Governments around the world are recapitalising banks, injecting liquidity into the markets and lowering interest rates. I'm confused. How are each of these measures different and how do they help?
RECAPITALISING
· What is it? The central bank buys shares in a bank. This gives the latter more capital, or more money to spend, in return for some commitments it must fulfil. The central bank effectively gets an ownership stake in the bank.
· Who's doing it? Widely regarded as the best tool available. Countries are adopting variations of this, with central banks in Britain and Europe requiring the banks to accept their money.
In the United States, the government is encouraging banks to ask for money on a voluntary basis.
· How effective is it? Right now, it seems to be working. Stock markets rebounded when central banks in Europe, the US and Japan announced they would adopt this plan. The British government has already bought stakes in the Royal Bank of Scotland and HBOS and Lloyds TSB.
· How much will it cost? The US will use US$250 billion (S$365 billion), while the UK, France and Germany have pledged some ¥150 billion.
GUARANTEEING LENDING
· What is it? The central bank will ensure, for a period of time, that any money lent by a bank will be protected so that even if the borrower defaults on the loan, the bank will get its money back.
· Who's doing it? Again different variations of this are being adopted. Central banks in Europe are guaranteeing lending between banks. The US Federal Deposit Insurance
Corp is guaranteeing all new bank debt for a fee and all small business deposits. Australia, New Zealand and Hong Kong will guarantee all bank deposits.
· How effective is it? Experts expect this move to finally unfreeze the credit markets.
· How much will it cost? Germany has set aside ¥400 billion (S$799 billion), France some ¥320 billion and Spain ¥100 billion.
INJECTING LIQUIDITY
· What is it? The central bank provides more funds to banks by lending to them.
· Who's doing it? Most central banks, even Singapore's, have done it recently at different times, in efforts to encourage banks to lend to one another.
· How effective is it? Has not boosted lending between banks because the fundamental problem of confidence was not addressed.
Libor and Sibor interest rates, an indication of overnight lending, stayed high. Banks simply held on to the money or would put it in safe assets like US treasuries.
CUTTING INTEREST RATES
· What is it? Cutting the cost of borrowing from banks.
· Who did it? On Oct 8, in an unprecedented move, the US Federal Reserve, the European Central Bank, the Bank of England and central banks in Canada, Switzerland and Sweden cut lending rates by 50 basis points. Other central banks have since followed.
· How effective is it? The move sent a good signal that central banks were prepared to work together, though credit markets stayed clogged. But interest rate cuts are a tried and tested means of boosting growth in a flagging economy as they help to spur new spending or investment. The International Monetary Fund expects global growth to slow to 3 per cent next year. With more countries facing slowing growth, further interest rate cuts seem likely.
ROBIN CHAN
RECAPITALISING
· What is it? The central bank buys shares in a bank. This gives the latter more capital, or more money to spend, in return for some commitments it must fulfil. The central bank effectively gets an ownership stake in the bank.
· Who's doing it? Widely regarded as the best tool available. Countries are adopting variations of this, with central banks in Britain and Europe requiring the banks to accept their money.
In the United States, the government is encouraging banks to ask for money on a voluntary basis.
· How effective is it? Right now, it seems to be working. Stock markets rebounded when central banks in Europe, the US and Japan announced they would adopt this plan. The British government has already bought stakes in the Royal Bank of Scotland and HBOS and Lloyds TSB.
· How much will it cost? The US will use US$250 billion (S$365 billion), while the UK, France and Germany have pledged some ¥150 billion.
GUARANTEEING LENDING
· What is it? The central bank will ensure, for a period of time, that any money lent by a bank will be protected so that even if the borrower defaults on the loan, the bank will get its money back.
· Who's doing it? Again different variations of this are being adopted. Central banks in Europe are guaranteeing lending between banks. The US Federal Deposit Insurance
Corp is guaranteeing all new bank debt for a fee and all small business deposits. Australia, New Zealand and Hong Kong will guarantee all bank deposits.
· How effective is it? Experts expect this move to finally unfreeze the credit markets.
· How much will it cost? Germany has set aside ¥400 billion (S$799 billion), France some ¥320 billion and Spain ¥100 billion.
INJECTING LIQUIDITY
· What is it? The central bank provides more funds to banks by lending to them.
· Who's doing it? Most central banks, even Singapore's, have done it recently at different times, in efforts to encourage banks to lend to one another.
· How effective is it? Has not boosted lending between banks because the fundamental problem of confidence was not addressed.
Libor and Sibor interest rates, an indication of overnight lending, stayed high. Banks simply held on to the money or would put it in safe assets like US treasuries.
