The financial news these days is coming pretty hard and fast. The latest is that the Federal Deposit Insurance Corporation’s website is reporting that Washington Mutual has been sold to JP Morgan chase and its deposit accounts transferred (here). Multiple news sources are reporting that Chase will pay $1.9 billion and will take over many of Washington Mutual’s branches and other assets (1,2).
There has been a lot of contradictory information in the press these days, but the stock is currently trading at .45 cents a share. This suggests that Washington Mutual bank has been effectively wiped out.
Just wanted to add a quick posting. Today I picked up about 80 shares of Citigroup. If you’re not familiar with it, Citigroup is one of the worlds largest banks (1).
Why did I buy? Because its well globally well diversified, it should be a good position to capitalize on changing market conditions in the financial sector. Also, Citi’s management has been aggressive about limiting the financial impact of the subprime crisis on its bottom line. More importantly, the company is trading at an attractive 19 dollars a share, so it seems a good value.
Are there some downsides? Of course, the US is a recession. This means that pretty much all of Citigroups core businesses are going to be under pressure. Also there is still the potential of further write downs due to their exposure to sub prime lending, but for 19 dollars a share, its a good long term value.
The Financial Times is reporting that our house of representatives has approved 25 billion in low cost loans for the big three Detroit automakers. Here. This is in addition to the 700 billion bailout package being discussed on capitol hill.
To follow up on yesterday’s post about my recent salary negotiations, we had a commenter request that I share a bit about my career and salary history and how I got into the development world.
We’ll take it from the top. My first tax paying job was picking raspberries by the quart. We were allowed to eat the berries, but of course didn’t paid for those we ate. I didn’t last long. Babysitting was more lucrative at $15 a day.
I moved on to a summer job building playgrounds, at minimum wage, before going to Finland as an exchange student at 16. I saved all of my money for a tour around Europe.
Between high school and college I worked at Crater Lake National Park. I highly recommend working at a national park for those who are interested in the outdoors and want to make money over the summer. I started as a dishwasher and moved on to prep cook. While I was earning only just above minimum wage, we were allowed to work as much as we wanted. I averaged 65 hours and had several pay periods over 80 hours a week, thereby earning overtime according to federal parks rules. The key was that it cost something like $6 for room and board and there was nowhere to spend money! According to my social security paperwork I earned more at 18 than I did until age 22.
In college I worked two jobs throughout. These jobs included managing a small office that led outdoor trips (yes, the trips were a major perk!), taking pictures of kids, nannying, being a resident assistant, and working at the overseas office. After having trained two bosses at the outdoor outfit I was working for, I decided to move over and make contacts for the long term at the overseas office. This was a good move. Being an resident assistant (dorm mom) my senior year was a great financial move as well, since they paid for room and more that normally came out of my pocket.
Post college I took my first summer off of work and traveled, since I’d saved so much working and had been used to putting this towards tuition. In the fall I went to Ghana, West Africa as a Peace Corps Volunteer. Here I got $85 a month living allowance and housing provided by my village. At the end of service I got somewhere around $6k for completion of service and cash in lieu for my return plane ticket. When I landed back in Portland I realized that while I had been living in a hut, I had as much in cash as my friends had in credit card debt, living in cubes.
Post Peace Corps I leveraged my previous contacts at the Lewis & Clark overseas office and went on to co-lead a semester abroad in Australia. This was the same program I had gone on as a student. When I had returned from my initial trip I went to the director and asked him what I had to do to become a co-leader on a program. He advised that I graduate, do something like Peace Corps, and come back to him. I followed suit and got the job. I had a fully paid five months in Australia, including per diem, and an additional $5k.
After traveling to Europe and temping a bit I then worked at a fire camp near where I grew up. I worked sixteen hours a day, fourteen days on, two days off, for the next 3 months. This was certainly a test of endurance, but gave me a nice chunk of change to settle down a bit.
I then moved to Portland, Oregon and tried to find a job in one of the worse economies around. My friends were making between $22k and $27k annually after several years in the work force. I said that I wanted to find something for $30k and they all told me that I was dreaming. I landed something working for a health advocacy non-profit making $33k initially and negotiated for a six month review and went up to $35k.
I then moved to DC and have been with the same employer up until now. I was first hired as an internal temp for someone going on maternity leave with twins. There wasn’t much room for negotiation, but I went up to $38k and negotiated for a salary review after four months where I went up to $41k. I only had a 1% raise at the end of the year since my increase was mostly through the year.
In March, a year after being hired, I had a grade level promotion and got a 10% raise to around $45k. At the end of that year I was contemplating moving departments. When I got an offer my office begged me to stay and agreed to the maximum end of year increase of another 8%, bringing me to around $49k. My technical promotion wasn’t for another six months, which brought me up another 10% to $54k. At the end of the year I had another annual increase of 5% and went up to $57k.
When I took my position here in Afghanistan I got another 10% on my base to $63k, plus another 1% at the end of the year to $65k.
Then for my new position I managed to get an increase of 8% to just over $70k as a base. Both of my assignments have a considerable amount of allowances, bringing my current salary to $149k.
In terms of really getting into the develop world, it was studying international affairs, getting out in the world, being a star performer, making it known that I wanted field experience, and going after it. If you are interested in development and want further details I’m happy to share.
For salary negotiations, my main tip would be this: ASK!
