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Post by shortcircuit on Dec 15, 2007 17:41:12 GMT -4
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Post by shortcircuit on Dec 15, 2007 17:47:06 GMT -4
Morgan Stanley issues full US recession alert
Published on Tuesday, December 11, 2007.
Source: The Telegraph
Morgan Stanley has issued a full recession alert for the US economy, warning of a sharp slowdown in business investment and a "perfect storm" for consumers as the housing slump spreads.
Fed chairman Ben Bernanke will be hoping he can keep the US economy from recession
In a report "Recession Coming" released today, the bank's US team said the credit crunch had started to inflict serious damage on US companies.
"Slipping sales and tightening credit are pushing companies into liquidation mode, especially in motor vehicles," it said.
"Three-month dollar Libor spreads have jumped by 60 to 80 basis points over the last month. High yield spreads have widened even more significantly. The absolute cost of borrowing is higher than in June."
"As delinquencies and defaults soar, lenders are tightening credit for commercial, credit card and auto lending, as well as for all mortgage borrowers," said the report, written by the bank's chief US economist Dick Berner. He said the foreclosure rate on residential mortgages had reached a 19-year high of 5.59pc in the third quarter while the glut of unsold properties would lead to a 40pc crash in housing construction.
"We think overall housing starts will run below one million units in each of the next two years -- a level not seen in the history of the modern data since 1959," he said.
Although the US job market has apparently held up well, an average monthly fall of 138,000 in the number of self-employed workers over the last quarter suggests it may now be buckling. "Consumers face what could be a perfect storm," said Mr Berner.
The partial freeze on subprime mortgage rates announced last week by US treasury secretary Hank Paulson may help cushion the blow for some banks, but it could equally backfire by adding a "risk premium" that drives even more lenders out of the mortgage market.
Like Goldman Sachs, and Lehman Brothers, the bank no longer believes Asia and Europe will come to the rescue as America slows.
It has slashed its 2008 growth forecast for Japan from 1.9pc to 0.9pc, and warned that credit stress will weigh heavily on the eurozone.
Mr Berner said US demand is likely to contract by 1pc each quarter for the first nine months of 2008, but the picture could be far worse if the Federal Reserve fails to slash rates fast enough. It is betting on a quarter point cut this week, with three more cuts by the middle of next year. "We expect the Fed to insure against the worst outcome," he said.
Morgan Stanley is the first major Wall Street bank to warn that it is may now be too late to stop a recession, though most have shifted to an ultra-cautious stance in recent weeks.
The bank at first treated the August crunch as a "mid-cycle correction", much like the financial storm after Russia's default in 1998. But the collapse of the US commercial paper market has now continued for seventeen weeks, suggesting a "fundamental deleveraging of the banking system."
Mr Berner -- known at Morgan Stanley as the "resident bull" -- is one of the most closely watched analysts on Wall Street. While he began to turn bearish last April as the credit markets turned nasty, the latest report is written in tones that may is rattle the fast-diminishing band of optimists.
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Post by sometimeman on Dec 17, 2007 18:35:01 GMT -4
The Coming Collapse Of
The Modern Banking System
Staring Into the Abyss
By Mike Whitney
12-17-7 Most people have no idea how grave the present situation is or the disaster the country will face if trillions of dollars of over-leveraged bonds and equities begin to unwind. There's a widespread belief that the stewards of the system - Bernanke and Paulson - can somehow steer the economy through this "rough patch" into calm waters. But they cannot, www.rense.com/general79/collapse.htm |
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Post by sometimeman on Dec 17, 2007 18:49:40 GMT -4
Shrinking The US Dollar
From The Inside-Out
Offshoring Interests And Economic Dogma
By Paul Craig Roberts
12-17-7 On December 8, Chinese and French news services reported that Iran had stopped billing its oil exports in dollars. Americans might never hear this news as the independence of the US media was destroyed in the 1990s when Rupert Murdoch persuaded the Clinton administration and the quislings in Congress to allow the US media to be monopolized by a few mega-corporations. Iran's oil minister, Gholam Hossein Nozari, declared: "The dollar is an unreliable currency in regards to its devaluation and the loss oil exporters have endured from this trend." Iran has proposed to OPEC that the US dollar no longer be used by any oil exporting countries. As the oil emirates and the Saudis have already decided to reduce their holdings of US dollars, the US might actually find itself having to pay for its energy imports in euros or yen. Venezuela's Chavez, survivor of a US-led coup against him and a likely target of a US assassination attempt, might follow the Iranian lead. Also, Russia's Putin, who is fed up with the US government's efforts to encircle Russia militarily, will be tempted to add Russia's oil exports to the symbolic assault on the dollar. www.rense.com/general79/insid.htm |
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Post by shortcircuit on Dec 23, 2007 14:46:39 GMT -4
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Post by shortcircuit on Dec 23, 2007 14:52:13 GMT -4
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Post by sometimeman on Jan 4, 2008 7:05:21 GMT -4
Is the U.S. Government Sneaking Gold Out of Fort Knox?
