Wednesday April 15 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

California plans big bond sale, with U.S. taxpayers' help - (www.latimes.com) California, which just completed one of the largest municipal bond offerings in U.S. history, will go back to investors for another big chunk of change this month. This time, the state plans to sell taxable rather than tax-free bonds. A portion of the deal will be subsidized by U.S. taxpayers under Congress’ new Build America Bonds plan, part of the economic-stimulus program. State Treasurer Bill Lockyer may try to raise as much as $4 billion via taxable bonds either next week or the week of April 20, spokesman Tom Dresslar said. Part of the offering will be used to finance projects that don’t qualify for tax-free funding -- such as the stem-cell research measure that California voters approved in 2004. The rest of the deal will finance traditional infrastructure projects that usually are funded with tax-free bonds. Lockyer will use taxable bonds instead because the U.S. Treasury will pick up part of the interest cost of the securities. Under the Build America Bonds program, states and other municipal issuers can choose to sell taxable bonds for public-works projects and have the federal government pick up 35% of the annual interest expense on the securities. That could be a great deal for California -- depending on what it has to pay on taxable bonds. On Monday, food-products maker ConAgra Foods Inc. paid a 7% annualized yield on new 10-year bonds. ConAgra’s credit rating from Moody’s Investors Service is Baa2.

SEC Mulls Two Short Sale Circuit Breakers - (www.cnbc.com) S. securities regulators are crafting two types of 'circuit breakers' to restrict short selling, a type of investing often blamed by executives for declines in the stocks of their companies, a source familiar with the proposals told Reuters on Monday. The Securities and Exchange Commission will consider at its Wednesday meeting the restoration of the "uptick rule," which allowed short sales -- a bet that a stock's price will fall -- only when the last sale price was higher than the previous price. The SEC is working on an updated version of the uptick rule to include all stocks and a bid test, which would only allow shorting at a price above the highest available bid, said the source, who requested anonymity because the proposals are still being crafted. The source said the SEC is working on a circuit breaker proposal that could temporarily prohibit short sales of a stock if the stock has already fallen by a certain percentage. The source also said the SEC is crafting another circuit breaker that would trigger the application of the uptick rule or bid test after the price of a stock had fallen by a certain percentage.

Irish Emergency Budget Aims to Avert ‘Grave Crisis’ - (www.bloomberg.com) Ireland’s government, reeling from the loss of its top credit rating by Standard & Poor’s, may increase taxes and cut spending in an emergency budget today aimed at stemming the biggest deficit among euro-area nations. Finance Minister Brian Lenihan, who is making his second budget speech in six months, says the country faces a “very grave national crisis” as the deficit heads for 13 percent of gross domestic product, four times the European Union limit. He may also announce plans to remove toxic property loans from the nation’s biggest banks. Ireland’s fiscal woes are another symptom of the global economic crisis that brought the nation’s 14-year boom to a halt, leaving the government with a 23 billion-euro ($31 billion) hole in the public finances. The economy, set to shrink the most of any euro area country this year, last month became the fourth member of the region to be downgraded this year. “The S&P downgrade was a kick up the backside,” said Jim Power, chief economist at Friends First in Dublin. “There is a short-term firefighting issue in the budget and a longer-term sustainability issue.” Lenihan may double the payroll levies he introduced in his previous budget in October and increase taxes on cigarettes and alcohol, the Sunday Business Post reported on April 5. The bank plan may involve setting up an asset-management company to remove some loans to real-estate developers. The minister is scheduled to deliver the statement to the parliament in Dublin at 3:45 p.m.

