Wednesday, October 7, 2015

Friday October 8 Housing and Economic stories

The Real Estate Crisis in North Dakota's Man Camps - ( Chain saws and staple guns echo across a $40 million residential complex under construction in Williston, North Dakota, a few miles from almost-empty camps once filled with oil workers.  After struggling to house thousands of migrant roughnecks during the boom, the state faces a new real-estate crisis: The frenzied drilling that made it No. 1 in personal-income growth and job creation for five consecutive years hasn’t lasted long enough to support the oil-fueled building explosion. Civic leaders and developers say many new units were already in the pipeline, and they anticipate another influx of workers when oil prices rise again. But for now, hundreds of dwellings approved during the heady days are rising, skeletons of wood and cement surrounded by rolling grasslands, with too few residents who can afford them. 

Brazil's Record Overseas Borrowing Comes Back to Bite Companies - ( Brazilian companies including state oil producer Petrobras are at risk from a weakening real after they issued a record amount of debt in foreign currency. The mismatch prompted President Dilma Rousseff to say over the weekend that she’s “extremely concerned” about the situation. Borrowing in overseas markets by non-finance companies reached a record $137 billion last year, seven times the level just a decade earlier, according to the Bank for International Settlements. Petroleo Brasileiro SA, with $56 billion of outstanding bonds, has become the world’s largest non-investment grade corporate issuer after Standard & Poor’s cut its rating this month following a similar move by Moody’s Investors Service. Brazil’s corporate debt is the worst performing in Latin America this year, losing 13 percent as the real plummeted the most among major currencies. 

Brazil corporate defaults hit three-year high as recession worsens - ( Loan default and unpaid utility bills among Brazilian companies rose during the first eight months at the fastest pace in three years, reflecting the steepest economic recession in 25 years, soaring borrowing costs and a slump in the currency, credit research firm Serasa Experian said on Monday. The so-called Serasa Experian Corporate Default Index rose 13.3 percent in the January-to-August period from a year earlier, the biggest jump since a 14.3 percent rise three years ago. On an annual basis, corporate delinquencies surged 16.1 percent in August from a year earlier, Serasa said. On a monthly basis, corporate defaults fell 5.7 percent in August versus July, Serasa said.

Catalonia's president placed under investigation for 2014 independence referendum - ( Catalonia's acting regional president has been placed under investigation by a court for his role in staging a referendum on independence last year, officials said Tuesday. Artur Mas will appear Oct. 15 for questions concerning the Nov. 9, 2014, independence referendum called by him, Catalonia's regional justice department said. The plebiscite was held despite having been suspended by the Constitutional Court. On Sunday, Catalonia held a regional election and the "Together for Yes" pro-independence alliance headed by Mas won 62 seats in Catalonia's 135-member parliament — six short of a majority. Mas had promised to go for secession if they had achieved a majority. Catalonia labeled the 2014 referendum an informal process to try to skirt the suspension order. The Constitutional Court later ruled the plebiscite to have been unconstitutional.

US junk bonds cracking after debt binge - (  After the debt binge comes the bill and that is the grim message for investors looking at the present performance of the US corporate bond market. As the third quarter draws to a close, slowing global economic activity threatens the earnings power of many US companies, which have amassed $7.8tn in debt. Years of easy monetary policy that kept borrowing costs low, a wave of mergers and acquisitions and the spectre of shareholder activism have all contributed to an erosion of balance sheet quality. Most vulnerable are junk rated companies, which account for $2.5tn of the recent US corporate debt binge, with bonds worth roughly $1.5tn set to mature over the next five years, according to S&P. Refinancing that amount may prove a hurdle for corporate executives and chief financial officers if earnings come under more pressure.

Thursday October 8 Housing and Economic stories

U.S. Junk Bond Rout Pushes Yields Past 8% as Treasuries Gain - ( Bond bulls are piling into Treasuries as turmoil in junk bonds pushes investors into the safety of lower-yielding government debt. Diminished demand for energy companies spurred losses in speculative-grade debt, pushing the yield on an index of U.S. high-yield corporate obligations above 8 percent. U.S. government securities rose Monday and junk bonds extended losses as Glencore Plc, the miner and commodity trader, plunged to a record and oil prices fell. The yield of 8.01 percent reached Sept. 25 on the junk-bond index was only surpassed once in the past four years, in August, based on Bloomberg World Bond Indexes. Investors are seeking a haven after the Federal Reserve refrained from raising interest rates Sept. 17, citing international risks to the economy. Turmoil in Chinese markets stoked a global market rout amid concern that economic growth is slowing.

