(no subject)

[ksmith]

From the latest entry in John Cole's Balloon Juice:

Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.

The revelation sparked fury among the workers’ former colleagues, Lehman’s 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments. It also prompted a renewed backlash over the compensation culture in global finance, with critics claiming that many bankers receive pay and rewards that bore no relation to the job they had done.

***

Many of Lehman’s UK staff are particularly angry about the US payouts because it has emerged that in the days running up to the bankruptcy, some $8bn in cash was transferred out of the account of the bank’s European business into accounts at the New York head office.

But wait--it gets better:

Check out the chart showing the recent spikes in the US 10-year credit default swap. In other words, the market is now pricing-in the genuine possibility that the US will struggle to pay-back some of its long-term T-bills.

That possibility is still deemed to be quite low. But the ultimate financial question – until recently, unthinkable – is now being asked. Yes siree, the mighty US government could default. That’s how much the world has changed.

I need to stop reading this stuff until after the book is done. Assuming I'll still have a publisher by then.

Comments

[michaeldthomas.livejournal.com]

On the plus side, it does seem that the Senate Banking Committee is fixing the bill to make it less insane.

[kristine-smith.livejournal.com]

I read something about there being a danger of folks jumping to enact any bill that looked better than Paulsen's, because anything looks better than Paulsen's bill and can't we just take our time and work this out right instead of rushing something through?

[e-moon60.livejournal.com]

I'm with you, babe. On all points, including the need to not read everything that makes me rage until the book is done.

ARGH!!!!

I'm with cdozo, too: I want the bailout money to go to the people who really need it, to keep them in their houses, keep them fed, etc. Money needs to move, and moving through grocery stores and hardware stores and so on is better overall than moving through yacht salesmen and Swiss banks.

E.

[scbutler.livejournal.com]

It is impossible for a sovereign nation to default in its own currency. All you have to do is print the money. Since all US debt obligations are in US dollars, I'm not sure why the CDS's would widen, unless they're cross currency. Even that's more a forex play than a debt play.

Very interesting about the Lehman cash transfers. I wonder what the bankruptcy court will have to say about it.

Not to mention that your Cubs are thumping my Mets.

[kristine-smith.livejournal.com]

Very interesting about the Lehman cash transfers. I wonder what the bankruptcy court will have to say about it.

It was a rotten move. I hope whoever arranged it gets hammered.

Not to mention that your Cubs are thumping my Mets.

As much as I wanted to, I did not watch KO or Rachel Maddow because I had to work. But I did turn on the game for background noise. I couldn't believe it when Marquis hit it out of the park.

Sean Marshall's pitching tomorrow. Not sure about him--your guys may take that one.

[scbutler.livejournal.com]

I looked into this more deeply. US Govt CDSs are quoted in Euros, so the rise in the spread is more about expectations of a decline in the dollar (which is what caused a lot of the problems today) as opposed to underlying credit concers.

[kristine-smith.livejournal.com]

That's good to know, although the declining dollar is kinda depressing. It's all depressing. Jeez, what a mess.

[scbutler.livejournal.com]

There is a bright side to the dollar's decline. It's been overvalued for years, which is one of the reasons the US has lost so many manufacturing jobs. Those jobs will start coming back as it declines.

It would be nice if the Mets won tonight, but I ain't expecting it. They're falling worse than the dollar.

[(Anonymous)]

::shudder:: I didn't want to know the world is thinking the US might default on its loans. I didn't.

http://pol.moveon.org/wallstreet/o.pl?id=13979-5412563-mEGtp1x&t=3
is a petition asking congress to put controls on how the bailout money is spent.

Adrianne