009 18:20:42 +0000

I saw this graphic today on Animal New York, and it got me thinking.

The amount of money represented in the graphic above, is one billion dollars. One trillion dollars is one thousand times what you see in the picture. That’s a lot of cash. Ok, now that you have the mental image of one trillion dollars, try to put it into a practical example. I hate Karl Rove and Rush Limbaugh as much as the next guy, but Rove has published a couple of articles recently that have really gotten under my skin (not because of the author). The reason they bothered me, is because the content of the articles, points to all of the discrepancies of the campaigning Obama, vs. Commander in Chief Obama. Today, a different Carl, sent me the link to an WSJ Op. Ed. piece authored by Rove. A lot of it was repeat content of an article published earlier this week, also authored by Rove, dealing with bait and switch. But the part of today’s article that blew my mind, was the following:

Not even Team Obama can forestall unpleasant reality. And among those America now faces is Mr. Obama adding $3.2 trillion to the national debt in his first 20 months and 11 days in office, eclipsing the $2.9 trillion added during the Bush presidency’s entire eight years.

Whoa! $2.9T is a lot any way you slice it. But to Bush’s credit, it was spread over 8 years, including all of the 911 and war crap. The Obama administration is a runaway train and the boiler fire is being stoked by pallets full of money. 20 months?!!! $3.2 trillion?!! Ok, so now take the money in the picture, multiply it by 1 thousand, then multiply that by 3.2. It may just be my limited imagination, but I’m having a hard time even picturing the image of 1 thousand times what is in the graphic. Was this really the kind of change that we were looking for?

Romney’s Op Ed Piece

Ted Swenson — Thu, 20 Nov 2008 17:06:28 +0000

Former Governor of MA, and GOP figure in the recent election, submitted an OP Ed piece for the NY Times this week. The article addressed the floundering domestic automotive industry. Romney is a self made independently wealthy individual (Bain Capital) whose father was a Auto industry mogul before becoming a political in Michigan. You would think that these things would qualify Romney to speak on the topic of solving the problems of domestic auto producers. Indeed, Romney is qualified. But Romney’s article “let Detroit go bankrupt” does not delve into any sort of complex strategy based on his expertise as a Private Equity genius. Instead, Romney merely asserts that decisions should be made using common sense. Hmmm, imagine that. Romney astutely points out that “Getting more and more pay for less and less work is a dead-end street.” Romney also suggests that bailing out the floundering auto makers will only prolong the inevitable. I couldn’t agree more.

Buckle up, Wall Street. Lehman is on the block

Ted Swenson — Thu, 11 Sep 2008 19:04:12 +0000

As LB’s stock hit an all time low twice this week, Fuld appears to have officially put the firm up for sale.

Why deal with problems, when you can ignore them?

Ted Swenson — Thu, 28 Aug 2008 16:24:04 +0000

While the rest of the world’s banks are failing, trying to raise liquidity, trying to keep from failing and freaking out about all of the above, British bank execs say “ho hum, ol’ chap! What credit crunch?” Dealbook today, cited a survey conducted by a consulting firm called the Hay Group. According to the data, over half of the financial firms surveyed, said that the top executives have decided to make no changes in their company’s strategies, to attempt to compensate for the current market slowdown. What’s more, is that only 38% surveyed said that they “see the market woes as a threat.” The financial service sector leader for the Hay Group added his commentary, stating “The sector is sleepwalking into a period of extreme turbulence which is likely to result in some serious damage to those organizations that persist in neglecting proper preparations.”

We have heard these rumors before

Ted Swenson — Thu, 21 Aug 2008 18:23:05 +0000

Lehman Brothers is like a ship bouncing around in rough waters. Last month, it was rumored that the firm was being eyed by Blackstone, HSBC and Barclays, as a possible takeover target. It was recently in negotiations with a South Korean bank to sell half of its holdings. Apparently the deal died before the terms could be finalized. According to Dealbook, takeover rumors are flying again today. Dealbook has learned that “Theodore Janulis, the global head of Lehman’s mortgage capital division, and Richard McKinney, its head of American securitized products, will be leaving the firm.” The meat of the article, however, is the alleged reason for the upgrade in stock rating today. Dealbook reports that Richard X. Bove of Ladenburg Thalman sent a note to his clients, listing the reason for upgrade “Hostile takeover now a possibility.” The reasoning behind this prediction is unclear, but Dealbookspeculates that it could be based on the failed negotiations with the South Korean buyer. More rumormongering? I guess we will see.

Policy makers look into the crystal ball for Fannie Mae and Freddie Mac

Ted Swenson — Thu, 21 Aug 2008 15:11:30 +0000

As the debate on the best way to fix Fannie Mae and Freddie Mac, continues, one thing is for sure… They are both going to change, big time. Ideas for two quasi-governmental entities include: Reverting to complete governmental control; Breaking them into smaller entities; Phasing them out completely; Limiting their functions and; Limiting their borrowing ability. Why not all of the above?

Jamie Dimon, that guy is ahead of the game

Ted Swenson — Fri, 15 Aug 2008 14:37:44 +0000

Finally, some good news from Wall Street. JPMorgan Chase raised 1.6 Billion in hybrid securities yesterday. The offering, pays out at 8.625% and contains a mixture of equities and bonds. Hold your breath and cross your fingers that they perform well, and that there is more to come.

Team are locked, says Merrill

Ted Swenson — Thu, 14 Aug 2008 21:53:23 +0000

Today, Merrill Lynch announced a hiring freeze that will be in place until the end of the year. The news came written in a formal memorandum from the ML’s President, Gregory J. Fleming. The reason for the freeze, if it is not already obvious, is stated to be a mitigation tactic for the billions in writedowns that the firm has recently suffered. Not to worry, says DealBook, the majority of ML’s hiring generally takes place during first and second quarters. Any bets on who will be next, with the formal hiring freeze?

Mystery solved!

Ted Swenson — Wed, 06 Aug 2008 16:58:12 +0000

Today a 172-page report was released by various chief risk officers, as well as other senior level executives from large Wall Street banks, outlining exactly what went wrong with the economy. The authors not only speculate as to the cause of the current situation, but also offer tips for avoiding a recurrence. Hmmmm, so you know what happened, you know how to avoid it….. you just wanted to test out your theories, or something?

Indymac files for CH7 protection

Ted Swenson — Fri, 01 Aug 2008 15:24:16 +0000

Indymac, the step cousin to Countrywide, when it comes to writing crappy residential mortgage backed paper, announced that it plans to file for Chapter 7 relief. The bank was seized by federal regulators three weeks ago, and now plans to liquidate its remaining assets under a Chapter 7 plan. After the Indymac announcement, all of the 2 bit, mom’s-basement-type mortgage brokers around the country could be heard sobbing into their pillows.