In conjunction with our current events discussion this morning in class, I chose to write a journal entry about an article which discussed Northern Rock and the company's current situation.
Title: Northern Rock opts to cancel dividend
Source: Financial Times 9/26/07
Amid growing pressure from regulators and MPs, the troubled mortage lender bank Northern Rock decided to drop its controversial £59m pay-out, which the company had announced and planned on doing before it was hit by financial crisis. While the Association of British Insurers and other investors are pleased to learn of this move, RAB Capital, Northern Rock's hedge fund manager, took the news with much dismay. Philip Richards, runner of RAB, said that they disagree with the decision about the dividend in that the decision agrees with suggestions that the Bank of England and Treasury want to see Northern Rock's shareholders wiped out; RAB became Northern Rock's biggest shareholder last week through its Special Situations fund.
Despite RAB's discomfort with Northern Rock's move to cancel its dividend pay-out, other companies such as the Treasury, Financial Services Authority and UK Shareholder's Association are all coming to Northern Rock's aid. The Treasury and Financial Services Authority has hired the Slaughter & May law firm to work with Goldman Sachs to adivse on options for Northern Rock, and the UK Shareholder's Association has formed an action group for Northern Rock investors in order to oppose any quick sale of the bank. Since the initial announcement of the bail-out, however, most large banks have kept their distance from Northern Rock due to concerns about financing the £113.5bn balance sheet the company has accumulated as well as damage to their brand. As with many other current situations in the UK's economy, only time will tell what will happen to Northern Rock, if there even is a Northern Rock in the future. Until then, we'll all just have to wait around with our ears open and eyes peeled.
I personally think it was a good idea for Northern Rock to cancel their huge dividend. As the article mentions, the dividend pay-out would have alienated the government and resulted in an outflow of cash that would make the company particularly unattractive to bidders. With this, however, it is good that Northern Rock has a law firm working with Goldman Sachs, one of the biggest names in economics, to advise them on what their options are and what they can or should do next; Northern Rock has obviously made some bad decisions in the past so it is definitely a good thing for them to have advisors. As the old adage goes, time is the best and worst medicine, and as I have mentioned previously, only time will tell the destiny of this troubled bank.
Wednesday, 26 September 2007
Tuesday, 18 September 2007
9/18/07
Today's Guardian Newspaper had a particular article that caught my attention, not only because it seemed to be an interesting article, but also because it is very pertinent to the topics we have been discussing in class. It deals with inflation rates and their relation to interest rates and the overall UK economy. It was a very insightful article and gave me a more powerful understanding of how an economy functions and how one aspect can have a waterfall effect on the many other economic facets within a country.
Title of Article: Inflation drops further
Source: Guardian (9/18/07)
Although not done intentionally, the inflation rate fell by 0.1 percentage points in August from July's 1.9% reading. This news was announced after the Bank of England made another £4.4 billion available to money markets in attempts to bring down the Libor (London interbank offered rate) interest rates closer to that of the bank rate, which is around 5.75%. With this decrease, the inflation rate is at its lowest level in more than a year, is significantly less than the spring all-time high of 3.1%, and is also below the Bank's 2% target for the second consecutive month. It also carries the potential to allow banks to lower interest rates if the ongoing chaos in financial markets continues.
The article credits the decrease in inflation rates to mortgage lenders cutting their exit administration fees as well as many gas and electric companies lowering their prices. With this, it makes sense that housing, water, electricity, gas and other fuels inflation has gone down to 2.8% from 3.5% in July, which is the lowest its been since March 2004.
Until recently, officials expected the interest rates to rise to 6% or over, but with the decrease in inflation rates, many are now expecting a cut to occur before Christmas. Howard Archer from Global Insight says the decrease is very encouraging but expects the Bank of England to be very cautious about lowering interest rates just yet given the record oil price and possible increase in food prices, as these two factors may cause the inflation rate to rise once again in the coming months. To judge whether or not interest rates should be trimmed, the Bank plans to monitor how the current credit crunch and Northern Rock crisis is affecting the economy and the outlook for growth and inflation, and says that if growth is being significantly hit and continues to dilute underlying inflationary pressures, officials will then be more likely to lower interest rates.
