Wa-Mu Implodes In Biggest US Bank Failure

“The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift’s banking assets to JPMorgan Chase & Co. for $1.9 billion.

Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country’s history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July.

One positive is that the sale of WaMu’s assets to JPMorgan Chase prevents the thrift’s collapse from depleting the FDIC’s insurance fund. But that detail is likely to give only marginal solace to Americans facing tighter lending and watching their stock portfolios plunge in the wake of the nation’s most momentous financial crisis since the Great Depression….”

More at AP.

And from the Miami Herald:

“Federal regulators had been trying to broker a deal for Washington Mutual because a takeover by the Federal Deposit Insurance Corp. would have dealt a crushing blow to the federal government’s deposit insurance fund.

The fund, which stood at $45.2 billion at the end of June, has been severely depleted from the sudden collapse of IndyMac Bank. Analysts say that a failure of Washington Mutual would cost the fund upwards of $20 or $30 billion.”

And from the CS Monitor :

“JPMorgan plans to mark down WaMu’s loan portfolio by about $31 billion – a sign of the costs the US Treasury may face if Congress gives the go-ahead for the government to buy troubled assets from banks.”

A good round up of some of the statistics on this from Mish Shedlock, dated July 2008:

“There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.”

Comment

OK. I’d been hearing that another big one was about to go and this is the one – last night. Interesting that, again, it’s JPMorgan that’s picking up the pieces.

I don’t understand this though. Buying $307 billion in assets for 1.9 b. is a steal for JPMorgan. Yet, it’s the FDIC that takes the hit because it has to guarantee the deposits to the tune of $20-30, when it’s already hurting from IndyMac, which cost it around $8b. Worst case scenario – the FDIC is almost wiped out and needs to be replenished. So why doesn’t the government get the assets on the cheap but JPMorgan does?

How is this a rescue?

From better days at WaMu, this notice about its activities in 2002:

” In 2002 Washington Mutual funded $275 billion in home loans and made homeownership possible for 1 out of 8 homeowners in America…..As a leader in the mortgage industry, we offer unmatched home financing solutions designed for flexibility and innovativeness. “One of America’s Most Admired Companies in Mortgage Finance” for 2002 as recognized by Fortune Magazine and ranked No. 116 in the 2002 Fortune 500. We currently fund loans in over three quarters of the United States.”

As a curious aside, I see that Goldman Sachs was hired to do the auction. Goldmans Sachs analysts (only on September 15) changed their rating on WaMu from sell to neutral while lowering its price target from $5 to $4

And another ominous sign for the dollar: Barclay’s reports that McDonald CDS are now trading inside US Government debt at 29bp (30bp for US debt). Uncle Sam is a worse risk than a whopper, says Boris Schlossberg at GFT Forex.

Update:

Looks like it was bank runs that did WaMu in, although its exposure to subprime is high and that probably made its assets much less than they were on paper. But it still looks like the FDIC basically went in and handed WaMu over to JPMorgan. Rescue? Or cannibalism? I’d like to look at the FDIC structure a bit more..

*Bush made changes to deposit insurance in 2005 on the recommendation of Alan Greenspan that consolidated the two government insurance funds.

*Paulson was pushing a federal insurance regime this March.

*Three IB’s that are rivals of Goldman Sachs go under (Lehman, Bear, Merrill)

*The remaining IB’s (Goldman and Morgan Stanley) as well as a commercial bank (JP Morgan) profit.

*GS changes into a commercial bank along with the second surviving IB, Morgan Stanley.

Looks like interbank predation combined with implosion. Is this all scare-mongering to allow a huge round of financial consolidation favoring 2-3 big players and complete a highly centralized structure for whoever is the next president?

Update:

Looks like the deposits in excess of $100,000 get taken over by JP Morgan, so there wasn’t a problem for them either. Check this post on Seeking Alpha on outflows from large deposit banks. It seems that WaMu wasn’t insolvent – which is good news – but just suffered liquidity problems, when large deposit holders moved money out. In that case, an even sweeter deal for JPMorgan Chase.

