The Good, The Bad and The Ugly

First some reasonably good headline news:

• The ECB cut its interest rates by 50 basis points to 1.5%.  The Bank of England also cut rates to nearly zero and said it will purchase $211 billion in government and corporate bonds.
• Wal-Mart's same-store sales soared by 5.1% last month, besting estimates.  At least consumers are buying something even if it is just bread, milk, bars of gold and guns.
• Jobless claims actually fell by 31,000 to 639,000, although the four-week average rose 2,000 to 641,750.  Continuing claims also slid 14,000 to 5,106,000, which is still very high, but down is better than up.  Brace yourselves for tomorrow's employment report.
• Andrew Cuomo has subpoenaed several Merrill executives who sucked more than $10 million a piece out of the dead carcass before it was handed over to sink Bank of America.  

Some Bad News:

• Barclay's is probably not too thrilled about being asked by Lehman's liquidators to explain what it did with $3.3 billion that was earmarked to pay bonuses and other liabilities when Barclays acquired Lehman's North American investment bank.  Apparently, not all of the money was paid out and the liquidators at Alvarez and Marsal are doing trying their best to recover as much as they can for Lehman's creditors.
• Here's a shocker:  GM's auditors say there is substantial doubt about the automaker's ability to remain a going concern.  
• The difference between the values of loans being carried on the books of our largest banks and the actual fair value of those loans is rather large.  In some cases, if banks were required to mark their loans to market, shareholder's equity would drop below zero.  This gets at the heart of the whole solvency issue of our banks which continues to plague the bank stocks.

And the ugly:

• GE's stock continues its steep decline as the confidence crisis continues.  The credit default swaps on the company's finance arm are trading at highly distressed levels.  Regular readers know that I have been warning about GE's balance sheet since I launched this blog a year ago, in pieces such as "What's Behind the Curtain at GE?" and most recently "Why is GE Still Paying a Dividend?" (not anymore.)  The company relied too much on short-term debt to finance a huge investment portfolio of god knows what (also labeled as "other" on its balance sheet.)  I suppose this kind of accounting used to fly a year ago, but no more.  Investors have woken up, demanded clarity, and want answers.  GE's protestations about everything being peachy are not being met with enthusiasm any longer.