While it would be a welcome change to the now high interest rates, I believe the Bank of England is being very smart to be weary of lowering them just yet. I don't know very much about economics as of now, but I at least know that the field is very dynamic, and just because inflation rates are low right now it does not mean that they will be low for long. If the Bank lowers interest rates now, inflation rates may spike tomorrow and then the Bank would be in serious trouble. Therefore, the Bank should continue to do what it is doing now and just keep track of the inflation rate decrease, and not make any decisions to lower interest rates until the inflation rate decrease remains constant.
Title of Article: Inflation drops further
Source: Guardian (9/18/07)
Although not done intentionally, the inflation rate fell by 0.1 percentage points in August from July's 1.9% reading. This news was announced after the Bank of England made another £4.4 billion available to money markets in attempts to bring down the Libor (London interbank offered rate) interest rates closer to that of the bank rate, which is around 5.75%. With this decrease, the inflation rate is at its lowest level in more than a year, is significantly less than the spring all-time high of 3.1%, and is also below the Bank's 2% target for the second consecutive month. It also carries the potential to allow banks to lower interest rates if the ongoing chaos in financial markets continues.
The article credits the decrease in inflation rates to mortgage lenders cutting their exit administration fees as well as many gas and electric companies lowering their prices. With this, it makes sense that housing, water, electricity, gas and other fuels inflation has gone down to 2.8% from 3.5% in July, which is the lowest its been since March 2004.
Until recently, officials expected the interest rates to rise to 6% or over, but with the decrease in inflation rates, many are now expecting a cut to occur before Christmas. Howard Archer from Global Insight says the decrease is very encouraging but expects the Bank of England to be very cautious about lowering interest rates just yet given the record oil price and possible increase in food prices, as these two factors may cause the inflation rate to rise once again in the coming months. To judge whether or not interest rates should be trimmed, the Bank plans to monitor how the current credit crunch and Northern Rock crisis is affecting the economy and the outlook for growth and inflation, and says that if growth is being significantly hit and continues to dilute underlying inflationary pressures, officials will then be more likely to lower interest rates.
While it would be a welcome change to the now high interest rates, I believe the Bank of England is being very smart to be weary of lowering them just yet. I don't know very much about economics as of now, but I at least know that the field is very dynamic, and just because inflation rates are low right now it does not mean that they will be low for long. If the Bank lowers interest rates now, inflation rates may spike tomorrow and then the Bank would be in serious trouble. Therefore, the Bank should continue to do what it is doing now and just keep track of the inflation rate decrease, and not make any decisions to lower interest rates until the inflation rate decrease remains constant.
Tuesday, 11 September 2007
9/5/07
Despite its plethora of intriguing and prevalent articles, a particular story in today's Financial Times caught my attention. As we all know, Chinese manufacturing companies are under intense scrutiny after several occurrences of potentially fatal product recalls. This article discusses how China is slowly getting to grips with product safety standards as well as the effect of the strong price pressure from the big western groups these Chinese manufacturers supply.
Title of Article: Testing Times
Source: Financial Times (9/5/07)
Whenever 21st century consumers in one country buy products from manufacturing industries working in 19th century conditions in another, there is bound to be problems. Such is the situation between US and UK business tycoons and several Chinese manufacturing industries. These very modern and prosperous countries have moved their production to the place with the lowest level of regulation (China), which has stirred up much controversy and caused great economic turmoil for all countries involved.
Over the recent years, US and UK buyers of Chinese goods have put enormous pressure on these companies to reduce the prices of their goods. This has in turn forced Chinese manufacturers to look for cheaper alternatives as well as cut corners on quality standards in order to win contracts with US and UK companies. On account of these resolutions, everything from dog food to toys and toothpaste have been recalled, and these recalls are the source of the intense attention put on and the tarnished image of China and its manufacturing companies.
The all too common occurrence of recalls has also led to unexpected visits from US and UK safety inspectors. Previously, inspections usually focused more on social compliance, labor conditions and environmental issues within each factory, but now more than ever inspections are mainly concerned with safety issues. These unannounced inspections have caused factory managers a great amount of stress and also disrupted work within the factories.
Before all the blame is put on the Chinese factories, one has to realize the faults within the US and UK companies. Firstly, these companies are demanding lower prices regardless of the conditions the Chinese workers face, and are not realizing the problems caused by making such demands. They are also waiting until the toys are shipped to their respective destinations (either in the US or UK) to test the products' safety and not requiring continual inspection and testing by the suppliers.