Update:

On FDIC funds, this disturbing caution:

“BE very, very careful. There are reports the US Federal Deposits Insurance Commission is running out of money. Chairman Sheila Blair has been forced to issue a statement. “US banks are overwhelmingly safe and sound and the Government fund used to cover insured deposits will be adequate to absorb any losses, even high losses,” she says.

But Brian Bethune, US economist at consulting company Global Insight, said: “Additional failures of large banks or savings and loans companies seem likely, and that could overwhelm the FDIC’s insurance fund.”

Christopher Whalen, senior vice-president and managing director of Institutional Risk Analytics, said: “We’ve got a … retail bank run forming in this country More at The Age.com.

The Paulson Put(sch): Questions for Hank Paulson

The Paulson Put(sch)

Questions for the new CEO of US Government Inc.

[Last Wednesday, Hank Paulson was installed as CEO of US Government Incorporated, replacing the now defunct United States of America].

Charles Krauthammer wrapped up an astounding week in American history with a hosanna to Ben Bernanke and Hank Paulson. The best possible team to have on your side in a financial crisis bigger than any since the 1930s, says he. Bernanke, because he is an economic historian specializing in the Great Depression. And Paulson because he knows everyone in the banking industry and is the perfect person for arm-twisting and deal-making. Financiers aren’t all bad, sniffs Krauthammer. There were all those greedy realtors and home-owners too.

Yes, Charles, we do see that greed is a many-splendored thing, visiting the poor and rich alike. But on a mundane level, the yearning of the cleaning lady who gets herself in over her head with a home loan she can’t pay is not the same sort of public hazard as the cosmic larceny of financiers who’ve skipped out with hundreds of millions from companies they’ve skinned like pole cats…

Read the rest of my latest piece on Paulson’s power grab at Lew Rockwell. You can find other articles of mine on the old archive of Dissident Voice. I will (eventually) get my pieces onto this site in a more approachable way, but being bloggitudinally challenged, that may take a while.

 

End of an Era: Wall Street Caving In

“Sept. 14 (Bloomberg) — A group of banks including Bank of America, CitiGroup and JPMorgan Chase & Co. are putting up $70 billion for a borrowing fund aimed at providing liquidity… Each participating financial firm will provide $7 billion to establish the fund and have the ability to borrow up to a third of the total. Other banks include Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co. and UBS AG. The pool could expand as other companies join.

Now, let’s get this straight. Ten banks put up $7 billion for a total of $70 billion. Because any bank can withdraw up to $23.3 billion, if three banks take $23.3 billion each, there will be nothing left for the others. Am I missing something?

There is nothing wrong with the plan, per se. The flaw lies in the flawed character of the participants. These are investment banks and if investment banks can exploit a situation, they will do so. That’s what investment banks do for a living, they exploit situations for their own advantage in order to maximize profits.

Last year when two Bear Stearns highly leveraged funds were in danger of failing, Bear Stearns came to the “rescue” of one of its funds and lent it more capital, albeit with the caveat that Bear now had first claim on the fund’s assets. Then, when the fund collapsed shortly thereafter Bear Stearns exercised its now first-in-line rights to all the assets.

Since self-serving behavior is common among investment bankers, it will be interesting to see how the bankers’ $70 billion fund will fare. After the first withdrawal, there may be a “bank run” on the remaining assets by the remaining banks—a real life version of what will be “the Banker’s Dilemma”.

A FRACTIONAL RESERVE SAFETY NET

The investment banks’ $70 billion liquidity fund is predicated on much the same premise that fractional reserve banking is based. While it is understood there may not be enough in the fund to cover all needs, it is assumed that not everyone one will need their funds at the same time.

This thinking/sic assumption is the basis of today’s fractional reserve banking system; because, as in the banker’s “liquidity plan”, there is not enough money in US banks in the event of significant withdrawals by savers.

