FTSE-100 falls below 5,000 for first time since June 2005

Alistair Darling, the Chancellor, has warned that he is prepared to take action against financial speculators who many blame for seeking to manipulate the stock market by unduly forcing down the value of popular shares.
Source: Telegraph Business | 16 Sep 2008 | 2:09 pm

HBOS shares plunge as sell-off quickens

Shares in HBOS slumped 36 per cent after news of sliding profits at Goldman Sachs added to pressure on financial stocks on Tuesday. At the same time, concern about the financial health of AIG in the US deepened after it was downgraded, hitting European insurers. Indices fell heavily in Europe and Asia. Futures trading pointed to further declines on Wall Street indices after their worst day since the terrorist attacks of September 11 2001.
Source: FT.com - US homepage | 16 Sep 2008 | 1:38 pm

European, Asian markets slide on Lehman, Merrill woes

World stock markets swooned again today as the global financial crisis caused investors to worry that asset prices have yet to hit rock bottom.

Source: L.A. Times - Business | 16 Sep 2008 | 1:33 pm

Fed to mull rate cut but may hold steady course (Reuters)

Reuters - The Federal Reserve will consider cutting U.S. interest rates to boost confidence in battered financial markets but policy-makers may keep rates on hold in the hopes that already low rates and expanded central bank lending will stabilize the economy.

Source: Yahoo! News: Business | 16 Sep 2008 | 1:29 pm

Central banks fail to lift markets

The European Central Bank, Bank of England and the Fed intervened as the financial system showed further signs of strain. Euro, dollar and sterling interbank lending rates all soared as financial institutions scrambled to work out their exposure to Lehman Brothers. Financial stocks fell sharply in Europe and Asia, with London's FTSE 100 falling briefly below 5,000 for the first time since June 2005
Source: FT.com - US homepage | 16 Sep 2008 | 1:28 pm

AIG shares plummet as cash crisis mounts

NEW YORK (Reuters) - American International Group Inc shares plummeted early Tuesday after the insurer's credit ratings were cut, jeopardizing its efforts to raise cash to survive.

Source: Reuters: Business News | 16 Sep 2008 | 1:26 pm

Lehman Rains On Solar Stocks Too (LEH, ESLR, JASO)

Source: 24/7 Wall St. | 16 Sep 2008 | 1:25 pm

Global market turmoil continues

Major global stock markets extend losses in the aftermath of the demise of top US investment bank Lehman Brothers.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 1:24 pm

Fed pumps $50 billion into Wall Street

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 1:24 pm

Best Buy profit drops 19% missing estimates

Best Buy Co., the No. 1 U.S. electronics retailer, says its second-quarter profit fell 19%, hurt by increased spending and sales of less profitable items such as notebook computers and video game consoles.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 1:23 pm

Futures Movers: Crude-oil futures extend sharp losses

Oil futures fall nearly 4% to trade near $92 a barrel, pressured by turbulence in the global financial markets and OPEC’s lowering of its forecast for world oil demand growth for this year.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 1:22 pm

Indications: U.S. stock futures extend losses on AIG fears; Fed on tap

U.S. stock futures dropped on Tuesday as the focus of the financial crisis shifted from Lehman Brothers to American International Group, with markets on alert for results from Goldman Sachs and a possible interest-rate cut from the U.S. Federal Reserve.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 1:21 pm

Best Buy shares fall after results (Reuters)

Reuters - Consumer electronics retailer Best Buy Co reported a worse-than-expected 19 percent drop in second-quarter earnings as it spent more money to improve stores, sending its shares down 7 percent.

Source: Yahoo! News: Business | 16 Sep 2008 | 1:20 pm

Best Buy shares fall after results

ATLANTA (Reuters) - Consumer electronics retailer Best Buy Co reported a worse-than-expected 19 percent drop in second-quarter earnings as it spent more money to improve stores, sending its shares down 7 percent.

Source: Reuters: Business News | 16 Sep 2008 | 1:20 pm

Stocks set for another plunge at open on AIG worries (Reuters)

Reuters - Stocks headed for a sharply lower open on Tuesday as investors fretted about insurer American International Group's ability to secure desperately needed capital to avert more credit agency downgrades.

Source: Yahoo! News: Business | 16 Sep 2008 | 1:19 pm

Stocks set for another plunge at open on AIG worries

NEW YORK (Reuters) - Stocks headed for a sharply lower open on Tuesday as investors fretted about insurer American International Group's ability to secure desperately needed capital to avert more credit agency downgrades.

Source: Reuters: Business News | 16 Sep 2008 | 1:19 pm

Monsanto Tries Raising Guidance (MON)

Source: 24/7 Wall St. | 16 Sep 2008 | 1:17 pm

Metals Stocks: Gold rises for third day as economic worries persist

NEW YORK (MarketWatch) - Gold futures rose Tuesday for a third session, as demand for gold as a safe haven increased after failures in major Wall Street financial firms raised economic concerns.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 1:16 pm

Consumer prices ease slightly

Consumer prices eased on an annual basis in August, bouncing off a 17-year high the previous month as energy prices fell, the government said Tuesday.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 1:15 pm

ArKal Medical, Inc. Secures $17.5 Million in Series B Financing

FREMONT, Calif., Sept. 16 /PRNewswire/ -- ArKal Medical, Inc. raised $17.5 million in a Series B financing round led by Thomas McNerney & Partners. Existing...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:15 pm

Future crunch?

Where to for the global economy in the year ahead?
Source: BBC News | Business | World Edition | 16 Sep 2008 | 1:14 pm

Europe Markets: Shares in Europe slump to three-year lows

European shares dropped to a level not seen since 2005 on Tuesday, after ratings downgrades threatened the survival of U.S. insurance giant AIG, Goldman Sachs revealed a sharp drop in third-quarter earnings and funding worries sliced another 30% from the value of U.K. mortgage bank HBOS.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 1:13 pm

CSX Board Invites Two New Members to Join Immediately

JACKSONVILLE, Fla. Sept. 16 /PRNewswire-FirstCall/ -- CSX Corporation (NYSE: CSX) today announced that, in light of yesterday's decision by the Second Circuit Court of...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:12 pm

Cincinnati Financial Corporation Comments on Full-year 2008 Outlook

Current economic and pricing pressures raise strategic importance of growth initiatives Mild catastrophe losses in July and August followed by mid-September storms Capital...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:10 pm

Fed set to hold rates steady, may signal cuts

WASHINGTON (Reuters) - Federal Reserve policy-makers are expected to stop short of lowering U.S. interest rates at a meeting on Tuesday but could signal readiness to cut them quickly if needed to protect the economy from one of the most serious financial crises in decades.

Source: Reuters: Business News | 16 Sep 2008 | 1:09 pm

Goldman Sachs net plunges 70 percent

NEW YORK (Reuters) - Goldman Sachs Group Inc said third-quarter earnings plunged 70 percent as one of the market's worst slumps ever sapped revenue in almost every business while fueling investment and credit losses.

Source: Reuters: Business News | 16 Sep 2008 | 1:09 pm

Goldman Sachs sees profits fall

Goldman Sachs reports a 70% fall in quarterly profit, avoiding the meltdown sustained by some of its rivals.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 1:08 pm

J.D. Power and Associates Reports: The Average Auto Insurance Company Fails to Capture 98 out of Every 100 Shoppers

WESTLAKE VILLAGE, Calif., Sept. 16 /PRNewswire/ -- On average, auto insurance companies quote and successfully sign only 2 percent of all auto insurance shoppers,...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:06 pm

New England Financial Appoints Corina Alvarez to Newly Created Position of Agency Multicultural Director

~Strengthens ties to Hispanic Community during Hispanic Heritage Month~ MIAMI, Sept. 16 /PRNewswire/ -- New England Financial, a MetLife company, recently announced...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:05 pm

Consumer prices ease on cheaper energy (Reuters)

Reuters - Consumer prices dropped 0.1 percent in August, the first decline in nearly two years as energy costs fell in a sign that a slowing global economy is relieving some inflation pressures, government data showed on Tuesday.

Source: Yahoo! News: Business | 16 Sep 2008 | 1:04 pm

Consumer prices ease on cheaper energy

WASHINGTON (Reuters) - Consumer prices dropped 0.1 percent in August, the first decline in nearly two years as energy costs fell in a sign that a slowing global economy is relieving some inflation pressures, government data showed on Tuesday.

Source: Reuters: Business News | 16 Sep 2008 | 1:04 pm

McCain/Obama: Who will reform healthcare?

