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Macro chatter: Greece could get alimony in euro breakup

Around the world in business: Greece could get a big alimony check if it breaks up with the euro zone, and it may soon be time for a "You're Sued" Facebook button.
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(Ian Waldie/Getty Images)

Need to know:
If Greece does break up with the euro zone, it can expect a $63 billion alimony payment.

While European officials would really like Greece to play by the rules of its bailout and stay in the euro zone, they’re planning for an amicable divorce just in case things don’t work out, Reuters said. The money would be aimed at easing the pain of a Grexit.

Greece expects to run out of cash in a couple of months. Fellow euro zone members are worried about what that could do to their own economies, so they just might be willing to play along with EU and IMF to pave the way for a friendlier split. 

Want to know:
Facebook’s been public for less than a week, and it’s already gotten itself sued. This of course just tops off what’s been a really tough week for a company that just held a hackathon to celebrate raising $16 billion.

Facebook’s shareholders are suing the company and its lead underwriter Morgan Stanley for allegedly hiding weakened growth forecasts ahead of the Facebook IPO. Shareholders claim Facebook told underwriters to lower their forecasts for the company and that those underwriters disclosed that information only to preferred clients.

While the Facebook saga has taken some of the spotlight off of JPMorgan, shareholders have dragged it into the Facebook mess as well. It and Goldman Sachs also are among the underwriters being sued.

Facebook’s stock price is down nearly 20 percent since its IPO Friday. That isn’t unusual for an tech IPO, but combined with Facebook’s trouble monetizing mobile, unproven business model, it’s got some investors really worried.

Dull but important:
Greece may be causing a lot of trouble around the world, but it has managed to help bring the price of crude oil futures below $90 a barrel for the first time since November.

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Zuck disclosed his wedding better than Facebook disclosed its financial prospects

Facebook wants you to share the details of your life but may have been a little more selective about what it told its own investors ahead of its outsized IPO.
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This photo was taken pre-IPO in Paris. (JOEL SAGET/AFP/Getty Images)

For a company that urges users to share the details of their lives with friends and far flung strangers, Facebook, as Heidi Moore points out in the Guardian, did a really bad job of monitoring its own privacy settings.

Mark Zuckerberg's timeline may have scooped The New York Times in announcing  his wedding and $1 billion Instagram acquisition, but the paper was among those revealing another Facebook bombshell: that the company's executives may have told select analysts about a coming earnings disappointment.

The analysts were reportedly able to tip off large investors, helping them get out profitably before Facebook's share price started tanking. Small investors, who may have heard about Facebook's pending acquisition of Instagram through a status update from Zuckerberg, were forced to decipher what Moore describes as "a vague blurb" in an SEC filing. 

Facebook simply failed at figuring out "who should know what," Moore wrote.

A status update shared with such a limited list could violate US securities laws, but the company may have decided its Wall Street friends and its own fortunes were worth more to it.

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Macro chatter: Facebook's Zuckerberg sued for being unfriendly to investors

Around the world in business: Illusion or reality edition — US home price increases may not be as good as they look, and Facebook doesn't look as nearly as good to investors as it did at this time last week.
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Foreclosure sales are so popular in some states, that there aren't enough foreclosures to sell, the National Association of Realtors said. (Justin Sullivan/Getty Images)

Need to know:
A big jump in US home sale prices may not signal as big a turnaround for the housing market as it may appear.

The National Association of Realtors said the median sales price for an existing home in the US climbed to $177,400 in April. That’s up 10 percent for the year, but CNBC pointed out prices rose because a smaller number of more expensive homes were sold.

Fewer heavily discounted distressed properties were on the market, and that pushed up median sale prices.

If distressed properties that are being held back were to creep back onto the market, price gains could be erased, CNBC said.

Want to know:
Facebook’s friends list might be shrinking.

The company behind the world’s biggest tech IPO is suspected of tipping off certain Wall Street banks to its financial problems while leaving many investors in the dark. Several state and federal regulators including the SEC, are sniffing around, the New York Times said.

Meanwhile, Facebook and Morgan Stanley are being criticized for their handling and pricing of the social network’s big deal. Facebook went public at $38 a share on Friday, but prices have pretty much been sliding since. And the lawsuits have begun. 

