Tesco plans further China expansion (AP)

AP - Tesco PLC, the world's third-biggest retailer, said Tuesday it plans to expand its presence in China by opening new stores in the eastern coast provinces of Shandong and Fujian next year.
Source: Yahoo! News: Business | 11 Nov 2008 | 12:49 pm

Top Pre-Market Analyst Upgrades (FRPT, INFY, NZ, OPTR, UTHR, USB, VMW)

These are the top analyst upgrades we are seeing from Wall Street early this Tuesday morning:

• Force Protection (NASDAQ: FRPT) Raised to Buy at Collins Stewart.
• Infosys (NASDAQ: INFY) Started as Outperform at William Blair.
• Netezza (NYSE: NZ) Started as Outperform at Oppenheimer.
• Optimer Pharmaceuticals (NASDAQ: OPTR) Raised to Outperform at Baird.
• United Therapeutics (NASDAQ: UTHR) Started as Buy at Deutsche Bank.
• US Bancorp (NYSE: USB) Raised to Hold from Sell at Sandler O'Neill.
• VMware (NYSE: VMW) Started as Perform at Oppenheimer.

Jon C. Ogg
November 11, 2008

Source: 24/7 Wall St. | 11 Nov 2008 | 12:42 pm

Bank holding co status to aid American Express' funding: Whitney

(Reuters) - Getting approval to work as a bank holding company will afford American Express Co a more stable funding mix, Oppenheimer analyst Meredith Whitney said.

Source: Reuters: Business News | 11 Nov 2008 | 12:42 pm

Asia Markets: Cautious mood sparks broad-based selling in Asian session

Asian equity markets end broadly lower on fears about profits as investors digest China’s $586 billion economic stimulus package and contempate what the the Group of 20 meeting might yield this weekend.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 12:40 pm

Tyco International quarterly profit tops forecasts (Reuters)

Reuters - Tyco International Ltd reported higher-than-expected quarterly earnings as it benefited from strong pricing in its electrical and metal products segment and increased demand for its valves and temperature controls.

Source: Yahoo! News: Business | 11 Nov 2008 | 12:38 pm

Tyco International quarterly profit tops forecasts

NEW YORK (Reuters) - Tyco International Ltd reported higher-than-expected quarterly earnings as it benefited from strong pricing in its electrical and metal products segment and increased demand for its valves and temperature controls.

Source: Reuters: Business News | 11 Nov 2008 | 12:38 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 Carmike Cinemas, Cinemark, Citi, Liz Claiborne, Freeport-McMoran, Las Vegas Sands, MarineMax, Midway Games, Sirius XM, Toll Brothers and Starbucks.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 12:36 pm

Top Pre-Market Analyst Downgrades (AA, AZ, ACAS, CAR, CMA, HTZ, KFN, SGMO, TM)

These are the top early bird analyst downgrades we are seeing with more than two hours to the open on this Tuesday morning:

• Alcoa (NYSE: AA) Cut to Market Perform at FBR.
• Allianz (NYSE: AZ) Cut to Hold from buy at Citigroup.
• American Capital (NASDAQ: ACAS) Cut to Market Perform at William Blair; Cut to Hold at BB&T.
• Avis Budget (NYSE: CAR) Cut to Underweight at Barclays.
• Comerica (NYSE: CMA) Cut to Hold at Deutsche Bank.
• Hertz (NYSE: HTZ) Cut to Equal Weight at Barclays.
• KKR Financial (NYSE: KFN) Cut to Sell at Citigroup.
• Sangamo Biosciences (NASDAQ: SGMO) Cut to Neutral at Merriman Curhan Ford; Cut to Sell at Piper Jaffray.
• Toyota (NYSE: TM) Cut to Underweight at HSBC.

Jon C. Ogg
November 11, 2008

Source: 24/7 Wall St. | 11 Nov 2008 | 12:34 pm

Indications: U.S. stock futures slip on economy fears

U.S. stock futures slipped Tuesday with the strains in the economy showing as Toll Brothers and InterContinental Hotels noted downturns in just the last month and as American Express converted into a bank to get quicker access to U.S. government cash.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 12:32 pm

Vodafone to focus on cost control after revenue cut

LONDON (Reuters) - Mobile phone group Vodafone cut its full-year revenue outlook for the second time in four months on Tuesday but said it would maintain profits and boost free cash flow by cutting 1 billion pounds ($1.6 billion) of costs.