Glencore Shares Plunge as Debt Fears Rattle Investors - (  Investors pounded shares of Glencore PLC on Monday, sending the giant miner and trader down nearly 30% to a new all-time low amid fresh concerns that persistently low commodity prices will cripple its debt-laden balance sheet. The Swiss company’s stock has collapsed in recent months despite a series of moves designed to bolster investor confidence and ease its debt burden. The company’s stock closed at 69 pence on the London Stock Exchange—down from 97 pence in the morning and down 87% from its splashy initial public offering at 530 pence in 2011. The problems have raised questions about whether what Glencore says is its biggest strength—its blend of mining and trading operations—is actually a fundamental flaw. Chief Executive Ivan Glasenberg engineered a $29 billion deal in 2013 to buy Xstrata, the largest merger in the mining industry’s history and a tie up that transformed Glencore from a trader into one of the world’s mining titan.

Icahn warns of potential looming catastrophe – ( Danger ahead—that's the warning from Carl Icahn in a video coming Tuesday. The activist says low rates caused bubbles in art, real estate and high-yield bonds—with potentially dramatic consequences. "It's like giving somebody medicine and this medicine is being given and given and given and we don't know what's going to happen - you don't know how bad it's going to be. We do know when we did it a few years ago it caused a catastrophe, it caused '08. Where do you draw the line?" In a telephone interview, Icahn said he's "more hedged now than I've been in years." "The Fed may have backed itself into a corner. They should have absolutely raised rates six months ago," adding it's difficult now because of global concerns.

Another Chinese SOE Flirts With Default as Broker Calls It Early - ( A brokerage report Friday saying the parent of China National Erzhong Group Co. won’t pay bond interest due today is prompting speculation over whether the smelting equipment maker will become China’s second state-owned company to default on onshore bonds. Analysts from China International Capital Corp. said the firm’s controlling shareholder China National Machinery Industry Corp. agreed with bondholders not to pay interest on 1 billion yuan ($157 million) of 2017 notes and a 2015 debenture from unit China Erzhong Group Deyang Heavy Industries Co., without saying where it got the information. While interest on the 2017 notes is due Monday, not everyone’s rushing to make a call. “It’s uncertain if it’s time to call it a default because there is no official statement about whether China National Machinery will pay the interest,” said Zhang Li, a bond analyst at Guotai Junan Securities Co. “If it won’t pay the interest, it will be a default. But even if it’s a default, we should focus more on the fact that investors will get all the principal back.”

'FX liquidity is getting worse' - Deutsche Bank - (  It's getting harder to get currencies trades done, according to new analysis by Deutsche Bank. Looking at liquidity, measured by the interplay between average weekly trading volumes and realised market volatility (ie, how much exchange rates shake about), "there has been a further deterioration in eight of the 12 most commonly-traded G10 pairs," says Oliver Harvey, a macro strategist at the bank. Trading in the euro is particularly tricky, he points out. [Liquidity in the euro against] the dollar and the yen is] seeing the largest declines, further evidence of how painful euro funding unwinds have been for investors. Liquidity in [the euro against the dollar] is closing in on the lowest levels save after the Lehman bankruptcy. Alternative measures of liquidity, such as the gap between bid and ask prices for currencies, paints a similar picture, Mr Harvey added. Trading volumes are generally heading south too.

Tuesday, October 6, 2015

Wednesday October 7 Housing and Economic stories

1MDB Dollar Bonds Slump to Record as U.S. Probes Hurt Sentiment - ( A group of hedge funds holding $5.2 billion of Puerto Rico debt disbanded as creditors prepare for talks to restructure the island’s obligations in smaller alliances, said two people with knowledge of the matter. The group, which counted more than three dozen firms as members, had begun losing support as some broke off to form more nimble coalitions, said the people, who asked not to be named because the information isn’t public. The defections started after Governor Alejandro Garcia Padilla said in June that the government’s debts were "not payable." The creditors had joined to structure and fund a debt package that they thought would help the cash-strapped U.S. territory bridge its budget gap before longer-term reform measures alleviated the deficit. The hedge funds, sometimes referred to as the "ad hoc group," had been negotiating since at least February with Puerto Rico officials over the sale of $2.9 billion of new petroleum-tax bonds, people with knowledge of the matter said at the time.

