By Francesco Guerrera and Joanna Chung in New York
Financial Times. Published: October 30 2008 23:21
AIG has raised funds from a new Federal Reserve lending facility to repay part of a $123bn Fed loan that is keeping the stricken US insurer alive, in a move that could deepen the political backlash over its use of taxpayers’ money.
AIG said on Thursday that it had tapped a Fed lending window designed to kick-start the flagging market for commercial paper and used some of the proceeds to pay back part of the government loan.
The decision to use one government facility to repay another could raise eyebrows among Washington politicians, who have attacked AIG for paying for a corporate retreat and for spending money on lobbying following the federal bail-out.
AIG has since cancelled all corporate events, saving an estimated $80m, and suspended its lobbying activities.
The company on Thursday declined to say how much it had raised from the commercial paper facility, which is open to all top-rated corporate borrowers. It has also declined to say what portion was used to repay the rescue loan.
Fed figures showed that as of Wednesday, AIG owed the government $83.5bn, down from $90bn a week ago.
The company has repaid $6.5bn of the $72bn it had drawn down from the original $85bn government loan.
AIG has also used around $18bn of a $37.8bn liquidity facility extended by the Federal Reserve to help fund its troubled security lending programme.
Analysts said that AIG might have used the commercial paper facility to pay back the loan because the interest rates charged were lower. The government demanded a punitive rate of 8.5 per cent over the London Interbank Borrowing Rate on its $85bn two-year loan, while the Fed is charges interest of around 2-3 per cent for three-month commercial paper.
In a regulatory filing, AIG said that, under Fed rules, it can only raise a maximum of $21bn from the commercial paper window and adding the proceeds would be used for corporate purposes as well as repaying part of the loan.
The news came as Hank Greenberg, AIG’s former chief executive and a large shareholder, was Thursday night preparing to send a letter to Edward Liddy, AIG’s current chief, urging him to ask the government to guarantee all its credit default swap collateral. In Mr Greenberg’s view, the move would enable AIG to quickly repay the government loan.
Copyright The Financial Times Limited 2008
Friday, October 31, 2008
Friday, October 24, 2008
Broader, Deeper Job Cuts Risk Steepening Slump
By KELLY EVANS, JOANN S. LUBLIN, TIMOTHY AEPPEL and JONATHAN D. ROCKOFF
Wall Street Journal October 24, 2008
Employers grappling with the financial crisis and a slowing economy are accelerating and broadening job cuts in multiple industries, potentially deepening the economic downturn.
Xerox Corp., General Motors Corp. and bottler Coca-Cola Enterprises Inc. disclosed new job cuts Thursday, following layoff announcements earlier in the week by Chrysler LLC, Merck & Co. and Yahoo Inc., among others. The economic slowdown, previously concentrated among housing- and finance-related employers, is spreading to once-sheltered sectors like health care and technology.
"As the overall economy weakens, even those not in the epicenter of the shock will start seeing losses," said Zach Pandl, an economist with Barclays Capital. Barclays economists expect U.S. payrolls, which have dropped 760,000 jobs so far this year, to shrink about 200,000 a month through the middle of next year.
That will likely push the unemployment rate, now 6.1%, to 7% or 8%, above the 6.3% peak in the last economic downturn. That high came in June 2003, about 18 months after the recession was technically over.
The Labor Department said Wednesday that the number of mass layoffs in September -- defined as instances in which employers cut 50 or more jobs -- rose to 2,269, the most since September 2001.
While the job market has been deteriorating over the past year, analysts say employers are now beginning to eliminate jobs more quickly than in past downturns, in part because of the uncertainties created by the credit crunch and volatile financial markets.
Employers want to "get ahead of the curve" of a weakening economy, said Bernadette Kenny, senior vice president of human resources at Adecco Group North America, a unit of Adecco SA, the world's biggest staffing company. Adecco itself said last week it would cut 600 jobs in France. The company has eliminated a small number of U.S. and Canadian jobs this year, but Ms. Kenny said she still has openings, particularly in engineering. In past downturns, she said, companies "would go into the misery zone" before laying off workers.
Not this time. Xerox Chief Executive Anne Mulcahy said Thursday that the company's financial position "remains strong," even as she announced plans to cut 5% of the work force, or about 3,000 jobs. She said the cuts would help Xerox deliver "double-digit earnings growth in 2009." Chief Financial Officer Larry Zimmerman said the cuts would affect most divisions except sales, as well as many parts of the globe.
The Xerox cuts were the latest sign of growing unease in technology. Last month, Hewlett-Packard Co. said it would cut 24,600 employees, or 7.5% of its work force, as it sought to integrate its acquisition of tech-consulting company Electronic Data Systems Corp. Dell Inc. Chief Executive Michael Dell said this week his company has laid off about 8,900 workers world-wide, or about 10% of its work force, since last year.
Tuesday, Internet giant Yahoo said it would lay off 10%, or roughly 1,500, of its employees by year end. The cuts are part of Yahoo's broader plans to reorganize, but executives said they would also help the company weather the economic downtown, which is hurting its display-advertising business.
Start-ups, too, are trimming payrolls. Internet companies Mahalo, Imeem and AdBrite have laid off 10% to 40% of their staffs. The numbers involved are relatively small. But start-up executives said they are acting pre-emptively, to avoid repeating the mistakes of small companies earlier in the decade that died after not cutting quickly and deeply enough.