Source: Reuters: Business News | 11 Nov 2008 | 12:31 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 | 11 Nov 2008 | 12:31 pm

Swiss say no UBS client data transferred to U.S. (Reuters)

Reuters - Switzerland said on Tuesday it had not passed Swiss-based account details of U.S. clients of UBS bank to the United States, which is seeking the information as part of a tax probe that may threaten Swiss bank secrecy.

Source: Yahoo! News: Business | 11 Nov 2008 | 12:29 pm

Swiss say no UBS client data transferred to U.S.

ZURICH (Reuters) - Switzerland said on Tuesday it had not passed Swiss-based account details of U.S. clients of UBS bank to the United States, which is seeking the information as part of a tax probe that may threaten Swiss bank secrecy.

Source: Reuters: Business News | 11 Nov 2008 | 12:29 pm

Goldman urged bets against bonds it sold: paper

(Reuters) - Goldman Sachs Group Inc , which acted for the state of California in selling bonds, has urged some of its big clients to place investment bets against some of those bonds this year, the Los Angeles Times reported.

Source: Reuters: Business News | 11 Nov 2008 | 12:26 pm

Grim economic data throws spotlight on crisis summit

LONDON (Reuters) - Weak economic readings from China, Japan and Britain and a grim corporate outlook worldwide reinforced fears on Tuesday of a prolonged recession, prompting investors to look to a world leaders' summit for solutions.

Source: Reuters: Business News | 11 Nov 2008 | 12:26 pm

Barton Biggs: Fears are overblown

Bear in mind two caveats as you peruse these comments. First, I run a hedge fund, so I am hardly an unbiased observer. Second, nobody, and I mean nobody, really knows what hedge fund liquidity is or what redemptions are or will be.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 12:26 pm

What would Buffett do?

Warren Buffett has already told the world what he's doing in this frightful market. The Oracle of Omaha proudly proclaimed that he's "been buying American stocks" with his personal funds.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 12:25 pm

Sao Tome names new oil minister after resignation

president on Tuesday named an economist trained in the former
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 12:20 pm

Colao outlines new strategy for Vodafone: Cash is king

Vodafone Group Chief Executive Vittorio Colao on Tuesday unveils a new strategy for the mobile giant that will see it focus on cash generation and capital discipline amid the general economic downturn.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 12:20 pm

Oil falls nearly 3 percent as China boost fades

LONDON (Reuters) - Oil prices fell nearly 3 percent below $61 a barrel on Tuesday as a firmer dollar and renewed gloom over the global economy wiped out Monday's boost from China's stimulus plan.

Source: Reuters: Business News | 11 Nov 2008 | 12:17 pm

UPDATE 1-Syneron Q3 profit misses estimates

Medical Ltd reported a lower quarterly profit that
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 12:14 pm

Crisis reaches Harvard's doors

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 12:09 pm

Chase De Vere fined £1m for pensions mis-selling

The Financial Services Authority (FSA) has handed AWD Chase De Vere Wealth Management, the financial adviser, a £1.12 million fine for serious failings that the regulator concluded led to pensions mis-selling.
Source: Latest Business News from Times Online | 11 Nov 2008 | 12:09 pm

Grim economic data throws spotlight on crisis summit (Reuters)

Reuters - Weak economic readings from China, Japan and Britain and a grim corporate outlook worldwide reinforced fears on Tuesday of a prolonged recession, prompting investors to look to a world leaders' summit for solutions.

Source: Yahoo! News: Business | 11 Nov 2008 | 12:09 pm

Asian officials worried about food security

Southeast Asian countries are concerned the global economic meltdown may hurt agricultural investment, sparking massive layoffs that could make access to food even more difficult for the...
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 12:08 pm

Europe Markets: European shares weaken as banks, oil and gas majors drag

European shares decline on Tuesday morning amid more gloom on the state of the economy, although gains for telecom giant Vodafone Group help limit losses.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 12:07 pm

US dollar mixed, gold falls in European trading

The U.S. dollar was mixed against other major currencies in European trading Tuesday morning. Gold fell. The euro traded at $1.27363, down from $1.2764 late Monday in New York. Other...
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 12:01 pm