Jody Hall considers herself lucky to be able to offer health insurance to the 55 employees of her two Seattle coffeehouses, Vérité Coffee and Cupcake Royale. But she may not be able to afford it much longer. Her premiums, currently $6,000 a month, took a staggering 40% leap last year. Even that is just for major medical, coverage that she calls "compromised." And it's available only to employees working at least 30 hours a week, who must still pay 25% of the cost.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 1:03 pm

How to Ride the Mortgage Roller Coaster (Today From Barron's)

Key lessons from the credit debacle and how to make the most of "an unmitigated disaster times 10."

Source: SmartMoney.com | 16 Sep 2008 | 1:02 pm

Kroger (KR): People Love Being Cheap

Wal-Mart (WMT) is not the only retailer benefiting from the consumer's need to be cheap. Kroger (KR), which sells groceries for the middle classes, reported robust earnings.

The chain said it had revenue of $18.1 billion for the second quarter ended August 16, 2008, an increase of 11.9% over the same period last year. Identical supermarket sales increased 9.7%.

Based on Kroger's year-to-date results and management's outlook for the remainder of the fiscal year, it raised the low end of its range for annual identical sales guidance to 4.5%.

KR confirmed its fiscal 2008 earnings guidance of $1.85 to $1.90 per diluted share. The range reflects 9% to 12% growth over fiscal 2007 earnings of $1.69 per diluted share.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Sep 2008 | 1:01 pm

Earnings Watch: Updates, advisories and surprises

A roundup of the latest corporate earnings reports and what companies are saying about future quarters.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 1:01 pm

Thomson Reuters Integrates Tradeweb Equity Services Into Its Exchange Traded Offerings

LONDON, Sept. 16 /PRNewswire/ -- Thomson Reuters today announced that it has strengthened its exchange-traded offerings by drawing on assets from Tradeweb, a leading...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:01 pm

NewsWatch: Market looks for rate cut, but it's not certain

Financial markets are betting on an interest-rate cut by the Federal Reserve some time this month, but it’s not certain that the central bank will deliver it at Tuesday’s regularly scheduled meeting of its rate-setting panel.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 1:00 pm

Loreto Resources Corporation Announces the Closing of a $1,350,000 Private Placement

SARASOTA, Fla., Sept. 16 /PRNewswire-FirstCall/ -- Loreto Resources Corporation (OTC Bulletin Board: LRTC, the "Company"), announced today that it completed an initial...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:00 pm

Freegold Continues to Extend High-Grade Mineralization at Rob with 4.5 m of 18 g/t Gold in Step-Out Holes

VANCOUVER, Sept. 16 /PRNewswire-FirstCall/ - Freegold Ventures Limited (TSX: ITF, OTCBB: FGOVF, Frankfurt: FR4) is pleased to announce that it is continuing to intersect...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:00 pm

New Book Opens an Unprecedented Window on the Vietnam War

WILMINGTON, Del., Sept. 16 /PRNewswire/ -- When American troops in Vietnam answered the call to correspond with a young reporter four decades ago, they could not have...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:00 pm

Deloitte Forecasts 2.5 to 3.0 Percent Increase in 2008 Holiday Spending

Consumers Are Focused on Value; Innovative Approaches Can Help Retailers NEW YORK, Sept. 16 /PRNewswire/ -- With many economic factors weighing heavily on...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Sep 2008 | 1:00 pm

Goldman profits slump as financial carnage swirls

LONDON (Reuters) - Quarterly profits at top U.S. investment bank Goldman Sachs slid 70 percent on Tuesday and shares in Britain's HBOS plunged by about a third as financial sector carnage snowballed beyond insurer AIG.

Source: Reuters: Business News | 16 Sep 2008 | 12:57 pm

Ingram Micro, Skydiving Without A Parachute (IM, TECD)

Source: 24/7 Wall St. | 16 Sep 2008 | 12:56 pm

Big fall in energy pushes consumer prices down

Consumer prices in August posted the first monthly decline in nearly two years as Americans finally get a break from surging energy prices.

Source: L.A. Times - Business | 16 Sep 2008 | 12:56 pm

Movers & Shakers: Tuesday's biggest gaining and declining stocks

Among the companies whose shares are expected to see active trade in Tuesday’s session are Aegon, AIG, Dell, Goldman Sachs, HP, Ingram Micro, Pall and J.M. Smucker.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 12:51 pm

Goldman Sachs profit falls 70%

NEW YORK (MarketWatch) -- Goldman Sachs said Tuesday that its fiscal third-quarter profit slipped 70% from a year ago as results at several units plummeted during ongoing market turmoil.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 12:48 pm

Dell warns of weaker IT demand

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 12:47 pm

Fed, world central banks boost liquidity for second day

Central banks around the world on Tuesday took steps for the second straight day to keep money markets from seizing up due to fears of further turmoil in the financial sector following the collapse of Lehman Brothers.

Source: MarketWatch.com - Top Stories | 16 Sep 2008 | 12:47 pm

Goldman profits slump as financial carnage swirls (Reuters)

Reuters - Quarterly profits at top U.S. investment bank Goldman Sachs slid 70 percent on Tuesday and shares in Britain's HBOS plunged by about a third as financial sector carnage snowballed beyond insurer AIG.

Source: Yahoo! News: Business | 16 Sep 2008 | 12:43 pm

Global shares dive before Wall Street open, Fed rate call (AFP)

AFP - World equities plunged for a second day running on Tuesday as investors in Europe nervously awaited the reopening of Wall Street and a key decision on US interest rates amid a financial meltdown.

Source: Yahoo! News: Business | 16 Sep 2008 | 12:43 pm

Lehman Bros files for bankruptcy

Top US investment bank Lehman Brothers files for bankruptcy protection, sending shockwaves through financial markets.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 12:40 pm

UBS Gets Its Turn In The Barrel (UBS)

Source: 24/7 Wall St. | 16 Sep 2008 | 12:38 pm

FTSE dives below 5,000 in second day of carnage

Commodities ravaged | Bruiser of Wall St looked after people | Memorabilia worth more than bank | Middleman left holding parcel | Leader: after Lehman
Source: Latest Business News from Times Online | 16 Sep 2008 | 12:36 pm

Fall in house prices is confirmed

The fall in house prices during the past year has been confirmed by the government's own house price index.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 12:34 pm

Dell sees further signs of weak tech spending

NEW YORK (Reuters) - Dell Inc's customers are cutting back further on technology spending, the company said on Tuesday, sending the computer maker's shares down more than 7 percent.

Source: Reuters: Business News | 16 Sep 2008 | 12:32 pm

Goldman Sachs (GS) Holds The Thin Line

Strong earnings out of Goldman Sachs (GS) would probably reverse the market's perception that all is lost and the best companies on Wall St. can handle the pressure of the credit crisis.

Goldman delivered. It shares fell slightly, but its numbers were comparatively strong.

Goldman net revenue of $6.04 billion and net earnings of $845 million for its third quarter ended August 29, 2008. Diluted earnings per common share were $1.81 compared with $6.13 for the third quarter of 2007.

In other words, Goldman kept its head above water.

The broker left its dividend intact. The weaknesses in the numbers is where they were expected. Credit products included very weak results from investments and a loss of approximately $275 million. Mortgages included net losses of approximately $500 million on residential mortgage loans and securities and approximately $325 million on commercial mortgage loans and securities.

But, Goldman did not loss money. It may be the only large financial company that will be able to say that this quarter. Good management and a prudent use of leverage and hedging kept Goldman out of harm's way.

Goldman will not have to sell itself or liquidate because of the burdens of mortgage-backed paper and ill-advised borrowing.

Goldman's earnings were perhaps the only chance the markets had to hold the line.

Goldman did its part.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Sep 2008 | 12:30 pm

The deepening auto recession

In the darkened cocktail lounge of a midtown Manhattan hotel early one recent evening, the gloomy atmosphere matched the mood of the Detroit executive who was nursing a beer. Auto sales are being ravaged by the toxic combination of plummeting housing prices, expensive consumer credit, and cratering used car values. And the economic forecast offers little hope of a recovery over the next 15 months

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 12:25 pm

Oil tumbles as Wall Street slides

Oil prices tumbled Tuesday as the meltdown on Wall Street pulled the oil market's focus to the economic slowdown that has already been cutting away at demand for energy.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 12:19 pm

Future bleak for music subscription services

Back in April, MySpace CEO Chris DeWolfe vowed to create a groundbreaking new digital music service offering everything from ad-supported free songs to iTunes-like downloads to monthly subscriptions. But DeWolfe ended up jettisoning part of that plan.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 12:19 pm

Consumer inflation rises to 4.7%

The UK's inflation rate jumped to 4.7% in August, up from 4.4% in July according to the Office for National Statistics.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 12:16 pm

Crisis threatens insurance giant

Concerns mount about the future of US insurance giant AIG as investors fear a domino effect in the wake of Lehman's collapse.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 12:08 pm

Analysts see additional write-down at Merrill Lynch

(Reuters) - At least two analysts said Merrill Lynch & Co Inc, the world's largest retail brokerage, could face additional write-downs in the coming quarters if market conditions do not improve.