The downturn is "much worse than I thought it would be, and ignoring market conditions today would only mean deeper cuts down the road," Mahalo CEO Jason Calacanis wrote in a blog post Thursday.
In another ominous sign, UPMC, the big Pittsburgh-based hospital system, said this week it was laying off 500 employees as part of continuing cost-savings initiatives. The layoffs are almost entirely "nonclinical" and are coming from all parts of the hospital network, which employs about 50,000.
The health-care industry had been one of the few bright spots in the national economy, adding roughly 360,000 jobs over the past year. Layoffs at hospitals are bad news for regions like Pittsburgh, which have increasingly come to rely on medical and university jobs to help offset the erosion of jobs in the region's old-line industries.
Drug makers, which have been paring costs for years, are now broadening the scope to include executives and researchers.
Merck, which has eliminated 10,400 jobs over the past three years, said Wednesday it will cut 7,200 positions, or 12% of its work force, by the end of 2011. The layoffs will touch every part of the company, from sales representatives to researchers, and a quarter will be mid- and senior-level executives. The company is closing labs in Seattle, Japan and Italy.
Chief Executive Richard Clark said the latest cost-cutting wasn't a reaction to the company's 28% decline in third-quarter profit but part of longstanding efforts to reposition Merck for a new era.
Spreading layoffs could further exacerbate weakness in consumer spending, the largest driver of U.S. economic growth, and delay any recovery. "A weak labor market makes consumers and businesses even less creditworthy and causes lenders to pull back even further," says Barclay's Mr. Pandl.
The government said Thursday that the number of new claims for unemployment benefits last week rose by 15,000 to a seasonally adjusted 478,000
In a sign of weakness in the consumer economy, Coca-Cola Enterprises, the world's largest soft-drink bottler, said on Thursday it has laid off more than 1,000 people, primarily from management ranks, in its North American operations since Labor Day. The bottler has been struggling to revive soft-drink sales in the U.S.
Many manufacturers, meanwhile, says they have seen a sudden drop in orders and are quickly moving to cut jobs to avoid building up inventories. Makers of construction machinery, powerboats, appliances and copper pipe are among those shedding workers.
Pipe-coupling maker Victaulic Co. of America last week said it would eliminate 100 jobs at a Pennsylvania factory that typically employs more than 1,000 people. The company said the action was "in response to a precipitous decline in our business over the last 30 days."
Companies that serve the housing sector are growing even more pessimistic as a recovery recedes further into the future. Window maker Silver Line Building Products disclosed Monday it would close a North Carolina plant by year-end and lay off 428 workers because of slow sales. The company will shift production to plants in New Jersey and Georgia but won't add workers there, a spokeswoman says.
Meanwhile, at the center of the economic crisis, financial companies continue to lay off thousands of workers. Cleveland-based National City Corp. said this week it would eliminate 4,000 jobs, or 14% of its work force. Goldman Sachs Group Inc. is preparing to lay off 10% of its 32,500 employees, according to people familiar with the matter. And Bank of America Corp. is expected to lay off thousands of workers as it completes its acquisition of Merrill Lynch & Co. The financial-services industry has lost 172,000 jobs since December 2006, according to the Labor Department.
Companies overseas are cutting employees, too. In France, layoff plans have become a fixture on the morning news. Last month, car maker Renault SA said it would shed 6,000 jobs in Europe, citing difficult market conditions. This week, mail-order group La Redoute, part of retail giant PPR SA, announced 580 layoffs.
—Betsy McKay, Shirley Wang, Pui-Wing Tam, Dan Fitzpatrick, Ethan Smith and David Gauthier-Villars contributed to this article.
Write to Kelly Evans at kelly.evans@wsj.com, Joann S. Lublin at joann.lublin@wsj.com and Timothy Aeppel at timothy.aeppel@wsj.com
Wall Street Journal October 24, 2008
Employers grappling with the financial crisis and a slowing economy are accelerating and broadening job cuts in multiple industries, potentially deepening the economic downturn.
Xerox Corp., General Motors Corp. and bottler Coca-Cola Enterprises Inc. disclosed new job cuts Thursday, following layoff announcements earlier in the week by Chrysler LLC, Merck & Co. and Yahoo Inc., among others. The economic slowdown, previously concentrated among housing- and finance-related employers, is spreading to once-sheltered sectors like health care and technology.
"As the overall economy weakens, even those not in the epicenter of the shock will start seeing losses," said Zach Pandl, an economist with Barclays Capital. Barclays economists expect U.S. payrolls, which have dropped 760,000 jobs so far this year, to shrink about 200,000 a month through the middle of next year.
That will likely push the unemployment rate, now 6.1%, to 7% or 8%, above the 6.3% peak in the last economic downturn. That high came in June 2003, about 18 months after the recession was technically over.
The Labor Department said Wednesday that the number of mass layoffs in September -- defined as instances in which employers cut 50 or more jobs -- rose to 2,269, the most since September 2001.
While the job market has been deteriorating over the past year, analysts say employers are now beginning to eliminate jobs more quickly than in past downturns, in part because of the uncertainties created by the credit crunch and volatile financial markets.
