* * * * *
08:30 Jan non-farm payrolls revised to (655K) from (598K)
* * * * *
08:31 Follow-up: Dec non-farm payrolls revised to (681K) from (577K)
* * * * *
08:30 Feb average hourly earnings 0.2% vs. consensus 0.2%; average weekly hours 33.3 vs. consensus 33.3
Jan average hourly earnings revised to 0.2% from 0.3%; average weekly hours unrevised from 33.3.
* * * * *
US Feb payrolls fall 651,000; jobless rate 8.1 pct
WASHINGTON, March 6 (Reuters) - U.S. employers axed 651,000 jobs in February, pushing the unemployment rate to its highest in 25 years, as companies buckled under the strain of a recession that is showing no signs of ending, according to a government report.
While that figure was near economists' expectations for a 648,000 drop in non-farm payrolls, January and December job losses were revised sharply higher.
The Labor Department on Friday said the unemployment rate surged to 8.1 percent in February, the highest level since December 1983. That was above market forecasts for a rise to 7.9 from January's 7.6 percent.
January's job cuts were revised to show a steep decline of 655,000, while December's payrolls losses were adjusted to 681,000, the deepest since October 1949. Since the start of the recession in December 2007, the economy has purged 4.4 million jobs, with more than half occurring in the last 4 months.
Job losses in February were broad based, with only government, education and health services adding jobs.
"Since the recession began, the rise in unemployment has been concentrated among people who lost jobs, as opposed to job leavers or people joining the labor force," said Bureau of Labor Statistics Commissioner Keith Hall
The manufacturing sector shed 168,000 jobs in February, after eliminating 257,000 positions the prior month. Construction industries bled 104,000 jobs in February after losing 118,000 in January. The service-providing industry slashed 375,000 positions after shedding 276,000 in January.
-END-
In the King report, Bill King dissects the numbers. Again, these bureaucrats created 134000 jobs with a phony B/D plug. This figure estimates that when you lose your job (death) you start a new business (birth). They try and estimate this number in job creation. It is totally without merit.
Here is where they added the jobs in the phony B/D plug:
>Manufacturing:* 6,000
*>Trade, Transportation & Utilities:* 10,000
*>Information:* 7,000
*>Financial Activities:* 8,000
*>Professional & Business Services:* 36,000
*>Leisure & Hospitality:* 35,000
*>Education & Health Services:* 17,000
Mike - The Republic of Texas!
John Williams in his Shadow government Statistics estimates that total unemployment is now 19.1% up from last month 18%. Williams adds workers who are trying to find jobs but cannot as they become discouraged and do not look any more. The government does not treat these people as unemployed. Go figure!!
It looks more likely now that GM will have to declare bankruptcy: This came at 2: oclock yesterday:
02:01 GM General Motors executives becoming more open to bankruptcy - WSJ (1.86)
A person familiar with the matter says the company now feels it could emerge from a speedy reorganization financed by the government, and no longer worried the move would scare too many customers away. A prepackaged bankruptcy, in which unions, suppliers, and bondholders agree to concessions in advance, should take only a few months, though executives are concerned a behemoth like GM could take substantially longer than 90 days to emerge. Sources say GM's bankruptcy advisers have been trying to figure out how to reduce the negative effect bankruptcy would thrust on the company's public image. A personal familiar with bondholders' thinking says a greater chance of bankruptcy might move them to make more concessions in their debt-for-equity discussions. A company spokesman still toes the line, saying GM does not want to contemplate bankruptcy.
Reference Link (subscription required)
Now we are hearing from the auto dealers and the trouble they are facing. They are asking Obama for some bailout money. Here is Bloomberg's report:
Auto Dealers Plead for U.S. Help as Hundreds May Fail in 2009
By Jeff Green and John Hughes
March 7 (Bloomberg) -- The National Automobile Dealers Association appealed to President Barack Obama’s car industry task force for help in cutting financing costs for retailers.
The 90-minute discussion with U.S. Treasury auto advisers Steven Rattner andRonald Bloom didn’t elicit any commitment for aid, NADA Chairman John McEleney said yesterday in an interview. The 19,700-member association expects 1,200 U.S. dealers to close this year, he said.
“We certainly did not receive a commitment and nor did we expect to,” McEleney said. “We had a very helpful discussion. We spent about one-third of our time discussing that topic.”
Treasury Secretary Timothy Geithner and National Economic Council DirectorLawrence Summers held talks yesterday at the White House to discuss the restructuring of U.S. automakers. U.S. auto sales in February slid to the lowest rate since December 1981, led by a 53 percent plunge for GM as the recession deterred buyers and demand fell for the 16th straight month.
