KeNosHousingPortal.blogspot.com
TOP STORIES:
Shipping rates hit zero as trade sinks – (www.telegraph.co.uk) Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October. "They have already hit zero," said Charles de Trenck, a broker at Transport Trackers in Hong Kong. "We have seen trade activity fall off a cliff. Asia-Europe is an unmit igated disaster." Shipping journal Lloyd's List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal "bunker" costs. Container fees from North Asia have dropped $200, taking them below operating cost. Industry sources said they have never seen rates fall so low. "This is a whole new ball game," said one trader. The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.
A last-minute Bush pardon for Michael Milken? – (www.latimes.com) This would not be setting a good example letting the Madoff of his time off the hook. Nikki Finke reports today on Hollywood chatter that billionaire Michael Milken is spending big bucks lobbying for a pardon by President Bush before he leaves office Tuesday. The 62-year-old Milken, of course, is the finance legend who built the modern junk bond market in the 1980s while at Drexel Burnham Lambert, only to have the government indict him on racketeering and other charges in 1989. He pleaded guilty in 1990 to lesser counts of conspiracy and fraud related to illegal securities trading after denying the much broader array of allegations. Milken, who served almost two years in prison after his guilty pleas, is barred from the securities industry. He has spent the last 15 years on philanthropic efforts and his Milken Institute think tank in Santa Monica.
State Borrowing Gets Pricey – (www.forbes.com) Greece, Spain and Ireland are having to pay more and more to borrow. Pity their taxpayers. In Europe, governments have already been borrowing billions more than usual from the debt markets to fund rescue attempts for troubled banks and economies, and some look more at risk than others. Spreads on government debt from countries that were Europe's most famous economic success stories not long ago -- Greece, Spain and Ireland -- have reached record highs over German bunds in recent weeks on concerns about their public finances. They spiked again on Friday after Ireland nationalized one of its biggest lenders, Ango Irish Bank. "There's not much we can do," said Papanicolaou [head of Greece's Public Debt Management Agency], when asked about his reaction to widening debt spreads, which are essentially a result of the bond market's perceived risk of Greece's ability to pay back its debt. "We just have to convince the market that they are wrong and they overreacted and the spreads are not justified. Let's hope they will change their mind." Some don't think investors should, though. Chris Pryce, Western Europe director at Fitch Ratings, says the current yield differential between Greek and German bonds reflect a better assessment of the risk. "Previously euro zone investors did not property distinguish the risks in the euro zone. Greek government accounts are pretty appalling. They have the highest debt after Italy." Greece's debt-to-GDP ratio is forecast by Fitch to have hit 92.0% in 2008; Italy's hovers around 100.0%.
Largest manufacturer of sign and image products in the U.S. goes bankrupt - (www.wkm.com) The largest manufacturer of sign and image products in the U.S., Knoxville-based ImagePoint Inc., said Friday it will close as soon as pending projects are completed. The company's 450 employees will be let go as the business shuts down. Of that number, 270 are located in Knoxville, with the rest based in northern Kentucky. Employee James Martin was shocked by the news. He says he was given a promotion earlier this week. "It's been very rough because every corner has an emotion behind it. I've been giving out my card telling people to keep in touch, but it's going to take some time to digest this and I'm worried about some people," says Martin. In a written statement, ImagePoint CEO Jim Martin blamed the economy on the closure. "The automotive and restaurant businesses are facing serious challenges," Martin said. "And these industries represent a major part of ImagePoint's business." Focusing on autos and restaurants was a serious mistake. They should have focused on making "Going Out Of Business" signs.