Employers want to "get ahead of the curve" of a weakening economy, said Bernadette Kenny, senior vice president of human resources at Adecco Group North America, a unit of Adecco SA, the world's biggest staffing company. Adecco itself said last week it would cut 600 jobs in France. The company has eliminated a small number of U.S. and Canadian jobs this year, but Ms. Kenny said she still has openings, particularly in engineering. In past downturns, she said, companies "would go into the misery zone" before laying off workers.
Not this time. Xerox Chief Executive Anne Mulcahy said Thursday that the company's financial position "remains strong," even as she announced plans to cut 5% of the work force, or about 3,000 jobs. She said the cuts would help Xerox deliver "double-digit earnings growth in 2009." Chief Financial Officer Larry Zimmerman said the cuts would affect most divisions except sales, as well as many parts of the globe.
The Xerox cuts were the latest sign of growing unease in technology. Last month, Hewlett-Packard Co. said it would cut 24,600 employees, or 7.5% of its work force, as it sought to integrate its acquisition of tech-consulting company Electronic Data Systems Corp. Dell Inc. Chief Executive Michael Dell said this week his company has laid off about 8,900 workers world-wide, or about 10% of its work force, since last year.
Tuesday, Internet giant Yahoo said it would lay off 10%, or roughly 1,500, of its employees by year end. The cuts are part of Yahoo's broader plans to reorganize, but executives said they would also help the company weather the economic downtown, which is hurting its display-advertising business.
Start-ups, too, are trimming payrolls. Internet companies Mahalo, Imeem and AdBrite have laid off 10% to 40% of their staffs. The numbers involved are relatively small. But start-up executives said they are acting pre-emptively, to avoid repeating the mistakes of small companies earlier in the decade that died after not cutting quickly and deeply enough.
The downturn is "much worse than I thought it would be, and ignoring market conditions today would only mean deeper cuts down the road," Mahalo CEO Jason Calacanis wrote in a blog post Thursday.
In another ominous sign, UPMC, the big Pittsburgh-based hospital system, said this week it was laying off 500 employees as part of continuing cost-savings initiatives. The layoffs are almost entirely "nonclinical" and are coming from all parts of the hospital network, which employs about 50,000.
The health-care industry had been one of the few bright spots in the national economy, adding roughly 360,000 jobs over the past year. Layoffs at hospitals are bad news for regions like Pittsburgh, which have increasingly come to rely on medical and university jobs to help offset the erosion of jobs in the region's old-line industries.
Drug makers, which have been paring costs for years, are now broadening the scope to include executives and researchers.
Merck, which has eliminated 10,400 jobs over the past three years, said Wednesday it will cut 7,200 positions, or 12% of its work force, by the end of 2011. The layoffs will touch every part of the company, from sales representatives to researchers, and a quarter will be mid- and senior-level executives. The company is closing labs in Seattle, Japan and Italy.
Chief Executive Richard Clark said the latest cost-cutting wasn't a reaction to the company's 28% decline in third-quarter profit but part of longstanding efforts to reposition Merck for a new era.
Spreading layoffs could further exacerbate weakness in consumer spending, the largest driver of U.S. economic growth, and delay any recovery. "A weak labor market makes consumers and businesses even less creditworthy and causes lenders to pull back even further," says Barclay's Mr. Pandl.
The government said Thursday that the number of new claims for unemployment benefits last week rose by 15,000 to a seasonally adjusted 478,000
In a sign of weakness in the consumer economy, Coca-Cola Enterprises, the world's largest soft-drink bottler, said on Thursday it has laid off more than 1,000 people, primarily from management ranks, in its North American operations since Labor Day. The bottler has been struggling to revive soft-drink sales in the U.S.
Many manufacturers, meanwhile, says they have seen a sudden drop in orders and are quickly moving to cut jobs to avoid building up inventories. Makers of construction machinery, powerboats, appliances and copper pipe are among those shedding workers.
Pipe-coupling maker Victaulic Co. of America last week said it would eliminate 100 jobs at a Pennsylvania factory that typically employs more than 1,000 people. The company said the action was "in response to a precipitous decline in our business over the last 30 days."
Companies that serve the housing sector are growing even more pessimistic as a recovery recedes further into the future. Window maker Silver Line Building Products disclosed Monday it would close a North Carolina plant by year-end and lay off 428 workers because of slow sales. The company will shift production to plants in New Jersey and Georgia but won't add workers there, a spokeswoman says.
Meanwhile, at the center of the economic crisis, financial companies continue to lay off thousands of workers. Cleveland-based National City Corp. said this week it would eliminate 4,000 jobs, or 14% of its work force. Goldman Sachs Group Inc. is preparing to lay off 10% of its 32,500 employees, according to people familiar with the matter. And Bank of America Corp. is expected to lay off thousands of workers as it completes its acquisition of Merrill Lynch & Co. The financial-services industry has lost 172,000 jobs since December 2006, according to the Labor Department.
Companies overseas are cutting employees, too. In France, layoff plans have become a fixture on the morning news. Last month, car maker Renault SA said it would shed 6,000 jobs in Europe, citing difficult market conditions. This week, mail-order group La Redoute, part of retail giant PPR SA, announced 580 layoffs.
—Betsy McKay, Shirley Wang, Pui-Wing Tam, Dan Fitzpatrick, Ethan Smith and David Gauthier-Villars contributed to this article.
