Scenes from a Global Recession...

[GRG55]

Re: Scenes from a Global Recession...

The best of a very ugly set.

For the moment...

[Sapiens]

Re: Scenes from a Global Recession...

For the moment...

I will take the moment for as long as it lasts.

Even with the moratorium on foreclosures, the courts' dockets are out of control. This contraction is moving so fast, I am praying the government holds.

[cobben]

Re: Scenes from a Global Recession...

In Sweden 10% reduction in wages seems to be becoming SOP, unions are agreeing to it with little fuss, even the bosses are taking haircuts in solidarity. As the SEK is down some 20% or so still in it's trade weighted index despite a recent violent recovery, that means Swedes are now willing to work 30% cheaper than last year for the ROW.

One notable exception - SE Banken, the industrialist family Wallenberg's bank, which said no thank you to guvm'nt recapitalization (the Wallenbergs' are not stupid and are apparently still quite solvent, so far at least) and just gave the higherups notable wage increases despite big losses, drawing heavy fire from politicos across the board.

In Latvia all civil servants were supposed to have their wages cut by 10% as part of the IMF bailout package I believe, now my wife tells me she just heard from a woman friend in the military (accountant who has actually served in Kosovo), the generals are taking a 20% haircut whereas everyone else is getting whacked at more than 40%! Her monthly wage was something like 600 - 700 LVL, or say $1500 before taxes, my wife says.

[jk]

Re: Scenes from a Global Recession...

sister-in-law and her husband are both washington state employees. says employees are taking an 18% wage reduction. this isn't inflation.

[GRG55]

Re: Scenes from a Global Recession...

sister-in-law and her husband are both washington state employees. says employees are taking an 18% wage reduction. this isn't inflation.

Unfortunately, when they see how much more everything costs as a percent of disposable income, it will feel like it.

As much as being an iTulip subscriber helped anticipate the onset and consequences of this mess, now that it's here it still seems a bit surreal.

Where I am at the moment, there's little sign of any material slow down or stress, other than one sector, high end residential real estate, and that does not directly effect most people in this region. An acquaintance who runs a large accounting firm is trying to consolidate his staff, now spread over three buildings, into one, and cannot find suitable office space. The restaurants are full. My host saw his villa rent increase 15% earlier this year, and he is far from alone. It's almost as if everyone here is sleepwalking to the edge of the cliff. Like I said...surreal.

[cobben]

SEB executives forego pay rises after media storm

Well, having just checked today's Swedish news, it appears that the CEO of the Swedish SE Banken has just publicly appologized for and abstained from her pay raise on a morning TV talk show. Even the head of the Wallenberg industrialist clan almost appologized. :rolleyes:

Only in Sweden, the Japan of Europe? or a model for US banksters?

SEB executives forego pay rises after media storm
http://www.thelocal.se/18214/20090314/

"

Swedish bank SEB CEO Annika Falkengren on Saturday apologized to the bank's customers and employees after the outcry that followed a decision to hike executive pay.

SEB executives will now forego the pay rises.

"It all went very wrong," Falkengren said.

Swedish prime minister Fredrik Reinfeldt was among the large number of customers, staff, politicians and shareholders that were vocal in their condemnation of the decision to raise executive pay.

Annika Falkengren, it was announced, would get a basic pay rise from 7 million kronor ($811,000) to 9 million kronor per annum. As the financial crisis continues to rage this was too much for many to accept.

On Saturday morning Falkengren appeared on TV 4 to apologise.

"It feels very easy to apologize to our customers, but most of all I would like to apologize to my colleagues. We were wrong. The intentions were good but it all went very wrong."

. . . "

[Guest]

Re: Scenes from a Global Recession...

They are all Calvinists in Sweden. What are ya gonna do? They don't believe in ducking blame like America's riverboat gambler CEO's (we do the "Michael Jordan" version of accepting responsibility - duck and weave like champions).

[Down Under]

Re: Scenes from a Global Recession...

Was offered $1 Billion in MBS for $60 Million USD cash. You bet this is the Mother of All Disasters. Armageddon.

6 cents in the dollar, correct? So, in other words, said MBS are almost worthless.

