Washington Mutual falls...
I was surprised to learn on Wikipedia's In the News section, on the front page, that Washington Mutual has collapsed. Apparently the FDIC took over the bank earlier in the week when it had learned that customers had removed nearly $17 billion in assets in the previous week after WaMu's credit rating had been downgraded considerably.
http://en.wikipedia.org/wiki/List_of_bankrupt_or_acquired_banks_during_the_subprime_mortgage_crisis This is incomplete as there are a couple of small banks that have failed during this time as well. First National Bank of Arizona failed in July, and most of its accounts and assets are part of Mutual of Omaha Bank (along with three other banks across the West it acquired at the same time).
This is on top of Northern Rock (UK bank that failed a year ago), Bear Sterns (an assets or investment bank, not a "deposit" bank), IndyMac Bank (lending bank, failed in July, was part of Countrywide Financial). The financial institution I'd be worried about is JP Morgan which stepped in twice to buy Bear Sterns (for $10/share or $1.1 billion), and Washington Mutual (most accounts except for $1.9 billion), while they have been given a nice break from the Federal Reserve in the form of a non-recourse loan of $29 billion, this loan if they default will only deal with the loss of the collateral in the form of the commercial real estate and mortgage debt JP Morgan acquired from Bear Sterns, if the value of the collateral is less than the loan, the Fed will be stuck with the loss.
All this action with the Subprime mortgage crisis is having a huge effects with Target, as it has the Board of Directors in a panic. In an effort to cut spending, Target has implemented a strict no overtime policy which likely will be extended through Christmas (I possibly believe even through 2010), they've been cutting salaried positions company wide, two that will be removed is Assets Protection (the people that watch the cameras and prevent stealing) in February 2009, duties of AP will be transferred to other salaried positions; and Building Services (in store and district level maintenance crew) as this past week most in this department were offered severance packages.
I've also been seeing massive price inflation on basic goods at Target, while I have been seeing small amounts at other stores as well, its particularly bad at Target, in 6 months, the price of canned fruit has jumped 50 cents (from $1.19 to $1.67), most of their grocery line has experience similar price jumps, including a doubling price increase on certain frozen foods. Target is also cutting the number of store brand items to save money as the production cost cannot be guaranteed for more than a year or so, and any sudden production cost increase erodes the margin that the retailer uses to leverage its earnings.
-- John O'Hara
http://en.wikipedia.org/wiki/List_of_bankrupt_or_acquired_banks_during_the_subprime_mortgage_crisis This is incomplete as there are a couple of small banks that have failed during this time as well. First National Bank of Arizona failed in July, and most of its accounts and assets are part of Mutual of Omaha Bank (along with three other banks across the West it acquired at the same time).
This is on top of Northern Rock (UK bank that failed a year ago), Bear Sterns (an assets or investment bank, not a "deposit" bank), IndyMac Bank (lending bank, failed in July, was part of Countrywide Financial). The financial institution I'd be worried about is JP Morgan which stepped in twice to buy Bear Sterns (for $10/share or $1.1 billion), and Washington Mutual (most accounts except for $1.9 billion), while they have been given a nice break from the Federal Reserve in the form of a non-recourse loan of $29 billion, this loan if they default will only deal with the loss of the collateral in the form of the commercial real estate and mortgage debt JP Morgan acquired from Bear Sterns, if the value of the collateral is less than the loan, the Fed will be stuck with the loss.
All this action with the Subprime mortgage crisis is having a huge effects with Target, as it has the Board of Directors in a panic. In an effort to cut spending, Target has implemented a strict no overtime policy which likely will be extended through Christmas (I possibly believe even through 2010), they've been cutting salaried positions company wide, two that will be removed is Assets Protection (the people that watch the cameras and prevent stealing) in February 2009, duties of AP will be transferred to other salaried positions; and Building Services (in store and district level maintenance crew) as this past week most in this department were offered severance packages.
I've also been seeing massive price inflation on basic goods at Target, while I have been seeing small amounts at other stores as well, its particularly bad at Target, in 6 months, the price of canned fruit has jumped 50 cents (from $1.19 to $1.67), most of their grocery line has experience similar price jumps, including a doubling price increase on certain frozen foods. Target is also cutting the number of store brand items to save money as the production cost cannot be guaranteed for more than a year or so, and any sudden production cost increase erodes the margin that the retailer uses to leverage its earnings.
-- John O'Hara