In Brazil's Market Meltdown, a Wave of Panic -- Then Silence - ( It’s a startling turnaround for a country that was the darling of international investors just a few years ago. The bonds of oil giant Petrobras, once Brazil’s biggest company, are trading at distressed levels. The Ibovespa stock index fell for a sixth straight session, wiping out about $24 billion in market value. The nation’s currency, the real, is posting the biggest drop this year among major tenders, a collapse one Rio de Janeiro asset manager likened to a “death spiral.” “The worst part is there’s no light at the end of the tunnel,” said Vitor Suzaki, an analyst at the brokerage Lerosa Investimentos in Sao Paulo. “There’s a very serious political crisis that threatens fiscal balance, that leads to economic deceleration, that hurts companies. And we just can’t imagine what kind of news would bring confidence back."

It's All `Perverted' Now as U.S. Swap Spreads Tumble Below Zero - ( At the height of the financial crisis, the unprecedented decline in swap rates belowTreasury yields was seen as an anomaly. The phenomenon is now widespread. Swap rates are what companies, investors and traders pay to exchange fixed interest payments for floating ones. That rate falling below Treasury yields -- the spread between the two being negative -- is illogical in the eyes of most market observers, because it theoretically signals that traders view the credit of banks as superior to that of the U.S. government. Back in 2009, it was only negative in the 30-year maturity, a temporary offshoot of deleveraging and market swings following the credit crisis. These days, swap spreads are near or below zero across maturities.

Wealthy Reap the Most as Revenue Rush Triggers U.S. State Rebates - ( In another sign that U.S. states are recovering from the Great Recession, a handful are triggering mechanisms that repay taxpayers when coffers overflow, and the wealthiest are receiving the most. At least seven states have such laws. Oregon this year paid back $402 million to taxpayers. Colorado and North Carolina set off similar triggers. The product of taxpayer revolts aimed at checking government’s growth, the laws typically call for a rebate or reduction in income-tax rates when revenue exceeds benchmarks. Opponents say returning money to taxpayers leaves governments unprotected in the event of another recession, deprives states of cash for schools and roads, and prevents them from socking away money in rainy-day funds. Supporters say the policies keep states from overspending.

Puerto Rico's Bonds Overshadow Pension Fund Poised to Go Broke - ( Rico’s $72 billion debt burden overshadows another financial threat to the Caribbean island: a government workers pension fund that’s set to go broke in five years. As Governor Alejandro Garcia Padilla prepares to push for bondholders to renegotiate debts he says the commonwealth can’t afford, he’s also contending with an estimated $30 billion shortfall in the Employees Retirement System. The pension, which covers 119,975 employees, as of June 2014 had just 0.7 percent of the assets needed to pay all the benefits that had been promised, a level unheard of among U.S. states. If not fixed, the depleted fund could jeopardize a fiscal recovery by foisting soaring bills onto the cash-strapped government even if investors agree to reduce the island’s debt. The system is poised to run out of money by 2020, which would leave the government on the hook for more than $2 billion in benefit payments the next year alone, according to Moody’s Investor’s Service. That’s equal to about one-fourth of this year’s general-fund revenue.

Monday, October 5, 2015

Tuesday October 6 Housing and Economic stories


Chinese Art Auctions Fall to $7.9 Billion as Speculators Flee - ( Auction sales of Chinese art and antiques worldwide fell 7 percent to $7.9 billion in 2014, hampered by the country’s economic slowdown, government anti-corruption measures and fleeing speculators, according to a report. Sales are down 31 percent from the Chinese art market peak in 2011, according to the third annual report published Wednesday by art researcher and database Artnet and the China Association of Auctioneers. Auctions in mainland China accounted for most of last year’s decline, falling 9.3 percent from 2013. China’s art market rout contributed to a drop in global art sales, which fell 5.8 percent to $8.1 billion during the first half of 2015 from the same period in 2014, New York-based Artnet said in July. “Although it is impossible to disentangle the extent of the influence of speculative activity and graft on the market’s boom up to 2011, most experts agree it made some impact, the lack of which is now keeping growth more subdued,” Clare McAndrew, a cultural economist, wrote in the report.