Wednesday, October 17, 2007 Is the U.S. government sneaking gold out of Fort Knox? This may be exactly the case, as evidenced by a very curious change in U. S. Treasury reporting on gold supplies. Up until April 27th of this year, the U. S. Treasury reported on a weekly basis its international reserve position on this form: www.treas.gov/press/releases/2007581342179779.htmOn this form, the gold supply (valued at the old fixed price of $42.22 per ounce) is reported as $11,041 million. The following week, the Treasury changed the form and, as first spotted by Bill Rummel and reported in the Free Market Gold and Money Report, the new form has a change to its reporting of the gold supply. No longer is the gold supply listed as simply 'gold stock', it is now reported as "gold stock including gold deposits and, if appropriate, gold swapped” (our emphasis). See the new report here: www.treas.gov/press/releases/20075141738291821.htm. Very interesting. This is a strong indication the Treasury may be sneaking gold out the back door. A 'gold swap' is really pushing gold out the back door. It is not sold, it is, ahem, loaned for the value of the gold. Generally, it is loaned to bullion banks who then do the selling on the open market. If this is going on, the current climb in the price of gold is even more remarkable, given that it is occurring when, literally, Fort Knox gold may be in play and being sold. The new report from the Treasury is sufficiently vague, which makes it difficult to know exactly what is going on as far as specifics of gold swaps, it is just enough cover your butt info so that if anyone ever does an audit at Fort Knox and the gold at Fort Knox doesn't equal what the Treasury is reporting, the Treasury's reply can be "Oh yeah, that's part of the gold we loaned out," and then point to the "gold swap" clause on the new form and say, "Oh yeah, this is where we report the gold swaps." Sounds like a good time for Congress to demand an audit of just how much gold actually is in Fort Knox. Labels: Gold Posted by Robert Wallach 2:59 PM 6 Comments: At October 18, 2007 9:29 PM , Blogger Gerard said... Is the government sneaking gold out? Who would benefit from this? If it might be Bush and his cronies, the ultra-wealthy, then of course the gold is being taken out! Haven't we figured this simpleton out yet? At October 18, 2007 9:45 PM , Anonymous Anonymous said... Who needs gold, when you have an unlimited supply of green ink and paper. At November 1, 2007 11:18 PM , Anonymous Anonymous said... Ron Paul or Bust At November 5, 2007 2:43 PM , Anonymous Anonymous said... hmmm, the american dollar is losing value every day is it because their is nothing to back it? At November 12, 2007 7:34 PM , Anonymous truemyth2000 said... it's because it's debt money. we're spending into oblivion. subject to the political will and whims of the various leaders of the world. what do you want: control of your money or the world? At November 23, 2007 2:23 PM , Anonymous Anthony Hargis said... It appears they have been sneaking gold away from most of the central banks at least since the early 1990's; please see redressofgrievance.biz/gold_c_t.htm Post a Comment |
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Post by shortcircuit on Jan 6, 2008 18:46:28 GMT -4
Investors may see dividends disappear
Published on Sunday, January 06, 2008.
Source: Associated Press
With credit markets continuing their downward spiral, investors could see their dividends disappearing in 2008.
Dividend cuts or suspensions will continue to pick up among financial services firms in 2008, said Howard Silverblatt, a senior index analyst at Standard & Poor's. In 2007, fewer companies increased dividends, according to Standard & Poor's, while more companies in 2007 than in 2006 actually cut or suspended dividends.
