Posts filed under “Wages & Income”

Impact on Household Balance Sheets

Fascinating comparison from David Rosenberg, as to how the current crisis compares to 2001-02 Tech Wreck and the Great Depression:

Aggressive stimulus will only cushion the blow

So far, the impact to the household balance sheet is double what was created by the 2001-02 tech wreck, and half the loss incurred during the Great Depression.

By any measure, this hole that has been created in the household balance sheet is huge, and history shows there to be a 90% historical correlation between household wealth and the personal savings rate, which is now on a discernible uptrend.

The lagged impact from the unprecedented negative wealth shock on the personal savings rate is likely to be substantial and expectations that the Fed, Treasury or Congress have some magic wand are wholly unrealistic. At best, all the aggressive policy stimulus will do is cushion the blow.

Pretty wild stuff . . .

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Source:
Focus is on the cure,not the patient
David A. Rosenberg
Merrill Lynch, 08 January 2009

http://tinyurl.com/8hxejm

Category: Consumer Spending, Economy, Wages & Income

How to Deleverage Balance Sheets

Bouncing around trading desks: Credit Suisse is using a novel approach to deleverage its balance sheet…using its illiquid assets to pay bonuses; using leverage loans and CMBS to pay compensation packages for MDs and directors. The securities will be places in a fund called Partner Asset Facility and employees will be given stakes in the…Read More

Category: Corporate Management, Credit, Derivatives, Markets, Wages & Income

The Walking Zombies of Wall Street

WSJ’s Dennis Berman tells colleague Evan Newmark that although tens of thousands of people have managed to hold on to their jobs, there isn’t much work to go around. Instead, he says, Wall Streeters are working to appear busy.

12/9/2008

Category: Finance, Markets, Video, Wages & Income

Time For Wall Street To Get Real About Bonuses

WSJ’s Dennis Berman and Evan Newmark finally agree on something: In these tough times, it was right for Wall Street executives to forego bonuses. Now is also a good time to create a fair and predictable structure for the future.

11/18/2008

Category: Video, Wages & Income

Personal Bankruptcy Rising

Front page NYT article on the increasing number of personal bankruptcy filings:

The number of personal bankruptcy filings jumped nearly 8 percent in October from September, after marching steadily upward for the last two years, said Mike Bickford, president of Automated Access to Court Electronic Records, a bankruptcy data and management company.

Filings totaled 108,595, surpassing 100,000 for the first time since a law that made it more difficult — and often twice as expensive — to file for bankruptcy took effect in 2005. That translated to an average of 4,936 bankruptcies filed each business day last month, up nearly 34 percent from October 2007.

Let me remind you that this bill was pushed by the credit card industry — mostly based on claims that were factually inaccurate. Now, the same industry weasels who pushed this legislation thru are going back to DC begging for TARP money and a handout.

Question: How long before The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 act — a 1997 credit card industry drafted boondoggle, signed by President Bush — gets revised or even revoked?

The wide-opposed bill — dislike by consumer advocates, legal scholars, retired bankruptcy judges — was passed after the credit card industry spent more than $100 million lobbying for the bill. (See this Bloomberg video on Credit Cards and the TARP)

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Source:
Downturn Drags More Consumers Into Bankruptcy
TARA SIEGEL BERNARD and JENNY ANDERSON
NYT, November 15, 2008

http://www.nytimes.com/2008/11/16/business/16consumer.htm

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Category: Economy, Legal, Wages & Income

Good News on Stock Options & AMT

If you received and exercised stock options, and had to pay taxes on the phantom income, I have got some good news for you: Buried in the $700b TARP Bailout is this AMT tax amendment: “Their tax nightmare was created by a provision of the Internal Revenue Code called the Alternative Minimum Tax, or AMT….Read More

Category: Bailouts, Options, Taxes and Policy, Wages & Income

Hire This Man!

Depression era flashback: Remember all of those photos of people looking for work in the 1930s? The sandwich boards that said things like “WILL WORK FOR FOOD” ? Walking to work on Friday (42nd St and Vanderbilt), I bumped into Paul Nawrocki. He is looking for a job in Operations without much success. He got…Read More

Category: Economy, Employment, Wages & Income

Waiting for a FUGLY Employment Situation Report

Bob Farrell, Merrill Lynch’s now retired dean of Market Strategy, used to say “News doesn’t drive the markets, markets drive the news.” That’s worth keeping in mind in light of the recent slew of bad news: Bleak forecasts from Cisco (CSCO) and General Motors (GM), slumping sales at retailers, state and municipal budget shortfalls. Then,…Read More

Category: Economy, Employment, Markets, Wages & Income

Economics versus Politics

One of the things this election will be notable for is how well the Press is using digital media and interactive pages to dissect the issues and polls. I’ve gathered a slew of them and posted them in the Digital Media Tab. Here’s a terrific example: Forget the polls for a moment, and consider instead…Read More

Category: Economy, Employment, Politics, Real Estate, Wages & Income

Compensation Structures in Mortgage Industry

Interesting piece on how mortgage workers were comped during the heyday by John Quigley, titled Compensation and Incentives in the Mortgage Business. It goes a long way to explaining why so many people did such silly things during the boom: They were well paid to do so! A quick excerpt: The incentive structure that arose…Read More

Category: Markets, Real Estate, Really, really bad calls, Wages & Income