A Las Vegas Loan Center Blog

Ebay is laying off 10% of it’s work force. Guess who doesn’t get hurt..

Like in many companies, eBay’s has Golden Parachutes for its top executives. It appears from SEC filings that some top execs will receive two years’ target cash compensation, defined as annual base salary plus target annual incentive bonus. That “bonus” is usually 100% of salary, so it would be like getting 4 years’ worth of pay if they are laid off.

As for the working stiffs;
Paypal isn’t likely to get hit hard this close to the holidays.
Skype is the fastest growing part of the company.
But eBay motors has a lot of duplication of services offered by other segments of the company.

Like most fast growing companies eBay appears to be middle management heavy and I’m sure that their customer service segment will take a hit.

With eBay trying to become more retail and less auction oriented I would imagine that Top Seller Account Managers are fairly safe for the moment.

Of course there’ always Kijiji and Gumtree.
eBay’s European offices employ a lot of people. There’s over a thousand in Dublin alone and eBay Germany employs something like 1100.

10% may turn out to be 15 or 16 hundred employees -for now- which is not very many in the scheme of things. But the need for a company the size of eBay to layoff that many people is another indicator of more hard times to come.

The DOW dropped another 600 odd points when a major credit-rating agency said said it might cut its rating on General Motors and Ford.

Welcome to panic 101.

It wasn’t that many years back when these same people were jumping up an down and shouting for joy as the market passed 10,000. It went up like a skyrocket and nobody I knew seemed concerned. Then one day there was a 400 point correction and there was momentary panic.

What is it with people? If you deal in an overly inflated market then when something goes wrong it’s going to deflate. Aren’t these brokers supposed to be experts? Aren’t they supposed be able to predict to some degree market movements? Aren’t they supposed to protect their clients from bad investments? –Oh yeah. I forgot to take good old fashioned greed in to account.

Anybody with a few functioning brain cells should have seen the rating downgrade coming. Auto makers have been crying the blues for quite some time. Sales are down. Dealerships are closing and consumers don’t have any money left to rush right out and buy the latest model.

I would not consider any individual or company a good risk when they tell me that their primary source of income has gone down the tubes.

And through it all “the experts” seem to remain oblivious to the obvious.

Perhaps they should look up from their statistics (as in lies, damn lies and..) long enough to see what’s actually going on. — Or maybe not. It’s not like it’s their money.

WASHINGTON — The promise of lower interest rates and new federal efforts to stem the financial crisis failed to dispel the fear gripping Wall Street on Tuesday.

Stocks rose at the session’s opening but soon began to fall, and the selling intensified during the afternoon, even after Ben S. Bernanke, the chairman of the Federal Reserve, all but pledged to cut interest rates by the end of the month. The Dow Jones industrial average plunged 508 points, or 5.1 percent, extending a slide of months that has erased a third of its value in a year. In the last five trading days alone, the Dow has lost 1,400 points.

In its latest tactic, the Fed announced on Tuesday morning a new program to buy up parts of the short-term financing market to unlock the flow of credit to businesses. The program, which is expected to begin soon, was the latest and potentially biggest in a series of unprecedented efforts by the Fed to combat the worst turmoil that financial markets in the United States have endured since the Great Depression.

“These are momentous steps,” Mr. Bernanke said, “but they are being taken to address a problem of historic dimensions.”

Only a few weeks ago, the Fed’s official posture was that the risk of rising inflation was almost as big a concern as the risk of slowing growth and rising unemployment.

But on Tuesday, Mr. Bernanke said the outlook for inflation had “improved somewhat” and made it clear that worries about a recession had now trumped worries about rising prices.

“Worries about a recession???” —I suppose to the elitists who facilitated the destruction of our economy and who remain well paid and untouched the word “recession” is just some kind of theoretical financial term with no connection to real life.

The Fed did drop interest to 1.5% but that doesn’t immediately help the little guy.

Unemployment continues to rise as businesses cut back and even fail and helping the banks may help the larger businesses it is nothing more than a finger in the dike.

The small businesses rely on individuals to keep the doors open. If there’s no work because of cut backs and closures how is the little guy going to get the money to spend on anything but necessities?

I believe we are in for a long hard couple of years and even after we “recover” we are unlikely to see another boom.

The headline is from the New York Times.

After the House reversed course and gave final approval to the $700 billion economic bailout package, President Bush quickly signed it into law on Friday, authorizing the Treasury to undertake what could become the most expensive government intervention in history.