Many investors rely on dividend payments as a source of income, and financial institutions in particular have been rich sources of large payouts. Their need to raise capital in the face of rising loan defaults, though, has made their dividends one of the first places they look to save money.
Diane Merdian at Keefe Bruyette & Woods noted that banks, in general, are offering a dividend yield that is near an all-time high when measured against the dividend yield on the S&P 500. Yields are based on a company's full year of dividends compared to the current share price.
Higher yields indicate the company might be distributing more cash to investors than it can afford. Drastic dividends cuts or outright suspensions are likely steps if companies are struggling with earnings or other cash needs.
Since early July, credit markets have been in a free fall, mostly due to rising defaults on mortgages, especially subprime loans given to customers with poor credit history.
As a result of the rising defaults, investors have shied away from purchasing bonds and debt backed by the loans because of fears of mounting losses. As investors stopped buying the debt, banks and other holders of the bonds have been forced to write down their value.
The writedowns — which eclipsed $100 billion in 2007 — have strained earnings, forcing companies to look for new ways to raise capital and preserve cash.
Silverblatt said if the credit markets continue to deteriorate and the economy further weakens, the problem is likely to expand into other areas, such as the consumer discretionary sector.
Additionally, companies that would normally increase dividends each year could also put those plans on hold, Silverblatt said.
The majority of dividend raises usually comes at the beginning of the year, as companies review the last year's financials and prepare for annual meetings. Thus, companies not increasing dividends in the first two months of the year are unlikely to do so later in the year.
One of the country's largest banks, Washington Mutual, said Dec. 11 it will cut its dividend to 15 cents per share from 56 cents per share as part of a broader undertaking to conserve cash.
The dividend cut is likely to save the bank $1 billion. At the reduced dividend rate, Washington Mutual's dividend yield is about 4.6 percent. Had it not cut its dividend, the yield would be about 17.1 percent.
While the dividend cut might save money, investors quickly moved to shed shares of the Seattle-based bank. Washington Mutual shares have declined 25 percent since the company said it was cutting its dividend.
More dividend cuts are likely to come as well. Many analysts are even predicting the nation's largest bank, Citigroup, will have to slash it dividend to preserve capital.
"Citigroup's capital levels are so tight, it might not have a choice," but to cut its dividend, said Josh Peters, editor of Morningstar DividendInvestor. "I wouldn't buy Citigroup today counting on the current dividend rate."
Keefe Bruyette's Merdian said she believes there is a more than 50 percent chance that Citigroup, which spends $10.8 billion a year on dividend payouts, will cut its 54-cent dividend.
She said if it did, the reduction would likely be around 40 percent. Citigroup's dividend yield is currently about 7.7 percent.
The dividend cut is likely necessary because billions of dollars in expected writedowns in the fourth quarter could further strain capital reserves.
Citigroup already took about $6 billion in writedowns in the third quarter, and previously estimated fourth-quarter writedowns would range between $8 billion and $11 billion. In her latest update, Merdian anticipates that writedown is likely to be even larger, at about $15.3 billion.
AP Business Writer Madlen Read in New York contributed to this report.
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Post by shortcircuit on Jan 6, 2008 18:53:43 GMT -4
Americans Sold Out to Foreign Firms at Record Rate
Published on Friday, January 04, 2008.
Source: Bloomberg
Foreign investors exploited the declining U.S. dollar during the past three months to snap up American companies, taking the biggest share of U.S. deals in at least a decade.
Buyers from Dubai to the Netherlands accounted for 46 percent of the $230.5 billion of U.S. mergers and acquisitions announced in the fourth quarter, the largest portion since 1998 when Bloomberg started compiling the data. The total excludes $17.9 billion of so-called passive investments by state-run funds in Asia and the Middle East in U.S. banks, including New York-based Citigroup Inc.
The influx of overseas buyers cushioned a drop in domestic deals, as tighter credit markets ended the leveraged buyout boom that spurred record-setting takeovers in the first half 2007. Foreign acquirers, who stepped in as the dollar fell 10 percent against the euro last year, show no sign of losing interest, according to bankers and lawyers.
``In 2006 and the first half of 2007, it was cheap financing that allowed private equity firms to compete,'' said Lee Lebrun, head of M&A for the Americas at Zurich-based UBS AG. Now, ``foreign corporates with strong currencies'' dominate, he said.