Write to Kelly Evans at kelly.evans@wsj.com, Joann S. Lublin at joann.lublin@wsj.com and Timothy Aeppel at timothy.aeppel@wsj.com
Eyeing Your Pension
Are 401(k)s safe from congressional Democrats?
By JAMES TARANTO, Wall Street Journal blogs
If you have a 401(k) or equivalent retirement plan, you've probably been watching nervously the past few weeks as your nest egg has shrunken owing to the current turmoil in the markets.
Well, it could be worse. But don't take heart, for what we mean is it could get worse. The market turmoil has some politicians on Capitol Hill eyeing the end of the 401(k) as we know it.Workforce Management reports on a hearing of the House Education and Labor Committee earlier this month:
A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. . . .
Under Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
"I want to stop the federal subsidy of 401(k)s," Ghilarducci said in an interview. "401(k)s can continue to exist, but they won't have the benefit of the subsidy of the tax break."
Ghilarducci outlined her plan last year in a paper for the left-liberalEconomic Policy Institute, in which she acknowledges that her plan would amount to a tax increase on workers making more than $75,000--considerably less than the $250,000 Barack Obama has said would be his tax-hike cutoff. In addition, workers would be able to pass on only half of their account balances to their heirs; presumably the government would seize the remaining half. (Under current law, 401(k) balances are fully heritable, although they are subject to the income tax.)
Sounds pretty unappealing, doesn't it? But in her congressional testimony, Ghilarducci offered a sweetener:
Short-term I propose . . . that the Congress allow workers to swap out their 401(k) assets, perhaps at August levels, for a guaranteed retirement account--just a one-time swap. . . .
How would this work? You go back to your districts and meet up with a 55-year-old who had had $50,000 in his account last month and now has $40,000 in the account. He can swap out that $50,000, valued in August, for that guarantee of what would become, if he retires at 62, a $500 a month addition to Social Security.
A 55-year-old who lost 20% of his 401(k) because of the recent stock market decline was investing more aggressively than he should have, given his age. Ghilarducci proposes to reward this imprudence in exchange for dramatically limiting everyone's ability to take risks (and enjoy the corresponding rewards) and for greatly increasing government control of Americans' retirement funds.
It is by no means a certainty that Congress or a President Obama would embrace such a proposal, but this is a direction in which things may move if the Democrats make big gains next month.
By JAMES TARANTO, Wall Street Journal blogs
If you have a 401(k) or equivalent retirement plan, you've probably been watching nervously the past few weeks as your nest egg has shrunken owing to the current turmoil in the markets.
Well, it could be worse. But don't take heart, for what we mean is it could get worse. The market turmoil has some politicians on Capitol Hill eyeing the end of the 401(k) as we know it.
A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. . . .
Under Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
"I want to stop the federal subsidy of 401(k)s," Ghilarducci said in an interview. "401(k)s can continue to exist, but they won't have the benefit of the subsidy of the tax break."
Ghilarducci outlined her plan last year in a paper for the left-liberal
Sounds pretty unappealing, doesn't it? But in her congressional testimony, Ghilarducci offered a sweetener:
Short-term I propose . . . that the Congress allow workers to swap out their 401(k) assets, perhaps at August levels, for a guaranteed retirement account--just a one-time swap. . . .
How would this work? You go back to your districts and meet up with a 55-year-old who had had $50,000 in his account last month and now has $40,000 in the account. He can swap out that $50,000, valued in August, for that guarantee of what would become, if he retires at 62, a $500 a month addition to Social Security.
A 55-year-old who lost 20% of his 401(k) because of the recent stock market decline was investing more aggressively than he should have, given his age. Ghilarducci proposes to reward this imprudence in exchange for dramatically limiting everyone's ability to take risks (and enjoy the corresponding rewards) and for greatly increasing government control of Americans' retirement funds.
It is by no means a certainty that Congress or a President Obama would embrace such a proposal, but this is a direction in which things may move if the Democrats make big gains next month.
Monday, October 6, 2008
Dollar Distortions
Le privilège exorbitant du dollar
Par Ahmed Henni, économiste (*)
L'Humanite, 1 October 2008
Ce n’est qu’aujourd’hui que l’on mesure l’ampleur des conséquences de la décision prise par le président Nixon, le 15 août 1971, de décréter l’inconvertibilité or du dollar et, de ce fait, de faire sauter tous les verrous qui limitaient la création monétaire dans le système de Bretton Woods.
La décision du président Nixon fut prise, en pleine guerre du Vietnam, pour faire face à une crise conjoncturelle des paiements qui avait entraîné une défiance vis-à-vis de la monnaie américaine et conduit un certain nombre de pays, la France du général de Gaulle en particulier, à se défaire de leurs dollars pour les échanger contre de l’or, menaçant ainsi le stock d’or américain.
Certes, d’éminents économistes, en particulier l’Américain Robert Triffin et le Britannique sir Harrod, avaient dénoncé cette mesure en son temps et attiré l’attention sur les graves conséquences que pouvait engendrer ce nouveau « seigneuriage » américain. Mais ils prêchèrent dans le désert, et de Gaulle avait déjà été emporté à la suite des événements de mai 1968. L’enjeu était et reste la présence ou l’absence d’un étalon monétaire international qui ne peut être créé par aucun pays en particulier - l’or que défendait de Gaulle ou le bancor défendu par Keynes et rejeté par les Américains dans les négociations de Bretton Woods ou encore les droits de tirage spéciaux (DTS), créés en 1969 pour remplacer l’or monétaire dans les échanges internationaux.