But even as Mr. Bush declared that the measure would “help prevent the crisis on Wall Street from becoming a crisis in communities across our country,” Congressional Democrats said that it was only a first step and pledged to carry out a sweeping overhaul of the nation’s financial regulatory system.

Ms. Pelosi and other Democrats, who expect to widen their majority in Congress in the November elections, said they intended to tighten controls.

“High-fliers on Wall Street will no longer be able to jeopardize that personal economic security of Americans,” Ms. Pelosi said, “because of the bright light of scrutiny, accountability and the attention given under regulatory reform.”

Got all that? The Dems are going to fix all the stuff those bad old Republicans broke.

Now before you think it’s really going to change; remember the promises made by the Democrats last election.

They swore they were going to fix congress. Right up until the day they got the power.

There were some cosmetic changes, but the committee system stayed intact. The amount of pork and earmarks generated by members of Congress became a bragging point. Unrelated items still get “folded in” to bills at the last minute. And the same friends and family plan remains in place for government contracts.

Tell me again how these people are going to change anything except in the most superficial way.

WASHINGTON - With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President Bush who quickly signed it. –The final vote, 263-171 in the House.

Following Monday’s vote, Senate leaders quickly took custody of the measure, adding on $110 billion in tax and spending provisions designed to attract additional support, then grafting on legislation mandating broader mental health coverage in the insurance industry.

In addition, the measure was changed to broaden the federal government’s deposit insurance program, and the Securities and Exchange Commission loosened a regulation to ease the impact of the distressed assets on the balance sheet of financial institutions.

“No matter what we do or what we pass, there are still tough times out there. People are mad — I’m mad,” said Republican Rep. J. Gresham Barrett of South Carolina, who opposed the measure the first time it came to a vote. Now, he said, “We have to act. We have to act now.”

Rep. John Lewis, D-Ga., another convert, said, “I have decided that the cost of doing nothing is greater than the cost of doing something.”

Now some history:
In 2004 the SEC gave the big banks an exemption for their brokerage units to use the reserves that were kept in case of losses. This only applied to the banks with over $5 billions in assets… Guess who failed.

The SEC’s decision effectively to outsource its oversight to the firms themselves fit squarely in the broader Washington culture of the last eight years under President Bush.

A similar closeness to industry and laissez-faire philosophy has driven a push for deregulation throughout the government, from the Consumer Product Safety Commission and the Environmental Protection Agency to worker safety and transportation agencies.

“It’s a fair criticism of the Bush administration that regulators have relied on many voluntary regulatory programs,” said Roderick M. Hills, a Republican who was chairman of the S.E.C. under President Gerald R. Ford. “The problem with such voluntary programs is that, as we’ve seen throughout history, they often don’t work.”

From Steve Greenburg’s Cartoons.

Congress just sent a spending bill worth over $600 Billion, that included billions in earmarks to the President for his signature.

In the mean time they are working on a $700 Billion bail-0ut for financial institutions that took huge risks by acquiring what are now referred to as “toxic assets.”

This bail-out is unfortunate but necessary. We must in this case reward some of the most reckless, self-serving investment bankers and the worst policy makers in history, or risk losing our entire economy.

Now there is noise of a bail-out for those people who were so stupid that they thought they could always sell their house for more money even when the payments doubled. –Bad news; the bubble burst.

Why should the rest of us save a bunch of greedy, unthinking home buyers who made what anyone with even a modicum of common sense would say was a bad investment.

I admit that not all of them were greedy. Some of them simply got the house of their dreams without ever giving a moments thought to how they were going to make the payments when they suddenly had to pay more than just the interest.

Buy and flip is a gamble. Some people made some serious money, but most buyers had no extra income to make the improvements that allowed their neighbors to sell their houses so quickly. Nor did they have the willingness to sell quickly and move on.

The rest simply thought that the prices would go up forever. –Yes, when you take into account inflation and a growing population, the prices will continue to rise. But not astronomically and not without market corrections.

If a $150,000 house sells for $300,000 when the bubble bursts and the market settles, it doesn’t matter what you paid for it, it’s still a $150,000 house.

I may sound cold blooded, but speaking as a home owner who never asked for or got a dime from the government to help with my mortgage: If people lose their homes because they tried to live well beyond their means there is no reason for the rest of us to give them the money that we work so hard for just so they can continue to live out their unrealistic fantasy.

