Archive for February, 2009

• The Action Americans Need
  Eddy Elfenbein, February 5th, 2009 at 2:33 pm

  The president makes his case in today’s WaPo:

  This plan is more than a prescription for short-term spending — it’s a strategy for America’s long-term growth and opportunity in areas such as renewable energy, health care and education. And it’s a strategy that will be implemented with unprecedented transparency and accountability, so Americans know where their tax dollars are going and how they are being spent.
  In recent days, there have been misguided criticisms of this plan that echo the failed theories that helped lead us into this crisis — the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures; that we can ignore fundamental challenges such as energy independence and the high cost of health care and still expect our economy and our country to thrive. (Has anybody said this?)
  I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. They know that we have tried it those ways for too long. And because we have, our health-care costs still rise faster than inflation. Our dependence on foreign oil still threatens our economy and our security. Our children still study in schools that put them at a disadvantage. We’ve seen the tragic consequences when our bridges crumble and our levees fail.
  Every day, our economy gets sicker — and the time for a remedy that puts Americans back to work, jump-starts our economy and invests in lasting growth is now.
  Now is the time to protect health insurance for the more than 8 million Americans at risk of losing their coverage and to computerize the health-care records of every American within five years, saving billions of dollars and countless lives in the process.
  Now is the time to save billions by making 2 million homes and 75 percent of federal buildings more energy-efficient, and to double our capacity to generate alternative sources of energy within three years.
  Now is the time to give our children every advantage they need to compete by upgrading 10,000 schools with state-of-the-art classrooms, libraries and labs; by training our teachers in math and science; and by bringing the dream of a college education within reach for millions of Americans.
  And now is the time to create the jobs that remake America for the 21st century by rebuilding aging roads, bridges and levees; designing a smart electrical grid; and connecting every corner of the country to the information superhighway.
  These are the actions Americans expect us to take without delay. They’re patient enough to know that our economic recovery will be measured in years, not months. But they have no patience for the same old partisan gridlock that stands in the way of action while our economy continues to slide.

• Russia Is Trying to Shore Up the Ruble By Giving Banks Money to Bet Against the Ruble
  Eddy Elfenbein, February 5th, 2009 at 12:54 pm

  Or something like that.

  Russia’s central bank is exacerbating the ruble’s 35 percent plunge since August, even as it struggles to defend the exchange rate, by providing loans to banks that speculate on the currency, say Alfa Bank and UniCredit SpA.
  Bank Rossii lent 7.7 trillion rubles ($214 billion) in overnight and seven-day loans secured with bonds or other collateral in the 16 trading days last month, about double the 4.8 trillion rubles provided in so-called repurchase auctions in December, central bank data show. The ruble lost 18 percent against the dollar in January. It weakened today beyond the lower limit that the central bank said it will defend.
  “A significant amount, if not all, of the speculative attacks on the ruble are funded by the central bank itself,” said Vladimir Osakovsky, Moscow-based economist for UniCredit, Italy’s largest bank.
  Prime Minister Vladimir Putin praised the central bank’s “gradual devaluation” policy in a Bloomberg Television interview Jan. 25, saying it avoided a repeat of the financial crisis a decade ago when the ruble plunged as much as 29 percent in a day as the government defaulted on $40 billion of debt. Jim Rogers, chairman of Rogers Holdings, said today that Russia has become “unstable” and may break apart. He’s considering betting against the ruble because of central bank mismanagement.
  Policy makers are trying to stop speculators from driving down the currency, which makes it more expensive for borrowers to pay back debt and fuels inflation, at the same time it seeks to hold down interest rates to keep the economy from contracting for the first time since 1998. Russia’s inflation rate rose in January for the first time in five months to 13.4 percent as the weakening ruble pushed up the cost of imports.

• Slate’s Curious Economics
  Eddy Elfenbein, February 5th, 2009 at 10:42 am

  In Slate, Dan Gross attacks “nutso” claims the government doesn’t creates jobs. He singles out Michael Steele’s for saying, “Let’s get this notion out of our heads that the government create jobs. Not in the history of mankind has the government ever created a job.”
  Gross writes: “These claims are so peculiar that it’s hard to know where to begin. Contrary to Steele’s assertion, in the history of mankind, the government has in fact created many, many jobs (including the one he held for a few years: lieutenant governor of Maryland).”
  This is news to me. This morning, the Labor Department reported that initial jobless claims rose by 35,000 to reach 626,000, a 26-year high. So let’s make all those folks the lieutenant governor of Maryland.
  Problem solved.

• Trouble With Double Negatives
  Eddy Elfenbein, February 4th, 2009 at 2:11 pm

  “One cannot underestimate how widely admired Tom Daschle is in Washington for his integrity.”
  – David Gergen
  Think about that statement for a bit. Gergen says the exact opposite of what he means to say which would have been a false statement that would have been ironically true.
  After that, the sentence disappears into a post-modernist vortex.

• Fiserv’s Earnings
  Eddy Elfenbein, February 4th, 2009 at 1:41 pm

  Fiserv’s (FISV) earnings took a big hit last quarter due to a loss on the sale of part of its business. Fiserv made 39 cents a share compared with 58 cents a share for last year’s fourth-quarter. Once you toss out all the charges and one-time stuff, FISV made 85 cents a share which was just a penny below the Street’s estimate. Revenues dropped 4% to $1.06 billion from $1.11 billion.
  For the year, adjusted EPS was up 23% to $3.29 compared with $2.67 in 2007. For this year, Fiserv sees adjusted EPS rising 10% to 14% which works out to a range of $3.61 to $3.75.
  