There is $6.84 trillion on deposit in US banks; but US banks have only $273.7 billion cash on hand. The banks cannot possibly pay back depositors all their money as only 4 % of depositors’ funds are actually available. The rest has been loaned out, i.e. to real estate developers, etc.

The safety net of both bankers and depositors may prove inadequate in the days ahead. Be forewarned….”

 

More by Darryl Schoon.

Women Business Leaders in India: Some Notes

Here are some notes I made recently that turned into a full-fledged article. I thought people interested in the Indian business scene might find it interesting:

Women Business Leaders in India – Are Things Any Better Today?

Women in India do better in business today than they did about 35-40 years ago, but it’s fair to say there’s still a lot more they could do. In the professions and at lower levels things might have gotten better, but at the higher levels, you still don’t see the number of women you’d expect, given the available labor pool (in 2001 women were 48% percent of the population).

There are lots of reasons why Indian women at the top still have problems:

How women do is influenced strongly by how well educated they are. So, the more women have access to schooling, the better they perform economically. That’s why there’s been progress, especially at lower levels. But at the upper level, the situation is different. In the 1970s, you could say the main difficulties were the absence of role models and the shortage of financing and opportunities, which to some extent, still persist. But the overwhelming problem today in upper management remains culture: notions of what women should and should not do in the work place.

Traditional gender roles make female bosses unacceptable to a lot of Indian men. Tradition also places the bulk of family responsibilities on the shoulders of women. (This is strictly a generalization, and in particular cases, just the opposite can be true). Culture demands that women stay at home. That make it harder for them to develop networks and mentoring of the kind that men use to launch business careers.

Then there are problems of perception. Women are often seen as needing more time to balance work and family commitments, even when this isn’t really the case. Many male colleagues see them as opting for (and better at) the “soft-focus” areas of a business rather than its hard core. Women tend to get shunted into roles that provide support, communication, and coordination rather than profit and loss evaluation, or expansion and acquisition. That means that while women account for a good part of the ordinary work-force and mid-level positions, they aren’t so visible in the very highest positions. Kiran Mazumdar Shaw, CEO of Biocon, says there’s a credibility hurdle that women face when they go out to get financing. People see them as less willing to take risks and less capable of solving problems and trouble- shooting.

Not much research so far:

Another difficulty is that there isn’t much research on the subject available. What there is supports what I’ve observed. Studies in the last 2 years show that Indian women make up 16 percent at junior levels of work but at the highest level (CEOs), that tapers off to only 1 percent. There are only 2 -3 women in administrative and managerial positions for every 100 economically active people. That’s far behind the rest of the world. And while the rest of the world has spent time researching the matter (for example, Breaking through the Glass Ceiling, ILO, 2004), Indian examples haven’t usually figured in the research.

Of course, some of the problems in India are common to other countries too , problems like sexual harassment, patriarchal attitudes and some gender bias in hiring and employment practices. Just as in other countries, these are likely to get better with targeted effort.

Culture can help women too:

Surprisingly, culture can be a positive too. The statistics for top- level managers and leaders in the US may be better. But there are other areas where Indian culture, counter-intuitively, provides a a friendlier environment.

*Studies show that women in Asia tend to draw more of their income from business than women elsewhere. That’s proof of a solid tradition of female business acumen, even if it’s a tradition that’s largely been centered around the family. (Powerful Indian business women usually came out of powerful Indian business families: Simone Tata, from the Tata family (Trent Ltd); Vidya Chabria (Jumbo Group) and Priya Padamjee (Thermax) all owe their positions to family connections).

But even that might be changing now. Now you can also find a Kiran Mazumdar Shaw. Shaw started the biotech giant Biocon, from her garage, after being turned down for a job as a master brewer. And there is a whole crop of managerial divas – from Naina Kidwai (CEO of HSBC) to Microsoft India’s Neelam Dhawan.