The dollar declined to $1.4967 per euro on Nov. 23, the lowest since the euro's introduction in 1999, and traded at $1.4726 at 4:21 p.m. in New York yesterday. Analysts expect it to rise to $1.40 against the euro in the next year.
Turkish Chocolate
``With the dollar being valued the way it presently is, basic economics should lead us to expect continued strong foreign investment in the U.S.,'' said Frederick Green, co-head of U.S. M&A at New York-based Weil, Gotshal & Manges LLP.
The quarter's biggest transactions included Toronto- Dominion Bank's takeover of Commerce Bancorp Inc., based in New Jersey, for $8.5 billion, and the $8.1 billion purchase of Chicago-based Navteq Corp. by Finland's Nokia Oyj, the world's biggest maker of mobile phones. Weil Gotshal counseled Turkey's Yildiz Holding AS when it agreed to buy chocolate maker Godiva from Camden, New Jersey-based Campbell Soup Co. for $850 million.
JPMorgan Chase & Co. worked on $36.4 billion of foreign takeovers in the U.S., the most in the fourth quarter, followed by Goldman Sachs Group Inc., with $35.3 billion, according to Bloomberg data. JPMorgan represented Toronto-Dominion and Goldman advised for Commerce Bancorp.
Security Clearance
Non-U.S. buyers last year avoided the political controversy that plagued Dubai-owned DP World in 2006, when it added six U.S. port terminals with the purchase of London-based Peninsular & Oriental Steam Navigation Co. U.S. lawmakers, including New York Democratic Senator Charles Schumer, said Dubai's ownership of the port operations could threaten national security, forcing DP World to sell them to American International Group Inc.
``In a post-Dubai Ports world, you've had two years that turned out to be record years for U.S. foreign investment,'' said Ivan Schlager, a partner at Skadden, Arps, Slate, Meagher & Flom in Washington. ``It really dispels the idea that the U.S. was turning inward. 2008 will shape up to be probably an even bigger year.''
Schlager is advising Nasdaq Stock Market Inc. in a transaction that will result in Borse Dubai owning a minority stake in the electronic exchange. It won approval this week from the Committee on Foreign Investment in the U.S., which reviews purchases on national-security grounds.
Citigroup, Morgan Stanley
Foreign companies were the buyers in $105.3 billion of the $230.5 billion of U.S. purchases in the quarter, Bloomberg data show. Overseas acquirers have accounted for just 18 percent of U.S. deals per year on average since 1998.
Some of the biggest U.S. merger advisers have themselves turned to foreign investors during the past three months to shore up capital depleted by losses on subprime home loans.
Citigroup, the biggest U.S. bank, raised $7.5 billion from Abu Dhabi's sovereign wealth fund. Firms controlled by China invested $5 billion in Morgan Stanley and $1 billion in Bear Stearns Cos., and Merrill Lynch & Co. got $4.4 billion from Singapore's government-run fund, Temasek Holdings.
To contact the reporter on this story: Zachary R. Mider in New York at zmider1@bloomberg.net
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Post by shortcircuit on Jan 13, 2008 12:45:39 GMT -4
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Post by sometimeman on Jan 14, 2008 22:34:26 GMT -4
THE COLLAPSE OF THE US DOLLARmagine being sent forward in time from 1968 to 2008. Instead of gas costing 25 cents a gallon, it's $3.00 or more. A decent home, intead of costing $15,000, costs $250,000 or more. Imagine your shock that the average American family owes $9000 on their credit cards. Imagine entering a society where less than 2% of the cars on the road are owned by those that drive them, and less than 1% of the homes are owned by the people who live in them. Welcome to the debt based slave state of America in 2008. It is all symbolic of how the globalists have America right where they want it, and are eager to finish it off. Posted Jan 13, 2008 05:17 PM PST Category: ECONOMY 64.233.169.104/search?q=cache:4lR2CqLOG7MJ:www.geocities.com/northstarzone/EURO.html+%22intead+of+costing%22&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a |
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Post by shortcircuit on Jan 16, 2008 22:27:17 GMT -4
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Post by shortcircuit on Jan 16, 2008 22:31:00 GMT -4
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Post by shortcircuit on Jan 16, 2008 22:35:36 GMT -4
Largest Saudi State Bank Urges Dropping Dollar Peg
Published on Monday, January 14, 2008.
