Economic Roundup
Countrywide Financial Corp announced Friday cuts of 20% of its workforce, all in production.
Countrywide Letter to EmployeesYes. Because the fastest way to profitability is to slash support while ramping up sales. Doesn't matter if no one can actually service the accounts of take care of the work. Just sell sell sell.
Unfortunately, the only way to accomplish this is to make significant reductions in our workforce which we estimate to range between 10,000-12,000 employees (which includes reductions that we have already made). As of July 31, Countrywide employed more than 61,000 people. The areas primarily affected will be our production divisions, and the general and administrative support areas of the Company. Areas which we do not expect to be materially impacted by workforce reductions include our banking operations, our insurance businesses and our loan servicing operations, each of which are expected to continue growing in both the short-term and long-term. As noted above, the distributed retail unit of our Consumer Markets Division will continue to aggressively grow its sales force while adjusting its expense structure to the new reality of the marketplace.
Shares of Countrywide rose 19 cents to $18.40 in after-hours trading.
Mortgages.
I've got one. Probably you do also. Thought I understood them. Turns out, not so much. Want to begin to understand the current banking mortgage crisis?
READ Mortgage Origination Channels for UberNerds, from my favorite financial blog, Calculated Risk.
Long, tricky to get through in spots, but I learned more in ten minutes than...well, just go read the bloody thing. Consider it background for owning a home. (I skipped the truly hard part in the middle. Shhh.)
Michael Lewis
The author of Moneyball (wonderful; you'll love the book) brings his own unique take on the sub-prime crisis. *grins*
Yes, it's satire people. Really.
Michael LewisAbsolutely worth reading all of. Trust me. I laughed till people came over and asked me why I was laughing so hard. Then they looked at me funny.
A Wall Street Trader Draws Some Subprime Lessons: Michael Lewis
Sept. 5 (Bloomberg) -- So right after the Bear Stearns funds blew up, I had a thought: This is what happens when you lend money to poor people.
Don't get me wrong: I have nothing personally against the poor. To my knowledge, I have nothing personally to do with the poor at all. It's not personal when a guy cuts your grass: that's business. He does what you say, you pay him. But you don't pay him in advance: That would be finance. And finance is one thing you should never engage in with the poor. (By poor, I mean anyone who the SEC wouldn't allow to invest in my hedge fund.)
That's the biggest lesson I've learned from the subprime crisis. Along the way, as these people have torpedoed my portfolio, I had some other thoughts about the poor. I'll share them with you.
See that big brown bear at the top? Go ahead, click on him and watch him get REALLY BIG. He's from the San Diego Zoo. Nice bear.
The bear has you pegged as dinner. So do the big lending companies. Watch your back.
Start by learning the vocabulary. Which means read Calculated Risk. If your company offers a 401K at least put in up to whatever your company matches, otherwise you're simply throwing away money. Which would make you a sucker. Pay off your credit card debt. Convert your ARM into a fixed if you possibly can, even if it hurts. Pay cash or go with out. Like our grandparents did. Short term pain, long term gain. Big bear.
Tough times are coming. The administration has wrecked the economy; now they're going to run for cover and leave it for the next crew to clean up their mess. They could give a damn about you and neither could the financial companies who hold your markers.
Either the bear eats you or you...well, if not you eat the bear, at least you stay the hell out of its reach.
|