Source: Reuters: Business News | 16 Sep 2008 | 12:04 pm

Dell sees further signs of weak tech spending (Reuters)

Reuters - Dell Inc's customers are cutting back further on technology spending, the company said on Tuesday, sending the computer maker's shares down more than 7 percent.

Source: Yahoo! News: Business | 16 Sep 2008 | 12:00 pm

A.I.G. on the Brink

Forget about Wall Street or some mortgage lender, American International Group is the mother of all financial crises. If this global colossus collapses, the reverberations will drown out all other failures.

This is the Big One.

The giant insurance company is desperately scrambling to raise cash after Standard & Poor’s and Moody’s Investors Service cut their ratings on A.I.G late Monday.  The company has previously estimated that a rating cut means that counterparties to swaps A.I.G. sold could ask for another $14.5 billion in collateral.
 
Others put the number higher. The ratings cuts may lead to “more than $17 billion'' in collateral calls, UBS analysts led by Andrew Kligerman in New York said in a note to investors today, Bloomberg News reported.

The action comes as officials of the Federal Reserve Bank of New York have reportedly been in talks with A.I.G. and Goldman Sachs and J.P. Morgan Chase in an effort to persuade  the two Wall Street firms to extend a $75 billion line of credit to the insurer.

If those talks fail, A.I.G. may have to file for bankruptcy protection as soon as Wednesday, the New York Times and the Wall Street Journal say.

Amid the crisis, A.I.G.’s insurance business has been solid, and the fate of those businesses will be largely determined by the state regulators that have power over them.

But the real impact of an A.I.G. collapse will be in the business that it got it in trouble: the insuring of derivatives like collateralized debt obligations that were tied to mortgages through credit-default swaps. These contracts backed $441 billion of assets as of June 30. A.I.G. has recorded losses of more than $13 billion this year, largely on those swaps.

A.I.G. is a counterparty on these swaps to countless other banks, hedge funds, and other financial institutions. The unwinding of contracts by a company so interconnected as A.I.G. will unleash shock waves throughout the financial system.

The ratings agencies cited concerns that the continued deterioration in the housing market was having an impact on A.I.G.’s capital and liquidity position.

"The main reason for the rating actions is the combination of reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses," Standard & Poor's credit analyst Rodney  Clark, said Mark-to-market losses from mortgage-related investments and swap exposures have placed significant pressure on A.I.G's ability to access capital and liquidity.

And the agencies may cut ratings again.

"Further downgrades of the parent and certain operating units are likely if the immediate liquidity and capital concerns are not fully addressed," Moody's said.

Related Links
Clock Ticks for A.I.G.
World Turned Upside Down
How Much Did Hank Greenberg Lose Today?


Source: Portfolio.com: Top 5 | 16 Sep 2008 | 12:00 pm

Stock Spin-Offs Can Be Good Investing Opportunity (SmartMoney Magazine)

The rough economy has sparked corporate spin-offs, creating unique opportunities.

Source: SmartMoney.com | 16 Sep 2008 | 11:47 am

Home prices to fall on liquidity concerns: analyst

(Reuters) - The collapse of Lehman Brothers Holdings Inc and takeover of Merrill Lynch & Co Inc will cause liquidity in the credit market to shrink, resulting in lower home prices, prominent U.S. banking analyst Meredith Whitney said.

Source: Reuters: Business News | 16 Sep 2008 | 11:46 am

Oil leads retreat across commodity markets

Oil prices tumbled sharply for a second session on Tuesday as risk aversion continued to dominate trading in commodity markets amid an ongoing financial crisis on Wall Street following Lehman Brothers'...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:46 am

Sell-off in financials continues

Insurance stocks joined banks at the forefront of a second session of heavy selling on European equities markets on Tuesday, as investors continued to worry that Lehman Brothers might not be the only big...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:42 am

Drowning sorrows

Should we feel sorry for City bankers?
Source: BBC News | Business | World Edition | 16 Sep 2008 | 11:41 am

Nationwide deal not end for windfalls

Cash windfalls remain likely from building society mergers in spite of the lack of payouts in Nationwide's takeover of the troubled Derbyshire and Cheshire societies. But future merger bonuses are expected...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:37 am

Page plunges as Adecco walks away

Adecco on Tuesday walked away from its proposed bid for Michael Page International, two weeks before a "put up or shut up" deadline imposed by the UK Takeover Panel.The Swiss recruitment group said it...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:36 am

Central banks try to lift markets

Central banks across Europe intervened heavily on Tuesday morning, after much higher than usual volatility in money markets as banks scrambled for cash following the collapse of Lehman Brothers. The European...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:32 am

Barclays eyes Lehman assets

Barclays on Tuesday confirmed that it was in talks with Lehman Brothers to buy some of the US banks' assets. If a deal comes to fruition it is likely to be tied up rapidly, possibly by later in the day...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:32 am

Salvaging the Wreckage

More of Lehman Brothers, and more of its employees, may be able to remain in business than was the case at Bear Stearns.

Barclays, the big British bank that had withdrawn from talks to buy all of Lehman over the weekend, has confirmed that it is in talks with Lehman on the possible acquisition of certain assets.

If it clinches a deal, Barclays would get the “good bank”: the broker-dealer business, including underwriting, merger advising, and fixed income. Those businesses employ 10,000 people, most of whom could presumably keep their jobs as there is not that much of an overlap with Barclays’ current investment banking operations.

The “bad bank,” the troubled real estate and investment portfolio tied to mortgages, would be liquidated by creditors, the Wall Street Journal reports.

The parent holding company of Lehman Brothers filed for Chapter 11 bankruptcy protection on Monday, giving it the ability to run the sales of its assets.

The Deal.com notes: “AChapter 7 filing for the whole Lehman empire would have resulted in a trustee-supervised liquidation, with little ability to maneuver for better deals. Under Chapter 11, Lehman as debtor-in-possession can supervise its own sales.”

Reuters reports that “there is an urgency to the talks” because of the belief that a deal needs to be struck quickly before clients and executives abandon the firm.

Related Links
The End of Lehman
Wall Street Huddles for Safety
Parsing Bank of America: Crisis Is Our Friend


Source: Portfolio.com: Top 5 | 16 Sep 2008 | 11:30 am

Recall Takes Down Another Contact-Lens Company (Market Movers)

A contact-lens solution recall sank shares of Advanced Medical Optics.

Source: SmartMoney.com | 16 Sep 2008 | 11:26 am

AIG (AIG) Dying

AIG (AIG) shares are off 40% in pre-open, to $2.85.

Source: 24/7 Wall St. | 16 Sep 2008 | 11:25 am

Gas prices rise another penny

Gas prices ticked up another penny, bringing the total increase in gas prices to 18 cents since Hurricane Ike rocked the Gulf, according to a survey released Tuesday.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 11:25 am

Lehman: A test for bankruptcy laws

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 11:18 am

Dell (DELL) Sails To Dark Waters

Perhaps it is just a bad week for news and it is not going to get better.

Dell (DELL) said it is seeing further softening in global end-user demand in the current quarter.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Sep 2008 | 11:12 am

European, Asian markets slide on Lehman, Merrill woes

PARIS -- World stock markets swooned again Tuesday as global financial crisis make investors worry that asset prices had yet to hit rock bottom.
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:10 am

Lehman Brothers collapse: Alistair Darling vows to crack down on market manipulation

Alistair Darling, the Chancellor, has warned that he is prepared to take action against financial speculators who many blame for seeking to manipulate the stock market by unduly forcing down the value of popular shares.
Source: Telegraph Business | 16 Sep 2008 | 11:09 am

Lehman Brothers collapse: Alistair Darling vows to crack down on market manipulation

Alistair Darling, the Chancellor, has warned that he is prepared to take action against financial speculators who many blame for seeking to manipulate the stock market by unduly forcing down the value...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:09 am

Europe extends losses as financials drop

European shares fell on Tuesday with banks continuing to lead the slide after a debt downgrade for American International Group fuelled fears for the health of the financial sector. The benchmark FTSE...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 11:03 am

Sell-off spreads to insurers

Insurance stocks joined banks at the forefront of a second session of heavy selling on European equities markets on Tuesday, as investors continued to worry that Lehman Brothers might not be the only big...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Sep 2008 | 10:11 am

AIG hit by credit agency downgrades

Concern over the future of AIG heightened today after two credit agencies cut their ratings on the American insurance group's debt, in a move that will drive up its cost of borrowing and put its $75 billion ($£42 billion) fundraising efforts in jeopardy.
Source: Latest Business News from Times Online | 16 Sep 2008 | 10:07 am

Cool roofs: Saving trillions

A new study claims white roofs could save billions in energy costs, reduce greenhouse gas emissions and create carbon credits worth $1 trillion.