In light of these recalls and faults, all companies invovled are vowing to right their wrongs. US companies such as Wal-Mart are pursuing a drive to improve the monitoring of workplace conditions and has recently stepped up the testing of products in response to safety concerns. US and UK companies are also requiring routine safety checks of all products produced. Chinese companies are paying more attention to the manufacturing processes and securing the quality of their goods. Many of them have made needle detectors mandatory to check for any fragments of broken needles in their garments or plush toys and are also testing each of their products to ensure their safety and reliability. For example, one company has developed a "drop test" in which toys are dropped from 90 cm (a child's height), and tested to see if they fracture into shards that are either dangerously small or sharp. The Chinese government is also stepping in, demanding to see safety reports for toy shipments and requiring that the reports not be more than twelve months old. Executives complain that the government is "being more Catholic than the Pope."
Even though Chinese companies are complaining of the unexpected safety inspections and strict Chinese governmental regulations, in order to rid these companies of their bad image, I believe such precautions must be taken. If not, China may lose their reputation of having the world's best toy factories and largest volume of international product exports. If the promises of improvement made by US and UK buyers and Chinese producers do not come to fruition, the economies of all three countries could suffer even more than they already have.
Title of Article: Testing Times
Source: Financial Times (9/5/07)
Whenever 21st century consumers in one country buy products from manufacturing industries working in 19th century conditions in another, there is bound to be problems. Such is the situation between US and UK business tycoons and several Chinese manufacturing industries. These very modern and prosperous countries have moved their production to the place with the lowest level of regulation (China), which has stirred up much controversy and caused great economic turmoil for all countries involved.
Over the recent years, US and UK buyers of Chinese goods have put enormous pressure on these companies to reduce the prices of their goods. This has in turn forced Chinese manufacturers to look for cheaper alternatives as well as cut corners on quality standards in order to win contracts with US and UK companies. On account of these resolutions, everything from dog food to toys and toothpaste have been recalled, and these recalls are the source of the intense attention put on and the tarnished image of China and its manufacturing companies.
The all too common occurrence of recalls has also led to unexpected visits from US and UK safety inspectors. Previously, inspections usually focused more on social compliance, labor conditions and environmental issues within each factory, but now more than ever inspections are mainly concerned with safety issues. These unannounced inspections have caused factory managers a great amount of stress and also disrupted work within the factories.
Before all the blame is put on the Chinese factories, one has to realize the faults within the US and UK companies. Firstly, these companies are demanding lower prices regardless of the conditions the Chinese workers face, and are not realizing the problems caused by making such demands. They are also waiting until the toys are shipped to their respective destinations (either in the US or UK) to test the products' safety and not requiring continual inspection and testing by the suppliers.
In light of these recalls and faults, all companies invovled are vowing to right their wrongs. US companies such as Wal-Mart are pursuing a drive to improve the monitoring of workplace conditions and has recently stepped up the testing of products in response to safety concerns. US and UK companies are also requiring routine safety checks of all products produced. Chinese companies are paying more attention to the manufacturing processes and securing the quality of their goods. Many of them have made needle detectors mandatory to check for any fragments of broken needles in their garments or plush toys and are also testing each of their products to ensure their safety and reliability. For example, one company has developed a "drop test" in which toys are dropped from 90 cm (a child's height), and tested to see if they fracture into shards that are either dangerously small or sharp. The Chinese government is also stepping in, demanding to see safety reports for toy shipments and requiring that the reports not be more than twelve months old. Executives complain that the government is "being more Catholic than the Pope."
Even though Chinese companies are complaining of the unexpected safety inspections and strict Chinese governmental regulations, in order to rid these companies of their bad image, I believe such precautions must be taken. If not, China may lose their reputation of having the world's best toy factories and largest volume of international product exports. If the promises of improvement made by US and UK buyers and Chinese producers do not come to fruition, the economies of all three countries could suffer even more than they already have.
Wednesday, 29 August 2007
8/29/07
As I perused The Guardian's online newspaper today, I came across two articles in which I wish to discuss. The first article pertains to Turkey and the EU (what we discussed in class today), and the second article has an interesting subject and also has US involvement.