More housing worries send stock futures lower

Wall Street looked to open lower Tuesday after homebuilder Toll Brothers Inc. said it couldn't project a profit for 2009 and Starbucks Corp. reported earnings missed Wall Street...
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 12:00 pm

UPDATE 1-Hungary's Egis eyes takeovers, sees export boost

* Sees domestic sales up 3 pct in fiscal yr starting Oct. 1
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 11:53 am

InterContinental warns on outlook; quarterly net drops 28%

As InterContinental Hotels reports a 28% downturn in third-quarter profit, management warns of a “sharp deterioration” in market conditions last month. Shares retreat in London trading.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 11:53 am

Stocks brace for more losses

Wall Street headed for a drop at Tuesday's open as recession fears, lower oil prices and jitters about the financial sector haunted investors.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 11:52 am

British retail sales fall for 1st time since 2005

British retail sales fell for the first time in three and a half years during October as consumers tightened their belts in a sagging economy, while the number of house sales in England and
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 11:49 am

Macau leader: No plans to help Sands' financing

Macau has no plans to help Las Vegas Sands Corp. with financing after the struggling casino operator announced it was suspending multibillion-dollar projects in the Chinese gambling city...
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 11:48 am

Citigroup to help at-risk borrowers stay in homes

Citigroup says it is imposing a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers remain in their homes _ making Citi the latest big bank
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 11:48 am

AmEx approved to become bank holding company

American Express wants your deposits. The Federal Reserve on Monday granted AmEx's request to become a commercial bank, opening the door for the credit card giant to accept deposits and...
Source: Infocious RSS raw feed - channel BNewsBusiness | 11 Nov 2008 | 11:47 am

NSN to cut 1,820 jobs

HELSINKI (Reuters) - Telecom gear vendor Nokia Siemens Networks said on Tuesday it would slash around 1,820 jobs, mostly in Finland and Germany, as it enters the last part of its 2 billion euro ($2.58 billion) cost-cutting programme. The news comes one day after Canada's Nortel said it would axe 1,300 jobs as vendors try to cope with fierce competition for new business, subdued demand and falling prices.

Source: Reuters: Business News | 11 Nov 2008 | 11:38 am

7 investing themes for tough times

As the bear market becomes situation normal, successful investing has become more a matter of "my stocks are down less than your stocks." But should it be? The old adage is that any fool can make money in a bull market and we saw that writ large over the past couple of years. Making money in today's market takes real skill. The question really then is what kind of stocks could possibly go up in this market?

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 11:38 am

Vodafone cuts sales outlook; shares gain on cash-flow focus

Vodafone posts a 35% drop in first-half profit and cuts its sales forecast for the second time in four months, but investors cheer an upwardly revised free-cash-flow outlook for the year and the launch of a program aimed at realizing cost savings of 1 billion pounds.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 11:32 am

Taylor Wimpey shares dive as orders halve

Shares in Taylor Wimpey fell more than 9 per cent today after the housebuilder revealed orders have almost halved in the past year and warned market conditions show no sign of improvement.
Source: Latest Business News from Times Online | 11 Nov 2008 | 11:31 am

Treasury Starts To Run Out Of Bailout Money

Source: 24/7 Wall St. | 11 Nov 2008 | 11:30 am

AmEx to become a bank

Seeking shelter amid a global credit crunch and consumer spending slowdown, American Express announced Monday it is becoming a bank.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 11:21 am

China: Trade surplus up, exports slow

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 11:19 am

Sterling falls to 12-year low

Sterling hit a 12-year trough against a basket of currencies and held close to a record low against the euro on Tuesday as BoNY Mellon said it saw signs that investors were abandoning gilts
Source: FT.com - US homepage | 11 Nov 2008 | 11:19 am

Bailing on Nike to design new trail runner

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 11:17 am

China Can't Outrun The Trouble

Six hundred billion dollars may be a lot of money, even by national bailout standards, but it won't save China from a recession.

Based on data release overnight, China reported the slowest export growth in four months. Imports suffered as the Chinese consumer felt a bit more impoverished. With real estate prices falling and the Shanghai stock market off nearly 70% from its high, the average citizen in the world's largest country by headcount has to worry about his job.

In China, according to Bloomberg, "Manufacturing contracted by a record last month, industrial output grew by the least in six years in September, and the halving of inflation from a 12-year high in February may be another sign that the economy is losing steam."