Dutch Commodity Trading Firm Suffers Massive Loss, Blames It On "Rogue Trader"
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Oe of the most surprising developments in recent months has been the relative scarcity of any high-profile commodity blow-ups or trader snafus, despite the tumbling commodity prices. That changed today when Dutch grain-trading firm, Nidera BV (whose name is an acronym consisting of the countries in which it operates: Netherlands, India, Deutschland, England, Russia, Argentina) has suffered a crushing blow as a result of a "rogue trader" whose actions led to "significant losses" in the company's biofuels business. Nidera CEO Ton van der Laan said the grain-trading house has since exited the biofuels business and closed all the deals linked to the losses. "There is a significant loss."

Mexico Moves to Support Peso For Third Day as Currency Tumbles - ( Mexico’s central bank held an extraordinary dollar auction for a third consecutive day to support the peso as the local currency tumbled to the lowest level in a month amid an emerging-market selloff. Policy makers sold an extra $200 million today, following similarly-sized auctions Monday and Tuesday. Still, the peso fell 1.3 percent to 17.1113 per dollar, reaching what would be the lowest closing level since Aug. 25. The most-traded emerging-market currency in the world followed the Brazilian real as the world’s worst performers in a basket of 16 major currencies tracked by Bloomberg. Investors sold emerging-market assets and oil prices tumbled as weak manufacturing data in China spurred concern about the outlook for global economic growth.

Debt Relief for Students Snarls Market for Their Loans - (  As more borrowers postpone payments, the bonds backed by those loans are more likely to default.  Federal programs designed to ease the burden of college loans are causing snarls in the bond market and raising concerns that banks may soon ratchet back lending. The programs, which let struggling borrowers scale back their repayments, have made student loans more affordable at a time when millions of Americans are falling behind on their student debts. But that slowing stream of money is having a knock-on effect in the market for bonds backed by that debt. Investors who own the bonds are beginning to worry that they may not get repaid on time, and they are balking at buying new bonds being offered by financial institutions. Without that revenue from selling off the student loans into bonds, banks have less capital to turn into new loans.

Energy Lending Caught in a Squeeze - (   Banks are clashing with regulators over loan reviews that could crimp the flow of new credit to the oil patch. The dispute is focused on the relatively narrow issue of loans secured by oil and gas companies’ reserves, but it highlights the much broader point of how postcrisis regulation of the financial industry is affecting sectors far from Wall Street. On one side are the bankers who have been grappling with the plunge in oil prices and the need to shore up billions of dollars in credit extended to the energy industry. On the other are regulators eager to prevent another financial crisis while not knowing what it might be. Caught in the middle are the small- and medium-size exploration and production companies that rely on credit lines that use their energy reserves as collateral. Banks are now beginning their fall reviews of the quality of that collateral and worry regulators could ding them for making loans the banks think are prudent. 

Brazil Real Drops Fifth Day Amid Skepticism Over Fiscal Outlook - (
US oil settles down 4.1%, at $44.48 a barrel
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U.S. factory activity stuck at near two-year low in September: Markit
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Draghi Says Time Needed to Judge If More Stimulus Necessary
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ECB's Nowotny Says He's Wary of Expanding Bond-Buying Program
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Surge in U.S. Stock Buybacks Gains Support From Idle Factories
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Deeper China downturn, weak Europe dents global growth outlook
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Citigroup Strategist: Central Banks Will Try to Monetize Government Debt When the Next
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Sunday, October 4, 2015

Monday October 5 Housing and Economic stories

Clerk Indicted For Filing Back-Dated Deed For Cash - ( Regina Taylor, former clerk for the Cook County Recorder of Deeds accepted a $200 cash bribe in exchange for preparing and agreeing to record a back-dated deed on an Oak Park home, according to a federal indictment announced today. Regina Tayor accepted the bribe from an individual who purportedly wanted to add a relative’s name to a back-dated deed of a residence in Oak Park according to the indictment. Unbeknownst to Taylor, the individual she sold the back-dated deed to was actually an undercover law enforcement agent, the indictment states. The indictment was returned Thursday in U.S. District Court in Chicago. It charges Taylor, 59, of Chicago, with one count of mail fraud and two counts of wire fraud.  Taylor will be arraigned before U.S. District Judge Sara L. Ellis on Sept. 24, 2015, at 10:00 a.m.