Title of Article: Gul sworn in as Turkey's president
Source: The Guardian (8/29/07)
Link: http://www.guardian.co.uk/turkey/story/0,,2157875,00.html
Yesterday, Abdullah Gul, a British-educated economist as well as a Muslim democrat, was sworn in as the 11th president of Turkey. This election marks the end of the military and bureaucratic elite ruling, a title held by them for the past 84 years. Soon after he was elected, Gul vowed to be a more active president and push modernizing reforms, which he hopes will in turn promote Turkey's role in the world. Gul, who recently received praise for his handling of Turkey's bid to join the EU, vows to do such things because of the country's great desire to join the prestigious EU.
Gul also plans to leave the AK party, which he helped found, to impress his skeptics who aren't buying into his vow of impartiality (most likely another ploy to gain membership into the EU). Turkey would obviously benefit from being able to join the EU (although some residents most likely think otherwise), but only time will tell if Gul's attempts will pay off, or if members of the EU will again turn down Turkey's request on account of the impending movement of people freedom and the various other benefits Turkey will receieve if accepted.
Title of Article: PartyGaming revenues drop 70%
Source: The Guardian (8/29/07)
Link: http://business.guardian.co.uk/story/0,,2158213,00.html
PartyGaming, the world's most lucrative gaming market and operator of the PartyPoker and PartyCasino websites, posted a pre-tax loss of $47m (£23.4m) for the first half of 2007 on account of the recent US ban on all online gambling. Revenues also plunged for the business, down 70% to $212.5m. This US ban knocked PartyGaming out of the FTSE 100 index after wiping out three-quarters of its business.
On the brighter side, shares in the website rebounded by nearly 10% to 25p this morning, which is a welcome change from the sharp fall yesterday. Trading figures are still matching up to City expectations as well and the website is still averaging about 1,192 new members each day. Mitch Garber, the website's chief executive, is currently working with the US Department of Justice towards a satisfactory resolution; however, the website is planning to expand its business to China and Russia to make up for the loss of business in the US.
This is obviously a major setback for the PartyGaming business. Three-quarters of its business has just been wiped out, so it's going to be tough to try and regain their losses. Administrators are handling it well, however, with talks with the US and plans to expand their business to other foreign countries. Let's just hope that China and Russia don't put a ban on all online gambling as well or PartyGaming may have to call its bluff.
Title of Article: Gul sworn in as Turkey's president
Source: The Guardian (8/29/07)
Link: http://www.guardian.co.uk/turkey/story/0,,2157875,00.html
Yesterday, Abdullah Gul, a British-educated economist as well as a Muslim democrat, was sworn in as the 11th president of Turkey. This election marks the end of the military and bureaucratic elite ruling, a title held by them for the past 84 years. Soon after he was elected, Gul vowed to be a more active president and push modernizing reforms, which he hopes will in turn promote Turkey's role in the world. Gul, who recently received praise for his handling of Turkey's bid to join the EU, vows to do such things because of the country's great desire to join the prestigious EU.
Gul also plans to leave the AK party, which he helped found, to impress his skeptics who aren't buying into his vow of impartiality (most likely another ploy to gain membership into the EU). Turkey would obviously benefit from being able to join the EU (although some residents most likely think otherwise), but only time will tell if Gul's attempts will pay off, or if members of the EU will again turn down Turkey's request on account of the impending movement of people freedom and the various other benefits Turkey will receieve if accepted.
Title of Article: PartyGaming revenues drop 70%
Source: The Guardian (8/29/07)
Link: http://business.guardian.co.uk/story/0,,2158213,00.html
PartyGaming, the world's most lucrative gaming market and operator of the PartyPoker and PartyCasino websites, posted a pre-tax loss of $47m (£23.4m) for the first half of 2007 on account of the recent US ban on all online gambling. Revenues also plunged for the business, down 70% to $212.5m. This US ban knocked PartyGaming out of the FTSE 100 index after wiping out three-quarters of its business.
On the brighter side, shares in the website rebounded by nearly 10% to 25p this morning, which is a welcome change from the sharp fall yesterday. Trading figures are still matching up to City expectations as well and the website is still averaging about 1,192 new members each day. Mitch Garber, the website's chief executive, is currently working with the US Department of Justice towards a satisfactory resolution; however, the website is planning to expand its business to China and Russia to make up for the loss of business in the US.
This is obviously a major setback for the PartyGaming business. Three-quarters of its business has just been wiped out, so it's going to be tough to try and regain their losses. Administrators are handling it well, however, with talks with the US and plans to expand their business to other foreign countries. Let's just hope that China and Russia don't put a ban on all online gambling as well or PartyGaming may have to call its bluff.
