Saudi Arabia and its Gulf neighbors have given their biggest vote of confidence yet to the dollar, saying they will keep their currencies pegged to the underperforming greenback for the foreseeable future, the New York Times reports. "The peg is here to stay, no ifs or buts," Muhammad al-Jasser, vice governor of the central bank, the Saudi Arabian Monetary Agency, told the NYT. Al-Jasser oversees the financial management of Saudi Arabia's soaring dollar reserve base, the NYT points out, providing valuable reassurance, indeed, despite clamor from the likes of Alan Greenspan and, no doubt, everyday Saudis struggling under double-digit inflation to latch on to a stronger currency.
Al-Jasser's unwavering support is being rewarded in early trading Tuesday. The dollar approached a six-month high against the euro and a two-year high against the pound sterling, the BBC reports.
Credit market fears, higher oil prices, dollar weakness, and the poor health of the global economy all contributed to Monday's broad losses on U.S. markets, the Financial Times and CNNMoney report. All major U.S. indexes were down at least 2 percent on Monday, leading pundits to again ask if last month's rally was a mirage. "Lately people are realizing that there may be a whole other leg of this credit market fallout that they haven't anticipated yet," Lee Schultheis, chief investment strategist at AIP Funds, told CNNMoney.
The Wall Street Journal reckons it will take a recovery in home prices before the markets show any sign of sustained recovery. "I don't think you have to see prices go up, just some stabilization so we know the home-price declines aren't continuing to get out of hand," Keith Hembre, chief economist at mutual-fund firm First American Funds in Minneapolis, told the WSJ. "Looking out at least a couple of quarters, though, I just don't see that happening."
The list of shaky U.S. banks placed on probation by federal regulators continues to climb, the WSJ reports, just hours before the Federal Deposit Insurance Corporation is expected to update its list of "problem" institutions. How do you know if your bank is on probation? You probably won't—until it's too late. At-risk banks are slapped with a memorandum from regulators that they are not required to disclose, the WSJ explains. And "federal regulators haven't disclosed more-serious enforcement actions against banks until after those banks have failed." The WSJ executed a Freedom of Information Act request to get the details from regulators for the article. They named a few tottering banks such as First Private Bank & Trust in California and National City in Ohio.
The WSJ's probe shows the roster of troubled banks is growing longer by the week. In 2008, there are already more banks on probation than in all of 2007, the newspaper says. "The FDIC had 90 banks on its list March 31," the WSJ reports. "There have been five bank failures since July 11, and many other banks are considered at risk by regulators." Indeed. Business Week reports the number of failed banks actually stands at nine after Kansas' Columbian Bank and Trust Co. closed its doors last week.
Big banks, too, continue to feel the pinch. Swiss banking giant UBS is planning to cut its wages for staff by a staggering $4 billion this year, the FT reports. UBS is the biggest casualty among European banks in the U.S. credit crisis, the paper points out, having written down $43 billion in losses from investments tied to America's sinking housing market. The staff exodus from UBS has been mammoth in the past 12 months: 2,600 staffers (or 12 percent) have left, and UBS aims to shed at least another 450.
Citigroup is also making some expensive cuts. On Monday, it eliminated an executive committee headed up by former Treasury Secretary Robert Rubin, Bloomberg reports. Rubin, who turns 70 this week, will get a title change amid the shuffling. He loses his chairman of the executive committee title in favor of a blander "senior counsel," Bloomberg reports. The move wasn't entirely unexpected. As the WSJ points out, Rubin "has taken a hefty share of criticism from investors as Citigroup has reported tens of billions of dollars in losses and write-downs amid the mortgage and credit crises. Citi didn't disclose Mr. Rubin's 2007 pay in the latest proxy. But in the previous several years he made about $17 million a year, including salary, bonus and stock."
The bicycle rickshaw: A vehicle for touristic amusement or a viable form of urban transportation? The WSJ poses this thoughtful question about the future of the bike taxi in American cities through its profile of Steve Meyer, Denver's pedicab king, as he tries to push his agenda for pedal power during this week's Democratic National Convention. Market forces are already at work. Denver's pedicab operators can bring in $700 on a good night, and even $30 an hour on a slow shift. And this week, with so many suits in town? "I think the lobbyists are going to be good tippers," veteran bike cabbie Jake Bradney tells the WSJ. "I'm not so sure about the Democrats."