Will Manchester United Actually Stay With AIG ???

With $150 billion of US government support, there has been intense scrutiny on the insurer’s spending habits, including those bonuses, some of which have now been returned. But AIG has to pay somewhere in between $20 million and $28 million to finish its four-year deal it signed with the team Manchester United in 2006.

The Question is not that how is AIG doing this? But the issue is that whether Manchester United and the owner Malcolm Glazer really cool with sporting these jerseys as they continue their quest to win championships? Actually it’s hard to get a quick sponsorship deal in this environment, but you have to think that it’s worth shelving the embarrassment by paying back the money from the rest of the deal and trying to sign a temporary stand-in.

But what about the ‘Nike’ jerseys which are already in production for next year? As explained by the London Telegraph recently, should AIG change the name to AIU (American Insurance United) would be responsible for the jersey change, but obviously if ManU ditches AIG, or whatever they’ll be called, for a blank jersey or another sponsor they would probably have to pay the bill.

How embarrassing would it be then for ManU to wear the AIG logo on their chests as they try to win the Champions League in Rome in May?

Ref.- Reuters

Credits - Manik Gursahani

Biggest Holders of US Government Debt !!!

As the US government spends an unprecedented amount of money to fix the nation's economy, there is an equally great need to raise the cash to pay for it. This is accomplished through borrowing, whereby ‘US Treasury’ sells Treasury securities of varying maturity.

For investors, the government bills, notes and bonds are considered a safe financial product because they have a guaranteed rate of return, based on faith in future US tax revenues. The government has been partially funding operations via Treasury securities for decades. This borrowing adds to the national debt, which is now above $11 trillion and is rising every day. Much of that debt is held by private sector, but about 40 percent is held by public entities, including parts of the government. Here's who owns the most.

1. Federal Reserve & Intragovernmental Holdings- $4.806 trillion
2. Mutual Funds- $769.1 billion
3. China- $739.6 billion
4. Japan- $634.8 billion
5. State & Local Governments- $522.7 billion
6. Pension Funds- $456.4 billion
7. Other Investors- $413.2 billion
8. Oil Exporters- $186.3 billion
9. Caribbean Banking Centres- $176.6 billion
10. Brazil- $133.5 billion
11. Insurance Companies- $126.4 billion
12. United Kingdom- $ 124.2billion
13. Russia- $119.3billion
14. Luxembourg -$87.2billion
15. US Depository Institutions- $107.3billion

I believe even if 5% holdings of all these entities enters the stock market of this world the volatility of the market will try to smoothen up and it would bring comfort and confidence to the financial market. Every entity being futuristic is still ready to hold and borrow more and more debt from an economy which is said to be the sole cause for this recession.

Ref.- CNBC

Credits - Manik Gursahani

Deflation On Inflation...

In simple layman terms deflation connotes a contraction in the general price levels. As the inflation has fallen to a 30 year low of 0.44 %, which is now turning out to new darker clouds of deflation from inflation on India. The skyrocketing inflation has come to an end for now but had put us into new worrisome shoes in this dis-inflationary environment is a fallout of the drop in commodity prices, rollback in production and weakening demand. Such a sudden and frenzied fall in inflation numbers brings to another worry, namely Deflation.

For general consumers food grain prices are still holding high, vegetable prices have gone down lower on diesel prices. The decline in prices of food articles, fuel and metals has pushed the WPI to strange lows in March, 09. Mainly consumers and manufacturers defer spending, trying to cut production costs by either firing workers or employees which entirely leads to drop in demand and further fall in prices. Deflation has a deep and harsh impact on the economy. As companies are forced to sell their products at reduced prices along with reduce out their margins, which indirectly threatens job loss and pay cuts which is a cause of worry.

There is still a room of scope and joy as the Consumer Price Index (CPI), which is a reflector of retail prices at the end-consumer level, held firm at 10.45%. Along with that Oil prices has again started soaring in international market along with that all time gold prices will bring some respite to the commodities market. Along with that this was just on week figures so deflation has not officially entered Indian Economy. I believe both RBI & Present government won't give easy permission giving out more scope to debt to expand from now onwards for a medium term. So folks don’t panic…..

Credits - Manik Gursahani

Ref. - Business Line

Citigroup: Crisis along with Shake-up

Citigroup, is changing its way significantly. Gary Crittenden as the new Chief Financial Officer, is being made responsible to manage all its underperforming and toxic assets. Crittenden has earned the confidence of the financial community. It is a welcome relief for the firm as they want to release these assets as soon as possible.Gary Crittenden along with Vikram Pandit wants to live with the dream to restore the third-largest U.S. Bank even after $38.5 billion in losses over five quarters.

Citigroup is also involved in some financial gymnastics to raise its sunken share price. Citigroup is planning a reverse stock split-equivalent of giving $10 billion to its investors in exchange for split. This lead to a short term rally in the share price of Citigroup since the beleaguered company is earning profits in the first two months of this year. To my view this won’t make a significant change in its fundamental outlook for the company. In financial terms a reverse stock split reduces the number of shares outstanding and therefore the share prices also increases proportionately. This financial housecleaning will also help in the bailout plan to go smoothly.

Credits : Manik Gursahani