Source: Business and financial news - CNNMoney.com | 16 Sep 2008 | 10:05 am

Rise In Oil Not Over: Nigeria, Venezuela, And Storms Out At Sea

Oil has hit a point where many analysts believe that it could move below $90 and stay there. If this were to happen, the boon to the economy should be considerable. Lower oil prices would go a long way toward saving the auto and airline industries. It would also undermine one of the key elements of inflation.

This dreamy view of crude's future however is unlikely to materialize The price of oil will rise again, and the events that will produce this reversal are ready to unfold. The market has just not yet focused on the impending disasters that are likely to occur before the end of the year.

Nigeria is the largest oil producer in Africa. The rebels there have spent their time randomly and stupidly attacking civilian targets. Someone holding a Ph.D in economics has moved into their midst and told them the country's oil infrastructure is the key to its financial health.

The Movement for the Emancipation of the Niger Delta has begun to bomb pipelines around the nation's large oil fields. Because the transportation system runs over thousand of miles protecting it is logistically impossible. It seems likely that in a short time a systematic series of attacks will cut a portion of the Nigeria's capacity.

Venezuela looks just as volatile. Hugo Chavez, the president for life, gives all the appearances of dementia. He has booted the US ambassador and nationalized much of the nation's oil and production operations. It is not clear that he has the engineering expertise within his borders to keep the system pumping crude efficiently.

Chavez has a new habit of spending time with the Russians, another oil exporter that has hard feelings toward the US and EU. According to The Wall Street Journal, Vladimir Putin dispatched a few bombers to Venezuela for a visit."It was the first time since the Cold War that military jets sent from Moscow touched down in the Western Hemisphere."

Venezuela may cut its own throat by reducing production to punish the US, but its government is not long on logic or foresight.

US oil refineries have dodged two hurricanes that made their way into the Gulf of Mexico. The storm season has two months to go. Luck is luck and never stays in one place for too long.

Crude is going higher and going higher soon.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Sep 2008 | 10:02 am

EU scrutinises Yahoo-Google deal

The European Competition Commission joins its US counterparts in ensuring the deal is within antitrust laws.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 9:45 am

The Lab Rats Next Door (Tough Customer)

Don't try this at home? One grandmother asks why not.

Source: SmartMoney.com | 16 Sep 2008 | 9:31 am

Got Your (Buy) Back (Stock Screen)

Firms willing to repurchase their own shares put money back into investors' pockets.

Source: SmartMoney.com | 16 Sep 2008 | 9:31 am

Double Your Next Egg (Cover Story)

Five strategies for getting more value out of work, savings, investments and your home.

Source: SmartMoney.com | 16 Sep 2008 | 9:30 am

Washington Mutual downgrade adds to pressure on bank

Concern over Washington Mutual's capital position are set to take centre-stage on Tuesday after ratings agency Standard & Poor's downgraded the lender's credit rating to junk status late yesterday.
Source: Telegraph Business | 16 Sep 2008 | 9:30 am

Which Warehouse Store Is the Best? (SmartMoney Magazine)

With food prices so high, buyers are flocking to warehouse stores. We visit three to find the best.

Source: SmartMoney.com | 16 Sep 2008 | 9:29 am

Are You Getting What You Pay for at Hotel Spas? (SmartMoney Magazine)

With hotel spas raising prices, we see if guests get what they're paying for.

Source: SmartMoney.com | 16 Sep 2008 | 9:29 am

Good Things Come to Those Who Wait (SmartMoney Magazine)

Japan's rebound has been slow in coming, but investors now see reason for optimism.

Source: SmartMoney.com | 16 Sep 2008 | 9:29 am

Your Vote, Your Wallet: McCain vs. Obama (SmartMoney Magazine)

Where the candidates stand on taxes, the housing crisis and health care coverage.

Source: SmartMoney.com | 16 Sep 2008 | 9:29 am

Barclays eyes core Lehman assets

UK bank Barclays says it is in talks to buy the core assets of collapsed US investment bank Lehman Brothers.
Source: BBC News | Business | World Edition | 16 Sep 2008 | 9:22 am

Fed Rate Cut: No Guts, No Glory

The Fed may still be concerned about inflation given that the UK said consumer prices there had a core increase of 4.7%. Even with that news, the oil and commodities elements of rising costs have been undermined by the perception that the world's economy is slowing and demand for goods and services is declining.

Most indications are that the Fed will not change rates, at least for now. It will reserve the right to cut them in an emergency.

By almost any definition, the emergency is here and is getting worse by the day.

The stock market collapse is only a relatively modest part of the problem. Unemployment clearly is rising. Layoffs at financial firms will exacerbate that. Hewlett-Packard (HPQ) said it would let 25,000 people go. Even healthy firms will cut where they can to keep earnings moving up as their revenues come under pressure.

The typical American has no equity left in his home. A flailing equities market has recently cut into many retirement savings accounts. This will undermine consumer spending again.

In China, the central government is beginning what will probably be a series of interest rate cuts. The corrosive by-product of inflation is being trumped by the need to keep the economy from falling.

The Fed has a simpler puzzle in front of it. The sharp reversal in consumer confidence and the torrential sell-off of stocks should kneecap any rise in prices between now and the end of the year.

There is still no credit in the market. Banks will not lend to one another. This means that lending to consumers is out of the question.

The Fed's first obligation should be to do no harm. Cutting rates may not improve the current state of affairs, but not cutting rates could burden consumers with additional worry. If consumers are too afraid to buy anything but the absolute necessities, the economy will suffer further.

At the very least, the Fed should do its part.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Sep 2008 | 9:20 am

Inflation surges above forecasts to 4.7 per cent

Inflation surged above forecasts to 4.7 per cent in August to the highest rate since Britain's last recession, after the price of food and energy rose.
Source: Latest Business News from Times Online | 16 Sep 2008 | 8:50 am

FTSE 100 slides further as British banks hit

The FTSE 100's slide accelerated this morning, dragged down by British banking shares, on fears that the the demise of one of the world’s biggest banks sparked fears that the credit crisis will claim further major casualties.
Source: Telegraph Business | 16 Sep 2008 | 8:10 am

Barclays in talks to buy some Lehman Brothers assets

British bank Barclays, which dramatically pulled out of talks to buy collapsed Lehman Brothers on Sunday, said that it is now in talks to buy some of the US bank's businesses.
Source: Telegraph Business | 16 Sep 2008 | 7:30 am

KB Home's former chief Bruce Karatz to pay $7-million settlement

He settles charges with the Securities and Exchange Commission, which accused him of taking part in a scheme to backdate stock options for himself and others at the Los Angeles-based home builder.

The former head of one of the nation's largest home builders will pay more than $7 million to settle claims that he took part in a scheme to backdate stock options -- and then failed to disclose it, the Securities and Exchange Commission said Monday.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Lehman Bros., Merrill Lynch employees anxious about future

Workers at the two major investment banks are mired in uncertainty after the weekend's shake-ups.

A mixture of shock, anxiety and grim resignation settled over tens of thousands of investment bankers, brokers and other Wall Street employees Monday as they absorbed the news that two of the nation's major investment banks were vanishing in the turmoil roiling the financial system.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Merrill Lynch takeover is a match for Bank of America's ambitions

The groundwork was laid in 1998, when Hugh McColl's NationsBank swallowed up BofA to create the country's largest bank. Whether the marriage will succeed, however, is a big question.

A.P. Giannini is remembered as the revered founder of Bank of America, but the institution that snagged Merrill Lynch & Co. in a pressure-filled takeover last weekend is very much Hugh McColl's Bank of America.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Yahoo-Google ad partnership faces EU review

Growing scrutiny and opposition could cause problems for both Internet companies.

Roadblocks are mounting on a vital route for Yahoo Inc.'s revival: the company's advertising partnership with once-rival Google Inc.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Wall Street braces for more

Worries over Lehman's fallout and AIG's fate pervade the market

With Wall Street already reeling from the demise of one storied investment firm and the rushed takeover of another, investors are bracing for more turbulence as the housing crisis continues to hammer the nation's financial system.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Oil falls below $100 a barrel; gasoline prices jump in some U.S. areas

Power outages from Hurricane Ike put the squeeze on gas supplies. Steep hikes at the pump spur complaints on Gulf Coast and elsewhere.