N. Ireland police: Soldiers murdered as they lay on ground: first British soldiers to be killed in Northern Ireland in 12 years - (www.cnn.com) The execution-style killing of two British soldiers and wounding of four other people in Northern Ireland was "an attempt at mass murder," police said Sunday. British Prime Minister Gordon Brown condemned the Saturday night attack as "evil and cowardly," saying "the whole country is shocked and outraged." The troops are the first British soldiers to be killed in Northern Ireland in 12 years, the Ministry of Defense confirmed. They were shot as pizzas were delivered to their base in Massereene, in County Antrim, Detective Chief Superintendent Derek Williamson of the Police Service of Northern Ireland said Sunday. Two other soldiers and two pizza delivery men were also wounded. The injuries were serious, a police spokeswoman said earlier. Williamson called the attack "an attempt at mass murder," saying that two gunmen with automatic rifles fired an initial volley of shots, then moved forward and fired a second burst at people lying on the ground before fleeing in a car driven by a third person. Police have not named the victims, but Williamson described them as "very young men in their early 20s." They were due to be deployed shortly to Afghanistan, he said. "Our inquiries are concentrating on dissident republicans," said Williamson, referring to militants who refused to join the Northern Ireland peace process. The attack stirred memories of three decades of violence that has largely faded since the 1998 Good Friday Accord. Thomas Burns, a member of the Northern Ireland Assembly who represents south Antrim, warned the attack could be a "devastating blow to the peace process," and a return to "bad old days again where people are being killed in open gun attacks. ... You wouldn't want ever to go back to those terrible, terrible old days of killing."

US Recovery Is Far Off, Banks Are 'Basically Insolvent': Soros - (www.cnbc.com) The U.S. economy is in for a "lasting slowdown" and could face a Japan-style period of relatively low growth coupled with high inflation, billionaire investor George Soros said on Monday.
Soros, speaking to Reuters Financial Television, also warned that rescuing U.S. banks could turn them into "zombies" that draw the lifeblood of the economy, prolonging the economic slowdown. "I don't expect the U.S. economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown," Soros said, adding that in 2010 there might be "something" in terms of U.S. growth. Soros' view contrasts with the majority of economists, who expect the U.S. economy to stop contracting in the third quarter and resume growing in the fourth quarter, according to the latest monthly poll of forecasts conducted by Reuters. The recovery will look like "an inverted square root sign," Soros said. "You hit bottom and you automatically rebound some, but then you don't come out of it in a V-shape recovery or anything like that. You settle down—step down."

GM Bankruptcy Plan Said to Speed Up as Board Seeks Savings Goal - (www.bloomberg.com) General Motors Corp. is speeding up preparations for a possible bankruptcy filing even as directors scout for deeper savings this week to avoid that outcome, people familiar with the plans said. GM would focus on forming a new company from its best assets if court protection is needed, said the people, who asked not to be named because the details aren’t public. The efforts to set a new cost-cut goal center on how to go beyond a proposal to slash debt by 46 percent and shed 47,000 jobs in 2009, and will include talks with Treasury officials, the people said. The moves are a response to President Barack Obama’s March 30 rejection of GM’s bid to keep $13.4 billion in federal loans. With bondholders and the United Auto Workers balking at concessions, a push for more savings makes bankruptcy more “probable,” Chief Executive Officer Fritz Henderson has said. “The best outcome is for an arrangement outside of bankruptcy, but that will be very difficult,” said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. “A bankruptcy of a company the size and complexity of GM is not simple, and it’s probably going to get ugly.”

Financially pinched companies snip employee benefits - (www.usatoday.com) Goodyear Tire & Rubber this year did something few companies have in this economy: It reinstated its suspended 401(k) match for employees. Great news, right? Sure. But the back story isn't very uplifting. After the dot-com bubble burst and the subsequent recession of 2001, the tiremaker halted its 401(k) contributions in 2003 as part of a cost-savings program. Six years and millions of dollars in lost matching money later, salaried employees now get a 50% company match for the first 4% of their pay. While Goodyear reinstated that benefit, it froze others — such as its more traditional pension plan — to save hundreds of millions of dollars. As the tiremaker is among a few that have given something back, it is at the same time part of a growing and large movement of companies cutting or reducing benefits for employees. Health care costs for employees have been rising for years, but perks and benefits such as cost-of-living increases, pension plans, bonuses, 401(k) contributions and tuition reimbursement are now being looked at as places to save millions of dollars. Given the massive savings for employers, many workers have doubts about when — or if — such items will ever fully or partially return. On average, companies have sliced up to five employee-oriented spending areas, such as 401(k) matches and tuition reimbursement in the past year says Laura Sejen, global head of strategic rewards consulting at employment consultancy Watson Wyatt.