Mean while back at the ranch. How in Hell are we going to pay for all this spending?

Thursday night (9/25/08) the feds seized Washington Mutual Savings and Loan and sold the assets to JPMorgan Chase for 1.9 Billion.

JPMorgan will take on Washington Mutual’s big portfolio of troubled assets, and plans to shut down at least 10 percent of the combined company’s 5,400 branches in markets like New York and Chicago, where they compete with Bank of America, the largest bank in the country.

James Dimon, chairman and chief executive of JPMorgan Chase, said in a brief interview. “We are building a company. We are kind of lucky to have this opportunity to do this. We always had our eye on it.”

But the seizure and the deal with JPMorgan came as a shock to Washington Mutual’s board, which was kept completely in the dark: the company’s new chief executive, Alan H. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to people briefed on the situation. Mr. Fishman, who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus, according to an analysis by James F. Reda and Associates. WaMu was not immediately available for comment.

So in spite of taking over Bear Stearns with all their associated baggage just about 6 months ago and taking on WaMu’s bad debt yesterday, JPMorgan seems to think that they can hold out until things get better.

The bank plans to raise an additional $8 billion by issuing common stock on Friday to pay for the deal.

This is the part that bothers me: “Customers of WaMu, based in Seattle, are unlikely to be affected, although shareholders and some bondholders will be wiped out.”

“Mr. Fishman, who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus.”

According to France 24 The president of France is not only defending his current economic reforms at home, he’s saying that the world needs “a regulated capitalism in which whole swathes of financial activity are not left to the sole judgment of market operators.”

Regulated capitalism: Isn’t that a bit of an oxymoron?

Did you know France is second only to Sweden in it’s government spending, spending nearly 50% of it’s GDP?
This of course doesn’t include government-owned sectors, where the government consumes 22% of the GDP, and additional state controls on production. This means that if you live in France, your pension may be high, but your paycheck won’t be.

The government of France passed a bill reducing the work week to 35 hours, to counter a skyrocketing unemployment rate of over 11%.
The bill did reduce unemployment, because employers were forced to hire more people to make up for staff that could not work beyond the 35 hour work week maximum. This bill has a strangulating effect on individual workers -who may need the extra hours- and small businesses -who cannot afford the constant restaffing and loss of more available valued laborers-.

In other words, their country is a mess and their president wants to tell us to regulate our economy.
–No thanks. We have enough trouble with our home-grown politicians.

A co-worker said that she couldn’t understand why gold had suddenly jumped. –After all the stock market is way down.

OK here’s how it works:
When the stock market is up the dollar is worth more so it takes fewer of them to purchase the same volume of goods.

If the market is down the dollar is worth less. So more dollars are required to buy any commodity. (And yes, gold is a commodity, just like corn or oil)

The price of oil was running contrary to this rule because it was driven to artificial highs by speculators.

Now that the price is dropping OPEC is considering cutting production to try and maintain their increased profits.

Push comes to shove it’s all about how much of a thing do you have? and how bad does somebody else want it.

Just a fast note on the OJ trial.

First and foremost it’s starting to feel a lot like the first cluster-f***.

Fromong -the guy who said he’s been robbed- was accused of trying to sell his story to “Inside Edition” and denied under oath that he asked for money. -That is until almost inaudible tapes were played proving he did ask.

There are no security cameras in the critical areas of the hotel. - A quote from a security officer about camera in the hallways “They don’t have no cameras.” -Yessery-bob. He’s definitely a graduate of the US educational system.

The transcript of some of the audio tapes was embellished? -parts were filled in because the tapes them selves had many unintelligible sections.

A judge in this case that seems more concerned with a baliff’s snacking habits than the trial. –It turns out that instead of bran cereal he had chocolate chip cookies in the box.

Fromong’s testimony was halted when he became lightheaded and dizzy –he’s had four heart attacks in the last year.

FBI forensic examiner Jason Abramowitz then took the stand to explain his job (almost browbeaten to admit he isn’t an agent) and his analysis of a recording device where he discovered files were deleted and recovered. -The contents of these files will presumably be brought up again later in the trial.

I don’t doubt that OJ did it but what I question is the competence of the prosecution. They’ve turned the whole thing into a bit of a circus.

Don’t they review evidence or check testimony? (I’m waiting for Ferman to make a surprise appearance with gloves that don’t fit.)

For more detailed information the continuing silliness go to LasVegasVegas.com