Saturday January 31 Housing and Economic stories

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TOP STORIES:

Iceland's leaders say government could topple over economic crisis - (www.chicagotribune.com) Iceland's coalition government collapsed on Monday after an unprecedented wave of public dissent, plunging the island nation into political turmoil as it seeks to rebuild an economy shattered by the global financial crisis. Prime Minister Geir Haarde resigned and disbanded the government he's led since 2006. Haarde was unwilling to meet the demands of his coalition partner, the Social Democratic Alliance Party, which insisted on choosing a new prime minister in exchange for keeping the coalition intact. "I really regret that we could not continue with this coalition, I believe that that would have been the best result," Haarde told reporters. Iceland has been mired in crisis since October, when the country's banks collapsed under the weight of debts amassed during years of rapid expansion. Thousands of angry citizens have joined noisy protests against the government's handling of the economy, clattering pots and kitchen utensils in what some commentators called the "Saucepan Revolution."

Gloom deepens as 76,000 global jobs go - (www.ft.com) Corporate bellwethers in the US and Europe slashed more than 76,000 jobs from their payrolls to confront the deepening economic downturn, marking one of the most brutal days yet for workers on both sides of the Atlantic. US corporate groups such as Caterpillar, General Motors, Sprint Nextel. Texas Instruments, and Home Depot led the retreat, as the domestic recession coupled with tough export markets continued to take a heavy toll on their businesses. Pfizer, the drugs group, added to the tally saying jobs would be lost in its takeover of Wyeth. Large European companies such as Philips, the Dutch electronics company, financial group ING and the Anglo-Dutch steelmaker Corus, which is owned by India’s Tata Group, struck the same downbeat tone as they unveiled plans to axe staff.
· Sprint Nextel Cutting 8,000 Jobs to Fight Off Slump - (www.bloomberg.com)
· Home Depot to Cut 7,000 Jobs, Exit Expo Division - (www.bloomberg.com)
· Caterpillar to Cut 20,000 Jobs; 2009 Forecast Trails Estimates - (www.bloomberg.com)
· Philips focuses on cash as it axes 6,000 jobs - (www.ft.com)
· Corus cuts 2,500 UK jobs as demand drops - (www.ft.com)

71,400 jobs lost in one day - (money.cnn.com) The final week of January began with a bloodbath for the job market, as over 71,400 more cuts were announced on Monday alone. At least six companies from manufacturing and service industries announced cost-cutting initiatives that included slashing thousands of jobs. More than 200,000 job cuts have been announced so far this year, according to company reports. Nearly 2.6 million jobs were lost over 2008, the highest yearly job-loss total since 1945. "It's all about the consumer, and the consumer's been hit hard," said Robert Brusca, chief economist at Fact and Opinion Economics. "It's a vicious circle as weakness begets layoffs, which beget more spending weakness." Construction machinery manufacturer Caterpillar (CAT, Fortune 500) said Monday it will cut 20,000 jobs amid a "very challenging global business environment." The company had already planned to cut 15,000 workers since the fourth quarter of 2008, but added another 5,000, bringing the total to 20,000. Pfizer (PFE, Fortune 500) said in an earnings report it would cut 10% of its staff of 81,900 and close five of its manufacturing plants. And a second round of cuts will shed about 15% of employees from the combined Pfizer/Wyeth staff of 120,000. That makes a total of 26,000 jobs lost. The company already cut 4,700 jobs in 2008.

Citigroup to buy $50M private jet: report - (money.cnn.com) Citigroup Inc, which has received $45 billion of capital from the government, is going through with plans to buy a $50 million corporate jet, a person familiar with the matter said. The bank put in an order for the Dassault Falcon 7X two years ago and plans to accept delivery on the plane later this year, the source said. Canceling the deal would have forced the bank to pay a multimillion-dollar fee, the person said. Citigroup is selling two older Dassault jets, worth an estimated $27 million each, according to the New York Post, which was first to report that the bank was still buying the new plane.

US Arrests Financier in Purported $400 Million Scam - (www.cnbc.com) Authorities on Monday arrested the chief executive of a private New York financing firm on suspicion of running a purported Ponzi scheme that attracted $400 million in investments, U.S. law enforcement officials said. They said Nicholas Cosmo, head of Agape World on New York's Long Island, was said to provide commercial bridge loans, but was instead operating a traditional Ponzi scheme in which early investors are paid with the money of new clients. "Nicholas Cosmo took the advice of an attorney and complied with an arrest warrant," said Al Weissmann, spokesman for the U.S. Postal Inspection Service, which is investigating Agape World and Cosmo along with the FBI. Another law enforcement official, said agents had visited Cosmo's office on Monday expecting to arrest him, but he was not there. He complied with the warrant on Monday night. The amount of money, while large, pales compared with the alleged $50 billion fraud masterminded by investment manager Bernard Madoff. But law enforcement officials say they expect to uncover more Ponzi schemes following the sharp decline of the U.S. financial industry.

