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Monday, March 17, 2008

Rate Cut Fodder

Empire State Survey:

This is not going to help confidence.

G.17 reports industrial production dropped 0.5 in February. The decline was broadbased but led by lower utility output, which dropped 3.7. Consumer goods dropped 0.6.

Asia got its first chance to react to Bear's collapse overnight, and it reacted with broad and steep equity declines. Europe opened down as well. Siemens' announcement could not have helped. A month ago they were saying they were on track, and now:
Siemens AG, Europe's biggest engineering company, fell the most in at least 18 years in Frankfurt after saying order delays and cancellations will cut earnings by 900 million euros ($1.42 billion) this quarter.

The Munich-based company fell as much as 14 percent to 68.76 euros, cutting Siemens's market value by about 10.4 billion euros. Siemens said today it reviewed the energy, transport and technology divisions and uncovered about 600 million euros in costs tied to power-plant projects alone.
Read the whole article.

This is off-topic, but there was a post a bankstocks.com the other day (by Vernon Hill, formerly of Commerce Bancorp) asserting that US regulations make it much easier for a foreign investor to purchase a substantial stake in an American bank than it is for an American investor do the same. Do you know if this is right? I guess Mr Hill would know, but it's amazing there hasn't been more attention paid to this factor.
Foreign laws vary, but some nations do have a principle of trying to keep domestic ownership. There is little barrier to foreign investment in banks. Control of banks is regulated by the various agencies.
His point didn't have to do with difficulties Americans have in buying an interest in foreign banks, but in buying a substantial interest in *American* banks. In particular, he says that if you are an American investor, say a private equity firm, and you acquire over 9.9% commercial bank(sometimes just over 4.9%) then you become a bank holding company, with all kinds of restrictions on what else you can do--and that these rules don't apply to foreign sovereign-wealth funds.
Looks like trimming back in order.
As, in recommended trimming management profits vs. pink slips to workers and no earning their living.

Interesting clarifying point.

Thus far Americans are being calm about Fed.
bailing out.

Don't think enough people understand the sweetheart deal for the investment houses involved.

Seems most everyone and everything was speeded up. I have no problem with trimming and getting back to more basic living. (for corp. and govt. entities: reduced work hours per week, unpaid days off vs. paid holidays etc. would be better for people's quality of life and longevity.

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