Monday, 27 August 2007
8/27/07
Title of Article: Five rate rises bring housing boom to August standstill
Source: The Guardian (8/27/07)
Link: http://business.guardian.co.uk/story/0,,2156784,00.html#article_continue
As per our discussion in class today with the UK (and US) housing market status, I found it rather fitting to use this article I found on the Guardian online website as my journal entry for the day. According to the article, five interest rate rises in just a year has caused the once booming and successful house-price market to record its slowest growth in twenty months for the month of August. Hometrack, the housing intelligence company, warns consumers of a weaker market in the months to come if nothing is done about this recent slow growth rate in house prices.
Richard Donnell, Hometrack's head of research, reports that the increase in interest rates over the past twelve months has pushed the average debt servicing costs to a fifteen-year high. High interest rates will most likely continue to hinder market activity levels as well as have an effect on house price inflation for the next twelve to eighteen months.
London has been the driving force behind the market boom, but now even this city is faltering. London still recorded a rise in prices in August, but this 0.1% increase is very minimal compared to the 1.8% increase seen in March.
Apparently, this slower growth in property prices has been going on for quite some time. In June, 27.9% of postal districts saw an increase in prices. This percentage dropped to 14.6 in July and dropped even more in August to 9.3%. Buyer confidence is weakening now which will, according to Donnell, create a snowball effect in which the market sentiment will be further underminded followed by weaker levels of demand and ultimately causing the rate of house price growth to become further underminded as well.
A sign of a weaker market is a decrease in the amount of people able to secure the asking price of their home. If this falls below 94%, there will be a greater chance of small month on month falls in underlying prices. The amount of people able to secure the asking price of their home was at a recent high of 95.6%; it has since fallen to 94.9%. With this, if this percentage gets much lower, the UK housing market may be seeing a smaller fall in underlying prices.
In my opinion, the housing market needs to lower their interest rates so that buyer confidence will rise once again and asking prices will be achieved. Increasing the interest rates increases the cost of money, so no wonder no one is buying and everything is at a stand still. They need to revamp the weak market, increase the percentage of postal districts seeing an increase in prices, and lower the average debt servicing costs. Lowering interest rates, however, may cause higher inflation, so a happy medium between interest rates and inflation needs to be reached. Maybe if interest rates were lowered just enough so that the inflation would balance with the rates, then the market can return back to its booming and successful self.
Source: The Guardian (8/27/07)
Link: http://business.guardian.co.uk/story/0,,2156784,00.html#article_continue
As per our discussion in class today with the UK (and US) housing market status, I found it rather fitting to use this article I found on the Guardian online website as my journal entry for the day. According to the article, five interest rate rises in just a year has caused the once booming and successful house-price market to record its slowest growth in twenty months for the month of August. Hometrack, the housing intelligence company, warns consumers of a weaker market in the months to come if nothing is done about this recent slow growth rate in house prices.
Richard Donnell, Hometrack's head of research, reports that the increase in interest rates over the past twelve months has pushed the average debt servicing costs to a fifteen-year high. High interest rates will most likely continue to hinder market activity levels as well as have an effect on house price inflation for the next twelve to eighteen months.
London has been the driving force behind the market boom, but now even this city is faltering. London still recorded a rise in prices in August, but this 0.1% increase is very minimal compared to the 1.8% increase seen in March.
Apparently, this slower growth in property prices has been going on for quite some time. In June, 27.9% of postal districts saw an increase in prices. This percentage dropped to 14.6 in July and dropped even more in August to 9.3%. Buyer confidence is weakening now which will, according to Donnell, create a snowball effect in which the market sentiment will be further underminded followed by weaker levels of demand and ultimately causing the rate of house price growth to become further underminded as well.
A sign of a weaker market is a decrease in the amount of people able to secure the asking price of their home. If this falls below 94%, there will be a greater chance of small month on month falls in underlying prices. The amount of people able to secure the asking price of their home was at a recent high of 95.6%; it has since fallen to 94.9%. With this, if this percentage gets much lower, the UK housing market may be seeing a smaller fall in underlying prices.
