Generali's Thread of Doom

Generali

Fresh woes at AIG:

http://dealbook.blogs.nytimes.com/2009/02/23/aig-to-seek-more-government-aid/?ref=business

one thing the New York Times omits from its article is that if AIG's book value drops much more, it will trigger debt covenants meaning it has to repay some of its debt immediately. AIG can't afford to do that.

Citibank to be Nationalised?:

link

Citigroup's road to nationalization

A push by the government to convert its stake into common stock could push Citi closer to nationalization. But what happens after will define the fate of the firm.

Royal Mail Pension Scheme deficit is over GBP 5,900,000,000:

http://news.bbc.co.uk/2/hi/business/7906820.stm

The Royal Mail pension fund deficit is "significantly larger" than the £5.9bn in the Hooper Review, according to its trustees, in a letter seen by BBC News.
Current government proposals involve the bigger-than-expected shortfall being funded by taxpayers.

Queensland debt downgraded:

http://www.bloomberg.com/apps/news?pid=20601081&sid=aotuFcHl38Y0&refer=australia

S&P downgraded Queensland and Queensland Treasury Corp., citing the state’s large spending program and a “significant decline” in operating revenue.

Hmmmm, large spending program and declining revenue. Remind you of anywhere?

IMF running out of cash:

http://www.ft.com/cms/s/0/bc7aa41c-01e0-11de-8199-000077b07658.html

Source of extra IMF funds unclear

The EU’s backing at the weekend for a campaign by the International Monetary Fund to double its resources will have been welcomed at the institution’s headquarters in Washington, where its limited resources are rapidly flowing out to troubled governments around the world.

It looks like the IMF might have to issue Special Drawing Rights, in effect printing money.

Thai GDP Down 6.1%:

http://www.ft.com/cms/s/0/2c0dc42a-0160-11de-8f6e-000077b07658.html

Thailand on Monday unveiled dismal new figures showing that the economy shrank by a seasonally adjusted 6.1 per cent in the fourth quarter of 2008. Economists said there was every indication that the economic situation would get worse before it got better.

Oh well, over to Ian Dury:

http://www.youtube.com/watch?v=rD9AFG1GdgI

Snooze

:eek: I hope you've got your suit of armour ready for !!!!!!?/carolt type insult onslaught in the morning when they all see this!!!

Rob

Generali

Snooze wrote: »

:eek: I hope you've got your suit of armour ready for !!!!!!?/carolt type insult onslaught in the morning when they all see this!!!

Rob

I have my flame proof suit at the ready.

Snooze

In fact there's that much doom-mongering concentrated in one place that this could be what start the riots !!

:eek:

Rob

Generali

Snooze wrote: »

In fact there's that much doom-mongering concentrated in one place that this could be what start the riots !!

:eek:

Rob

That's just a fraction of what's going on - I could fill a page with bad news on pensions alone.

globalds

Generali wrote: »

That's just a fraction of what's going on - I could fill a page with bad news on pensions alone.

Aren't the pensions the only thing buying in the stock market now ..If it goes up they will boom

Generali

globalds wrote: »

Aren't the pensions the only thing buying in the stock market now ..If it goes up they will boom

It's true.

Unfortunately, we look like we're going to have a bit of a problem. Most companies have shortfalls in their defined benefit pension schemes and at some point they will have to plug the gap. As they can't borrow right now, that'll have to be done by cutting the dividend. That makes a problem for all the other funds and it becomes self fuelling cycle.

globalds

Time to change some of the rules on funding for pensions.
The value of stocks seems an odd way of valuing pensions ..Stocks up ..Don't need to pay ...Stocks down ...Huge deficits .
Someone has been using Peter to give bonuses to Paul and regulation should have been in place to stop this.

Generali

globalds wrote: »

Time to change some of the rules on funding for pensions.
The value of stocks seems an odd way of valuing pensions ..Stocks up ..Don't need to pay ...Stocks down ...Huge deficits .
Someone has been using Peter to give bonuses to Paul and regulation should have been in place to stop this.

The trouble is, what do you replace it with? At least if you value the assets at the current market price you can point at something and show a good reason for valuing a certain asset the way that you do.

globalds

without the assets being crystallised regularly then the value is not the reliable

Generali

globalds wrote: »

without the assets being crystallised regularly then the value is not the reliable

It's a fair point but I just don't see what you replace it with. You can't just hold assets at the price you bought them at. The losses on bank shareholdings for example are very real - it wouldn't be realistic to hold LLOY on your books at 11 or 12 quid/share.