Il est connu que la création monétaire (la monnaie de crédit) ne peut être limitée que par la détention de quelque chose qu’on ne peut pas créer soi-même. C’est ainsi que les Banques centrales peuvent la limiter en obligeant les banques commerciales à ne faire crédit qu’en relation avec une quantité plus ou moins grande de monnaie qu’elles ne peuvent pas créer : les billets de banque. Or, aujourd’hui, la détention de ces billets atteint des montants ridicules au regard des crédits accordés (la monnaie que créent les banques ex nihilo).
Il en est de même pour les États : la création monétaire y est limitée par quelque chose qu’ils ne peuvent pas créer en donnant un ordre, en claquant des doigts ou en faisant marcher une imprimerie. Ce quelque chose, c’est la production de richesses, génératrice de gains en or, en devises étrangères ou en impôts. Les États-Unis se sont affranchis de cette contrainte depuis 1971. Ils peuvent créer autant de monnaie que de besoin sans posséder quelque chose qu’ils ne peuvent pas créer.
Les conséquences de la levée des contraintes monétaires ont été de deux sortes : les unes positives, permettant d’engendrer une croissance mondiale sans précédent et de l’étendre à de nouveaux pays (sans l’émission de dollars, le crédit et l’endettement des ménages américains qui ont fait l’ouverture du marché américain, la Chine ne serait pas ce qu’elle est devenue) ; les autres négatives se traduisant par une explosion de l’émission de dollars, du crédit et de l’endettement avec, pour corollaire, un déclin de l’épargne américaine.
La masse monétaire américaine (M3) est passée de 743 milliards de dollars en août 1971 à 10 276 milliards en février 2006 (dernier chiffre publié), soit 14 fois plus, alors que, dans le même temps, le PIB réel passait de 3 916 milliards à 13 197 milliards, soit 3,3 fois plus. Depuis le 23 mars 2006, les États-Unis ne publient plus l’indice M3. Ils ne renseignent plus le monde sur les quantités de monnaie qu’ils créent.
Les acteurs de l’économie américaine et mondiale se sont habitués à cette monnaie abondante et facile. Les ménages américains eux-mêmes ont intégré dans leur comportement cette vie à crédit qui a débouché sur la crise des subprimes. Le crédit à la consommation est passé de 126 milliards en 1971 à 2 535 milliards en 2007, pendant que l’épargne des particuliers (personal saving) (81 milliards en 1971 avec un maximum de 380 milliards en 1992) est retombée à 47 milliards en 2005, pour devenir négative depuis cette date. En même temps, la dette de l’État fédéral bondissait de 424 milliards en 1971 à 8 506 en 2006. C’est cette émission sans frein de dollars (les autres monnaies ont suivi) qui a permis aux opérateurs sur les marchés financiers d’acheter à crédit (à découvert) tous les titres possibles et imaginables (actions, obligations, contrats à terme, dérivés, titres hypothécaires…). Les uns y ont gagné des fortunes, les autres y ont perdu leur logement. L’électronique a, de plus, démultiplié la quantité de dollars et de monnaies qui circulent : un dollar créé peut, en quelques secondes, passer de l’un à l’autre et permettre un multiple de transactions sur titres sur toute la planète.
Mais, comme les marchandises, les titres doivent, à un moment ou un autre, être livrés et payés ou réalisés. Une cargaison de pétrole représentée par un contrat peut, durant le trajet du tanker, passer d’une main à l’autre mais le dernier acheteur devra en prendre physiquement livraison. Si le pétrole a entre-temps diminué de prix, l’acheteur perdra un peu mais aura le pétrole. Le dernier acheteur d’un titre peut, lui, se retrouver avec un titre qui ne vaut rien si l’émetteur du titre a, entre-temps, fait faillite. C’est ainsi que, grâce à l’endettement permis par le crédit, des banques se sont retrouvées titulaires de titres qui ne valaient plus rien parce que, entre-temps, leurs émetteurs étaient devenus insolvables (dans la crise des subprimes on a abondamment cité le cas des ménages achetant à crédit un logement et devenus insolvables).
Le jeune trader français Jérôme Kerviel a pu engager, à découvert, des sommes de l’ordre de 50 milliards d’euros (équivalent du PIB du Maroc). Lorsqu’un individu peut acheter à crédit l’équivalent de la richesse produite en un an dans un pays comme le Maroc, le monde ne peut qu’aller à la catastrophe.
La solution évidente, bien entendu, serait de restaurer le système d’avant 1971 et de limiter la création monétaire par la détention de quelque chose que personne ne peut créer : les DTS, le bancor, ou autre. Les États-Unis, mais les autres pays aussi, ne le voudraient pas.