Technology spurs womenomics

*There’s another angle to this. It shows how “culture” as an explanation can cut both ways. In India, engineering had been (and still is) a field for men. One side effect was that the “alternative” discipline of computer science was left wide open for women. So, when the Internet revolution brought the outsourcing industry to India, Indian urban women with computer skills got a good chunk of the financial benefits.

*Technology has helped. Contrary to Luddite rhetoric, globalization and the Info-tech revolution have helped womenomics in India. Take transportation. In the past, it’s been a major barrier for would-be business women in India. Now women can set up shop whenever they turn on their computers. Not only do computers let house-bound women become entrepreneurs, they also open up a whole new market of home-shoppers to whom other businesses can sell. Computers also make networking and mentoring easier and cheaper. An example of a bottom-up network enabled by the computer is the popular Indian work-at-home site, sitagita.com

Some people even credit computer technology with the renaissance of Indian female entrepreneurship. That might not be completely true. But what’s true is that female home businesses are a success story overlooked by activists who focus only on the negatives, like the impact of multinationals on female agricultural workers.

Other cultural factors that help

*Despite the traditionalism shown in gender roles, Indian women leaders, at the highest levels, seem to be judged more fairly. A comparison of national politics in the US and in India bears this out. In the US, female candidates have to suffer far more remarks about their appearance than Indian candidates do. And Indian female business leaders are called upon in the media as much as, or more than, American female business leaders.

I believe that one reason for this is a streak of misogyny hidden under the surface of a lot of popular culture in the US. Being able to command the respect of her peers and subordinates is perhaps the most crucial element in a woman getting to the top. But public culture in the US is permeated by demeaning imagery and language. Violently misogynistic rap lyrics and pornography and sexualized epithets for women do not help the perception of them as workers. Asian cultures tend to be less permissive about this.

* Another positive for Indian women in business is that although women are only a tiny part of top management, the women who are at the top are very powerful and in crucial sectors where they make an enormous impact.

How demographics can help women in India

*Demographics also helps in India. India (like China) suffers…and will continue to suffer…a shortage of skilled personnel. This seems incredible given the population figures. But first-class education there really does not reach down as deep as it does in the west. In a number of disciplines, including computer programming and management, there simply aren’t enough people for all the start-ups, expansion and relocation going on. That’s going to be good for women. Human resources departments will have to go after them more actively and groom them for higher positions.

*There are other positives. About a third of India consists of young people below the age of 15. That means that the pool of experienced labor is relatively small and HR departments will be forced to turn to an overlooked resource: women who’re done with rearing their children and want to reenter the job market. Since women live longer than men by several years, there’s no reason why women couldn’t outlast them to reach the top in managerial positions.

*Companies looking to hire Indians who live abroad and relocate them to India are running into obstacles. The Indian- origin employees want pay and benefits equal to other employees. Also, they’re often not in touch with what’s happening in their home country, unless they revisit frequently (as I do). Local employees resent the “foreign-returned” Indians. There are only a few areas where this isn’t so, and two of them are computers and finance. Not surprisingly, some of the most powerful women entrepreneurs and managers are in those areas.

The most important Indian business women

* Who are the most important Indian business women?

It’s difficult for an outsider to judge but it’s possible to pick a dozen of the most visible.

  • The capital markets are important as India opens up to foreign direct investment. And Naina Lal Kidwai, who was the first Indian woman to graduate from Harvard Business School and runs the Indian operations of HSBC, has been named repeatedly on lists of the most prominent Indian business women.

    Lalita Gupte and Kalpana Morparia, the joint managing directors of ICICI Bank, India’s second largest bank are important figures as well.

    So is Manisha Girotra, who chairs the India operation of Swiss banking giant UBS.

  • In Information technology and computers, one of the most visible managers is Neelam Dhawan, head of Microsoft’s Indian operations.

  • In Biotech, the biggest name is Kiran Mazumdar Shaw, who heads Biocon.