The price of oil fell sharply Monday to close below $100 -- a first since early March -- reflecting the gloom in financial markets and a sense of relief that key energy facilities weren't heavily damaged by Hurricane Ike.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Businesses could face tighter credit after Lehman bankruptcy

Small and mid-size companies could face more difficulty getting financing for expansion, new ventures or acquisitions.

Small and mid-size companies that depend on banks for the money to help them grow are facing new challenges as the nation's credit crunch squeezes lenders and forces some to consolidate or even collapse.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Teaching kids a financial lesson

Recent upheavals provide a dramatic backdrop for the launch of a U.S. Treasury program to educate children about credit.

See Sally. See Sally run from the bank. Run Sally run.

Source: L.A. Times - Business | 16 Sep 2008 | 7:00 am

Barclays mulls buying Lehman Brothers assets

Barclays, the UK lender, confirmed this morning that it was in talks with Lehman Brothers to buy assets from the bankrupt US investment bank.
Source: Latest Business News from Times Online | 16 Sep 2008 | 6:43 am

AIG's credit ratings slashed as Wall Street drama intensifies

Insurance giant becomes latest victim of fall-out from credit crisis
Source: Telegraph Business | 16 Sep 2008 | 5:45 am

Qantas gets its first A380

Qantas takes delivery of its first Airbus A380 superjumbo this week as it looks forward to building a fleet of fuel efficient aircraft to combat an environment of high fuel costs. After a delay of nearly two years, Airbus will...
Source: New Zealand Herald - Business | 16 Sep 2008 | 2:45 am

Downgrades deepen AIG woes

AIG, the troubled insurer that sits at the heart of the financial system, had its key credit ratings cut potentially forcing AIG to hand over billions of dollars of collateral payments on its many derivatives trades.
Source: FT.com - US homepage | 16 Sep 2008 | 2:12 am

NZ shares keep heading south after Wall St turmoil

New Zealand shares continue to be hit hard by the Wall St driven financial crisis, with the benchmark NZX -50 falling more than 3 per cent so far today. It recently stood at 3221, down 98 points. Market leader Telecom has been...
Source: New Zealand Herald - Business | 16 Sep 2008 | 2:00 am

Australian stocks: Market hit by global woes

The Australian stock exchange opened more than two per cent lower today, after a strong negative lead from Wall Street as uncertainty escalated in global financial markets. The benchmark S&P/ASX200 was down 110.9 points, or 2.3...
Source: New Zealand Herald - Business | 16 Sep 2008 | 1:25 am

Home affordability improves on back of house price, interest rate falls

Housing affordability improved by a record amount in August to its best level since January last year after house prices fell sharply and fixed mortgage rates fell below 9 per cent. The Wizard Home Loans Affordability report for...
Source: New Zealand Herald - Business | 16 Sep 2008 | 1:00 am

After The Close - Monday

J.M. SMUCKER (SJM), a food company, will pay a one-time dividend of $5 in connection with its Folgers buyout. The dividend is payable Oct. 31....
Source: Investor's Business Daily: BUSINESS | 16 Sep 2008 | 12:53 am

PR Software Helps Companies Polish Their Image With Efficiency

Public relations is the practice of managing the flow of information between an organization and the public.
Source: Investor's Business Daily: BUSINESS | 16 Sep 2008 | 12:53 am

In Brief - Monday

Nucor (NUE), the steel producer, lifted its Q3 outlook by 35 cents to a range from $2.15-$2.20, above views of $1.93, citing acquisitions, lower...
Source: Investor's Business Daily: BUSINESS | 16 Sep 2008 | 12:53 am

Business Briefs - Monday

Titan falls despite topping views. The seller of construction and agriculture equipment said its Q2 EPS fell 14% to 19 cents, 2 cents over views....
Source: Investor's Business Daily: BUSINESS | 16 Sep 2008 | 12:53 am

Trends & Innovations - Monday

Transit agencies stretched thin
Source: Investor's Business Daily: BUSINESS | 16 Sep 2008 | 12:53 am

Profile: Lehman Brothers

Founded by German immigrants in 1850, Lehman Brothers began life as a cotton-trading firm doing business in the American south, then a trader in general commodities including coffee.
Source: Telegraph Business | 16 Sep 2008 | 12:01 am

Merrill Lynch merger was an act of desperation

Merrill Lynch has agreed to merge with Bank of America (BoA) in a desperate attempt to avoid the same fate as that of Lehman Brothers.
Source: Telegraph Business | 16 Sep 2008 | 12:01 am

Profile: Merrill Lynch

Merrill Lynch, which has ceased to exist as an independent bank, is the quintessential Wall Street firm.
Source: Telegraph Business | 16 Sep 2008 | 12:01 am

CVC in pole position for Lehman's Formula One stake

Private equity group CVC is expected to buy a 16.8pc stake in Formula One from the administrators to Lehman brothers.
Source: Telegraph Business | 16 Sep 2008 | 12:01 am

Fried chicken sizzling but pizza cool at Restaurant Brands

Restaurant Brands total sales across its three brands were down 1.3 per cent to $92.4 million in the second quarter, although same store sales increased 1.2 per cent. In a continuation of previous patterns, the Pizza Hut operation...
Source: New Zealand Herald - Business | 16 Sep 2008 | 12:00 am

Stocks sink amid Wall St crisis

US stocks suffered their biggest one-day decline since the market reopened after the terrorist attacks of September 11 2001 as investors sought the safety of cash and government debt following the collapse of Lehman Brothers and growing unease about insurer AIG
Source: FT.com - US homepage | 15 Sep 2008 | 11:28 pm

Looking for a job after university? First, get off the sofa

In July, you looked on as your handsome 21-year-old son, dressed in gown and mortar board, proudly clutched his honours degree for his graduation photo. Those memories of forking out thousands of pounds a year so that he could eat well and go to the odd party, began to fade. Until now.
Source: Latest Business News from Times Online | 15 Sep 2008 | 11:00 pm

Pensioners are hardest hit by surging cost of bills

Pensioners have been hit hardest by the surge in the cost of food, fuel and mortgage bills, official figures show.
Source: Latest Business News from Times Online | 15 Sep 2008 | 11:00 pm

BASF agrees £3bn deal to buy Ciba

BASF, the German chemicals company, will take over Ciba, the Swiss company that makes chemical additives for the plastics, paper and coatings industries.
Source: Latest Business News from Times Online | 15 Sep 2008 | 11:00 pm

China’s central bank slashes interest rates as economy sputters

With Wall Street in full-blown crisis and its own stock market in tatters, China’s central bank has slashed interest rates for the first time in six years in a sign that the Asian powerhouse may be sputtering.
Source: Latest Business News from Times Online | 15 Sep 2008 | 11:00 pm

Hank Paulson has turned a drama into a crisis

It looks as if the prophets of doom may have been right after all. With the demise of Lehman Brothers and Merrill Lynch - and the threatened collapse of the world's largest insurance company, American International Group - we are now unquestionably in the worst financial crisis since the Great Depression.
Source: Latest Business News from Times Online | 15 Sep 2008 | 11:00 pm

Top execs resign at Plus SMS

NZAX-listed mobile phone content company Plus SMS is losing two top executives who were carrying out the roles of chief executive, chairman, chief financial officer and company secretary. Christopher Tiensch is resigning immediately...
Source: New Zealand Herald - Business | 15 Sep 2008 | 11:00 pm

British Energy on brink of deal with EDF after improved offer

The future of Britain's nuclear industry could be settled this week with the boards of British Energy and EDF, its French suitor, scheduled to meet to consider a sweetened £12 billion-plus bid for the UK generator.
Source: Latest Business News from Times Online | 15 Sep 2008 | 11:00 pm

Meltdown on Wall St - shades of October 1987

The US financial sector is crippled today following the bankruptcy of Lehman Brothers and the sale of Merrill Lynch. The demise of the two financial giants has sent a brutal message to Wall St about the effects of the 13-month...
Source: New Zealand Herald - Business | 15 Sep 2008 | 10:00 pm

Firm survived 9/11, but not this crisis

Born to serve cotton farmers in simpler times, Lehman Brothers grew into a financial high roller that succumbed to the recklessness that has immersed the world's financial markets in a morass of toxic mortgages and crumbling home...
Source: New Zealand Herald - Business | 15 Sep 2008 | 10:00 pm

HP to cut 24,600 jobs

SAN FRANCISCO - Hewlett-Packard Co. says it plans to cut 24,600 jobs, or about 7.5 per cent of its work force, over the next three years. This major restructuring is coming as HP integrates its newly acquired technology services...
Source: New Zealand Herald - Business | 15 Sep 2008 | 9:30 pm

VIX Index of U.S. Stock Option Prices Advances 23.5% to 31.70

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 9:14 pm

JPMorgan Muni-Swap Exit Not Just About Profit: Commentary

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 9:03 pm

Seeds of Lehman's Destruction

When the Federal Reserve helped push through a deal in March that saved Bear Stearns from filing for bankruptcy, did the central bank also ensure that Lehman Brothers would eventually fail?