Invoquant l’immoralité des individus, les États préfèrent se diriger plutôt vers des solutions répressives comme si la cupidité des individus (Kerviel) pouvait être arrêtée par des lois. Les solutions de fond renvoient au comportement des États eux-mêmes, de plus en plus alliés aux miraculés des rentes financières, vivant aussi à crédit et heureux de cette création monétaire qui leur permet déficits et financement des guerres (Irak). En mettant 700 milliards de dollars sur la table (l’équivalent du PIB du continent africain), ils veulent effacer les dettes de ceux qui ont déjà pris l’argent. Pour les autres, on voit déjà que les restrictions actuelles au crédit ne touchent finalement que ceux qui n’ont pas d’entregent. Le Congrès américain vient de voter majoritairement contre ce projet. En tout état de cause, la création monétaire est chose trop grave pour échapper au contrôle de représentants élus. Il ne s’agit pas de retomber dans les financements démagogiques obtenus auprès de Banques centrales soumises à des gouvernements de plus en plus liés aux marchés financiers. Tout en laissant les Banques centrales indépendantes, on devrait ajouter à leur conseil d’administration des représentants élus.
(*) Dernier ouvrage publié : le Syndrome islamiste et les mutations du capitalisme. Éditions Non lieu, 2008.
Par Ahmed Henni, économiste (*)
L'Humanite, 1 October 2008
Ce n’est qu’aujourd’hui que l’on mesure l’ampleur des conséquences de la décision prise par le président Nixon, le 15 août 1971, de décréter l’inconvertibilité or du dollar et, de ce fait, de faire sauter tous les verrous qui limitaient la création monétaire dans le système de Bretton Woods.
La décision du président Nixon fut prise, en pleine guerre du Vietnam, pour faire face à une crise conjoncturelle des paiements qui avait entraîné une défiance vis-à-vis de la monnaie américaine et conduit un certain nombre de pays, la France du général de Gaulle en particulier, à se défaire de leurs dollars pour les échanger contre de l’or, menaçant ainsi le stock d’or américain.
Certes, d’éminents économistes, en particulier l’Américain Robert Triffin et le Britannique sir Harrod, avaient dénoncé cette mesure en son temps et attiré l’attention sur les graves conséquences que pouvait engendrer ce nouveau « seigneuriage » américain. Mais ils prêchèrent dans le désert, et de Gaulle avait déjà été emporté à la suite des événements de mai 1968. L’enjeu était et reste la présence ou l’absence d’un étalon monétaire international qui ne peut être créé par aucun pays en particulier - l’or que défendait de Gaulle ou le bancor défendu par Keynes et rejeté par les Américains dans les négociations de Bretton Woods ou encore les droits de tirage spéciaux (DTS), créés en 1969 pour remplacer l’or monétaire dans les échanges internationaux.
Il est connu que la création monétaire (la monnaie de crédit) ne peut être limitée que par la détention de quelque chose qu’on ne peut pas créer soi-même. C’est ainsi que les Banques centrales peuvent la limiter en obligeant les banques commerciales à ne faire crédit qu’en relation avec une quantité plus ou moins grande de monnaie qu’elles ne peuvent pas créer : les billets de banque. Or, aujourd’hui, la détention de ces billets atteint des montants ridicules au regard des crédits accordés (la monnaie que créent les banques ex nihilo).
Il en est de même pour les États : la création monétaire y est limitée par quelque chose qu’ils ne peuvent pas créer en donnant un ordre, en claquant des doigts ou en faisant marcher une imprimerie. Ce quelque chose, c’est la production de richesses, génératrice de gains en or, en devises étrangères ou en impôts. Les États-Unis se sont affranchis de cette contrainte depuis 1971. Ils peuvent créer autant de monnaie que de besoin sans posséder quelque chose qu’ils ne peuvent pas créer.
Les conséquences de la levée des contraintes monétaires ont été de deux sortes : les unes positives, permettant d’engendrer une croissance mondiale sans précédent et de l’étendre à de nouveaux pays (sans l’émission de dollars, le crédit et l’endettement des ménages américains qui ont fait l’ouverture du marché américain, la Chine ne serait pas ce qu’elle est devenue) ; les autres négatives se traduisant par une explosion de l’émission de dollars, du crédit et de l’endettement avec, pour corollaire, un déclin de l’épargne américaine.
La masse monétaire américaine (M3) est passée de 743 milliards de dollars en août 1971 à 10 276 milliards en février 2006 (dernier chiffre publié), soit 14 fois plus, alors que, dans le même temps, le PIB réel passait de 3 916 milliards à 13 197 milliards, soit 3,3 fois plus. Depuis le 23 mars 2006, les États-Unis ne publient plus l’indice M3. Ils ne renseignent plus le monde sur les quantités de monnaie qu’ils créent.
Les acteurs de l’économie américaine et mondiale se sont habitués à cette monnaie abondante et facile. Les ménages américains eux-mêmes ont intégré dans leur comportement cette vie à crédit qui a débouché sur la crise des subprimes. Le crédit à la consommation est passé de 126 milliards en 1971 à 2 535 milliards en 2007, pendant que l’épargne des particuliers (personal saving) (81 milliards en 1971 avec un maximum de 380 milliards en 1992) est retombée à 47 milliards en 2005, pour devenir négative depuis cette date. En même temps, la dette de l’État fédéral bondissait de 424 milliards en 1971 à 8 506 en 2006. C’est cette émission sans frein de dollars (les autres monnaies ont suivi) qui a permis aux opérateurs sur les marchés financiers d’acheter à crédit (à découvert) tous les titres possibles et imaginables (actions, obligations, contrats à terme, dérivés, titres hypothécaires…). Les uns y ont gagné des fortunes, les autres y ont perdu leur logement. L’électronique a, de plus, démultiplié la quantité de dollars et de monnaies qui circulent : un dollar créé peut, en quelques secondes, passer de l’un à l’autre et permettre un multiple de transactions sur titres sur toute la planète.