CUTTING INTEREST RATES
· What is it? Cutting the cost of borrowing from banks.
· Who did it? On Oct 8, in an unprecedented move, the US Federal Reserve, the European Central Bank, the Bank of England and central banks in Canada, Switzerland and Sweden cut lending rates by 50 basis points. Other central banks have since followed.
· How effective is it? The move sent a good signal that central banks were prepared to work together, though credit markets stayed clogged. But interest rate cuts are a tried and tested means of boosting growth in a flagging economy as they help to spur new spending or investment. The International Monetary Fund expects global growth to slow to 3 per cent next year. With more countries facing slowing growth, further interest rate cuts seem likely.
ROBIN CHAN
Charity Bidding Starts at $100,000 for Portrait of Warren Buffett Painted In Under Ten Minutes
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Online bidding has just gotten underway for a 36-square-foot portrait of Warren Buffett speed-painted at this year's Berkshire Hathaway Shareholders Meeting in Omaha.The minimum starting bid for the EBay auction: $100,000.
After the first 15 minutes tonight (Monday), there are no offers to buy at that price.
Anyone who does want to place a bid will have to be pre-qualified.
While it took less than 10 minutes for performance artist Michael Israel ("Art In Concert") to create the painting, the auction will run for 10 days, ending at 8p ET on Thursday, November 20.
Proceeds go to Girls Incorporated of Omaha, a group that works to "inspire all girls to be strong, smart, and bold."
The painting has been signed by both the artist and Buffett.
Will this auction generate anything close to this year's $2,110,100 winning bid for a lunch with Buffett? That seems extremely unlikely, especially in today's increasingly tight financial environment.
Source.
Anyone bidding here? :P
A rather good article written by Conrad Raj aka Editor-At-Large.
SINGAPORE : For the second time in less than a decade DBS Holdings, the listed parent of DBS Bank and the island’s largest financial institution, has announced plans to reduce its staff strength - this time by more than 900 people, or 6 per cent of its total workforce.
The move appears to have taken most people, especially the staff, by surprise because, although the bank reported a sharp decline in earnings for the third quarter, it did not plunge into the red nor is it likely to do so in the final quarter.
Unlike the previous retrenchment exercise when some 200 staff were axed in Singapore in 2001, this time the cuts are across the board and affect personnel both in Singapore and Hong Kong.
In 2001 the bank’s broking arm, DBS Vickers Securities, also retrenched some 250 people following the integration of the operations of DBS Securities, Vickers Ballas and Lum Chang Securities.
And between 2001 and 2002, Mr Wee Cho Yaw’s United Overseas Bank let go 435 staff following its merger with Overseas Union Bank. After OCBC Bank absorbed KeppelTatLee Bank, it got rid of some 200 people.
So, while the previous layoffs were the result of integrating acquired institutions, this appears to be the first time DBS is involved in a mass layoff as a result of a global economic downturn.
Chief executive Richard Stanley told reporters at a briefing on its operating results: “To be a streamlined organisation, I believe we must run a tighter ship.”
The cuts are being made despite staff costs in Singapore and Hong Kong having fallen substantially from both the previous quarter and the corresponding period a year ago.
Could the lay-offs have been avoided? What other measures did the group look at before deciding to take the present drastic action?
The bank earned S$402 million in net profits for the quarter ended September 31: 38 per cent less than the corresponding 2007 quarter. And in the first nine months of the year net profits were off only 13 per cent to the S$1.67 billion from a year ago.
As UOB told TODAY about its manpower policies: “The bank (UOB) will continue to be disciplined in managing its cost. And in managing our expense, we will examine all avenues, including staff cost. In general, there are many avenues to manage staff cost. Some avenues could include, inter alia, smaller or no built-in increment, our performance linked bonuses, re-deployment of staff, through attrition etc. Job cuts are considered only as a last resort.”
Were the above measures considered by DBS Bank’s management? Or were they more concerned in increasing the bottomline and maintaining profit margins than in protecting jobs?
And who are the ones that are going to be laid off at DBS? Are they going to be the so-called non-performers, the underperformers, or those that led DBS into its unfortunate encounter with the Lehman Brothers Mini-Bonds and the DBS High Notes 2 and 5?
Those at the receiving end will feel unfairly treated if those responsible for the S$70 million that DBS has to put aside to meet its structured notes obligations and the ensuing adverse publicity are retained, while they are given the pink slips.
DBS will not be the last company to retrench staff here. The current global downturn, which has been exacerbated by a credit crunch. Many may even drown under the “financial tsunami”, as the event is being described by some.