FDIC may let banks borrow cheaply for longer - (www.marketwatch.com) The Federal Deposit Insurance Corp. said Friday it is considering expanding its guarantees for new bank debt, tweaking a popular program that aims to boost lending by letting financial institutions sell debt below market levels. In a press release announcing another $20 billion in aid to Bank of America (BAC) , the FDIC said the board may soon propose rule changes to its Temporary Liquidity Guarantee Program that would allow banks to sell FDIC-guaranteed debt that matures in up to 10 years. Currently the agency only backs debt with maturities of three years or fewer. Under the program, banks can sell their debt backed with the full faith and credit of the United States in exchange for a fee to FDIC. It was created to enable banks to lend more and at better rates to consumers and businesses. Since this bank debt comes with a government guarantee but carries higher yields than the government's own debt, the new supply has already cut into demand for safe-haven U.S. Treasurys in maturities between three and 10 years, he said. Right now, banks' 10-year bonds based solely on their own credit are trading at yields around 7%, Jersey said. By comparison, FDIC-backed three-year bonds sold over the last couple months are trading around 1.8%. The FDIC specified that under the expanded program, the issuance would have to support new consumer lending. Reports show that consumer credit remains tight, leading some critics of the program to conclude many banks have held onto a lot of their FDIC-backed funding to shore up their balance sheets. "Banks have been caught between needing to lend and needing capital," said Jason Brady, who helps oversee about $6 billion in fixed-income assets at Thornburg Investment Management. "You can't make a bank lend, but structuring it in a way that lending is guaranteed by the government addresses the problem in a very direct way. It's a good idea."Chávez Lets West Make Oil Bids as Prices Plunge - (www.nytimes.com) President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again. Until recently, Mr. Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases. But faced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here. Mr. Chávez’s olive branch to Western oil companies comes after he nationalized their oil fields in 2007. Two companies, Exxon Mobil and ConocoPhillips, left Venezuela and are still waging legal battles over lost projects. But Venezuela may have little choice but to form new ventures with foreign oil companies. Nationalizations in other sectors, like agriculture and steel manufacturing, are fueling capital flight, leaving Venezuela reliant on oil for about 93 percent of its export revenue in 2008, up from 69 percent in 1998 when Mr. Chávez was first elected. Under the current bidding rules, the onus for financing the new projects lies with the foreign companies, even though Petróleos de Venezuela would maintain control. Banks might balk at such a prospect. Distrust also lingers in dealing with Petróleos de Venezuela. “An agreement on a piece of paper means nothing in Venezuela because of the way Chávez abruptly changes the rules of the game,” said a Venezuelan oil executive who has had dealings with oil companies from China, Russia and other countries. “In 10 years, not one major oil project has been built in Venezuela,” said the oilman, who asked not to be identified for fear of retribution. “Chávez has left his so-called strategic partners out to dry, like the Chinese, who have been given the same treatment as Exxon.” Why should anyone trust Venezuela or Russia?Quebec promises to guarantee pension plans - (www.theglobeandmail.com) As the global financial crisis jeopardizes the future of private pension plans, the Quebec government is taking the unprecedented move of guaranteeing benefits to pensioners and workers of companies whose plans go bankrupt. Nearly a million workers and pensioners in Quebec are registered in more than 950 private company pension plans with assets worth about $100-billion. A handful of those pension plans could become insolvent this year if the companies declare bankruptcy, Quebec Employment Minister Sam Hamad said yesterday. Under a bill tabled yesterday, the Quebec Pension Plan (known as the Régie des rentes du Québec) will take over the management of insolvent pension plans and guarantee retirement income for five years to those who are entitled. If proved successful, the measure could be extended beyond the five years and perhaps become permanent, a senior government official said yesterday. The fund could also be transferred to an insurance company. All opposition parties and Quebec's major business and labour leaders support the bill. It is expected to be adopted today and will be retroactive to Dec. 31, 2008. Quebec companies will have 10 years rather than five years to replenish shortfalls in their pension plans. Currently, the market value of the assets of Quebec's private pension plans is 70 per cent of their total solvency liabilities, or what they need to pay out in benefits. This represents a $22-billion shortfall to bring solvency levels up to 100 per cent. Many cash-strapped companies face serious problems in meeting their pension contribution obligations. The initiative was one of a half dozen economic stimulus measures Premier Jean Charest's newly re-elected government included yesterday in Finance Minister Monique Jérôme-Forget's economic update. Ms. Jérôme-Forget also announced $250-million in refundable tax credits for home renovation projects, a benefit of up to $2,500 for homeowners.
OTHER STORIES:
Mortgage Rates are falling, but re-financings remain somewhat limited - (online.wsj.com) Bank approvals are less than they have been due to more stringent credit standards.