Economists want to cling to the fiction that China's GDP growth will only drop to 8% or so next year. It ran 9% last month. The fact of the matter is that keeping up that kind of pace is not improbable. It is impossible.

It now appears that GDP could contract by 4% to 6% in the US during the first quarter of 2009. EU countries and Japan are not likely to do much better. That leaves China with nowhere to send its goods. Only so much inventory can be piled up at the nation's ports and on outbound ships.

There is absolutely no reason to believe if the economies of the West seize up like old engines that China can keep its export growth in plus territory year-over-year. GDP growth in China could easily drop to the 3% to 4% range. In China, where the economy has moved up by 10% for five years, that is a recession.

Douglas A. McIntyre

Source: 24/7 Wall St. | 11 Nov 2008 | 11:17 am

Oil falls to $60 on China stimulus doubts

Read full story for latest details.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 11:13 am

Boost to business as trade deficit narrows

Britain's economic prospects received an unexpected boost today as official figures showed that the trade deficit had narrowed to £3.9 billion in September by far more than expected.
Source: Latest Business News from Times Online | 11 Nov 2008 | 11:07 am

Overseas outsourcing heats up again

Two years ago, when the economy was booming, Tessa Luu's furniture showroom in Los Angeles was running smoothly. But Luu was tired of the rising electric bills, salaries, benefits and rent that ate her profits. So she undertook a radical move to cut all the overhead: She said goodbye to her five employees and moved her business online, hiring outsourcers to run the operation.

Source: Business and financial news - CNNMoney.com | 11 Nov 2008 | 11:05 am

The Mortgage Salvation Plan Spreads (JPM)(C)(WFC)(BAC)

Ben Bernanke and Henry Paulson may be holding guns to the heads of major banks to get them to "reset" the mortgages of troubled homeowners, or the generous spirit of the holidays may have reached the corner offices at the big financial firms.

Yesterday, Citigroup (C) followed the road taken by JP Morgan (JPM) and offered to modify the terms of as much as $20 billion in mortgages for borrowers that are current on their loan payments but at risk of falling behind. Added to the $75 billion of home loans which are candidates for alteration by JPM and the swell is turning into a wave.

Congress has gotten the idea that it has to set up its own mortgage salvation plan, a church for the souls who may lose their homes to the repo man. But, the commercial banks may beat them to the altar.

At this point, if Bank of American (BAC) and Wells Fargo (WFC) offer similar programs, the pool of mortgages being reconsidered could go to $250 billion because of the acquisitions of Countrywide and Wachovia.

The notion is not popular, but the Paulson plan may be working, along with the Bernanke emergency window where financial firms can trade worthless paper for real money. By some estimates, $2 trillion has gone out of that Fed facility. The amount of capital pumped into financial firms by the system may just have been enough for the mortgage problem to be partially solved by the lenders themselves.

Of course, banks may be acting in self interest, their normal motivation. A falling housing market means more mortgage write-offs. Even worse, it may lead to more haircuts on mortgage-backed paper.

Regardless of the reasons, the banks may help housing find a bottom.

Douglas A. McIntyre

Source: 24/7 Wall St. | 11 Nov 2008 | 10:57 am

Mortgage squeeze 'stifles' market

Home sales are at a 30-year low as a lack of available mortgages "stifles" the housing market, an industry survey suggests.
Source: BBC News | Business | World Edition | 11 Nov 2008 | 10:52 am

Chinese trade surplus hits record

China's trade surplus hits a new record at $35.2bn in October, while separate data showed inflation hit a 17-month low.
Source: BBC News | Business | World Edition | 11 Nov 2008 | 10:49 am

Stock futures point to drop in early trade (Reuters)

Reuters - Stocks are set to fall on Tuesday on fresh worries over the global economy after more evidence of a weakening Chinese economy, and concerns about corporate profits after Starbucks posted a steeper-than-expected decline in profit.

Source: Yahoo! News: Business | 11 Nov 2008 | 10:42 am

Stock futures point to drop in early trade

(Reuters) - Stocks are set to fall on Tuesday on fresh worries over the global economy after more evidence of a weakening Chinese economy, and concerns about corporate profits after Starbucks posted a steeper-than-expected decline in profit.

