Thought for the weekend:
The entire financial world hangs by the LIBOR rate. It better drop Monday morning and stay down or it has all hit the fan.
Jim Sinclair’s Commentary
The question is will you lose your pension? The uncomfortable answer is probably YES.
Check out Bear and Lehman. Don’t forget GE is a major OTC derivative manufacturer within their financial arm.
WaMu employees likely to lose pensions; many to lose jobs
San Francisco Business Times – by Kirsten Grind
Washington Mutual employees are likely to lose their current pensions and they might not find out for another two months whether they have a job, according to a J.P. Morgan Chase executive who spoke to employees from both companies in a frank, hourlong conference call Thursday.
JPMorgan (NYSE: JPM) also plans to rebrand WaMu branches across the country with the JPMorgan Chase name, said Charlie Scharf, head of JPMorgan Chase’s Retail Financial Services group.
WaMu employs about 43,000 employees nationwide – including 3,500 in downtown Seattle – and JPMorgan Chase has about 195,600.
Scharf, who spent a chunk of the conference call answering blunt questions from employees, said employees’ pension plans are part of WaMu’s business that’s held up in Chapter 11 bankruptcy, so it’s not J.P. Morgan’s responsibility to honor them. That likely means employees who are currently accruing money into the plan as well as employees who are already retired might be cut off.
Jim Sinclair’s Commentary
This is going to stand the world on top of its head financially primarily in oil and gold. It has the capacity of being the one piece of straw that breaks the banking system’s back completely.
This is no longer an if but a when. It looks very close to me, perhaps weeks, not months.
I would say the odds of this happening before the election is now north of 65%.
No denying it: It’s war in Pakistan
The army in engaged in full-scale battles against the Taliban and Al-Qaida. Tens of thousands of civilians have fled, and there is no end in sight.
By JANE PERLEZ and PIR ZUBAIR SHAH , New York Times
Last update: October 2, 2008 – 8:41 PM
PESHAWAR, PAKISTAN — War has come to Pakistan, not just as terrorist bombings, but as full-scale battles, leaving Pakistanis angry and dismayed as the dead, wounded and displaced turn up right on their doorsteps.
An estimated 250,000 people have now fled the gunship helicopters, jets, artillery and mortar fire of the Pakistani Army, and the assaults, intimidation and rough justice of the Taliban fighters who have dug into Pakistan’s tribal areas.
About 20,000 people are so desperate they have flooded over the border from the Bajur tribal area to seek safety in war-torn Afghanistan.
Many others are crowding around the city of Peshawar, in northwest Pakistan, where staff members from the U.N. refugee agency help at nearly a dozen camps.
The International Committee of the Red Cross flew in a special surgical team from abroad last week to work alongside Pakistani doctors to help treat the wounded in two hospitals. “This is now a war zone,” said Marco Succi, a Red Cross spokesman.
Not since Pakistan forged an alliance with the United States after 9/11 has the Pakistani Army fought its own people on such a scale and so close to a major city. After years of relative passivity, the army is now engaged in heavy fighting with the militants on at least three fronts.
Jim Sinclair’s Commentary
Maybe we can have another bailout bill this week for states and municipalities with pork and bicycles attached. Today’s bailout that has the markets all befuddled is a bad joke with a lot of fanfare that means very little. The vote certainly was no booming success.
Schwarzenegger to U.S.: State may need $7-billion loan
In a letter obtained by The Times, the governor warns that tight credit has dried up funds California routinely relies on and it may have to seek emergency aid within weeks.
By Marc Lifsher and Evan Halper, Los Angeles Times Staff Writers
October 3, 2008
SACRAMENTO — California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.
The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.
The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.
Plans by several state and local governments to borrow in recent days have been upended by the credit freeze. New Mexico was forced to put off a $500-million bond sale, Massachusetts had to pull the plug halfway into a $400-million offering, and Maine is considering canceling road projects that were to be funded with bonds.
California finance experts say they know of no time in recent history when the state has sought an emergency loan of this magnitude from the federal government. The only other such rescue was in 1975, they said, when the federal government lent New York City money to avoid bankruptcy.
“Absent a clear resolution to this financial crisis,” Schwarzenegger wrote in a letter Thursday evening e-mailed to Paulson, “California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing.”
The letter, obtained by The Times, came on the eve of a vote by the House of Representatives on a $700-billion rescue package, but it was too soon to know how the package would affect the nation’s paralyzed credit markets. The Senate approved the so-called rescue bill Wednesday night.
Jim Sinclair’s Commentary
Be cautious of the “set in cement” opinion that the negative economic conditions in Europe will exceed the size of the unwind in the USA, the largest economy on the planet and the one who wrote over 75% of all OTC derivatives. This opinion is over discounted in the markets which tends to vote against it or at the least vote for overstatement.
The European situation may come all at once, giving a scary visage, but in the final analysis will be considerably smaller in financial terms than the many trillions already fried in dollar based financial entities.
IMF Says U.S. Faces `Sharp Downturn’ as Market Crisis Worsens
By Christopher Swann
Oct. 2 (Bloomberg) — The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said in its most pessimistic outlook for the world’s largest economy since the credit crisis began last year.
“The financial turmoil that began in the summer of 2007 has mutated into a full-blown crisis,” the fund said in a section of its semiannual World Economic Outlook released in Washington today. There is “a substantial likelihood of a sharp downturn in the United States,” the fund said.
By contrast, the IMF in July projected the U.S. would “contract moderately” in the second half of 2008 before recovering in 2009. Officials also said in a July update of economic forecasts that the global growth outlook was more “balanced.”
“Strong actions by policy makers to deal with the stress and support the restoration of financial system capital seem particularly important,” the lender said today. Next week, the IMF will release updated projections for gross domestic product for the U.S. and other economies.
The warning came as the U.S. Congress worked to pass a $700 billion bank rescue package to reassure financial markets. The Senate passed the legislation late yesterday, and the House of Representatives may vote tomorrow after rejecting a different version three days ago.