Almost Half of French Approve of Locking Up Bosses - (www.cnbc.com) Almost half of French people believe it is acceptable for workers facing layoffs to lock up their bosses, according to an opinion poll published on Tuesday. Staff at French plants run by Sony, 3M and Caterpillar have held managers inside the factories overnight, in three separate incidents, to demand better layoff terms — a new form of labor action dubbed "boss-napping" by the media. A poll by the CSA institute for Le Parisien newspaper found 50 percent of French people surveyed disapproved of such acts, but 45 percent thought they were acceptable. "They are not in the majority ... but 45 percent is an enormous percentage and it demonstrates the extent of exasperation among the public at this time of economic crisis," Le Parisien said. On March 31, billionaire Francois-Henri Pinault was trapped in a taxi in Paris for an hour by staff from his PPR luxury and retail group who were angry about layoffs. Riot police intervened to free him.

Blockbuster indicates its future is bleak – (www.latimes.com) Its ability to remain a going concern hinges on completion of financing deals, but it may be unable to meet lender conditions, the Dallas company says in an SEC filing. Movie rental company Blockbuster Inc. said Monday the risk that it may not complete financing deals raised "substantial doubt" about its ability to continue as a going concern. Dallas-based Blockbuster, which has struggled amid the rising popularity of DVD-by-mail services such as Netflix, disclosed the warning in a filing with the Securities and Exchange Commission. The company had already cautioned last month that its auditor was likely to raise doubts about its ability to stay in business. A going-concern qualification refers to an auditor's assessment of a company's ability to continue to operate for the foreseeable future. Last week, Blockbuster said its revolving and term loan agreement was amended, giving it a $250-million revolving loan refinancing that matures Sept. 30, 2010. Lenders including JPMorgan Chase & Co. also agreed to waive any default that could result if auditors attached a "going concern" classification.





OTHER STORIES:

Banks' Toxic Debts Could Hit $4 Trillion: Report - (www.cnbc.com)
Pimco's El-Erian 'Very Underweight' Stocks - (www.cnbc.com)
Where Are Stocks Going? 4 Things You Should Know - (www.cnbc.com)
BOJ Stands Pat, But Australia Cuts Rates to 3% - (www.cnbc.com)
Layoffs Not an Option for Some US Companies - (www.cnbc.com)
Pier 1 Posts Loss on Markdowns - (www.cnbc.com)
ECB Official Raps IMF's 'Helicopter Money' - (www.cnbc.com)
Drilling Down on the G20’s $1 Trillion Pledge - (www.cnbc.com)
State Ownership of UK's RBS Will Rise to 70% - (www.cnbc.com)

Asia markets stumble amid US banks, earnings fears - (finance.yahoo.com)
Treasuries Rise as Stocks Decline, Fed Prepares to Buy Bonds - (www.bloomberg.com)
Soros Says Gain in U.S. Stocks Is ‘Bear-Market Rally’ - (www.bloomberg.com)
Yen Gains as Stock Losses Sap Demand for Higher-Yielding Assets - (www.bloomberg.com)
Plan to Expand Financial Oversight May Add New Risks - (www.washingtonpost.com)
Muted Signs of Life in the Credit Markets - (www.nytimes.com)

Foreclosure Scams Are Target of Crackdown - (www.washingtonpost.com)
Goldman Says IMF Gold Sales to Have ‘Limited Impact’ - (www.bloomberg.com)
U.S. Equities Cut to ‘Underweight’ at Citigroup - (www.bloomberg.com)
U.K. Factories Extend Worst Streak Since 1980 on Cars - (www.bloomberg.com)
Europe’s Recession Deepens as Investment Declines - (www.bloomberg.com)
Bank of Japan Takes Further Steps to Get Credit Flowing - (www.nytimes.com)
Canada Quantitative Easing to Be ‘Gentler’ Than U.S., CIBC Says - (www.bloomberg.com)
Australia’s Central Bank Cuts Rate to 49-Year-Low 3% - (www.bloomberg.com)
Australia to Build $31 Billion Broadband Network - (www.nytimes.com)
Fed Agrees on Swap Lines to Access Euros, Yen, Pounds - (www.bloomberg.com)
Economy Falling Years Behind Full Speed - (www.nytimes.com)
For port cities, slowdown in global trade hits home - (www.usatoday.com)

Ford in Uphill Challenge Despite Cutting Debt $9.9 Billion - (www.washingtonpost.com)
Sun May Be Left Standing Alone After IBM Ends Takeover Talks - (www.bloomberg.com)
Gates Seeks Sharp Turn In Spending - (www.washingtonpost.com)
Parsing the G-20’s $1 Trillion Pledge - (www.nytimes.com)