Bernanke Risks ‘Very Unstable’ Market as He Weighs Buying Bonds - (www.bloomberg.com) Federal Reserve Chairman Ben S. Bernanke and his colleagues may try once again to cure the aftermath of a bubble in one kind of asset by overheating the market for another. Fed policy makers meeting tomorrow and the day after are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield. Behind the potential move: a desire to reduce long-term borrowing costs at a time when the Fed can’t lower short-term interest rates any further because they are effectively at zero. The risk is that central bankers will end up distorting the Treasury market, triggering wild swings in prices -- and long-term interest rates -- as investors react to what they say and do. “It sets forth a speculative dynamic that is very unstable,” says William Poole, former president of the Federal Reserve Bank of St. Louis and now a senior fellow at the Cato Institute in Washington. The Treasury market has “some bubble characteristics,” Bill Gross, the manager of Newport Beach, California-based Pacific Investment Management Co.’s $132 billion Total Return Fund, said in December on Bloomberg Television. He echoed that sentiment last week.

Nationalization Gets a New, Serious Look - (www.nytimes.com) Only five days into the Obama presidency, members of the new administration and Democratic leaders in Congress are already dancing around one of the most politically delicate questions about the financial bailout: Is the president prepared to nationalize a huge swath of the nation’s banking system? Skip to next paragraphPrivately, most members of the Obama economic team concede that the rapid deterioration of the country’s biggest banks, notably Bank of America and Citigroup, is bound to require far larger investments of taxpayer money, atop the more than $300 billion of taxpayer money already poured into those two financial institutions and hundreds of others. But if hundreds of billions of dollars of new investment is needed to shore up those banks, and perhaps their competitors, what do taxpayers get in return? And how do the risks escalate as government’s role expands from a few bailouts to control over a vast portion of the financial sector of the world’s largest economy?



OTHER STORIES:

American Express earnings plunge 79% - (money.cnn.com)
Nobel economist: How to rescue banks - (money.cnn.com)
Stimulus 101: What's in the bills - (money.cnn.com)
Your economy: Bad to worse - (money.cnn.com)
Microsoft and Yahoo: Deal or no deal? - (money.cnn.com)

Thain: Loss Not My Fault, BofA Knew Of Problems - (www.cnbc.com)
American Express Profit Tumbles, Misses Forecasts - (www.cnbc.com)
Texas Instruments Profit Falls; Will Cut 3,400 Positions - (www.cnbc.com)

Highest Rates in Generation Confront Everyone Without Fed Funds - (www.bloomberg.com)
House Prices Dropped in 70% of U.S. States in 2008, Report Says - (www.bloomberg.com)
Elliott Hedge Fund Bought Fictitious Securities From Dreier - (www.bloomberg.com)
China’s ‘Severe’ Challenges Create Budget Woes, Minister Says - (www.bloomberg.com)
Economic Crisis Fuels Unrest in E. Europe - (www.washingtonpost.com)
Pound Plunge May Push U.K.’s Brown Off Currency Fence - (www.bloomberg.com)
Barclays says not seeking capital after $11 billion hit - (www.reuters.com)
Warning over quantitative easing in eurozone - (www.ft.com)
Caterpillar, Sprint, Home Depot Slash Jobs on Falling Sales - (www.bloomberg.com)

U.S. Existing Home Sales Rise on Record Price Slump - (www.bloomberg.com)
Fed May Gain More Financial Oversight - (www.washingtonpost.com)
Tuition Hike Considered At Va., Md. Colleges - (www.washingtonpost.com)
Companies in U.S. to Slash More Jobs, Business Economists Say - (www.bloomberg.com)
With Rates Near Zero, What Will Fed Do Next? - (www.cnbc.com)
Property tax revenue plummets with home values - (www.sfgate.com)
American Express Profit Drops 72% as Missed Loan Payments Grow - (www.bloomberg.com)
Texas Instruments Posts Smallest Profit Since 2002, Cuts Jobs - (www.bloomberg.com)

Shadow of insolvency hangs over chipmakers - (business.timesonline.co.uk)
Smurfit-Stone, Cardboard Maker, Files for Bankruptcy - (www.bloomberg.com)
Toyota Japan output to drop 60 percent in April - (www.reuters.com)