Just heard a great gem on National Public Radio. NPR was reporting on the financial crisis, and was asking why the treasury was asking for the specific figure of 700 billion. The answer from their on the air expert? – “Nobody knows“.
Don’t you love it? I have the strong impression that nobody in congress really knows whats going on with the nations finances, they are just taking Bernake and Paulson’s word.
We wanted to share some fabulous news from the DINKs.
I have accepted a senior position with development funded project in Afghanistan. In the development lingo this is called “Deputy Chief of Party” which in plain English means second in command. The Chief of Party is actually planning to work remotely, so I’ll be Acting CoP most of the time and hopefully move up permanently over time.
While the programmatic and professional challenge of the position was the reason for the move, the increase in salary was also a bonus. The processes of how I did it is instructive.
Getting the increase wasn’t exactly easy. It took over two weeks of negotiation, but it was worth it in the end. Initially they tried to offer the same as what I have been making, but the benefits weren’t quite as good. While looking at the offer letter I realized that I might be crazy to turn down such money, it also needed to be worth my leaving my current job and deciding to be away from the states for another year.
In the end I said no dice, and played the jeopardy card. I had been told that they were pushing up against salary brackets, so I put in a final offer at just below a round number to make it look like less of a request. This was a base salary of $69,550. In the end they replied with offering me more than I said was my minimum threshold, and my base is now $71,500.
Given the allowances and so forth, it adds up to a pretty healthy sum. Including my base, danger pay, post differential (payment for living in a crappy place), separate spousal maintenance allowance, and housing, it comes to a grand total of $148,980 per year.
True, the downside is not being able to spend time with my husband. But I do get to carry out my dream professional work and do my best to help a nation in need. Despite the difficulties of working in Afghanistan, it is still a very rewarding experience.
In dealing with salary negotiations this time around, my tips would be the following
1. Don’t be afraid to ask. This is most often more of your downfall than whomever you are up against in negotiations. You may be able to negotiate a higher base salary if you ask for it.
2. Know what you are worth. It is essential that you have a good assessment of what your total package is in comparison to what you are being offered. This includes the dollar value of fringe benefits, direct salary, retirement contributions and reimbursement for incidentals. This will give you a sense of weather you’re coming out ahead or behind in your negotiation. 3. Play nice. While you want to be savvy in your negotiations, you must be professional and respectful at all times. Maintain a positive tone, reread you messages several times, and make sure you cover all of your bases. Remember, if all goes well you will be working with these folks, so you want to start things out on the right foot.
4. Essentials versus nice bonuses. Make a list of what your must haves are, and what you’d ideally like to have. It is best to make this list before you get an offer, otherwise you are less likely to be objective in the face of making a choice. Check your list twice and make sure you have covered all areas. Remember, you’ve got a one time shot to ask, so forgetting to mention a parking pass or day care could cost you in the end. 5. Don’t bluff. While it is good to negotiate for more, know what your threshold is. If you want the job, then make sure that you play within your safety zone. 6. Be patient. This is so hard, especially when you want it. Salary negotiations can take some time, and caving early on is a common mistake. Remember, she who breaks the silence looses.
Follow these simple steps, and with any luck you’ll be successful in your negotiations. For more information you might consider checking out a copy of Perfect Phrases for Negotiating Salary and Job Offers, available on Powells.com.
“Buy when blood is running in the streets“ – Baron Rothschild
It looks like the smart money is eyeing the banking sector.
For example, a recent piece from Kiplinger.com is reporting that the “mad wizard of wall street” Ken Heebner, is buying bank stocks. Kiplinger speculated that Heeber is optimistic on bank stocks for at least two reasons. First, Heebner estimates that the potential for profit in the finance sector has increased because a number of as weaker banks have gone bust. Second, Heeber estimates that the economy will start to rebound as many consumers will begin spending again in mid 2009 (1).
Its been all over the headlines, but billionaire investor Warren Buffett’s firm Berkshire Hathaway has taken a five billion dollar stake in the Goldman Sachs Group (1). This suggests that Buffett is optimistic about the long term potential of Goldman and probably the US banking system more generally.
What the big millionaires are doing seems to make personal sense. I’ve been talking with a couple of hedge fund guys – and the general feeling seems to be that there could be some good deals to be had in the financial industry. We are personally looking at buying some shares in Citigroup (C). While we haven’t checked their financials, a large company with global exposure like Citigroup might do well in the next five to ten years.
If you’re looking to save a few extra bucks, you might consider canceling your magazine subscriptions. Some subscriptions can cost up to $500, and for many publications you can get the articles online. By canceling your subscriptions, you also have the benefit of generating less garbage and less clutter in your home.
Apparently someone hasn’t lost their sense of humor about the current Wall St. crisis, the e-mail below has been sent around parodying those Nigerian scams.
Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Given the gravity of the current financial crisis, I wanted to do a bit of follow up on James’ last post on the Paulson/Bernake bailout plan.
One of our commenters tipped me off to a fabulous op-ed piece in the New York Times by Paul Krugman, called Cash for Trash. His piece gives a very good summary of how we got into this mess and why the current plan won’t work.
The main things that I picked up from the article were:
Mr. Paulson is demanding extraordinary power for himself.
If the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.
This is a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out.
Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency.”
Krugman also gives a four step view of the financial crisis.
These are the highlights, but I highly recommend checking out the full article.
