September 15th, 2008
Well, by the time you read this, the delegation will have had a nice dinner at the SACC-USA Anniversary Banquet. Do you suppose they’re eating lots of fish? Or they’re probably talking about the high technology of Swedish companies. Maybe drinking glugg?
Well in any event, I’m sure that it was interesting evening.
Here’s Tuesday’s Agenda….
Tuesday 16th 7 AM Departure Hotel Haga to the E-days
7.30 AM-5PM E-days conference
7 PM Dinner with the delegation
September 15th, 2008
Now here is an action that I fully support! We small companies who have our own savings and income tied into our companies can’t just walk in and out and expect “golden parachutes”, yet these guys do. They should get nothing and if anything, they should get thrown in jail for making a mess of things that eventually affect so many people. Greed is NOT GOOD….Eventually these situations affect manufacturers as well as consumers….
By JAMES R. HAGERTY
September 15, 2008; Page A18
The regulator of Fannie Mae and Freddie Mac said Sunday that it won’t allow the companies to make “golden parachute” severance payments to the mortgage companies’ ousted chief executive officers.
In a statement, the Federal Housing Finance Agency said such payments wouldn’t be made to Daniel Mudd and Richard Syron, despite provisions in their contracts. Mr. Mudd served as chief executive of Fannie and Mr. Syron was chairman and CEO of Freddie until last weekend, when the regulator seized control of the companies, saying they were in danger of running out of capital.
News reports that the two executives stood to receive millions of dollars in severance payments under their contracts triggered public protests from numerous politicians and inspired political cartoons in newspapers.
The FHFA cited “applicable statute and regulation” for its decision. The regulator has taken management control of the two companies under a legal process known as “conservatorship,” which could last for years while Fannie and Freddie are restored to financial health. The U.S. Treasury has pledged to provide as much capital as the companies need to continue in their role as the main suppliers of funding for home mortgages.
The FHFA last week named Herb Allison as CEO at Fannie and David Moffett as CEO at Freddie.
Spokesmen for Fannie and Freddie declined to comment on the pay decision. Messrs. Syron and Mudd couldn’t be reached immediately for comment.
David Schmidt, a senior consultant at James F. Reda & Associates LLC, a compensation consulting concern in New York, estimated that, without the regulator’s intervention, Mr. Mudd’s exit package could total as much as $6 million to $8 million and Mr. Syron’s $15 million. Those totals include pensions, continuing benefits and other payments the companies’ boards might grant. It isn’t clear what pension and other payments may still be made to Messrs. Syron and Mudd, given the regulator’s ruling.
The collapse in the share prices of Fannie and Freddie already has wiped out much of the two executives’ wealth. Since March, for instance, the value of Mr. Mudd’s shares in Fannie has dropped to about $683,000 from $23.7 million.
Write to James R. Hagerty at bob.hagerty@wsj.com
September 15th, 2008
As Barack Obama and John McCain move into the next stage of the Presidential campaign, there’s one economic question they won’t be able to escape: What should Washington do to reverse the decline in manufacturing jobs? How each candidate answers that question might help decide which one wins.
Manufacturing’s political importance in this election year depends partly on geography. The crucial swing states of Indiana, Michigan, Ohio, and Pennsylvania have seen their manufacturing bases implode. Altogether, they have lost 200,000 factory jobs in the past two years alone.
Read further….
http://www.businessweek.com/magazine/content/08_26/b4090042435180.htm
September 15th, 2008
By JEFF BATER Wall Street Journal
September 15, 2008 9:23 a.m.
WASHINGTON — Production by U.S. industries plunged in August, falling double the rate expected as carmaking slumped and weather both mild and stormy struck.
Industrial production decreased 1.1%, following a downwardly revised 0.1% climb in August, the Federal Reserve said Monday. Previously, July output was seen rising 0.2%.
Capacity utilization decreased to 78.7% in August. July capacity use was 79.7%, revised down from an originally reported 79.9%. The 1972-2007 average is 81.0%.
Economists expected industrial production to drop 0.5%, with a capacity utilization rate of 79.4% for the month.
Over the 12 months ending in July, industrial production was 1.5% lower. Manufacturing production decreased 1.0% in August, after increasing 0.1% in July. Manufacturing capacity utilization decreased to 76.6% from 77.5%.
Manufacturing of motor vehicles and parts dived 11.9% last month compared with July. It increased 2.5% in July. For the year, auto production was down 20.7%. The weak economy is keeping consumers from making big purchases, and high gasoline prices have also hurt vehicle sales.
Excluding motor vehicles and parts, industrial production would have decreased 0.2% in August. Production ex-auto in July fell 0.4%.
U.S. utilities output plunged 3.2% in August and the sector’s capacity usage was 81.5%, down from 84.4% in July. Utilities fell so sharply because of unseasonably mild temperatures, the Fed said. But some bad weather — Hurricane Gustav — affected energy production.
“Precautionary shutdowns in the Gulf of Mexico in advance of Hurricane Gustav partly curtailed refinery activity, petrochemical production, and the extraction of crude oil and natural gas,” the Fed said in its report. “However, the estimated effect in August of disruptions due to the hurricane on total industrial production is estimated to have been less than 0.1 percentage point.”