The group convened “cabinet-level members of the Presidential Task Force on the Auto Industry to discuss the status of restructuring plans from Chrysler LLC and General Motors Corp.,” the Treasury said in an e-mailed statement.
Owners of dealerships this week criticized the $1 trillion Term Asset-Backed Securities Loan Facility for failing to meet their most pressing need: financing to buy cars from automakers. Car sellers are complaining they don’t qualify under the program that covers only AAA-rated debt.
Auto dealers use loans from finance companies to buy cars and trucks from manufacturers. Ratings companies have ranked loans to dealers below AAA, meaning the debt can’t be bought by investors with funds from the program.
Tight Financing
Car dealers of small-to-medium size need financing to support their inventory, which is typically $5 million in vehicles, the NADA chairman said.
“Our floor traffic is off 40 percent, but our business is off 60 percent to 70 percent because people can’t get financing,” said Gordon Stewart, a Detroit-based Chevrolet dealer for 29 years. “I’ve never seen anything like this. I’ve been calling it a depression since last January and it’s only gotten worse.”
GM, seeking to keep $13.4 billion in U.S. Treasury loans and gain as much as $16.6 million more, said it needs to reduce its dealer ranks to 4,100 in 2014 from 6,246 last year. Chrysler, seeking $5 billion in addition to $4 billion already granted, said only 48 percent of buyers were approved for car loans in January.
Record Closures
U.S. auto sales fell to 13.2 million last year, a 16-year low, and slowed further in the first two months of this year. U.S. auto dealerships closed in record numbers in 2008, with the pace accelerating in the last quarter of the year as the economy collapsed.
Chrysler, which hasn’t said how many of its dealers will have to close, said in a Feb. 17 report to the U.S. Treasury that 27 percent of its retailers were “weak” as of December and 74 closed from September to December.
Shutdowns totaled 881 last year, with most coming in the fourth quarter, according to a study released Feb. 19 by Detroit- based consultant Urban Science. That was the biggest decline since recordkeeping began in 1991, the firm said.
Domestic automakers accounted for 80 percent of the car- dealer closings, Urban Science said. It counted 20,084 U.S. dealers at year end.
‘It’s Really Bad’
Late in the day we heard from an ECB central banker, that the ECB may have to cut interest rates to zero. The Italian member of the ECB Smaghi commented:
04:45 ECB's Smaghi says should be ready to cut rates toward zero if needed, but adds zero rates can lead to substantial problems -- Reuters
Smaghi says that interest rates should be cut at a pace necessary to ensure price stability in the medium term. He adds that the easing phase should end when upward risks to inflation become dominant again as he believes it is not sound to always err on the side of excessive easing. - SA London end
The big news of the day belongs to the trading of JPMorgan and Goldman Sachs.
With stock markets up in the early hours of the stock market, both JPMorgan and Goldman Sachs swooned. When the Dow did their famous HAIL MARY finish in the last 1 hr to cause the dow to go from negative 150 to a positive 32, both JPMorgan and Goldman Sachs did not participate. Here are some closing numbers;
THE RACE FOR ZERO…
*JPM fell 67 cents to $15.93, after breaking $15 on the downside.
*Goldman Sachs dropped a hefty $6.07 to $75.65, with a low of $73.25. While the PPT gunned the DOW, traders shied away from GS, giving more fodder to the notion they are in trouble. *GM is truly disappearing. It sank another 41 cents to $1.45.
*Citigroup (C) held above $1 at $1.03.
*Bank of America (BAC) traded as lows $3 before finishing the day at $3.14, off 3 cents.
*AIG managed to hold the lead in the race to zero, finishing the week at 35 cents, unchanged on the day.
Please note that JPMorgan fell to 15.00$ at one point. It closed down .67 cents to 15.93. Goldman Sachs fell 6.07 to 75.65. The street is getting very nervous of hidden derivative losses at both of these entities.
Late Friday night: this came over Bloomberg and it portends hugh losses on Monday; Lloyds is being taken over by the Government to the tune of 75% ownership:
Lloyds Cedes Control to Government, Insures Assets (Update2)
By Andrew MacAskill and Jon Menon
March 7 (Bloomberg) -- Lloyds Banking Group Plc, Britain’s biggest mortgage lender, will cede control to Prime Minister Gordon Brown’s government in return for state guarantees covering 260 billion pounds ($367 billion) of risky assets.