The Fed's justification for the deal that sent Bear under the protective arms of J.P. Morgan Chase and put $29 billion of Bear's assets on the Fed's balance sheet was that markets were too jittery to handle a failure of the size of Bear. Had the government not intervened, the consequences could have been dire, Fed officials warned.

"Our judgment was that, had Bear Stearns been allowed to walk into bankruptcy court, that would have disrupted the financial system and had very serious effects on the economy," Federal Reserve Vice Chairman Donald Kohn testified in June.

But critics have accused the Fed of encouraging banks to maintain the status quo and not face up to the fact that their balance sheets were in need of a Clorox treatment. If institutions didn't acknowledge the exposure they had to falling real estate prices, more trouble was surely on the way.

Fast-forward six months and that's basically what happened with Lehman Brothers: Shortly after the Bear Stearns rescue, Lehman's chief executive Dick Fuld said that the worst of the credit crunch was over and only last week announced a major restructuring. But it was too little, too late.

"When you intervene, you think you're buying time for other firms to adjust, but you may actually only be buying time for management to delay," says Vincent Reinhart of the American Enterprise Institute and a former Fed economist.

Writing on the Economist's View blog, the University of Oregon's Tim Duy agrees: "Fed officials likely now understand the can of worms they opened with the Bear Sterns bailout."

That can of worms goes by the name of moral hazard, the risk faced by insurers that the protection they offer will lead parties to take on more risk. In the case of Lehman, the hazard was that the firm wouldn't shed its already high risk levels. If the Fed was willing to save a smaller firm, why not the larger Lehman?

"They had to draw the line somewhere," says Reinhart. "The government can't have an open backstop for financial firms."

The Fed had hoped that a combination of a Bear rescue and opening up access to its discount window for investment banks would calm markets and save the economy from a serious downturn. And it seemed to have worked, but only for a short while as it became clear that liquidity constraints weren't the problem, it was financial firms' solvency that was the main issue for investors and counterparties. There wasn't much the Fed could do about that.

With the decision by the Treasury Department and the Fed this weekend to not use taxpayer money to prop up Lehman, it seems that the government has gotten out of the bailout game it introduced with Bear. But the Fed also signaled that liquidity was still a concern and expanded the type of collateral it would accept from borrowers.

It's still too early to tell if the government's move will ease credit conditions. Early indications are that short-term funding could be tight: The federal funds rate shot up to 6 percent for a time today—the target rate is currently set at 2 percent. Another key measure of how willing banks are to lend to each other spiked, but in a possibly positive sign for markets, it stayed below levels reached earlier this year.

One thing that is clear is that most analysts expect more failures to be on the way. Will the government stand the ground it staked out this weekend and not open the public wallet? The move today to allow troubled insurer American International Group to borrow from itself seems to point in that direction.

But with the flip-flopping that's happened in both the Bear-Lehman situation as well as the rescue of Fannie Mae and Freddie Mac—even after the government said that the two mortgage giants wouldn't need public intervention—has left markets unsure about the Fed's commitment to its new harsh stance.
 

Related Links
The End of Lehman
Lehman Bailout? Just Say No
Helicopter Ben Strikes Again


Source: Portfolio.com: Top 5 | 15 Sep 2008 | 9:00 pm

Fonterra: We acted responsibly on killer milk

Chinese police have arrested two brothers suspected of adding an industrial chemical to milk they sold to a company that produced infant formula that has killed two babies. The news came just hours after Fonterra chief executive...
Source: New Zealand Herald - Business | 15 Sep 2008 | 9:00 pm

Julian Says ETFs Are Way to Make Money When Stocks Decline

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 8:59 pm

Big firms' failures aren't the last of it

Lehman Brothers is filing for Chapter 11 bankruptcy, and Merrill Lynch has been snapped up by Bank of America. What's next in the mortgage-crisis fallout? Bob Moon takes us through all the changes.
Source: Marketplace | 15 Sep 2008 | 8:55 pm

Lehman Bankruptcy Leads Investors to Cash Weinberg Says

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 8:49 pm

Lehman finds itself the focus of failure

After 9/11, Lehman Brothers moved its headquarters from Wall Street to near Times Square, where the new building's garish light displays fit right in. That didn't put it on the official tourist map -- until today's events. Sally Herships reports.
Source: Marketplace | 15 Sep 2008 | 8:19 pm

Where will Lehman failure fit in history?

There's no way to know now what the net effect of the events of this weekend are going to be. Surely they'll be fodder for authors and analysts for decades. Commentator and business historian John Steele Gordon says it was bound to happen.
Source: Marketplace | 15 Sep 2008 | 8:19 pm

How could latest collapses affect you?

When a lot of us first heard the news about Lehman Brothers declaring bankruptcy, our first thoughts went something like this: What about my money? Marketplace Money host Tess Vigeland explains what to do with your personal finances.
Source: Marketplace | 15 Sep 2008 | 8:19 pm

FDA eyes labels that are a little bit nuts

Food labels often make it tricky for people with food allergies to figure out whether something's safe to eat. The Food and Drug Administration on Tuesday is going to look into whether confusion is damaging confidence. Sarah Gardner reports.
Source: Marketplace | 15 Sep 2008 | 8:19 pm

GM hopes to get Volts into lagging sales

General Motors is celebrating its 100th anniversary with a big bash Tuesday in Detroit. At the party GM is expected to focus on the future and one very important car. Dustin Dwyer reports.
Source: Marketplace | 15 Sep 2008 | 8:19 pm

Next big question: Can AIG hold on?

AIG, the world's largest insurance company, is being torn apart by losses from the subprime mortgage meltown. The company got some breathing room today but the question on Wall Street is whether AIG can survive the week. Jeremy Hobson reports.
Source: Marketplace | 15 Sep 2008 | 8:19 pm

Levitt Says `Meltdown' May Prompt Years of Transparency

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 7:47 pm

Greenspan Says Fed Resources Must Focus on Financial System

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 7:19 pm

Fringe on the Edge

Fringe, the sci-fi series from superproducer J.J. Abrams, may have scored nine million viewers in its first episode, but on a Fox network accustomed to scripted blockbusters, the next few weeks will be crucial.
 
Trying to carry on the legacy of The Simpsons, 24, and even House, combined with a long-running marketing campaign created high expectations for the series that's supposed to be the linchpin of Fox's fall lineup.
 
And while Fringe performed respectably, with a debut audience of 9.1 million on Tuesday, September 9, and 5.7 million viewers for Sunday night's encore showing, it didn't quite generate the audience network executives were hoping for.
 
The big question: Will Fringe suffer from fan erosion over the next few episodes, undermining the network's investment (the pilot reportedly cost $10 million) and proving a rare failure for Fox?
 
Shari Anne Brill, senior vice president and director of programming at New York media agency Carat, says additional character development in episode two will help clarify the show's shot at success—and that the audience numbers for the premiere might be on the low side because it aired before the start of the official fall broadcast season, on September 22.
 
In Fringe's favor, says Brill, House, currently the network's top-rated scripted series, premiered to abysmal numbers—"six or seven million, insanely low"—in 2004.
 
"It was only when the show was relaunched in midseason, behind American Idol, that the numbers took off and doubled what they were in the fall," she says.
 
Tomorrow, House will have its season premiere on Fox, and the network has slotted in Fringe immediately afterwards to give the new show the kind of boost that benefited House back in 2004. And the series certainly has other things going for it.
 
The sci-fi theme will attract dedicated male viewers of the kind that made Fox's '90s show The X-Files a cult hit. The blond lead female investigator sure won't hurt with male fans, either. And a woman lead might make the science-fiction subject matter more palatable to female viewers.
 
Abrams has hits such as Felicity, Lost, and Alias under his belt, and the network has put on a glitzy promotional campaign, even filling the streets of Midtown Manhattan with cows, a Fringe motif, after announcing the show at the upfronts last spring.
 
On the other hand, if Fringe does prove a bust—and trade reviews, like one in Variety, have not minced words with negative opinions—the network will have an expensive flop on its hands.
 
Brill believes that the show's subject matter could ultimately determine its fate.
 
Fringe deals with mythology and fringe science, topics that normally attract niche audiences, "but Fringe is supposed to be more accessible," says Brill. "The idea that big business is corrupt and in cahoots with the government"—a concept that is unfolding as one of the show's central tenets—"is not that outlandish," she says.
 
