Wednesday, January 21, 2009

Obama Announcements and Wilbur Ross Expects “Horrific” First Quarter…

LOL! Obama, after just spending $150 million on his inauguration party, announces he is freezing/capping top government executive pay (those who make more than $100k)! On the good side, he is placing restrictions on lobbyists – hurray! Those are definitely welcome by me. Like, he says, that anyone who leaves his administration cannot lobby government while he is President – right on, but I would take it even further.

He is also announcing an open information policy, giving preference to those seeking information. He is talking about transparency and rule of law, but let’s see how he applies it to the banks and financial system, eh? Good first measures, I applaud them, but actions speak louder than words, so let’s see them!

Here’s what Wilbur Ross now thinks is likely for the first quarter:

Wilbur Ross Expects ‘Horrific’ First-Quarter Earnings, Job Cuts

By Tom Keene and Zachary R. Mider

Jan. 21 (Bloomberg) -- Wilbur L. Ross, the investor who made billions turning around distressed steel and textile companies, expects “horrific” first-quarter results from U.S. businesses and said the unemployment rate may reach the highest in 26 years.

“Just look at the announcements that have been made about job cuts since the first of the year,” Ross said today in a Bloomberg Radio interview. “You’re going to see unemployment get up toward the 10 percent region.”

The unemployment rate climbed to 7.2 percent in December and companies from oil refiner ConocoPhillips to Advanced Micro Devices Inc., a maker of computer processors, announced plans to cut jobs amid a global credit contraction. The banking industry won’t stabilize until the U.S. finds a way to stop the decline in housing prices, said Ross, who bought a Florida bank last week that he plans to use as a platform for more acquisitions.

The biggest U.S. banks “clearly” will need more government support, Ross said. “Maybe a good thing to do as part of the renovation process is to have them divest of some things so we minimize the danger of systemic failure in the event they get themselves into trouble again.”

Ross said on Jan. 16 he agreed to buy 68.1 percent of First Bank and Trust Co. in Indiantown, Florida. The bank had $83.5 million in assets as of Sept. 30.
The U.S. unemployment rate hasn’t exceeded 10 percent since June 1983, according to Bloomberg data.

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