The government’s stake will rise to as much as 75 percent, making Lloyds the fourth U.K. bank to slip into state control since the run on Northern Rock Plc in September 2007. Brown is using that leverage to force banks to increaselending to homeowners and businesses and spur an economy that is facing its worst recession since World War II.
“In order to get British banks lending again the government needed to take them over,” said Simon Willis, an analyst at NCB Stockbrokers Ltd. in London, who has a “sell” rating on Lloyds stock. “It is likely to be at least three of four years before the banks return to the private sector.”
Lloyds will pay more for asset protection than Royal Bank of Scotland Plc, the first lender to enter the program, because of the deteriorating quality of loans acquired when it bought HBOS Plc in a government-brokered deal. London-based Lloyds will pay 15.6 billion pounds, or 5.2 percent of the insured assets, in the form of non-voting shares, the bank said in a statement. RBS last month paid 2 percent.
About 83 percent of the assets Lloyds is insuring came from HBOS, the bank said.
‘Rubbish Bank’
The HBOS loan book “is more toxic than anyone ever dreamed,” said Alan Beaney, who helps manage $2 billion, including Lloyds stock, at Principal Investment Management in Sevenoaks, England. “As a Lloyds shareholder you are very annoyed because you had a bank that did not need the government very much and now you have inherited a rubbish bank.”
In September, Lloyds agreed to buy HBOS for about 7.7 billion pounds as the government sought to prevent HBOS from collapsing after credit markets froze.
Last month, HBOS posted a pretax loss of 7.5 billion pounds, bigger than Lloyds anticipated at the time of the takeover, and Chief Executive Officer Eric Daniels said he would have liked more time to examine HBOS’s accounts before the purchase. Lloyds wouldn’t have needed taxpayers’ money if it hadn’t made the acquisition, he said.
Some shareholders are pressuring Daniels to resign because of the HBOS deal, Beaney said. Daniels, who joined Lloyds in 2001, will receive a 3 million-pound pension, the London-based Times reported today, without saying where it got the information. The 58-year-old CEO will be entitled to payments of 150,000 pounds a year when he turns 60, the newspaper said.
Deepening Recession
Before today, the government had invested 17 billion pounds in Lloyds and HBOS, giving the Treasury a 43 percent stake when the banks combined. In January, Lloyds said it would resist any attempt to increase state ownership.
That position changed as the economy worsened, spokesman Shane O’Riordain said in an interview today.
“Banks across the world are facing unprecedented market conditions right now,” he said. “Our first objective is ensure that we have a very strong balance sheet given the downturn.” end
Bloomberg also reported that French bank BNParibas has bought from the country Belgium ownership of Forits with guarantees to the French bank of any losses:
BNP Paribas to Buy 75% of Fortis Bank With Belgian Guarantees
By John Martens and Fred Pals
March 7 (Bloomberg) -- BNP Paribas SA, France’s biggest bank, agreed to acquire Fortis’s former banking units in Belgium and Luxembourg and take a stake in the insurance business after obtaining state guarantees on potential losses.
BNP Paribas will buy 75 percent of state-owned Fortis Bank NV and gain control of the Luxembourg banking unit for 2.88 billion euros ($3.64 billion) in stock, the Belgian government said today in a statement. Fortis Bank will then pay 1.38 billion euros in cash for 25 percent of Fortis Insurance Belgium SA.
The French bank will become the biggest by deposits in Belgium and Luxembourg, two of Europe’s wealthiest nations, if it wins over Fortis investors. Belgium is seeking to sell the Fortis banking operations after the September collapse of Lehman Brothers Holdings Inc. and the freezing of credit markets triggered state bailouts of Fortis and Dexia SA.
“Given the situation, this is probably as good as it gets,” Albert Ploegh, an analyst at ING Wholesale Banking in Amsterdam, said today by telephone. “I don’t think there’s a much better deal to be expected.”
Under the new agreement, the Belgian government will provide 740 million euros of equity funding to a company created to split off 11.4 billion euros ofrisky assets into a separate entity. BNP Paribas will contribute 200 million euros to the risky-asset entity and Fortis will provide 760 million euros.
Fortis Bank will contribute the remaining 9.7 billion euros in debt funding, backed by a 4.36 billion-euro guarantee from Belgium. The structured-credit investments have been marked down to about 58 percent of par value, Belgian central bank Deputy Governor Luc Coene told reporters in Brussels.