Facebook CEO Mark Zuckerberg and the banks leading the company's IPO have already been sued by shareholders claiming they hid weakened growth forecasts from investors ahead of Facebook's IPO, Reuters reported

Dull but important:
India’s rupee just can’t seem to get ahead.

The Indian rupee slid to an all-time low against the US dollar for a again Wednesday, marking the sixth record decline in as many trading days for the Indian rupee. Europe’s debt crisis and India’s slowing growth rate and widening trade deficits are driving down the rupee’s value, Agence France-Presse said.

Indian oil importers demand for US dollars to hasn’t been helping the Indian currency. 

Just because:
Spanish workers are increasingly turning to jobs in the underground economy to stay afloat financially.

The latest video in GlobalPost's On Location video series takes you to Barcelona where Spaniards faced with steep unemployment are looking for informal jobs that save them from having to pay government taxes. 

For some Spaniards, these jobs have become a protest against the government's management of the Spanish economy. 

Spain is going through its second recession in recent years, and that's driving already high unemployment up even more.

Strange but true:
Wanna cut your debt payments in half? Buy 100 iPads. Or at least that’s how it’s worked out for Greece.

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Macro chatter: Tough Tuesday for Facebook and JPMorgan

Around the world in business: China doesn't need Wall Street, but Facebook and JPMorgan could use a boost from the stock market.
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A Jeep Grand Cherokee on display at the 2012 Washington Auto Show in Washington, DC. Jeep's Grand Cherokee is especially popular in China even though it can cost nearly $190,000 to drive home. (Karen Bleier /AFP/Getty Images)

Need to know:
Sorry Wall Street, China doesn’t need you to buy US debt anymore.

For nearly a year, China’s central bank has been able to buy Treasury securities directly from the US government, Reuters reported.

Every other central bank in the world has to go through a Wall Street bank. But China is a big time Treasury buyer. China owns more US Treasury debt than any other foreign government in the world, a distinction that has earned it the privilege to skip Wall Street on the way to the US Treasury.

China isn’t cutting out the middleman to save a few bucks but instead is trying to shield its bidding habits from banks that could try to exploit its positions, Reuters said.

China still has to go through Wall Street to sell US Treasuries.

Want to know:
Mark Zuckerberg and Priscilla Chan’s Parisian honeymoon has to wait as the Facebook founder and CEO deals with some “business stuff” at home, The Daily reported.

That “business stuff” isn’t pretty.

Facebook’s share price dropped 11 percent on the social network’s second day of trading after barely eeking out a gain on Friday. Bloomberg said the fall was enough to bring down the value Zuckerberg’s personal Facebook fortune by more than $2 billion, but the slide probably isn’t the only thing on Zuckerberg’s mind.

Questions about Facebook’s revenue model are bubbling up, and financial industry regulators are investigating a series of botched trades on the company’s first day on the Nasdaq.

Dull but important:
JP Morgan’s $2 billion trading loss is probably more like a $7 billion trading loss, CNN Money said, citing unnamed sources on the bank’s derivatives trading desk.

JPMorgan’s losses are expected to climb if global stock markets continue suffering.

JPMorgan shares have dropped nearly 20 percent since the company announced its trading debacle. The company also has suspended plans to buy back a chunk of its stock.

Just because:
The US Supreme Court has said twins conceived through in vitro fertilization after their father’s death cannot claim his federal survivor benefits, Agence France-Presse reported.

Karen Capato gave birth 18 months after her husband died of cancer using sperm the pair had frozen before his diagnosis. The twins were not mentioned in the man’s will and were therefore ineligible to collect benefits from the US Social Security Administration under state law.

More people have been seeking Social Security benefits for children conceived after a parent’s death, AFP said.

Strange but true:
It costs nearly $190,000 to buy a 2012 Jeep Grand Cherokee SRT8 in China where the Jeep brand is so popular that nearly 1,500 stores are licensed to sell its apparel.

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Macro chatter: Love 'em or leave 'em edition — Zuck weds, G8 stands by Greece

Around the world in business: Yahoo's letting go of Alibaba. The G8 is standing by Greece, and Mark Zuckerberg pulled off a surprise wedding the day after Facebook's IPO.
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The wedding photo the couple released on Facebook when updating their life events. (Facebook)

Need to know:
Yahoo is halfway out of the Alibaba business.