While that's a sad conclusion, if enough viewers agree, Fringe might stand a chance after all.Related Links
The New Masters of Hollywood
The Mystery of J.J. Abrams' As-Yet-Untitled Trailer
Cloverfield Is Familiar But Frisky


Source: Portfolio.com: Top 5 | 15 Sep 2008 | 7:00 pm

Clock Ticks for A.I.G.

When American International Group was run with an iron hand by Hank Greenberg some years back and the insurer was regularly churning out profits, the only real criticism of the company was that it was a black box.

Now that A.I.G. is battling to survive, it is its black box that may save it yet.

Black box refers to accounting or investments so complex and arcane that they remain unknown to most investors. In the case of A.I.G, these are credit-default swaps that the company sold as insurance on complex securities, including collateralized-debt obligations.

Nearly every bank has some form of derivatives exposure to A.I.G. Ken Lewis, the chief executive of Bank of America, said today that a collapse of the insurer would be a "much bigger problem" than the failure of Lehman.

In the "shadow-banking system" of derivatives and complex structured-debt instruments, A.I.G. is at its center. The company may not be too big to fail, but it is too interconnected with banks, hedge funds, and others to allow a destructive chain reaction to erupt through the financial world.

As a result, there are more varied efforts to secure a lifeline for A.I.G. than there were for Lehman.

Yves Smith on Naked Capitalism notes that A.I.G. is bigger in credit-default swaps than Bear Stearns. "If Bear could not be allowed to fail, A.I.G, certainly can't come apart. But how can the Fed extend a lifeline to a party it doesn't regulate or even have as a counterparty?"

The governor of New York, David Paterson, says the insurer has permission to access some $20 billion of capital from its New York subsidiaries to give the company some time.

A.I.G., meanwhile, is reportedly in talks with the Federal Reserve Bank of New York for a $20 billion lifeline. But Treasury Secretary Hank Paulson said at an afternoon news conference that there would be no bridge loan from the government.

"What is going on in New York is a private-sector effort," he said.

The Wall Street Journal says the Fed is asking Goldman Sachs and J.P. Morgan Chase  to help make $70 billion to $75 billion in loans available to A.I.G.

The company is also planning to sell off "some of its most valuable assets," the Journal reports. By some estimates, the company needs to raise as much as $30 billion in capital—or about double its current market value.

Time is short. Shares of A.I.G. are down 60 percent today.

 

Related Links
A.I.G. on the Brink
World Turned Upside Down
Seeds of Lehman's Destruction


Source: Portfolio.com: Top 5 | 15 Sep 2008 | 7:00 pm

Lombard Street's Dumas Says Banking System Needs to Be Smaller

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 5:48 pm

Lehman's Goodwin Says Past Excesses Will Be `Regulated Away'

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 5:46 pm

Lombard Street's Dumas Says Banking System Needs to Be Smaller

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 5:45 pm

Lehman's Goodwin Says Past Excesses Will Be `Regulated Away'

Source: Bloomberg - All Podcasts | 15 Sep 2008 | 5:38 pm

Shock to the System

Over the past year, we've seen a number of days when the stock market fell 300 points. We've been there and done that, and we're quite used to it at this point.

So were all those end-of-the world headlines overblown? Is this the worst that happens when a major investment bank files for bankruptcy? Hard to see what all the fuss is about, really, let alone why the Federal Reserve felt it necessary to put up $29 billion to bail out Bear Stearns.

Of course, it's not nearly as simple as that. For one thing, it's not the stock market that everybody was worried about. This is a credit crisis, and American companies (the ones which weren't bought by private equity shops, anyway) tend to have low levels of debt. Some parts of the economy are highly indebted—investment banks and homeowners, above all. Most of the companies listed on the stock market aren't, and they should be able to weather a financial storm with relative ease.

On the other hand, that financial storm really does seem to be more of a heavy breeze than a major hurricane. The Standard & Poor’s financial-stock index is down by only 3.5 percent this morning—hardly a bloodbath. And the TED spread—a measure of distrustfulness among banks—is up sharply at 192 basis points, but is still below the levels we saw in the summer of 2007, and again in December, and again in March. Indeed, each spike upward in the TED spread seems to be lower than the last, which has to be a positive sign.

The big unanswerable question, though, is what happens next. Hurricanes start out as a heavy breeze, and then get worse—and the preconditions for a financial hurricane are very much in place. If a real hurricane needs high ocean surface temperatures and warm humid air, a financial hurricane needs generalized nervousness and a general lack of liquidity. Once those are in place, a few failed trades are all that is necessary to precipitate a very nasty chain reaction.

In normal times, failed trades are a regrettable part of doing business in financial markets—they slow things down and can cause massive back-office headaches, but they don't pose much in the way of systemic risk.

In times like these, however, failed trades are every banker's worst nightmare because of something known as settlement risk: You fulfill your side of the bargain, but your counterparty goes bust before they can fulfill their side.

How big is settlement risk right now? An indicator one might look at is the number of "fails to deliver" and "fails to receive" reported by primary dealers in U.S. Treasury bonds. Last week, before Lehman was expected to file for bankruptcy, fails to deliver rose by $351 billion to $410 billion; fails to receive rose by $336 billion to $389 billion. (PDF here; Excel file here.) Again, there have been bigger spikes in the past, but they haven't happened at the same time as the bankruptcy of a primary dealer. Right now is the last time that anybody wants to be worrying about failed trades, because they can't have any assurance that their counterparty will still exist by the time they're all worked out.

Lehman Brothers has more than $600 billion in assets that will need to be liquidated as part of its bankruptcy. That's an order of magnitude greater than any bankruptcy the world has ever seen: No one has a clue how to even get started on something so huge, let alone what the repercussions will be. Is there $600 billion in cash sitting on the sidelines of the global financial markets just waiting for an opportunity to snap up assets on the cheap? No. So as Lehman's assets get liquidated, asset prices in general, and bond prices in particular, are likely to be under a great deal of pressure

In turn, that's going to hurt other players in the global financial system, from hedge funds and sovereign wealth funds to small- and medium-sized regional banks. Anybody who's leveraged and who marks their assets to market is at risk of margin calls and possible bankruptcy themselves, depending on the volatility and risk profile of those assets.

The upshot is a state of radical uncertainty: as Paul Krugman says today, "nobody knows what will happen next." Krugman says that in not bailing out Lehman brothers, Treasury Secretary Hank Paulson is "playing Russian roulette with the U.S. financial system."

He's right, although that doesn't alter the fact that Paulson's decision was the right one to make.

There is a very, very long list of things that could go horribly wrong from here on out. The liquidation of Lehman is one; the possible collapse of American International Group is another. Beyond that are countless hedge funds and other financial institutions which, collectively, present significant systemic risk.

But the biggest and most obvious risk of all is the one associated with Lehman's own debt, which is now trading at less than 35 cents on the dollar. That's a big loss for the institutions holding it—but it also means an unknowably huge loss for anybody who wrote credit protection on Lehman Brothers at any point over the past five years. Those sellers of credit protection are staring down the barrel of billions of dollars in claims, and they're going to have to raise that money quick by selling anything they can get their hands on—and that might well include stocks.

So you think that we've dodged a bullet with the Dow still above 11,000? Just wait. This thing ain't over yet. In fact, it's barely begun.
 

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Source: Portfolio.com: Top 5 | 15 Sep 2008 | 4:00 pm

Wall Street crisis hits stocks

Lehman Brothers filed for bankruptcy protection and Merrill Lynch agreed to a $50bn takeover by Bank of America after a dramatic weekend on Wall Street. The Federal Reserve, European Central Bank and the Bank of England rushed to introduce emergency measures to ease pressures in money markets but equity markets tumbled and the oil price dropped below $95 a barrel
Source: FT.com - US homepage | 15 Sep 2008 | 3:54 pm

Investment Bank, R.I.P.

And then there were two.

In just six short months (or long ones, depending on where you sit), the number of major investment banks on Wall Street has shrunk from five to two. Bear Stearns fell in March. And now, with Lehman Brothers in bankruptcy and Merrill Lynch in the arms of Bank of America, just Morgan Stanley and Goldman Sachs are left standing.

Regulators have long wondered whether the market is better off with investment banks as independent firms or as divisions of larger commercial banks. That question will undoubtedly continue to be asked as a new administration is ushered into the White House in the coming months.

Regardless of what Washington may ultimately decide, the market has made its choice clear this year: The independent investment-banking model is dead.

"Without doubt, the investment-banking industry will never be the same," Larry Tabb, founder of the advisory firm Tabb Group wrote in a report today. "The days of the all-in-one global investment bank may be nearing an end. We are seeing a downsizing of industry capacity, and we will absolutely see a movement away from risk toward transparency and liquidity."