  • The automotive industry has also been pretty important in recent developments, with a number of large auto manufacturers opening branches in India (including Ford, Toyota, and Hyundai) and with large-scale investment in highway projects and in other infrastructure.Sulajja Firodia Motwani, joint MD of Kinetic Motor, which manufactures two-wheelers, scooters and motorcycles and various auto components, as well as elevators, escalators and auto parking systems, is a noteworthy figure here. Her company has attracted investment from the likes of Citigroup and is likely to do well as the transportation business profits from the real estate boom in India.

  • Priya Paul, the chairwoman (chairperson is an awful word – I prefer chairman or chairwoman) of Apeejay Surendra Park Hotels is a business woman in a field which has a pivotal role to play now – travel and tourism. Commercial real estate and the hotel business is slated to be very profitable in Asia and Paul is the president of the Hotel Association of India and leads the Indian team at the World Travel and Tourism Council.
  • Health and medicine is an area where India offers extremely competitive rates for world class services and I expect that private medical groups like the Apollo Hospital will do very well, especially as medical tourism grows. Since Apollo caters to that demand, the heads of Apollo, Preetha and Sangita Reddy are positioned at the center of the development.
  • In alternative medicine, Shahnaz Hussain, CEO of Shahnaz Herbals which has hundreds of world wide franchises, was one of the earliest to realize the business potential of Ayurveda and alternative medicine.

  • In the food and beverage industry, Indra Nooyi, PepsiCo’s CEO (and one-time president and CFO) is one of the most noted managers and has been listed among Forbes top 10 women CEOs. She’s also on the board of the Federal Reserve Bank of N York, one of the most important banks in the US.
  • Shobana Bhartia (of the famous Birla family) is a news maker in the area of media. She’s is the Vice President of Hindustan Times and was appointed to the Rajya Sabha, the upper house of parliament.
  • Vidya Chabria (a non-resident Indian based in Dubai) who took over Jumbo Group (which includes one of the largest distributors of consumer electronics, IT and Telecom in the Middle East as well as several breweries and other companies in India) from her husband,

And you can’t leave out Jyoti Naik, President of Lijjat Papad (pappads are fried lentil crisps very popular in Indian households), the first cooperative business by housewives with no experience to make it big.

My Writing on Women:

My interest in India and Indian women stems from writing about the complexity of language, and about how small groups and businesses (and a contextual approach) do better at catering to the the needs of communities than big businesses.

I am not a gender feminist, although I’ve used the language when it’s useful. I’ve blogged on men’s rights and done some very anti-feminist pieces where I think it’s been warranted.

I would say I’m interested in marrying methodological individualism (from the right) with psycho-social awareness (from the left). Applied complexity theory might be another way of saying it.

Some writing that’s related:

  • Witches and Bastards,” 2005, Counterpunch, is a complex piece about Indira Gandhi and what it means to be a powerful woman in India. It argues that India is in many ways a very female-centered culture, where even village women are more powerful than many give them credit for being. It also suggests that Gandhian political economy has more sense than it’s been given credit for and might be the basis of a small group approach to politics and the economy. (This is a theme I take up in my book “Mobs, Messiahs and Markets,” 2007)
  • Missing Women,” 2004 The Gowanus Review – is a piece I did about female foeticide in India that explores cultural and economic explanations and suggests remedies. I make the point about technology and female entrepreneurship for the first time there.

Psychic Injuries and Double Standards,” – a chapter contributed to One of the Guys(Seal Press, 2007).

It argues that female soldiers should be held to be as accountable as the male soldiers.