[Rajiv]

Re: Scenes from a Global Recession...

No -- not worthless -- but rather that they cannot be priced -- because their riskiness cannot be judged -- in other words a crap shoot. And bankers by nature are very risk averse (or at least should be!)

[Down Under]

Re: Scenes from a Global Recession...

No -- not worthless -- but rather that they cannot be priced -- because their riskiness cannot be judged -- in other words a crap shoot. And bankers by nature are very risk averse (or at least should be!)

Well, to me, if I could only get back 6 cents in the dollar on my investment, I'd consider that "almost worthless". And, re. said MBS, if someone is trying to offload for 6 cents in the dollar, maybe they're only worth 4 cents in the dollar, or 3, or less...

[Rajiv]

Re: Scenes from a Global Recession...

Or they are in a dire need of cash -- that is what is currently happening, and has been happening since early last year -- If assets you thought were liquid suddenly freeze up, you may need liquidity at any cost in order to survive -- I know, for we managed to survive by the bare skin of our teeth -- but we were lucky in that we were covered in the settlements achieved by the Mass and NY AGs with BoA, Wells and other banks - and we got all of our money -- we were being offered 50 c on the dollar for ARS's that were based on assets that were not defaulting (because the ARS market had frozen) by friendly bankers (and I do sincerely mean friendly bankers.)

[GRG55]

Re: SEB executives forego pay rises after media storm

Well, having just checked today's Swedish news, it appears that the CEO of the Swedish SE Banken has just publicly appologized for and abstained from her pay raise on a morning TV talk show. Even the head of the Wallenberg industrialist clan almost appologized. :rolleyes:

Only in Sweden, the Japan of Europe? or a model for US banksters?. . . "

In the USA they would have taken the pay rise as a lump sum up front, used the media to explain why they deserved it and why it was still inadequate, and then resigned [to "spend more time with family..."] taking all the loot with them.

In Japan they would resign and then fall on an ancient sword to preserve the family honour.

Sweden has a ways to go...

[GRG55]

Re: Scenes from a Global Recession...

Well, to me, if I could only get back 6 cents in the dollar on my investment, I'd consider that "almost worthless". And, re. said MBS, if someone is trying to offload for 6 cents in the dollar, maybe they're only worth 4 cents in the dollar, or 3, or less...

Anytime there is abundant liquidity the value placed on any "object of desire" overshoots to the upside, and any time there is a lack of liquidity the valuations overshoot to the downside. But regardless, I agree with your view that at any moment in time something is "worth" only what someone else is actually willing to pay you for it.

[doom&gloom]

Re: Scenes from a Global Recession...

sister-in-law and her husband are both washington state employees. says employees are taking an 18% wage reduction. this isn't inflation.

How much did they get for raises over the past 4 years? I am in WA State and our 'illustious' governor increased state spending by 34% over four years, a clearly unsustainable trend. At present, our per capita budget deficit is right there with CA! :eek: And our legislature, all Blue and true to form, is gonna pass all the superfluous stuff for the budget, then float a ballot vote to see if we want to keep the more important chit and pay more for it.:rolleyes:

[Rajiv]

Re: Scenes from a Global Recession...

Anytime there is abundant liquidity the value placed on any "object of desire" overshoots to the upside, and any time there is a lack of liquidity the valuations overshoot to the downside. But regardless, I agree with your view that at any moment in time something is "worth" only what someone else is actually willing to pay you for it.

The worth can only be found out if the trade takes place -- if no trade takes place, the value is indeterminate -- probably somewhere between the bid and the ask but it could be higher or lower -- because when the trade in fact does take place, the circumstances have changed -- as clearly was the case in the circumstances I described -- where, the value at which traded was about $1.02 to the dollar instead of $0.5 to the dollar that was offered one week earlier!

For a value to be determined, both the buyer and the seller must agree on the value. In Sapiens' case he may have turned down the ask of 6 cents to the dollar -- However, the trade may have taken place at a higher or lower value -- We do not know whether a trade took place or not.

Even after the value is determined, it is not at all clear whether that determined price was "fair" on a system wide basis -- that is what happens when markets stop functioning -- as has clearly happened right now.