Yahoo has agreed to sell half its stake in the Alibaba Group for $7.1 billion. Yahoo has been working on the deal for about a year, the Los Angeles Times said.

It’s unclear whether Yahoo will use proceeds to pay dividends, make an acquisition or for a share repurchase, the paper said.

Yahoo plans to sell the rest of its stake in the company back to Alibaba in the future.

Want to know:
The day after taking his company public in the biggest ever US tech IPO, Facebook founder and CEO Mark Zuckerberg on Saturday married his college sweetheart in the backyard of their Palo Alto home.

Naturally, Zuck and Priscilla Chan, who also graduated from med school last week, announced their marriage by updating their life events on Facebook. Chan was listing Zuckerberg’s mother as her mother-in-law as early as Friday.

The pair won’t spill the beans on whether they signed a prenup, Reuters said

Regardless, Zuckerberg likely isn’t enjoying a relaxing honeymoon. Facebook shares were sliding Monday after barely closing above their $38 IPO price Friday. 

Dull but important:
The G8 has spoken, but that doesn’t mean the euro zone is going to listen.

The G8 this weekend said it wanted to see Greece stick with the euro, but Germany doesn’t seem to like that approach. Germany has been pushing for austerity, and Greece has been unable to control its budget in line with deals it made to receive government bailouts.

One BNY Mellon analyst told Reuters the G8 was “powerless” to stop a Greek exit from the euro zone.

Just because:
You’ve heard about people pulling their money out of Greece’s banks, but GlobalPost’s Ken Maguire has the story of the Greeks who remain committed to their banks.

“If everybody takes their money, the economy stops,” Nikos Charakaidis and his wife Magda Verouli told Maguire. The couple keeps their $13,000 nest egg a Greek bank as a matter of principle.

Greeks have been drawing down their accounts as the Greek financial crisis has intensified. Last week, the Wall Street Journal reported Greece’s account holders withdrew about $900 million on a single day.

Strange but true:
You may soon be able to kiss your mouse goodbye.

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Time Magazine spoof of the week: Breast-feeding and your iPhone

Sometimes a picture does say it all. Take that, Time Magazine.
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Time's controversial cover of a mother breastfeeding her 3-year-old son has stirred up controversy. (Martin Schoeller for Time Magazine/Screengrab)

Of course you've seen this now-famous Time Magazine cover, and are probably aware of the controversy it stirred up this week.

Here's how GlobalPost's Talia Ralph explained the provocative shot, which accompanied a Time cover story that examined the phenomenon known, quite colorfully in the case here, as "attachment parenting":

"The cover — which was released ahead of mother's day this Sunday — depicts Jamie Lynne Grumet, a 26-year-old mother based in Los Angeles, wearing a pair of jeans and a blue tank top, which she has pulled down to nurse her son. Both Grumet and her child are standing, with him on a small wooden chair to reach his mother's breast."

"Are you Mom enough?" Time blared.

Now behold the best parody of the week, courtesy of BuzzFeed contributor Leslie A. Wood.

It brilliantly manages to skewer Time, Apple, as well as our collective business and cultural obsession with everything iPhone, in one simple cartoon:

Follow Leslie on Twitter.

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Macro chatter: Facebook — more valuable than McDonald's Citigroup and Amazon

Around the world: It's Facebook IPO day, but one Facebook co-founder may never get to logon from the US again. The Federal Reserve Board gets a couple of new faces, and one Georgia teacher has found a way to make teaching kindergarten very profitable.
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Facebook CEO Mark Zuckerberg delivers a speech at the Facebook f8 Developer Conference at the San Francisco Design Center in San Francisco on Sept. 22, 2011. (KIMIHIRO HOSHINO/AFP/Getty Images)
p>Need to know:
US Fed Chairman Ben Bernanke won’t be lonely much longer. The US Senate has finally moved to fill the last two open spots on the Federal Reserve’s Board of Governors.

The Senate Thursday approved Obama administration nominees Jeremy Stein and Jerome Powell, clearing the way for the Fed to have a full board of governors for the first time since before the financial crisis.