Surge in U.S. Stock Buybacks Gains Support From Idle Factories – (  Glencore led a global sell-off in mining shares on Tuesday amid investor concerns that a Chinese slowdown could spark a wider emerging markets crisis and send demand for commodities tumbling. Shares in Glencore fell as much as 15 per cent to a fresh record low below 100p, with shares in some other large miners falling to multiyear lows. Commodity markets are facing their sharpest downturn since the global financial crisis of 2008 and 2009 interrupted a “supercycle” of strong demand. Investors and analysts say this downturn could be more prolonged, with few alternative sources of demand growth if the economic slowdown in China — by far the most important commodities consumer — persists.

Australia’s Mega LNG Projects are in Serious Trouble - ( In the US, natural gas is dirt cheap. The price peaked in 2008 and has since collapsed. It remains below the cost of production, even today. Two natural gas drillers have recently buckled and declared bankruptcy. In the international markets, natural gas is traded as Liquefied Natural Gas (LNG). There was a time, after Japan shut down its nuclear power plants in the wake of Fukushima, when prices, particularly for delivery in Japan and Korea, soared. And during this environment, a number of countries invested heavily into building LNG export terminals that convert natural gas into LNG. In the US, this has been the story of Cheniere Energy, a company that has barely any sales. It’s mostly famous for always losing a lot of money and then raising even more money. It’s stock has soared from less than $2 a share in 2009 to over $80 a share late last year and earlier this year, giving it a ludicrous market capitalization of nearly $20 billion. And it has a breath-taking $18 billion in debt. But the dream is deflating, and it closed at $52.40 today.


Obama Admin. Tries To Hide Land Grab From Western States – ( The Obama administration has opted not to list the greater sage grouse under the Endangered Species Act (ESA), instead using land use plans which basically amount to an underhanded land grab, according to critics. “The 15 amended federal land use plans the Interior Department is using to substitute for listing the greater sage grouse under the Endangered Species Act perpetuate a top-down, penalty-based approach that ultimately harms sage grouse conservation efforts,” Brian Seasholes, director of the libertarian Reason Foundation’s endangered species project, told The Daily Caller News Foundation. “Do not be fooled,” echoed Utah Republican Rep. Rob Bishop. “The announcement not to list the sage grouse is a cynical ploy. With the stroke of a pen, the Obama Administration’s oppressive land management plan is the same as a listing.”

Pacific E&P Bonds Plummet to Record Low as Oil Prices Decline - ( Bonds from Pacific Exploration & Production Corp., the Colombian oil driller set to lose its biggest field next year, tumbled to record lows as oil declined and investors turned increasingly bearish on emerging-market assets. The company’s $1.3 billion of bonds due 2019 dropped 8 cents to 35 cents on the dollar as of 1:37 p.m. in New York, reaching the lowest price since they were issued in 2013. Crude sank 3.2 percent to $45.21 a barrel amid speculation that slowing global growth will dent demand for fuel, while the MSCI Emerging Markets Index of stocks dropped to the lowest in a week. Pacific’s credit rating was cut three steps by Moody’s Investors Service last week to B3, or six levels below investment grade. The ratings company cited concern the producer has waited too long to sell assets and bolster its cash holdings. Moody’s said the outlook was negative given the possibility that a liquidity crunch would increase the risk of breaching financial covenants as the company’s contract to operate its biggest oil field expires next year.