For sure, some cutbacks in staff by companies cannot be avoided. But why is streamlining done only during a downturn? Why can’t companies here run a tight ship even in good times, so that the chances of resorting to lay-offs and retrenchment are slimmer? Too many companies here go on a hiring binge in good times. This has got to stop.
Source.
SINGAPORE : For the second time in less than a decade DBS Holdings, the listed parent of DBS Bank and the island’s largest financial institution, has announced plans to reduce its staff strength - this time by more than 900 people, or 6 per cent of its total workforce.
The move appears to have taken most people, especially the staff, by surprise because, although the bank reported a sharp decline in earnings for the third quarter, it did not plunge into the red nor is it likely to do so in the final quarter.
Unlike the previous retrenchment exercise when some 200 staff were axed in Singapore in 2001, this time the cuts are across the board and affect personnel both in Singapore and Hong Kong.
In 2001 the bank’s broking arm, DBS Vickers Securities, also retrenched some 250 people following the integration of the operations of DBS Securities, Vickers Ballas and Lum Chang Securities.
And between 2001 and 2002, Mr Wee Cho Yaw’s United Overseas Bank let go 435 staff following its merger with Overseas Union Bank. After OCBC Bank absorbed KeppelTatLee Bank, it got rid of some 200 people.
So, while the previous layoffs were the result of integrating acquired institutions, this appears to be the first time DBS is involved in a mass layoff as a result of a global economic downturn.
Chief executive Richard Stanley told reporters at a briefing on its operating results: “To be a streamlined organisation, I believe we must run a tighter ship.”
The cuts are being made despite staff costs in Singapore and Hong Kong having fallen substantially from both the previous quarter and the corresponding period a year ago.
Could the lay-offs have been avoided? What other measures did the group look at before deciding to take the present drastic action?
The bank earned S$402 million in net profits for the quarter ended September 31: 38 per cent less than the corresponding 2007 quarter. And in the first nine months of the year net profits were off only 13 per cent to the S$1.67 billion from a year ago.
As UOB told TODAY about its manpower policies: “The bank (UOB) will continue to be disciplined in managing its cost. And in managing our expense, we will examine all avenues, including staff cost. In general, there are many avenues to manage staff cost. Some avenues could include, inter alia, smaller or no built-in increment, our performance linked bonuses, re-deployment of staff, through attrition etc. Job cuts are considered only as a last resort.”
Were the above measures considered by DBS Bank’s management? Or were they more concerned in increasing the bottomline and maintaining profit margins than in protecting jobs?
And who are the ones that are going to be laid off at DBS? Are they going to be the so-called non-performers, the underperformers, or those that led DBS into its unfortunate encounter with the Lehman Brothers Mini-Bonds and the DBS High Notes 2 and 5?
Those at the receiving end will feel unfairly treated if those responsible for the S$70 million that DBS has to put aside to meet its structured notes obligations and the ensuing adverse publicity are retained, while they are given the pink slips.
DBS will not be the last company to retrench staff here. The current global downturn, which has been exacerbated by a credit crunch. Many may even drown under the “financial tsunami”, as the event is being described by some.
For sure, some cutbacks in staff by companies cannot be avoided. But why is streamlining done only during a downturn? Why can’t companies here run a tight ship even in good times, so that the chances of resorting to lay-offs and retrenchment are slimmer? Too many companies here go on a hiring binge in good times. This has got to stop.
Source.
DON'T LOOK AT NAKED LADY
Boy 1: Why do you run from a naked lady?
Boy 2: Becos my mum said that if I look at a naked
lady, I'll turn into stone. A part of me is getting
hard already!
HOW INDIA GOT ITS NAME
This is how India got its name.....
The king was having sex with his mistress while
thinking a name of his
country and his mistress ask him 'is it In Dear?'...
RESEARCH FINDING
Research shows men are fatter than women because
every-night men get fresh milk & 2 papayas
women only get 1 banana, 2 peanuts & 1 tea-spoon of
starch!
ARAB MAN
An arab was being interviewed at a US checkpoint.
'Your name pls.'?
'Abdul Aziz '
'Sex? '
'Six times a week!! '
'No, no, I mean male or female! '
'Doesn't matters, sometimes even camel !'
SERVICE
Sex is like a restaurant.
Sometimes you get full satisfactory service, and
sometimes you have to be
satisfied with self-service'
HAPPY MAN
What makes a happy man?
Daughter on the cover of cosmo.
Son on the cover of sports illustrated.
Mistress on the cover of playboy
and .. Wife on the cover of 'missing
persons'
GOOD AMBITION
Teacher: What do you want to become?
Little Johnny: Doctor !!