This is not to say that the Bank of America-Merrill Lynch model will fare much better, but at least it will have size on its side during times of crisis like this one. After all, Citigroup, which became a banking colossus with the merger of Citicorp and Travelers in 1998, hasn't exactly been an idyllic example of operational efficiency. But, painful as its voyage may have been in recent years, there is no evidence that Citigroup will succumb to this credit crisis the way investment banks have.

What will this mean for Morgan Stanley and Goldman Sachs? They, too, have had to deal with tarnished mortgage investments and bloated balance sheets during this credit crisis. Morgan Stanley's stock has fallen by more than half in the past year, and Goldman's has dropped by 44 percent. Neither bank is finished delivering bad news to investors, but they will try mightily to cloak that bad news with a positive spin that they are still doing better than the others.

Both banks are carefully constructing their comments now, as Morgan and Goldman are set to release third-quarter results later this week.

"Goldman and Morgan are better capitalized and better managed than the other three," says Steve Thel, a business law professor at Fordham Law School. "This is not to say they can survive, but the market is indicating that for highly leveraged firms, a steady source of capital is important."

Even if the two remaining names emerge from this credit crisis as independent entities, it's safe to assume that they will be forced to change the way they approach risk, just as the carcasses of their competitors will be forced to do under their new ownership.

This will pose a problem for Goldman and Morgan. As public companies, they are under pressure by shareholders to grow profits, which is the very pressure that led these firms to take the gamble on mortgage securities that has so spectacularly failed.

Perhaps, then, it's time to reconsider the investment bank as a public company. When Goldman became the last of the white-shoe firms to launch a ticker in 1999, the public structure for Wall Street became the new norm. It gave banks a source of capital, but it also gave them the freedom to take on risk with other people's money rather than their own.

Goldman and Morgan may also find it challenging to compete with the commercial banks on their own turf. The more capital a firm has available, the theory goes, the more risk it can take on.

Whatever the case, the investment-banking industry's shareholders, executives, and well-compensated employees must adapt to a new way of life. And the future may not please all or even most of them.
 

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Source: Portfolio.com: Top 5 | 15 Sep 2008 | 3:30 pm

World Turned Upside Down

This is the day of reckoning for Wall Street. The bankruptcy of Lehman Brothers, the sale of Merrill Lynch, and the troubles at American International Group have combined to send huge shock waves throughout the financial world.

Who could be next and when does the credit storm ease up? How does Washington deal with the fallout?

Here is where we stand:

The Fallout: So far, the market impact has been very ugly. The Dow Jones industrial average tumbled 504.48 points. The Standard & Poor's 500-stock index posted its steepest slide since the day the markets first reopened after the attacks of September 11. The S&P financials index plunged 10.3 percent, the worst for the index since its creation in 1989. The dive came just two months after the index recorded its biggest gain ever, rising 12.3 percent on July 17. Earlier,  stocks slid around the world, even as the biggest Asian markets—Tokyo, Hong Kong, and Shanghai—were closed for a holiday.

Credit default swaps also soared across the board. Even financially sound companies like General Electric were hit by investors suddenly skittish about everyone's creditworthiness. G.E.'s finance unit, GE Capital, saw its swaps jump by more than half today, to 348 basis points from 209 basis points on Friday. That means the cost to protect $10 million of GE Capital's debt rose to $348,000 a year today from $205,000 last week.

The Unwinding: The parent company, Lehman Brothers Holdings, filed for Chapter 11 bankruptcy protection in U.S. bankruptcy court in Manhattan. None of its broker-dealer subsidiaries are included in the filing, and they are continuing to operate. Lehman's bankruptcy is the biggest by a financial institution since Drexel Burnham Lambert, the firm whose fortunes rose and crashed with the junk-bond market, filed for Chapter 11 in 1990. Like Drexel, Lehman is expected to ultimately go into a runoff as it unwinds its trades.  

Whether an unwinding can be orderly in the current environment is the $1 trillion question.

On Sunday, the International Swaps and Derivatives Association, a trade group, organized an extraordinary ad hoc Sunday trading session. The goal was to give financial institutions a chance to offset their exposure to credit derivatives tied to the weakest of the stricken banks, Lehman Brothers.

But analysts say that the liquidation of Lehman will put the financial markets under pressure for some time as banks are forced to take additional write-downs and credit spreads widen. And the Wall Street Journal reports that some traders are having trouble trying to find new counterparties for their trades with Lehman.

The Next Victim: The financial firm seen as the most vulnerable is now clearly the American International Group. The insurance giant, desperate for new capital as its losses mount, may announce asset sales as soon as today. The company has also reportedly asked the Federal Reserve for $40 billion in short-term financing.

A.I.G. lost more than $13 billion in the first half of this year, most of it due to investments in mortgaged-backed securities and other debt-related instruments.

And there may be others. Still overhanging the financial-services industry is the fate of Washington Mutual, one of the nation's largest mortgage lenders. A team of private equity firms pumped $7 billion into the thrift last April, but its losses have continued to mount and its shares barely paused in their slide. They have lost more than 90 percent of their value in the last year, and closed on Friday at just over $2.

The End of the Investment Bank: With Bank of America's $44 billion acquisition of Merrill Lynch, only two independent Wall Street firms remain: Goldman Sachs and Morgan Stanley. Will they now feel pressure to merge with a big commercial bank?

When it was clear that there would be no rescue deal for Lehman, Merrill Lynch chose to welcome a suitor before its own situation was untenable.

With the deal, Bank of America leaps over Citigroup to become a behemoth in every niche of finance, from credit cards to derivatives. Is the financial supermarket back?

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Source: Portfolio.com: Top 5 | 15 Sep 2008 | 3:00 pm

BofA to buy Merrill Lynch for $50bn

Merrill Lynch rushed into an agreement to be acquired by Bank of America for $50bn in a sign that the crisis gripping Lehman Brothers is forcing rival investment banks to seek partners to avoid suffering the same fate
Source: FT.com - US homepage | 15 Sep 2008 | 1:06 pm

Gut Check

Tony Hawk is rich and chief executive of his own company, but that doesn’t mean he’s changed all that much from the skateboarding kid with a junk food diet. In fact, it’s something he says makes him a better C.E.O.
 
For Hawk, it's always been about being true to one's self, or at least his constituency—the skaters.

"You have to be approachable and identify with your audience," Hawk said. "I never forgot where I came from. I still continue to skate with the kids and see what they're up to. I still eat at McDonald's."

Hawk has never lost touch with that audience and doesn't want to. And that may be the key to the success of his Tony Hawk Inc., a privately held business with 30 employees working from an office park 40 miles north of San Diego.

"(I want to) actually experience it and not hire a marketing group to do it for you and then you're out of touch and you're relying on whatever their vision is," Hawks said.

Hawk started skating at the age of nine and three years later he gained his first sponsor.

Two years later at 14, he turned professional and in the following two years, he was considered the best skateboarder in the world. Over the next 17 years, he won enough contests–enough to think he was set for life.
 
He launched a skateboarding company, Birdhouse Projects, but it struggled as pubic interest slumped. Hawk slumped, too, financially. But when skateboarding and extreme sports began to grab the spotlight, he seized the opportunity.

His defining moment could be deemed when he went to the 1999 X-Games in San Francisco and completed the first "900" in skateboarding competition. (A 900 is a jump of two-and-one-half rotations, 360 degrees + 360 degrees + 180 degrees = 900).

"I didn't really anticipate making (the 900) that night," Hawk said. "I told myself that night that I was going to make that trick or get taken to the hospital."

That kind of determination served Hawk in business, too.

"I go with my gut feeling," Hawk said. "Is this is something that is truly connected with what I do."

He trusts his instinct because "I do live in this world. I didn't learn about it through videos or books. I actually did it and struggled with it."

As a businessman, Hawk now has racked up unusual success.

His video game series with Activision has sold more than 30 million copies and the newest releases are frequently among the top 10 sellers in the business. He’s done a direct-to-DVD movie, a clothing brand that’s sold at Kohl’s and last year, the Tony Hawk Big Spin roller coasters made their debut at Six Flags’ Amusement Parks.

That's all in addition to his skateboarding business and an extreme sports tour called Tony Hawk's Boom Boom HuckJam, which he started in 2002.

Hawk also founded the Tony Hawk Foundation, which is designed to promote and help finance public skate parks in low-income areas.
 
The foundation has distributed more than $2.3 million to non-profit groups building skate parks everywhere from Homer, Alaska to Needles, Calif., to Greencastle, Ind., to Livermore Falls, Maine.

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Source: Portfolio.com: Top 5 | 15 Sep 2008 | 12:00 pm