In my opinion, the housing market needs to lower their interest rates so that buyer confidence will rise once again and asking prices will be achieved. Increasing the interest rates increases the cost of money, so no wonder no one is buying and everything is at a stand still. They need to revamp the weak market, increase the percentage of postal districts seeing an increase in prices, and lower the average debt servicing costs. Lowering interest rates, however, may cause higher inflation, so a happy medium between interest rates and inflation needs to be reached. Maybe if interest rates were lowered just enough so that the inflation would balance with the rates, then the market can return back to its booming and successful self.
8/19/07
Title of Article: Banks in dark over final cost of credit turmoil
Source: Financial Times (8/19/07)
As we all know, there was a recent financial meltdown within the UK. This article discussed the problems banks now face because of the meltdown. All in all, bank companies are not exactly sure what the damage will be in the coming weeks; they really don't even know what the damage is to date. However, they do know that a big problem is lurking: they are unable to sell their leveraged loans, which means that they might have to mark them down; something they do not want to do, but, if forced, may have to.
According to analyst Howard Mason, the big bank company Citigroup could face up to 20% or 1.5 billion dollars in loses at the end of the quarter; however, Citigroup plans to cushion their huge loss by lowering staff pay. This, in my opinion, could cause tremendous problems. With lower pay, employees will most likely go on strike and create even more turmoil for the bank. A better, more efficient solution to their debt problems needs to be conjured up in order to avoid the impending doom Citigroup will face.
The worst performer over the past month has been Lehman Brothers as their shares have decreased 26%. This may or may not be the case in the coming weeks as sector share prices for all banks are likely to keep fluctuating for quite some time. Only time will tell what will happen to these big bank groups; who will end up on top...and on the bottom.
Since this article was about the turmoil banks may face due to the meltdown, I was puzzled when I came across this statement: "Bear Stearns jumped 13% and Lehman Brothers rose 6%." I don't know if I don't understand this because I have no background in Economics, but why would bank percentages increase at a time of financial turmoil? Also, the article mentioned that Lehman Brothers was the worst performer over the past month so how could their percentage rise? This is something I will definitely need to bring up with you, Professor Shackleford. Maybe you could tell me exactly what this percentage is and what it means for these bank companies.
Overall, I believe all banks will come out of this mess just fine, as long as they don't cause more problems by lowering staff pay or doing anything else of the sort (i.e. Citigroup). Banks can always borrow the money they need from the Fed, get out of debt, and return back to normal functioning. Unless another catastrophic event occurs, I believe we will be reading about the bounce-back banks will be going through in the next few weeks.
Source: Financial Times (8/19/07)
As we all know, there was a recent financial meltdown within the UK. This article discussed the problems banks now face because of the meltdown. All in all, bank companies are not exactly sure what the damage will be in the coming weeks; they really don't even know what the damage is to date. However, they do know that a big problem is lurking: they are unable to sell their leveraged loans, which means that they might have to mark them down; something they do not want to do, but, if forced, may have to.
According to analyst Howard Mason, the big bank company Citigroup could face up to 20% or 1.5 billion dollars in loses at the end of the quarter; however, Citigroup plans to cushion their huge loss by lowering staff pay. This, in my opinion, could cause tremendous problems. With lower pay, employees will most likely go on strike and create even more turmoil for the bank. A better, more efficient solution to their debt problems needs to be conjured up in order to avoid the impending doom Citigroup will face.
The worst performer over the past month has been Lehman Brothers as their shares have decreased 26%. This may or may not be the case in the coming weeks as sector share prices for all banks are likely to keep fluctuating for quite some time. Only time will tell what will happen to these big bank groups; who will end up on top...and on the bottom.
Since this article was about the turmoil banks may face due to the meltdown, I was puzzled when I came across this statement: "Bear Stearns jumped 13% and Lehman Brothers rose 6%." I don't know if I don't understand this because I have no background in Economics, but why would bank percentages increase at a time of financial turmoil? Also, the article mentioned that Lehman Brothers was the worst performer over the past month so how could their percentage rise? This is something I will definitely need to bring up with you, Professor Shackleford. Maybe you could tell me exactly what this percentage is and what it means for these bank companies.
Overall, I believe all banks will come out of this mess just fine, as long as they don't cause more problems by lowering staff pay or doing anything else of the sort (i.e. Citigroup). Banks can always borrow the money they need from the Fed, get out of debt, and return back to normal functioning. Unless another catastrophic event occurs, I believe we will be reading about the bounce-back banks will be going through in the next few weeks.
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