State Guarantee
BNP Paribas also obtained a 1.5 billion-euro state guarantee on losses exceeding 3.5 billion euros on the structured-credit holdings that remain within Fortis Bank. Once Belgium’s largest financial-services company, Fortis will emerge from the state- organized breakup as an insurer with the right to potential gains on Belgium’s stake in BNP Paribas.
“This solution guarantees the bank’s safety and future,” BNP Paribas Chief Executive Officer Baudouin Prot told reporters in Brussels. “And I think this is very important for the Belgian economy at a time when its banking industry is going through a difficult period.”
Fortis shareholders blocked an earlier agreement to sell units to BNP Paribas on Feb. 11. Mischael Modrikamen, a lawyer representing about 2,000 Fortis investors who won a Dec. 12 court injunction on the previous deal pending the shareholder vote, said there isn’t “any objective reason to call on shareholders to vote ‘yes’ on this” new agreement. end
It is Saturday and we now get our weekly bank failure. Today, it is Freedom bank of Commerce, Georgia being taken over by the FDIC. Here is todays press release:
Freedom Bank of Georgia Seized, 17th U.S. Failure This Year
By Margaret Chadbourn and Ari Levy
March 7 (Bloomberg) -- Freedom Bank of Georgia was seized by regulators, the 17th bank closed this year, as the recession persists and a jump in unemployment pushed more borrowers behind on home loan payments.
Freedom Bank, in Commerce, Georgia, with $173 million in assets and $161 million in deposits, was shut by the state’s Department of Banking and Finance and the Federal Deposit Insurance Corp. was named receiver. Northeast Georgia Bank of Lavonia, Georgia, will assume deposits, the FDIC said.
“Customers of both banks should continue to use their existing branches until Northeast Georgia Bank can fully integrate the deposit records of Freedom Bank of Georgia,” the FDIC said.
The U.S. economy is in the second year of a recession caused partly by a collapse of the housing market and losses in the financial system linked to mortgage securities. The U.S. unemployment rate reached 8.1 percent, the highest level in more than a quarter century, and employers shed 650,000 jobs last month, the Labor Department said.
Closely held Northeast Georgia Bank will buy about $167 million in assets at a discount of $13.7 million and the bank agreed to share with the FDIC in any losses on about $96.5 million in assets. The FDIC estimates the transaction will cost the deposit insurance fund, supported by fees on insured banks, about $36.2 million.
Bank Losses
FDIC-insured banks lost $26.2 billion in the fourth quarter, the first loss for a three-month period since 1990. U.S. banks and other financial companies have reported about $800 billion in writedowns and credit losses since 2007 in the worst financial crisis since the Great Depression.
“There is no question that this is one of the most difficult periods we have encountered during the FDIC’s 75 years of operation,” FDIC Chairman Sheila Bair said at a news conference on Feb. 26 after the industry report was released.
The FDIC predicted that bank failures will cost the fund $65 billion through 2013, up from the $40 billion estimated in October. The fund, drained by 25 bank shutdowns last year, dropped 45 percent to $18.9 billion in the fourth quarter from $34.6 billion in the preceding three-month period.
The Washington-based agency classified 252 banks as “problem” in the fourth quarter, a 47 percent jump from the third quarter. It doesn’t name the “problem” banks.
‘Not in Favor’
“Compared to the previous deal, there is absolutely nothing favorable for shareholders” of Fortis, Modrikamen told Belgian broadcaster RTBF today. The new arrangement includes “some elements” of the earlier plan, “but they have been adapted for the benefit of BNP Paribas and not in favor of Fortis Bank.”
Fortis’s largest shareholder, Chinese insurer Ping An Insurance (Group) Co., is “studying the situation,” L’Echo newspaper reported, citing a Ping An lawyer it didn’t identify.
Fortis Chairman Jozef De Mey said executives “feel relatively comfortable that we will get a positive vote” from shareholders on the new agreement. “We can definitely show that compared to the deal presented to shareholders in February, this one is better,” De Mey said on a conference call today. Meetings may be scheduled on April 8 in Brussels and the following day in the Dutch city of Utrecht, he told reporters. END
Early Friday morning, Wells Fargo cut their dividend by 85% to 5 cents to save 5 billion dollars. They are racking up losses on its home loans. In Canada they are what we call second mortgages.
In conclusion, the debt spiral facing the usa and the globe has been immense. Credit has been non existent as seen by Libor and the contraction of commercial paper.
However Governments continue to print money as foreign governments refuse to buy our paper. This can only lead to an hpyerinflationary depression. Have we ever experienced anything like this in our history? No. Is there anything like this anywhere? yes, Zimbabwe.
Have a great day and weekend
Harvey.