Stein is a Harvard economics professor who has held positions in both the first Bush administration and the Obama administration. Powell’s background is in private equity. He also was a Treasury undersecretary in the first Bush administration.

Want to know:
Facebook is about to become the largest tech IPO in history.

Facebook could raise more than $18 billion from its initial public offering, a figure that gives it a valuation of about $104 billion. That makes Facebook more valuable than McDonald’s, Citigroup and Amazon.

Facebook shares are expected to begin trading on the NASDAQ this morning under the symbol FB. They’re expected to get a LOT of likes.

To find out more about the people getting really, really rich from the deal click here.

Dull but important:
Europe’s banking troubles keep getting worse.

Banco Santander, the largest in the euro zone, is among 16 Spanish banks Moody’s downgraded Thursday. Spain is in a recession and its banks have been pummeled by a property market that came crashing down a few years ago.

Moody’s earlier this week downgraded 26 Italian banks, and Greece has seen its banking customers withdrawing their funds as the country’s political future remains unclear.

Greece’s problems are expected to be front and center at this weekend’s G8 meeting in Camp David.

Just because: 
Eduardo Saverin, the Brazilian born Facebook billionaire who decided to renounce his US citizenship has gotten in the crosshairs of US lawmakers.

New York Sen. Chuck Schumer accused Saverin of defriending the US. He and another Democratic senator have introduced legislation that would ban expats like Saverin from the US.

Saverin meanwhile told Bloomberg he didn’t renounce his US citizenship because he wanted to avoid taxes on his Facebook windfall but instead because he wanted it to be easier for him to do business in Singapore, where he now lives. Of course, his being banned from the US could make for some unhappy Saverin family gatherings. Saverin’s parents and siblings live in Miami.

Strange but true:
Teaching kindergarten may not pay well, but selling kindergarten lesson plans does.

One Georgia kindergarten teacher has earned $700,000 by selling her lesson plans online, Mashable reported. Deanna Jump has been selling her lesson plans on Teachers Pay Teachers, an ecommerce startup that connects educators with one another.

The site has 700,000 registered users, and its teachers have earned a combined $7 million by selling lesson plans on the site so far. Lesson plans usually sell for $5 to $10 each, but many are available for free.


 

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Private equity, profits and aggressive dentistry

Bloomberg reveals how Wall Street is making a buck off "dental abuse." Is your doc complicit?
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A robbery in progress? (John Moore/Getty Images)
Bloomberg has published an article today that you just have to read. It starts with a mom in Arizona picking up her 4 year old after school, only to learn that a dentist had installed steel crowns on two of his back teeth — "pulpotomies" according to a note in his backpack. Baby root canals. The mother hadn't even been consulted. "I was absolutely horrified," No, this wasn't Marathon Man. So why this aggressive act of dentistry? It was about money. Profits. Private equity. Bloomberg explains:
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Macro chatter: ECB cuts off Greek banks, Pinterest is worth more than Instagram

Around the world in business: Greek banks are having trouble with the ECB. JP Morgan gets sued over its $2 billion loss, and Pinterest is Silicon Valley's latest billion dollar baby.
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People walk outside an Alpha bank branch in Athens on April 19, 2012. Greek banks have been coming under increased pressure this week as consumers have been draining their accounts. (ARIS MESSINIS/AFP/Getty Images)

Need to know:
A tough week is getting tougher for Greece’s banks. The ECB has cut off Greek banks it doesn’t consider solvent, Reuters reported

The European Central Bank isn’t the only one who has lost faith in Greece’s financial institutions. Greeks have been draining their accounts and pulled nearly $900 million out of the country’s banks in the past 10 days. 

Greece has been struggling to form coalition government after it elected new leaders earlier this month. A new election is planned for June.

Meanwhile, World Bank President Robert Zoellick warned a Grexit could become really ugly for Spain and Italy as well. A Greek departure from the euro is believed to have the potential to trigger a ripple effect reminiscent of the 2008 collapse of Lehman Brothers.

Reuters said customers in Spain have already started pulling euros out of their accounts at Bankia, Spain’s fourth largest bank and the recent recipient of a Spanish government bailout. Spain also has officially slipped into a recession.