Americans on bailout: Stop spending - (money.cnn.com) Americans overwhelmingly say federal bailout has not been effective and majority want the government to stop providing money to banks. The government's financial bailout for troubled banks has not worked so far, a majority of respondents to a national poll say, and six in 10 don't want Washington to spend more money on the rescue. Sixty-one percent of those questioned in a CNN/Opinion Research Corporation survey released Friday oppose providing more government money in the financial bailout. There are some supporters, however -- 38% said the government should provide more assistance to ailing banks and other financial institutions. Most of the 1,245 adult Americans who were questioned for the poll were surveyed before Thursday's Senate vote to release the remaining $350 billion in the financial bailout program. "One reason for the opposition to more money being spent may be that more than eight in 10 said that the first $350 billion of taxpayer money for the bailout didn't work," said CNN Polling Director Keating Holland. "Only 14% say that the money accomplished what it was supposed to do."
Bank Losses Complicate U.S. Rescue - (www.washingtonpost.com) 2009 could be worse than 2008 as far as bank losses are concerned and the TARP, even if all the $700B is devoted to banks (and not autos, foreclosure prevention, etc), may not be enough.
Bailouts: Losses have become so large in many instances that the US Government may find itself becoming the majority owner of many banks.
In the wake of the Smith Barney+MS talks, the brokerage business is suddenly being viewed as one of Wall St's strongest - (online.wsj.com) Many companies are viewing these units as a potential source of growth and stability.
More write-downs on the way? Distressed asset indices fall sharply, raising worries about more write-downs for banks. - (www.ft.com) The Markit ABX index for triple A rated securities backed by subprime loans has dropped 13 per cent in the past week. Recovery rates in corporate bankruptcies will be much lower than usual according to the FT; senior unsecured debt holders can expect to recoup only 15c on the dollar (vs. historical levels around 40c) and bank loan holders will recoup only 52c (vs. historic 87c).
ECB Pres Jean-Claude Trichet’s vision of economies converging behind the shield of a shared currency may be unraveling as Italy, Spain debt is shunned - (www.bloomberg.com)
Gov Schwarzenegger on Thurs said that California would be insolvent “within weeks.” - (www.ft.com)
A tidal wave of discontent threatens China - (www.timesonline.co.uk) The most famous Chinese dissident predicts the Government will be trapped between the angry poor and the powerful rich.
US Military warns of “sudden collapse” of Mexico - (www.stratfor.com) A recent U.S. Joint Forces Command report warns of the potential for the Mexican state to collapse and says a devolution of control in Mexico would require U.S. intervention. Stratfor article on the situation:
Britain is now "bankrupt" following the sharp increase in Government borrowing - (www.telegraph.co.uk)
New York rents falling hard, anecdotal evidence - (optionarmageddon.ml-implode.com)
Estimated Change in House Prices: San Francisco will be worst hit - (www.seekingalpha.com)
In bad economy, Californians packing up and leaving - (www.dallasnews.com)
U.S. mortgage meltdown linked to 2005 bankruptcy law - (www.kansascity.com) This study is complete crap. This mortgage meltdown was in progress and the top was in around October 2005.
Beazer Homes: Sales Off more than 50% - (www.calculatedriskblog.com)
Warning that Irish house prices may fall by 80% - (www.irishtimes.com)
Miami-Dade Foreclosures Up 111% in 2008 - (www.miamicondoforum.com)
Toyota Slashes North American Production - (www.cnbc.com)
GM Cuts Auto Sales Outlook - (www.cnbc.com)
Should CEOs Of Public Firms Have Medical Privacy? - (www.cnbc.com)
Bernanke Hints Banks In Much Worse Shape Than Previously Admitted - (Mish)
Citi's Flip On Mortgage Cramdowns A Bad Idea - (www.seekingalpha.com)
We're All Foolish Keynesians Again - (online.wsj.com)
Deflationary Sprial Not Likely In US - (www.seekingalpha.com)
Is Financial Crisis Growing Worse—Or Is It Just Us? - (www.cnbc.com)
Intel Earnings Fall as PC Sales Remain Weak - (www.cnbc.com)
Cramer: Are the Bulls Back? - (www.cnbc.com)
Fox Business sues Fed for information on bailouts - (www.reuters.com)
No comments:
Post a Comment