Source: Reuters: Business News | 11 Nov 2008 | 10:42 am

The End Of Dividends (BAC)(WFC)(NYT)(GCI)(CBS)(GE)

Source: 24/7 Wall St. | 11 Nov 2008 | 10:42 am

China October exports growth rate eases to 19.2%

China's trade surplus swells to a record $35.2 billion, eclipsing the previous monthly record of $29.3 billion set in September. Analysts had forecast the trade surplus would reach $32 billion.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 10:37 am

Stamp duty savings leap but house market shrinks

The market for new mortgages continued to shrink in September as new home loans fell by almost 60 per cent, but the number of people who avoided paying stamp duty leapt following government changes.
Source: Latest Business News from Times Online | 11 Nov 2008 | 10:26 am

Robert Peston

The rising burden on taxpayers to provide loans
Source: BBC News | Business | World Edition | 11 Nov 2008 | 9:57 am

Chesapeake continues activity with $3.37 billion Statoil deal

LONDON (MarketWatch) - Chesapeake Energy on Tuesday announced the latest in a series of deals to raise funds and find partners to develop its natural-gas holdings, getting as much as $3.37 billion from StatoilHydro.

Source: MarketWatch.com - Top Stories | 11 Nov 2008 | 9:44 am

Housebuilder gloomy on UK outlook

Britain's biggest housebuilder, Taylor Wimpey, says there will be no short-term recovery in the UK housing market.
Source: BBC News | Business | World Edition | 11 Nov 2008 | 9:30 am

Vodafone plans £1bn of cost cuts

Mobile phone group Vodafone announces £1bn of cost cuts because of rising raw materials prices and increasing competition.
Source: BBC News | Business | World Edition | 11 Nov 2008 | 9:09 am

Buffet, Ross insurers eye Dexia U.S. unit: report

BRUSSELS (Reuters) - The insurance businesses of U.S. billionaire investors Warren Buffet and Wilbur Ross are close to buying all or part of the U.S. bond insurance unit of Dexia , Belgian business daily De Tijd said on Tuesday.

Source: Reuters: Business News | 11 Nov 2008 | 9:05 am

Buffet, Ross insurers eye Dexia U.S. unit: report (Reuters)

Reuters - The insurance businesses of U.S. billionaire investors Warren Buffet and Wilbur Ross are close to buying all or part of the U.S. bond insurance unit of Dexia , Belgian business daily De Tijd said on Tuesday.

Source: Yahoo! News: Business | 11 Nov 2008 | 9:05 am

Media Digest 11/11/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, a weakening economy in China and poor US earnings are causing concern that the recession will be deep and long.

Reuters writes that Vodafone (VOD) cuts its full-year revenue forecast.

Reuters writes that the Fed approved American Express's (AXP) application to become a commercial bank.

Reuters reports that Goldman Sachs (GS) cut 10% of its bankers in Tokyo.

Reuters writes that US regulators are urging banks to do more lending.

Reuters reports that AIG (AIG) got a $150 billion bailout as it posted a huge loss.

Reuters reports that the profit and outlook at Starbucks (SBUX) disappointed.

The Wall Street Journal reports that the US financial bailout is under pressure to help companies beyond banks and other financial firms.

The Wall Street Journal reports that Citigroup (C) will look at $20 billion in mortgages to help homeowners who may fall behind on payments.

The Wall Street Journal reports that China hopes infrastructure spending will help its economy.

The Wall Street Journal writes that retailing is so bad that it will no longer be the employer of last resort.

The Wall Street Journal reports that GM (GM) fell on a prediction its stock will go to zero.

The Wall Street Journal reports that the price of oil was helped by the China stimulus package.

The Wall Street Journal reports that data show Europe is in recession.

The Wall Street Journal reports that shares of Goldman Sachs (GS) hit a five year low.

The Wall Street Journal reports that Cisco (CSCO) plans a major upgrade of its hardware.

The Wall Street Journal reports that Circuit City (CC) filed for bankruptcy.

The Wall Street Journal reports that home inventories remain huge.

The Wall Street Journal reports that Nortel (NT) posted a loss and cut jobs.

The Wall Street Journal writes that Sirius (SIRI) posted a large loss.

The Wall Street Journal writes that Dell (DELL) has fallen behind in offering new holiday products.

The Wall Street Journal reports that the silence out of the corporate bond market may be troubling.

