Lunchtime Links 7-22
CIT rejected GE financing (Bloomberg) Wondering why so many lenders fell all over themselves to provide CIT’s stopgap funding late last week? First of all because the terms were usurious. Because it gives them a leg up on providing debtor-in-possession financing when the company finally does file for bankruptcy. DIP financing is incredibly lucrative. The interest rates are high and you jump to the front of the line to be paid back. Low risk, high reward.
LAX parking lot is home away from home for many airline workers (LA Times) “Buffeted by their industry’s turbulence, airline employees save money by living part time in a motor home colony at LAX.”
GE Capital “positions” self to “exit” TLGP (GE press release) Be careful not to step in the bullsh*t here. GE’s plan to “exit” TLGP is to stop issuing short-term paper, so the $17 million they’ve issued thus far will roll off over the next 9 months. But they’ve already issued $51 billion of long-term debt. And they have $14 billion left of capacity to issue more long-term debt, which they clearly intend to use. Bottom line: GE will continue to be the largest recipient of bailout funding via FDIC’s debt guarantee program.
A city without a grocery store chain (CNN Money) Not too hard to guess which one…
The Fed’s currency swaps (Jesse) In past weekly posts regarding the Fed’s balance sheet, I’ve noted the fluctuations in currency swap lines the Fed has with foreign central banks. This post explains what these are.
Morgan Stanley sets aside 72% of revenue for bonuses (Bloomberg) That’s a higher percentage of revenue than Goldman….
Amid protests, Cal State Trustees OK 20% fee hike (CBS5) Students protesting don’t realize they’ve enjoyed a discounted ride for a long time (see last post on Harvard…). There’s just no money to subsidize their education. This reminds me of protests that hit Ireland a few months ago (that have continued) when it became clear their national government had to make draconian cuts in order to balance its budget. We’ll be forced to make similar draconian cuts in the U.S. before too long. When those cuts come, Americans are likely to behave as naively as the Irish did, pretending that protests will somehow turn up cash to pay unpayable bills.
Actor Stephen Baldwin files bankruptcy (Reuters)
Funny signs (funnyjunk.com)
Ron Paul confronts Bernanke with some of his toughest, and most cogent, rhetoric to date…