Mining output fell 0.4% in August and mining capacity usage was 91.3%, down from 91.7%. Mining rose 1.1% in July. Machinery production rose by 0.3% in August after remaining flat in July. Business equipment decreased 0.6% in August.
Production of construction supplies fell 1.0% in August after rising 0.4% in July as the housing slump wears on.
Output at the nation’s technology firms was flat in August after rising 1.3% in July. Technology production has been giving overall output a big boost, having climbed 19.4% over the past year.
Write to Jeff Bater at jeff.bater@dowjones.com
September 15th, 2008
The Bank of England and the European Central Bank (ECB) today acted to stop escalating panic by pumping nearly £30 billion into financial markets after Lehman Brothers sent global shares plunging after it filed for bankruptcy.
The Bank of England made £5 billion worth of short-term funding available to guard against fears that financial markets will grind to a halt if banks, spooked by the collapse of Lehman, stop lending to each other.
At the same time, the ECB released €30 billion (£23.8 billion) to keep liquidity flowing between banks.
In London, the FTSE fell 246.3 points to 5,170.4 by noon after Lehman, the 158-year old bank, filed for bankruptcy early today. The bank’s UK holdings followed suit and went into administration today, advised by PricewaterhouseCoopers.
In France, the CAC 40 index lost 5.2 per cent and Frankfurt’s DAX fell 4.2 per cent. It is widely expected that the Dow Jones industrial average will open nearly 400 points lower when trading begins.
Tony Lomas, one of the administrators and a partner at PwC, said that the business would be wound down in as orderly manner as possible.
“Because the group managed its funding on a global basis, the UK trading operation found itself unable to meet its obligations when the flow of funds dried up last night,” Mr Lomas said.
“Our priority now is to work with management and trading counterparties to agree the manner in which the assets and liabilities will be handled.”
The Financial Services Authority, the City watchdog, said today: “The FSA is working with market practitioners, including the London Clearing House, to ensure the process connected with the winding down of this wholesale business is completed in an orderly manner to minimise any market disruption.”
Bank shares were predictably badly hit in early trading. Morgan Stanley was down almost 10 per cent in Frankfurt, while reports that the world’s biggest insurer, American International Group (AIG), was seeking rescue funding meant that its shares lost a third of their value on the German market.
In contrast, Merrill Lynch shares were up 38 per cent after it struck a $50 billion (£27.9 billion) deal to sell the group to Bank of America.
The sale came as a surprise to markets since Bank of America was believed to be in talks with Lehman about a takeover. Barclays was also in discussions about buying Lehman but said today it walked away “because it was not possible to conclude a transaction in the best interests of Barclays’ shareholders”.
More than 26,000 jobs are at risk across Lehman’s global operations. Earlier this year, the bank, which has written down billions of dollars on toxic assets linked to the US mortgage market, said it would cut 5 per cent of its workforce.
Workers at Lehman Brothers’ Canary Wharf headquarters were said they were “numb” at today’s developments.
One source said: “People are just trying to absorb what happened and get as much information as they can, but there’s been no big official meetings. There have been talks division by division.”
The source said that staff were told to come in to work today as normal and were “trying to be professional, cancelling appointments” but have been warned not to enter into any trades without sign-off from their superiors.
The hunt is now on for which banks are exposed to Lehman and, at the weekend, traders at all the leading banks were ordered back to their desks to calculate their exposure to a possible collapse of the lender.
While the bank has widely been perceived as most vulnerable because of its substantial holdings of mortgage-backed securities, it was the US Treasury’s refusal to bankroll a rescue that was seen as preventing other parties from bailing out the bank.
US authorities had tried to secure a rescue deal for Lehman Brothers over the weekend.
Hank Paulson, the US Treasury Secretary, and Tim Geithner, president of the New York Federal Reserve Bank, had convened an emergency meeting in New York on Friday evening to try to convince other banks to rescue Lehman.
American authorities had hoped to ring-fence $85 billion worth of Lehman’s real estate assets into one company, which they wanted banks, such as Citigroup and JP Morgan Chase, to prop up with $35 billion of new capital.
Mr Paulson had hoped to persuade the banks to inject new money to prevent a fire sale of Lehman’s assets, a move which could have triggered a fall in the value of their own securities.
On Sunday evening, Lehman Brothers, whose shares have fallen about 94 per cent over the year, was left in a vulnerable position.
Over the weekend, the bank hired bankruptcy specialists in the event that all other funding routes failed.
The collapse of Lehman and purchase of Merrill is likely to worsen an already difficult financial sector job market.
Headhunters said today that the US had already seen 100,000 jobs go in finance in the past year and that it was likely to see a further 50,000 cut.
Staff from Bear Stearns, which was bought by JPMorgan Chase in February, are still thought to be looking for work. Recruitment consultants said that they expected resumes to start flooding the market this morning.
The Federal Reserve is expected to try to help banks exposed to Lehman to use a wider range of collateral to borrow funds from the central bank.
In addition, 10 leading banks said they would pool $70 billion of their own money to create a borrowing facility. The institutions, which include Citigroup, Credit Suisse and Deutsche Bank, could tap the pool to help them ride out the crisis.
At Lehman’s New York headquarters in midtown Manhattan, employees were seen removing their belongings from the building ahead of the bank’s expected collapse.
Source: Times UK