The Wall Street Journal reports that GE (GE) is near 11-year lows on concerns about the ability of its financial unit to get funding.

The Wall Street Journal reports that DHL will get out of the domestic delivery business and fire almost 10,000 people.

The Wall Street Journal reports that Rio Tinto (RTP) cut its iron output to support prices.

The Wall Street Journal reports that Facebook is trying to get advertisers for its social network.

The New York Times reports that Obama asked Bush for help for US car companies.

The New York Times writes that Fannie Mae lost $29 billion on write-downs.

The New York Times reports that Time, Inc. asked for volunteers to take exit packages as it cut jobs.

The FT reports that Mexico is hedging against most of its oil prices.

The FT reports that Las Vegas Sands (LVS) has put expansion on hold.

The FT reports that KKR Financial has suspended its Q3 dividend despite making a profit.

Bloomberg reports that China's export growth slowed.

Douglas A. McIntyre

Source: 24/7 Wall St. | 11 Nov 2008 | 8:56 am

Asia Markets And Europe Open 11/11/2008

Markets in Asia were lower.

The Nikkei fell 3% to 8,809. Canon fell on bad economic news from the US.

The Hang Seng fell 4.8% to 14,042. HSBC (HBC) dropped almost 4%.

The Shanghai Composite fell 1.7% to 1,844.

In Europe, the FTSE opened down 1.4% to 4,344, The Dax was off .9% to 4,978. The CAC 40 fell 1.8% to 3,443.

Data from Reuters.

Douglas A. McIntyre

Source: 24/7 Wall St. | 11 Nov 2008 | 8:21 am

Japan stocks fall on economy jitters, stronger yen (AP)

AP - Japanese stocks fell Tuesday as ongoing anxiety about the U.S. economy and a stronger yen eclipsed enthusiasm about China's new economic stimulus plan.
Source: Yahoo! News: Business | 11 Nov 2008 | 8:10 am

Students forced to borrow more to finance college educations

As private lenders tighten standards, the U.S. increases lending limits on unsubsidized Stafford loans to ensure that funds for education will be available. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Businessman had perfect pitch for drawing investors

Some who entrusted their money to the elusive Alfredo Trujillo Fox are going to bankruptcy court to get it back. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Businessman had perfect pitch for drawing investors

Some who entrusted their money to the elusive Alfredo Trujillo Fox are going to bankruptcy court to get it back.

In retrospect, Drew Gordon says, he should have been more wary of the well-dressed man at the Beverly Hills BMW dealership with a deep voice, suave ways and a business offer that seemed too good to be true.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

Concern over pullback in spending erases stock rally

Enthusiasm over China's stimulus package had given shares an early boost. The Dow closed down 73 points after being up 215 points at one point. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

U.S. increases bailout for struggling AIG

The cost grows to about $150 billion. The move could feed demands by other companies, including automakers, for a chunk of the dwindling $700 billion in bailout funds.

Will $700 billion be enough? That question emerged Monday as the Bush administration decided to pump more money into insurance giant American International Group Inc. and lawmakers pushed to extend the government's rescue to the ailing automobile industry.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

Tips for sticking to a budget

Tips on sticking to a budget

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

General Motors shares driven down on forecast they could soon be worthless

The automaker's stock declines to a 59-year-low after an analyst cuts price target to zero. Shares in General...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Goldman Sachs urged bets against California bonds it helped sell

The Wall Street titan's activities could have harmed taxpayers, officials say.

Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds this year despite having collected millions of dollars in fees to help the state sell some of those same bonds.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

Starbucks profit falls 97% on fewer customers and rising costs

STARBUCKS Profit falls 97% on fewer customers and rising costs

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

Circuit City files for bankruptcy protection

The electronics retailer says it plans to stay in business while it comes up with a plan to restructure.

The bankruptcy filing of Circuit City Stores Inc. suggests that the retail environment is rapidly deteriorating.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

U.S. increases bailout for struggling AIG

The cost grows to about $150 billion. The move could feed demands by other companies, including automakers, for a chunk of the dwindling $700 billion in bailout funds. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Mattel seeks to stop Bratz dolls

The Barbie maker wants to bar MGA from producing the toys, seize its inventory and even get rights to the name.