Source: Financial Times
Saudi Arabia’s largest state bank has urged the government to consider altering the riyal’s peg to the US dollar and to diversify its assets by setting up a sovereign fund to boost returns and reduce exposure to the US currency.
The statement by National Commercial Bank’s chief economist comes amid intense pressure on the government to tackle rising inflation and consider the first riyal revaluation in 21 years.
The central bank has previously ruled out changing the peg, saying the effect of dollar weakness on inflation was relatively small.
However, Said Alshaikh, the NCB’s chief economist, said it was time to reconsider “provided that it is done gradually”, arguing that the effect of inflation had extended to the middle class and was no longer confined to the lower-income population.
There has also been speculation about how best to manage its oil wealth as the kingdom enjoys large budget surpluses following the deficits of the 1990s.
The central bank has acted as the sovereign wealth fund but has invested conservatively. It is estimated that 85 per cent of foreign reserves – currently at a record $285bn – are invested in dollar-dominated fixed-income securities. Mr Alshaikh said: “It would probably make more sense to use these resources in other types of assets across regions and in different currencies in order to maximise returns . . .”
Given the reserves, Mr Alshaikh estimated that any fund should be able to start with between $100bn and $150bn.
The government owns about 80 per cent of NCB but Mr Alshaikh’s comments do not represent official policy. However, he is thought to be the first prominent Saudi banker to urge the authorities publicly to create a sovereign fund.
The authorities have been considering various options for outside investments as they look at avenues to diversify holdings.
Both the central bank and finance ministry deny they are about to set up a separate sovereign wealth fund.
The central bank has said that enabling the Public Investment Fund, which has massive domestic holdings, to invest more aggressively overseas is under consideration.
PIF declined to comment, but said “significant developments” would be achieved in the next few weeks.
While sources inside Saudi Arabia say the PIF unit is likely to start off relatively small, in typical Saudi fashion, with as little as 20bn riyals, bankers abroad are expecting much larger sums to be deployed.
People familiar with Saudi plans, however, caution that the debate within the highest echelons of power is continuing, and key issues such as who would be the manager of any fund and how much it would have under-management are still being discussed.
Other ideas on the table include setting up other types of funds under the finance ministry to invest both domestically and abroad with the view to broaden asset management, but also to support investment and attempts to diversify the kingdom’s economy through overseas acquisitions.
Mr Alshaikh said the timing for a fund was opportune because some foreign entities, particularly financial institutions, had become attractive with the subprime crisis and a slowdown in the US and parts of Europe.
“I look at it also from the point of view that this is an opportune time to buy given that prices are attractive and at the same time you have the resources.”
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Post by shortcircuit on Jan 16, 2008 22:37:12 GMT -4
Import Prices Spur US Stagflation Fear
Published on Sunday, January 13, 2008.
Source: Financial Times
Import prices rose at their fastest pace in at least 25 years in 2007, underlining the threat of stagflation as the US enters a period of slower economic growth, according to figures from the commerce department.
The data come as other figures showed the US trade deficit widening in November, suggesting even weaker growth in the final quarter of the year.
Import prices rose 10.9 per cent last year, the fastest yearly increase since records began in 1982. The price of petroleum imports rose by 50 per cent over the year. Excluding energy, import prices rose by 3 per cent.
Prices in December grew at a slower pace than in the month before, but since then oil prices have risen further.
Rising energy and commodity prices are combining with higher food costs to pose an increasing inflationary threat. Meanwhile, the credit crisis and housing slump are threatening to pull back US economic growth to less than 2 per cent in the final three months of 2007, after a 4.9 per cent jump in the third quarter.
A growing number of economists are warning that the US will slip into recession this year.
On Thursday, Ben Bernanke, chairman of the Federal Reserve, raised hopes of rate cuts when he said the US central bank planned to act aggressively to offset the risks to growth.
Drew Matus, an economist at Lehman Brothers, said the trade and price figures highlighted the tight situation the Fed found itself in.
"It shows you can get slower growth and higher inflation," he said. "This is stagflation-lite."
The higher import prices data came after the US trade deficit widened in November to its highest level in 14 months as oil prices soared.
Total exports in November rose at a slower pace than imports, leaving the deficit up by $63.1bn, much larger than the $60bn that economists had expected.
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