Mais, comme les marchandises, les titres doivent, à un moment ou un autre, être livrés et payés ou réalisés. Une cargaison de pétrole représentée par un contrat peut, durant le trajet du tanker, passer d’une main à l’autre mais le dernier acheteur devra en prendre physiquement livraison. Si le pétrole a entre-temps diminué de prix, l’acheteur perdra un peu mais aura le pétrole. Le dernier acheteur d’un titre peut, lui, se retrouver avec un titre qui ne vaut rien si l’émetteur du titre a, entre-temps, fait faillite. C’est ainsi que, grâce à l’endettement permis par le crédit, des banques se sont retrouvées titulaires de titres qui ne valaient plus rien parce que, entre-temps, leurs émetteurs étaient devenus insolvables (dans la crise des subprimes on a abondamment cité le cas des ménages achetant à crédit un logement et devenus insolvables).
Le jeune trader français Jérôme Kerviel a pu engager, à découvert, des sommes de l’ordre de 50 milliards d’euros (équivalent du PIB du Maroc). Lorsqu’un individu peut acheter à crédit l’équivalent de la richesse produite en un an dans un pays comme le Maroc, le monde ne peut qu’aller à la catastrophe.
La solution évidente, bien entendu, serait de restaurer le système d’avant 1971 et de limiter la création monétaire par la détention de quelque chose que personne ne peut créer : les DTS, le bancor, ou autre. Les États-Unis, mais les autres pays aussi, ne le voudraient pas.
Invoquant l’immoralité des individus, les États préfèrent se diriger plutôt vers des solutions répressives comme si la cupidité des individus (Kerviel) pouvait être arrêtée par des lois. Les solutions de fond renvoient au comportement des États eux-mêmes, de plus en plus alliés aux miraculés des rentes financières, vivant aussi à crédit et heureux de cette création monétaire qui leur permet déficits et financement des guerres (Irak). En mettant 700 milliards de dollars sur la table (l’équivalent du PIB du continent africain), ils veulent effacer les dettes de ceux qui ont déjà pris l’argent. Pour les autres, on voit déjà que les restrictions actuelles au crédit ne touchent finalement que ceux qui n’ont pas d’entregent. Le Congrès américain vient de voter majoritairement contre ce projet. En tout état de cause, la création monétaire est chose trop grave pour échapper au contrôle de représentants élus. Il ne s’agit pas de retomber dans les financements démagogiques obtenus auprès de Banques centrales soumises à des gouvernements de plus en plus liés aux marchés financiers. Tout en laissant les Banques centrales indépendantes, on devrait ajouter à leur conseil d’administration des représentants élus.
(*) Dernier ouvrage publié : le Syndrome islamiste et les mutations du capitalisme. Éditions Non lieu, 2008.
Sunday, October 5, 2008
On Wall St: A little less conversation
By Francesco Guerrera
Published: October 3 2008 16:18 The Financial Times
For evidence of the financial industry’s much-vaunted ability to reinvent itself as cycles turn, look no further than Wall Street’s language.
Bankers’ argot has changed dramatically over the past year or so.
Gone are the bull market cliches’ on “win-win situations” and “truly transformational” deals (as opposed to “falsely transformational”, I guess).
Financial titans and regulators these days cannot stop talking about “strong headwinds” and “1,000-year-floods”.
Borrowing methaphors from the Weather Channel and the Bible has a crucial advantage for Wall Street executives: it enables them to deflect the blame for the current mess.
If, as the Street’s received wisdom goes, the financial storm of the past year was both unprecedented and unforeseen, there is little the captains could have done to steer their ships out of trouble (I, too, have read the Weather Channel’s book of cliches).
A corollary of this argument is that crafting a regulatory system capable of withstanding a crisis of this magnitude would make the banking industry too risk-averse and choke off profits and innovation.
I tend to agree.
Although the bubble in credit and housing markets had been steadily inflating for years, it is hard to fault Wall Street firms for wanting to make money until the music stopped.
The returns on what turned out to be toxic assets were just too good to miss.
Any banking chief who had dared pull out of the market for, say, leveraged loans or mortgage-backed securities in 2005 and 2006 would have been lynched by investors for destroying shareholder value.
Nor could watchdogs have done much to prevent the turmoil when many of the incriminated securities were triple-A rated and banks met all the regulatory yardsticks.
Criticism of Wall Street and its regulators for failing to forecast the 1,000-year flood is largely misplaced.
What I do object to, however, is that once the storm began, financial chiefs were incredibly slow in realising they were getting soaked.
Re-reading the confident statements made by leaders of companies that subsequently got into trouble would be hilarious if it were not so tragic.
Alan Schwartz of Bear Stearns, Dick Fuld of Lehman Brothers, Robert Steel of Wachovia, the Washington Mutual management and AIG’s upper echelons all expressed panglossian reassurances about their companies’ health just before they imploded.