The Barbie vs. Bratz case was back in federal court Monday, and it was clear Barbie-maker Mattel wanted all the dolls in the toy box.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

General Motors shares driven down on forecast they could soon be worthless

The automaker's stock declines to a 59-year-low after an analyst cuts price target to zero.

Shares in General Motors Corp. hit a 59-year low Monday after a Wall Street firm forecast the company's stock value could drop to zero within a year.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

Goldman Sachs urged bets against California bonds it helped sell

The Wall Street titan's activities could have harmed taxpayers, officials say. Goldman, Sachs & Co. urged...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Starbucks profit falls 97% on fewer customers and rising costs

STARBUCKS Profit falls 97% on fewer customers and rising costs
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Mattel seeks to stop Bratz dolls

The Barbie maker wants to bar MGA from producing the toys, seize its inventory and even get rights to the name. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Citigroup to offer help to 500,000 risky mortgage customers

The plan is targeted at homeowners who are current on their payments but might be in trouble later. The effort will focus on areas whose home values have fallen, including California. ...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Circuit City files for bankruptcy protection

The electronics retailer says it plans to stay in business while it comes up with a plan to restructure. The bankruptcy...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 11 Nov 2008 | 8:00 am

Students forced to borrow more to finance college educations

As private lenders tighten standards, the U.S. increases lending limits on unsubsidized Stafford loans to ensure that funds for education will be available.

Higher college costs and steep losses in college savings plans are forcing students and their parents to borrow more money -- if they can -- to earn bachelor's degrees.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

DHL to lay off 9,500 workers

The shipping firm's job cuts include 300 at a distribution center in Riverside County.

Struggling shipper DHL said Monday that it would close its 300-employee West Coast hub in Riverside County as it pulls out of the U.S. domestic shipping business, eliminating 9,500 jobs nationwide and closing most of its DHL Express service centers.

Source: L.A. Times - Business | 11 Nov 2008 | 8:00 am

Vodafone warns on £1bn sales fall

Vodafone, the UK telecoms giant, today gave warning that its full-year revenues could fall by as much as £1 billion as it embarked on a fresh strategy and a cost-cutting drive.
Source: Latest Business News from Times Online | 11 Nov 2008 | 7:36 am

Commercial bank status for Amex

Credit card firm American Express gains approval to become a commercial bank, enabling it to take deposits.
Source: BBC News | Business | World Edition | 11 Nov 2008 | 7:24 am

BNZ gets ratings upgrade

One of New Zealand's largest banks has received a shot in the arm from international credit rating agency Standard & Poor's. S&P has upgraded its outlook for BNZ's AA credit ratings from 'negative' to 'stable' after its parent...
Source: New Zealand Herald - Business | 11 Nov 2008 | 1:30 am

Dorchester promotes deferred payment plan

Dorchester Pacific said today it hoped a deferred payment plan for subsidiary Dorchester Finance could be with investors in time for a vote before Christmas. In June, Dorchester Finance was estimated to owe debenture holders $168m...
Source: New Zealand Herald - Business | 11 Nov 2008 | 1:00 am

KKR unit suspends pay-out despite income rise

KKR Financial Holdings, the publicly listed debt arm of the KKR private equity firm, suspended its third-quarter dividend, citing turbulent market conditions
Source: FT.com - US homepage | 11 Nov 2008 | 12:45 am

Crisis claims more US victims

The credit storm swept through Wall Street and Main Street with renewed virulence as AIG and Fannie Mae reported huge losses, a leading US retailer filed for bankruptcy and multinationals such as Nortel and DHL cut thousands of jobs
Source: FT.com - US homepage | 11 Nov 2008 | 12:36 am

Mortgagee sales rise

A record number of mortgagee sales were listed in the first week of November. Interest.co.nz, which tracks the listings, says forced sales for the period hit almost 490, up more than 25 per cent from a month ago. Managing editor...
Source: New Zealand Herald - Business | 11 Nov 2008 | 12:30 am

AmexCo converts to bank holding company

American Express became the latest financial group to convert to a bank holding company in a surprise move that will give the credit card group permanent access to Federal Reserve funds and could facilitate consolidation in the sector.
Source: FT.com - US homepage | 11 Nov 2008 | 12:25 am

Trends & Innovations - Monday

Cheaper homes attract newbies

Source: Investor's Business Daily: BUSINESS | 11 Nov 2008 | 12:25 am

After The Close - Monday

MINDRAY MEDICAL (MR), a maker of medical devices, said Q3 EPS rose 61% to 29 cents ex items, topping views by 6 cents. Revenue grew 94% to $146.5...