Want to know:
Pinterest
is the latest billion baby to emerge out of Silicon Valley.

The fast-growing social networking site has raised an additional $100 million from investors and now has an estimated value of $1.5 billion, the Wall Street Journal said. Pinterest allows users to collect and share images and links using virtual pinboards.

In less than a year, Pinterest has gone from being a site of one million users to a site of 20 million users and one of the fastest-growing stand-alone websites comScore has ever tracked. 

Pinterest can be so addicting that a pinboard titled Pinterest Addiction already has more than 5,000 followers.

Dull but important:
The Fed on Wednesday gave the world a peek inside its top policymakers’ heads, or at least into what they were thinking when they last met a few weeks ago.

At its most recent policy meeting in April, “several” members of the Fed’s policy-setting committee were thinking the central bank might have to do more to get US out of its growth slump. That’s up from a “couple” in March and is intensifying speculation over whether the Fed will launch another round of bond buying.

A Reuters poll said 30 percent of economists now expect the Fed could embark on another of quantitative easing.

Key interest rates are already as low as the Fed can taken them, and the US Federal Reserve is keen on keeping them there into 2014.

Just because:
As if the trouble it has gotten itself into with the Feds isn’t enough
, JPMorgan’s got more trouble, this time with its shareholders.

JP Morgan shareholders have filed two lawsuits for taking excessive risk against the bank. JPMorgan last week revealed it had loss at least $2 billion making trades on its own behalf this quarter.

The FBI, SEC, DOJ, the Federal Reserve and Congress already are investigating and a handful of high-paid people are out of jobs so far

Strange but true:
It turns out a pair of rather unattractive shoes endorsed by Kim Kardashian really can’t work miracles on your legs and butt.

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Greek crisis: Bank runs and the ghost of the Great Depression

Ordinary Greeks are pulling money from banks. Is history repeating itself? Bone up with this awesome Milton Friedman video.
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A man peers from the door of the Bank of Greece marked with an A for anarchy on December 7, 2009. (Louisa Gouliamaki/AFP/Getty Images)

Bank runs.

There aren't many words in economics that provoke as much fear and unease.

That terrifying specter looms in Europe, as we learned yesterday that depositors in Greece withdrew almost $900 million from the country's banks on Monday.

The trigger: the ongoing euro crisis made worse by Greece's rapidly deteriorating political mess, and the growing possibility of Greece leaving the euro zone — or what economists with verbal flair call a Grexit.

That giant pile of withdrawn cash comes from regular Greek citizens, as well as buy orders from Greek banks for German bunds, according to Greek President Karolos Papoulias.

Papoulias also warned of "a great fear that could develop into a panic," as reported by Reuters.

The one-day withdrawal arrives as Greeks have already been pulling their money from banks at a rapid clip.

Outflows from bank deposits have averaged between $2.5 billion and $3.8 billion per month so far this year, though as the Wall Street Journal reports, that number topped $6 billion in January.

So what does all of this mean? And how worried should the rest of us be?

To be sure, what's happening in Greece is troubling. But most analysts are downplaying the immediate fears.

"We have witnessed periods of tension before when the banks experienced large outflows. In my view, the majority of people with these concerns would have done so by now," Alex Tsirigotis, Greek banks analyst at Mediobanca told the Telegraph

But the possibility of panic means that the Greece crisis is, of course, serious and growing ever more so.

The failure of the Greek government to form a new coalition this week — combined with the split across Europe about the purported benefits and painful downsides of austerity, as well as this week's new leadership in France — represents a possible turning point in the future of the euro.

When ordinary citizens start pulling money from banks, it is cause for concern.

That's because confidence is the whole game in economics, no matter where you live: Consumers need it to spend. Banks need it to make loans and borrow for investments. Business owners need it to hire new workers and buy new equipment. Investors need it. We all need it.

Bank runs are so unsettling because they represent the Hobbesian view of economics where each person is out for himself or herself, driven by fear, panic and naked self-interest.

Of course, bank runs also have a dark history in economics that rattles the amygdala.

In fact, they played a key role in one of the most grim moments in economic history — the Great Depression.

Because humans have a short memory — particularly when it comes to complex matters like banking and economics — this seems like a good moment to review that past.

Here's the nutshell version:

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