Even General Electric’s Jeffrey Immelt, the darling of management gurus, fell into a similar trap.
Three working days before announcing a $15bn share offering (including a $3bn cash injection from Warren Buffett), he replied to an analyst’s question on the need for new capital with a categorical: “We just don’t see it right now.”
Remarks such as these are more than embarassing. They show that some of corporate America’s most respected and better-paid leaders are stuck in the past and unable to understand this crisis has radically changed their role.
Messrs Schwartz, Fuld, Steel, Immelt and others did not lie.
They just thought they had more time to fix their companies’ problems than the markets allowed them.
The panicky state of capital markets and investors’ visceral desire to cut their losses means that companies are being thrust into a crisis faster than you can say “collaterised debt obligation”.
The days when a chief executive had the time to do an internal study, draw up a rescue plan and then ask the markets for time to implement it are long gone.
As the grim fate of Lehman, WaMu and AIG illustrates, executives who strive to exude confidence are wasting time they should be spending in their situation rooms.
Did anyone hear or see Lloyd Blankfein a couple of weeks ago when Goldman Sachs’ stock was plunging?
He kept a low profile until he had a Federal Reserve lifeline and $5bn from Mr Buffett in his pocket.
And even then, he let his underlings do the talking. Silence is Goldman.
This may sound odd coming from a journalist, but in the current environment, executives who open their mouth ought to be sure of what they are talking about.
Which is why in a constructive, win-win, spirit I would like to suggest Wall Street add an Elvis line to its list of in-vogue phrases: “A little less conversation, a little more action, please”.
francesco.guerrera@ft.com
Copyright The Financial Times Limited 2008
Published: October 3 2008 16:18 The Financial Times
For evidence of the financial industry’s much-vaunted ability to reinvent itself as cycles turn, look no further than Wall Street’s language.
Bankers’ argot has changed dramatically over the past year or so.
Gone are the bull market cliches’ on “win-win situations” and “truly transformational” deals (as opposed to “falsely transformational”, I guess).
Financial titans and regulators these days cannot stop talking about “strong headwinds” and “1,000-year-floods”.
Borrowing methaphors from the Weather Channel and the Bible has a crucial advantage for Wall Street executives: it enables them to deflect the blame for the current mess.
If, as the Street’s received wisdom goes, the financial storm of the past year was both unprecedented and unforeseen, there is little the captains could have done to steer their ships out of trouble (I, too, have read the Weather Channel’s book of cliches).
A corollary of this argument is that crafting a regulatory system capable of withstanding a crisis of this magnitude would make the banking industry too risk-averse and choke off profits and innovation.
I tend to agree.
Although the bubble in credit and housing markets had been steadily inflating for years, it is hard to fault Wall Street firms for wanting to make money until the music stopped.
The returns on what turned out to be toxic assets were just too good to miss.
Any banking chief who had dared pull out of the market for, say, leveraged loans or mortgage-backed securities in 2005 and 2006 would have been lynched by investors for destroying shareholder value.
Nor could watchdogs have done much to prevent the turmoil when many of the incriminated securities were triple-A rated and banks met all the regulatory yardsticks.
Criticism of Wall Street and its regulators for failing to forecast the 1,000-year flood is largely misplaced.
What I do object to, however, is that once the storm began, financial chiefs were incredibly slow in realising they were getting soaked.
Re-reading the confident statements made by leaders of companies that subsequently got into trouble would be hilarious if it were not so tragic.
Alan Schwartz of Bear Stearns, Dick Fuld of Lehman Brothers, Robert Steel of Wachovia, the Washington Mutual management and AIG’s upper echelons all expressed panglossian reassurances about their companies’ health just before they imploded.
Even General Electric’s Jeffrey Immelt, the darling of management gurus, fell into a similar trap.
Three working days before announcing a $15bn share offering (including a $3bn cash injection from Warren Buffett), he replied to an analyst’s question on the need for new capital with a categorical: “We just don’t see it right now.”
Remarks such as these are more than embarassing. They show that some of corporate America’s most respected and better-paid leaders are stuck in the past and unable to understand this crisis has radically changed their role.
Messrs Schwartz, Fuld, Steel, Immelt and others did not lie.
They just thought they had more time to fix their companies’ problems than the markets allowed them.
The panicky state of capital markets and investors’ visceral desire to cut their losses means that companies are being thrust into a crisis faster than you can say “collaterised debt obligation”.
The days when a chief executive had the time to do an internal study, draw up a rescue plan and then ask the markets for time to implement it are long gone.
As the grim fate of Lehman, WaMu and AIG illustrates, executives who strive to exude confidence are wasting time they should be spending in their situation rooms.
Did anyone hear or see Lloyd Blankfein a couple of weeks ago when Goldman Sachs’ stock was plunging?
He kept a low profile until he had a Federal Reserve lifeline and $5bn from Mr Buffett in his pocket.
And even then, he let his underlings do the talking. Silence is Goldman.
This may sound odd coming from a journalist, but in the current environment, executives who open their mouth ought to be sure of what they are talking about.
Which is why in a constructive, win-win, spirit I would like to suggest Wall Street add an Elvis line to its list of in-vogue phrases: “A little less conversation, a little more action, please”.
francesco.guerrera@ft.com
Copyright The Financial Times Limited 2008
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