  The stock has basically followed the stock market even though its earnings outlook is far brighter.

• Quote of the Day
  Eddy Elfenbein, February 4th, 2009 at 12:18 pm

  David Viniar, Goldman’s CFO:

  “I would not pick up the Wall Street Journal every morning looking for the big Goldman Sachs acquisition because I think you will be disappointed,” he said. “We don’t really like or know the retail business and I don’t expect that to change too much.”

  I think he could have expressed the same thought without saying he didn’t like retail brokerage.

• A for Effort
  Eddy Elfenbein, February 3rd, 2009 at 4:05 pm

  Maybe I’m wrong, but I admire this.

  A bumbling New York Post reporter was busted Saturday after he tried to sweet-talk his way into Bernie Madoff’s upper East Side penthouse, police said.
  Josh Saul, 25, claimed to be a real-estate broker when he entered the Ponzi scheme swindler’s building at 133 E. 64th St. around 1 p.m., police said. “He misrepresented himself,” a police source said.
  Saul was escorted upstairs by a doorman and was near the front door of the $50 billion scam artist’s $7 million duplex when he was unmasked, cops said.
  The hapless hack’s weekend at Bernie’s did not end with the exclusive interview he was angling for. Instead, he was arrested, charged with trespassing and issued a summons.
  Saul, 25, of Greenwich Village, has been working at the Post for about a year. He is also the dubious star of a Web site that includes photos of him dancing in his underwear, chugging beer from a keg, wearing a woman’s wig and balancing objects on his head.

  Well, that part could damage the credibility of our media.

• Happy Boycott CNBC Day!
  Eddy Elfenbein, February 3rd, 2009 at 3:59 pm

  Stock Twits has declared today to be Boycott CNBC Day!

  We are boycotting CNBC on Tuesday February 3, 2009 and ask you to join us.
  We are boycotting CNBC because of what we perceive as a gross lack of accountability and editorial judgment.
  We are boycotting CNBC because they produce shows with personalities who take zero responsibility for stock picks and markets calls which misinform viewers and distort the severity of the economic crisis.
  We are boycotting CNBC because they trot out so called expert guests who have cost investors millions without warning viewers and allow these guests to pump themselves up without demanding the disclosure of performance.
  We are boycotting CNBC because we want to send a message that such asshat behavior is unacceptable to us, their viewers.
  Please help us spread the word by retweeting or reblogging and let them know you will not be watching.
  Thanks,
  – @StockTwits

  Apparently, Denny’s is honoring the boycott with a free Grand Slam Breakfast.

• Sysco & AFLAC
  Eddy Elfenbein, February 3rd, 2009 at 5:51 am

  We had two more earnings reports yesterday. Sysco (SYY) reported Q2 EPS of 40 cents which was down 10% from last year but still two cents above Wall Street. The company’s COO said: “Though not in line with our historical performance, our results for the quarter were solid given the difficult economic conditions,” Revenue dropped slightly to $9.1 billion. In November, the company raised its quarterly dividend from 22 cents a share to 24 cents a share, which translates to a yield of 4.1%. The shares rallied 5.6% yesterday. I expect Sysco to have a flattish year this year and next, which isn’t bad considering the environment.
  AFLAC (AFL), a company that’s been under a lot of scrutiny lately, reported Q4 EPS of 42 cents which is a 48% drop from last year. But with insurance companies, it’s better to look at operating earnings. There, AFLAC earned 98 cents a share which was two cents below expectations.
  The company’s investment losses were pretty big, $262 million. Nearly half came from investments in Icelandic banks. AFLAC also took a major bath in certain collateralized debt obligations.
  Despite criticisms from Wall Street, the company has defended itself and said that its balance sheet is strong. AFLAC also said that it expects operating earnings growth of 13% to 15% this year, which means $4.51 to $4.59. AFLAC currently yields nearly 4.9%.

• Madoff’s Judge Hit Wife: Cops
  Eddy Elfenbein, February 2nd, 2009 at 3:41 pm

  Ugh.

  The federal judge overseeing the liquidation of Bernard Madoff’s collapsed investment firm was arrested for smacking his wife around in their Park Avenue apartment, sources said yesterday.
  Bankruptcy Judge James Peck, 63, was charged with attempted second-degree assault and harassment following a Saturday-afternoon tiff with his wife, Judith, 64.
  Peck, who’s also handling the massive bankruptcy of failed Wall Street giant Lehman Bros., was released on his own recognizance.
  “We’ve been married 42 years,” the judge told cops who arrived at the tony building following a 911 call by Judith Peck, according to the sources.
  “We love each other very much. I have never hit her before. This was not about tonight.”
  Judith Peck, who complained of pain and suffered some bruising to the jaw, was taken to New York Presbyterian Hospital for evaluation.
  Neither the judge nor his wife answered a message left for them at the front desk of their building.
  Cops arrived to find Peck and his wife in separate rooms, the sources said.
  Peck allegedly told police that the blowup began over his wife’s late arrival at the house from the Hamptons, where she’d been earlier in the week.
  Peck said his wife slapped him first, as he was taking a ladder out of his closet.
  “She slapped me,” the judge told police, according to the sources. “I put the ladder down. I slapped her. Then we started slapping each other back and forth.”
  Remorse apparently set in quickly for Peck, when he told cops, “I will never do it again. We need to go to counseling.”
  Peck was appointed to the federal bench in 2006.