  • The Globalized Village,Alternet, 2003 (included in the book, The Third World: Alternative Views, 2006)demonstrates how ambiguous language has obscured the negative impact of free market policies on small-scale community efforts. The piece was widely reprinted. I make special note of the impact on village women’s access to water.
  • How About Your Back Yard?” 2004, Himal South Asian, argues that “north-south” language doesn’t help explain the problem of waste disposal in India, and that turning to multinationals doesn’t help. It actually disrupts the successful efforts of local small groups.
  • *I did an extended research paper on images of India in the American media as part of my graduate studies and also did graduate work in theories of representation focusing on how speech and imagery affect political discourse, with special reference to pornography.
  • This was continued in a series of popular articles in the alternative press, “Iraqi Women and Torture” questioning the media emphasis on the torture of men during the Iraq war. This led to a book on the subject, “The Language of Empire” (MR Press, 2005), which was well-regarded and influenced the work of many establishment journalists.
  • I am contributing an article on torture and performance theory to the Routledge Key Concepts Series, 2009. I make an extended argument to show that depictions of women in violent pornography can be torturous, given the cultural context.

Their Man in Africa: Chinese Checkered in Zimbabwe

And what’s the real deal behind the unrelenting bad press for Robert Mugabe, President of Zimbabwe? (Not that we are Mugabe fans here, but anyone who gets trashed regularly in the mainline…sorry…stream media invites lively curiosity, if not outright solicitousness from us). Well, here’s what:

“In April 2007 the chairman of China’s top political advisory body, Jia Qinglin, head of the National Committee of the Chinese Peoples’ Political Consultative Conference, flew to Harare to meet with Mugabe. It was a follow-up to the 2006 Beijing China-Africa Cooperation Summit where the Chinese government invited the heads of more than 40 African states to discuss relations. Africa has become a diplomatic and economic priority for China and its economy.

At that time, Beijing got an open invitation to help develop dormant mines in the country. The deputy speaker of Zimbabwe’s parliament called for more Chinese investment in the country’s mining sector, according to China’s Xinhua news agency. Zimbabwe’s mining laws were changed to allow the government to reallocate mining claims that were not being exploited.

Mining generates half of Zimbabwe’s export revenue. It is the only sector in the country that still has foreign investors after the collapse of the main agricultural sector. Western companies with mining claims in Zimbabwe were not exploiting them. “We would appeal to the Chinese government to come in full force to exploit these minerals,” Zimbabwean Deputy Parliamentary Speaker, Kumbirai Kangai said to the official Xinhua.

Kangai assured potential Chinese investors that they would not expose themselves to legal action if they took over claims held by Western companies.

A few months after, in December 2007, Chinese company, Sinosteel Corporation, acquired 67 percent stake in Zimbabwe’s leading ferrochrome producer and exporter Zimasco Holdings.Zimasco Holdings is the fifth largest high carbonated ferrochrome producer in the world. It used to produce 210,000 tons of high-carbon ferrochrome per year, nearly all of it along the mineral-rich Great Dyke, accounting for 4 percent of global ferrochrome production.

Zimasco has also the world’s second largest reserves of chrome, after South Africa. It was formerly owned by Union Carbide Corporation, now part of Dow Chemicals Corp.

Oh, oh! Alarm bells went ringing in London and in Washington at that news….”

More by the straight-talking Bill Engdahl.

Double-Trouble – An Oil Bubble….

“As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the tail that wags the dog.”[6]

U.S. Representative Bart T. Stupak, Democrat – Michigan, chairman of the subcommittee investigating commodity market speculation, attributes even a higher percentage of the oil price hike to market manipulation: “Speculations now account for about 70% of all benchmark crude trading on the New York Mercantile Exchange, up from 37% in 200.”

Wall Street financial giants that created the Third World debt crisis in the late 1970s and early 1980s, the tech bubble in the 1990s, and the housing bubble in the 2000s are now hard at work creating the oil bubble. By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for giant futures traders to buy even more oil and place it in storage….”

More at Counterpunch.

Comment:

Ah. Funny how intelligent people can think that the laws of supply and demand can explain the rate oil prices have shot up in the last two months. What a gas, eh?

Makes the environmentalists happy, the luddites chirpy, the nuclear industry and the Pentagon ecstatic and the big government lobby (the entire population) gets to vote in another big-government pol.