Thursday, October 1, 2015

Friday October 2 Housing and Economic stories

Quirky files for Chapter 11, will sell Wink unit - ( Design and invention hub Quirky announced Tuesday it has filed for Chapter 11 bankruptcy protection and plans to sell its Wink smart home unit.  Connected device maker Flextronics has submitted a bid to acquire Wink and will likely go through with the acquisition barring additional offers. Wink did not disclose the offer price, but said the deal could be completed in 60 days. "This does not impact the Wink experience for our users nor how Wink operates day-to-day," Wink said in a statement. Quirky—which generated more than $100 million in revenue in 2014—was featured on CNBC's Disruptor 50 list this year. Inventors submit ideas to its website and receive royalties if Quirky makes the products, which are sold in retailers.  The restructuring filing follows the departure of founder and CEO Ben Kaufman this summer. At the time, Quriky said it would continue to focus its efforts on Wink.

Groupon Is Laying Off 1100 At A Cost Of $35M, Shutters Operations In 7 Countries - (  Some significant downsizing is underway at Groupon, the daily deals and local-commerce site. The company is today announcing that it will be cutting 1,100 jobs — mostly in its sales (aka “deal factory”) and customer service operations — taking a pre-tax charge of $35 million in the process. As part of the restructure, Groupon is also ceasing operations in several markets internationally: Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand and Uruguay will all be closing. The closures come on top of recent exits in Turkey and Greece and a sell-off of a controlling stake in Groupon India to Sequoia (news we first broke in March of this year). “We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries,” COO Rich Williams noted in a blog post the company just put up on the news. Before the closures, Groupon was active in over 40 countries.

Glencore Falls to Record as Mining Shares Lead Stock Losses - ( The rout across metals and mining shares accelerated as evidence of China’s slowdown renewed investor worries and analysts said prices are heading lower. Glencore tumbled as much as 16 percent, the most ever, and slid below 100 pence for the first time since it began trading in 2011. Anglo American Plc touched a 15-year low and Antofagasta Plc sank 7.3 percent. KAZ Minerals Plc, a small copper miner in Kazakhstan, lost 25 percent. Mining companies are suffering under the lowest commodity prices in more than a decade and no signs of a turnaround in China’s economy. The largest companies in the industry have scrapped dividends, cut jobs and sold new shares to preserve profitability as the slump in raw-material prices continues.

The Surprisingly Big Market for Sand Just Collapsed - ( In New Auburn, Wisconsin, a desolate, little outpost carved from the rolling pine-tree forests that run into Lake Superior, the collapse in oil is wreaking havoc on every aspect of the economy. It’s not that there’s any oil here. None in fact for hundreds of miles around. What they’ve got is sand. Real good sand, piled high in giant mounds. And in what is a little-known offshoot of the shale oil revolution that swept across America over the past decade, the market for sand -- the grit that props open the rocks and makes fracking possible -- exploded too, transforming almost overnight what had been a sleepy industry that sold primarily to the likes of glass makers and golf courses. So when the shale boom went bust, it took down the sand industry with it. Prices have sunk almost a third to under $40 per ton. For the people of northwestern Wisconsin, the epicenter of the sand rush, the economic toll has been harsh. It all happened so fast that many -- like the Bischel brothers: Tom, age 42, and Jeff, 51 -- were blindsided. Back in the winter, the two had pooled their money together to open a fast-food joint. They named their ice-cream dessert the Sandstorm, a play on Dairy Queen’s Blizzard, and designed an extra-tall drive-through window to accommodate all the sand-hauling truckers rumbling through town.

Mines in America's Coal Country Just Sold for a Total of Nothing - (  For a reality check on America’s coal industry, consider how much a collection of Appalachian pits just sold for: nothing. That’s what Booth Energy Group’s Cambrian Coal Corp. paid up front for a Teco Energy Inc. unit that controls a collection of surface and underground mines, a company statement Monday shows. Teco said it may receive $60 million should coal prices reach “certain levels” over the next five years. (Coking coal is at a decade low. Futures are on track to fall for a record fifth straight year.) Bargain-basement coal deals are proliferating as producers bail out of an industry stuck in its worst downturn in decades. Miners are facing a slowing global economy, escalating competition from cheap natural gas and mounting environmental and mining regulations. In February, West Virginia businessman Jim Justice paid Russia’s OAO Mechel$5 million and assumed some debt to buy back operations that he had sold to the company in 2009 for $568 million.