Teacher: Why?
Little Johnny: Coz its the only profession where u
can tell a woman to take
off her clothes and ask her husband to pay for it.
VIRGIN
Old lady, 85, a virgin, about to die. wanted her
tombstone to read :
BORN A VIRGIN, LIVED A VIRGIN, DIED A VIRGIN.
The engraver shortened it to: ' RETURNED UNOPENED '
OLD MAN AND YOUNG GIRL
75 yr old man got married to a 15 yr girl.
On their first night both were crying - why???
Coz she didn't know anything, and he had forgotten
everything.
Boy 1: Why do you run from a naked lady?
Boy 2: Becos my mum said that if I look at a naked
lady, I'll turn into stone. A part of me is getting
hard already!
HOW INDIA GOT ITS NAME
This is how India got its name.....
The king was having sex with his mistress while
thinking a name of his
country and his mistress ask him 'is it In Dear?'...
RESEARCH FINDING
Research shows men are fatter than women because
every-night men get fresh milk & 2 papayas
women only get 1 banana, 2 peanuts & 1 tea-spoon of
starch!
ARAB MAN
An arab was being interviewed at a US checkpoint.
'Your name pls.'?
'Abdul Aziz '
'Sex? '
'Six times a week!! '
'No, no, I mean male or female! '
'Doesn't matters, sometimes even camel !'
SERVICE
Sex is like a restaurant.
Sometimes you get full satisfactory service, and
sometimes you have to be
satisfied with self-service'
HAPPY MAN
What makes a happy man?
Daughter on the cover of cosmo.
Son on the cover of sports illustrated.
Mistress on the cover of playboy
and .. Wife on the cover of 'missing
persons'
GOOD AMBITION
Teacher: What do you want to become?
Little Johnny: Doctor !!
Teacher: Why?
Little Johnny: Coz its the only profession where u
can tell a woman to take
off her clothes and ask her husband to pay for it.
VIRGIN
Old lady, 85, a virgin, about to die. wanted her
tombstone to read :
BORN A VIRGIN, LIVED A VIRGIN, DIED A VIRGIN.
The engraver shortened it to: ' RETURNED UNOPENED '
OLD MAN AND YOUNG GIRL
75 yr old man got married to a 15 yr girl.
On their first night both were crying - why???
Coz she didn't know anything, and he had forgotten
everything.
SINGAPORE: Singapore's DBS Group, Southeast Asia's biggest bank by assets, said on Friday it would be laying off 900 staff to trim costs amid the global credit crisis. The bank also reported a drop in third quarter net profit.
Chief executive Richard Stanley said most of the cuts, which would be carried out at the end of the month, will come from its offices in Singapore and Hong Kong and will account for 6 per cent of the workforce. He added that this was the largest lay offs ever.
The job cut will be across all businesses and all levels. The bank did not want to specify if the affected staff would come from DBS or POSBank.
Laid off staff will be paid the equivalent of one month's salary for every year of service as per market practice.
SAF introduced a new uniform few months ago. Now, take a closer look at the uniform in details. Just look at the new house for epaluette.
A very good and sincere speech by Mr Obama which touched every soul on the ground that day, specifically if you are a woman or a black. As clearly seen in the 2 separate videos of Mr McCain's and Mr Obama's speeches, the latter definitely has an edge over the former on public speaking. The confidence level, the tone and the feelings by Mr Obama was high and sincere.
A very candid and down to earth guy, Mr Obama admitted that things will get tougher and he alone would not be able to overcome them; hence he requested the help from fellow Americans and even the help of Mr McCain, which was a good move. He definitely has the charisma of a leader and vision longer than you expected (He mentioned things might not improve during the next 1 year or 1 term).
Credits to Mr McCain for asking his supporters to move on and support the new President-elect in the future as a nation.
A very candid and down to earth guy, Mr Obama admitted that things will get tougher and he alone would not be able to overcome them; hence he requested the help from fellow Americans and even the help of Mr McCain, which was a good move. He definitely has the charisma of a leader and vision longer than you expected (He mentioned things might not improve during the next 1 year or 1 term).
Credits to Mr McCain for asking his supporters to move on and support the new President-elect in the future as a nation.
A US Presidential election is always an eagerly awaited moment by many people in the United States and around the world. It is held in years divisible by four on the Tuesday that follows the first Monday in November. So the 2008 election will be held on November 4th and the 2012 election on November 6th.
The inauguration of a newly elected president, takes place at noon on January 20th of the following year. Hence the winner of the 2008 election will be inaugurated on January 20th, 2009 at 12:00 pm EST (which is the GMT-5 timezone).
More.
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