Brazil Booming…

Lost Your Job on Wall Street? Head for Brazil! PDF Print Mail
27 May 2008
by John Fitzpatrick
The financial crisis which has hit American and European banks has cost tens of thousands of workers their jobs. One side effect of this has been a rise in interest by Western bankers in other markets, particularly in India, the Middle East and the Far East. The Times of London coined the expression summing up the dilemma facing those with no prospects in Western markets: ‘Mumbai, Dubai, Shanghai – or Goodbye”. It quoted a headhunter as saying there had been an annual increase of 20% to 25% in the number of Western bankers heading East over the past two years. So far there has been no sign of many (if any) of these jobseekers heading to Brazil but there are a number of reasons why they should consider the idea.
Any Wall Street whiz kid would feel at home immediately in São Paulo. The city is obsessed with money, success, status and flaunting your wealth. Visit the old downtown area around the Bovespa and BM&F futures exchange, Avenida Paulista, Faria Lima, Funchal, Itaim and Berrini or head further out along the Marginal highway almost as far as Interlagos and you´ll see banks, brokerages, finance houses, insurance companies, accountancy firms, consultancies, actuaries and lawyers´ offices by the score. Countless sky-high buildings, gleaming as the sun reflects their glass exteriors, swarm with hundreds of thousands of busy bees, plugged into their computers, phones glued to ears as they gaze into their computer screens while holding conversations with a dozen people at the same time

Financial Flings: Consumer Prices Here to Stay

“Don’t expect to see any drop in the prices you pay at the pump — or at the grocery store or anywhere else — from any decline in the price of commodities. The price of gas at the pump actually climbed to a new high at $3.983 a gallon last week, according to automobile club AAA, even as the price of oil was falling. (And it kept on climbing, to $4 a gallon, on June 8 after a two-day rally in crude oil prices.)

You can expect the same from other commodities that have tumbled in price. Consumer prices will stay high even as commodity costs come down. Wheat prices are down. From a record $13.95 a bushel on Feb. 27, the most actively traded contract on the Chicago Board of Trade had dropped 42% to $7.78 a bushel on June 5. The prices of most other commodities — well, except for corn, which has soared as heavy rains have held up planting — have tumbled in recent weeks. See any drop in the price of bread or in a meal at your favorite restaurant?

No, and don’t expect to. There’s no quick relief coming to consumers even if commodities continue — or resume, in the case of corn and oil — their retreats in prices.”

More from Jim Jubak’s Journal at MSN Money.

The New Exit-Empire Tax….

“The primary purpose of the Heroes Earnings Assistance and Relief Tax Act of 2008 is to provide a range of tax breaks for veterans. But the law also imposes the first-ever “exit tax” on even moderately wealthy expatriates. I predicted Congress could pass an exit tax bill like this over a year ago, and now it has.

Once President Bush signs this bill, the law will require future expatriates to pay a tax on all unrealized gains of their worldwide estate, including most offshore trusts. And the tax applies not only to former U.S. citizens, but also to long-term green card holders who have resided in the United States for at least eight of the 15 years before they expatriate. (Fortunately, long-term residents can “opt out” of the exit tax, as I’ll explain in a moment.)

How are you supposed to pay the tax without selling your assets? That’s your problem – not the IRS’s – although the bill permits deferral in certain circumstances….”

From The Sovereign Society.

Not So Quiet On the Eastern Front….

WASHINGTON – U.S. authorities are investigating whether Chinese officials secretly copied the contents of a government laptop computer during a visit to China by Commerce Secretary Carlos M. Gutierrez and used the information to try to hack into Commerce computers, officials and industry experts told The Associated Press.

Surreptitious copying is believed to have occurred when a laptop was left unattended during Gutierrez’s trip to Beijing for trade talks in December, people familiar with the incident told the AP. These people spoke on condition of anonymity because the incident was under investigation….”

More at MSNBC