Financial Market Update – A Tough Day for The Ultrawealthy
- Nov 17, 2008
The Dow Jones index started down, bumped up a little, then went down again, and then… the usual undulations, in other words. By the end of the day, however, the Dow was down 233.73 points, or 2.63 percent. The S&P 500 dropped 2.58 percent and the Nasdaq was down 2.29 percent. Citigroup Inc. has unveiled plans to eliminate 50,000 jobs, or about 14 percent of its workforce, in the wake of four quarterly losses in a row totaling some $20 billion. The market was unimpressed: Citi stock fell in the morning, but rose toward noon back near where it started, then fell again down 0.63, or 6.62 percent. Dallas Mavericks owner Mark Cuban has been charged by the Securities and Exchange Commission with insider trading. The SEC is alleging that Cuban, an Internet entrepreneur, sold 600,000 shares of Internet search engine company Mamma.com Inc. in 2004 on inside information that it would initiate a stock offering. Strictly speaking, this is a pre-Panic of 2008 sort of story, but it’s nice to know that the SEC is still on task in wanting to slap billionaires on their wrists. Speaking of high-net-worth individuals, Goldman Sachs Group Inc., famed for its exceedingly fat executive bonuses, has decided to cancel bonuses for its senior officers in 2008. Goldman CEO Lloyd Blankfein’s bonus last year was nearly $70 million, so it’s a considerable cut, though presumably he has some dosh stashed away for this unimaginably rainy day. Shortly thereafter, Swiss bank UBS followed suit in axing executive bonuses. What about the rest of Wall Street? It could become a trend, but not without some soul-searching by those top dogs with really large senses of entitlement. One can imagine the trembling lips and the moist eyes: “Do we haveta?” President Bush said of the G-20 Summit over the weekend that it wasn’t “going to change the world,” but who expected it to? Still, the meeting did bring up various issues that the next round of G-20 in April will address again: controls on off-balance-sheet assets of investment banks, executive pay and oversight of credit-rating agencies. Bush is old news anyway. President-elect Obama, in his first major interview since the election, told 60 Minutes yesterday that he favored a bailout to the Big Three automakers, but that it must not be a “bridge loan to nowhere.” Obama seems to be for major strings attached to any money thrown at the automakers’ problems: “… my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders–all the stakeholders coming together with a plan…” he said.