Source: Investor's Business Daily: BUSINESS | 11 Nov 2008 | 12:25 am

In Brief - Monday

Arch Chemicals (ARJ), a specialty chemicals maker, backed its '08 EPS outlook of $2.20-$2.30 vs. views of $2.18, but it warned its sees Q4 results...

Source: Investor's Business Daily: BUSINESS | 11 Nov 2008 | 12:25 am

Gear Maker's Core Product Keeps It Growing, Even In Tough Times

Buyouts always carry risks. Like when your target's market is about to melt down.

Source: Investor's Business Daily: BUSINESS | 11 Nov 2008 | 12:25 am

Business Briefs - Monday

Fannie Mae posts $29 bil Q3 loss. The mortgage giant lost $13 a share as it took a $21.4 bil write-down of deferred tax assets -- an admission...

Source: Investor's Business Daily: BUSINESS | 11 Nov 2008 | 12:25 am

Global ambition

Japanese phone firms want bigger worldwide sales
Source: BBC News | Business | World Edition | 11 Nov 2008 | 12:09 am

Retail sales 'decline in October'

The annual rate of retail sales falls for the first time in three years, a report finds, a sign recession is looming.
Source: BBC News | Business | World Edition | 11 Nov 2008 | 12:02 am

David Cameron promises tax break to fight looming economic 'disaster'

David Cameron will unveil a package of tax breaks for employers and employees today after pledging that the Conservatives would not “walk on by” as dole queues lengthened.
Source: Latest Business News from Times Online | 11 Nov 2008 | 12:00 am

Santander announces €7.2bn capital-raising

Shares in Santander, the owner of Abbey and Alliance & Leicester, fell by more than 5 per cent yesterday after the Spanish bank announced a surprise rights issue of €7.2 billion (£5.9 billion).
Source: Latest Business News from Times Online | 11 Nov 2008 | 12:00 am

HSBC expected to defy appeal over rates cut

HSBC - one of the few banks that did not immediately pass on the biggest rate cut in more than 50 years - is thought to be considering offering better deals to new customers buying fixed-rate home loans.
Source: Latest Business News from Times Online | 11 Nov 2008 | 12:00 am

Jack Straw orders inquiry into repossessions

Jack Straw, the Justice Secretary, has ordered an investigation into a legal loophole that allows lenders to repossess a home without a court order.
Source: Latest Business News from Times Online | 11 Nov 2008 | 12:00 am

Circuit City in Chapter 11 as light fails

Corporate America suffered another grim day yesterday as Circuit City, the electrical retailer, filed for bankruptcy protection, DHL announced almost 10,000 job losses and shares in General Motors sank to their lowest level since 1946.
Source: Latest Business News from Times Online | 11 Nov 2008 | 12:00 am

Rescue package 'crucial' for Aussie auto industry

MELBOURNE - The federal government's A$6.2 billion ($7.18 billion) assistance package for Australia's ailing car manufacturers is "absolutely crucial" to ensure its survives, federal Finance Minister Lindsay Tanner says. But there...
Source: New Zealand Herald - Business | 11 Nov 2008 | 12:00 am

Mexico hedges almost all of its oil exports

Mexico is taking steps to protect itself from the oil price remaining below $70 a barrel in the clearest sign yet of the concerns of producer countries at the impact of the global economic slowdown on their revenues
Source: FT.com - US homepage | 10 Nov 2008 | 11:38 pm

Production cut at Tiwai Point

Aluminium production at Rio Tinto's Tiwai Point smelter at Bluff has been cut by the equivalent of about 280 tonnes per day due to equipment failure, the company says. The smelter has capacity to produce up to 350,000 tonnes of...
Source: New Zealand Herald - Business | 10 Nov 2008 | 11:30 pm

Most Overpaid CEO Of The Day: Howard Schultz Of Starbucks (SBUX)

A week or so ago Howard Schultz, the CEO of Starbucks (SBUX), said he thought he was seeing a bottom in his company's business. It must have been a mirage.

Starbucks reported a quarter that disappointed Wall St. and indicated that the day's of rapid growth are in the company's past.

Revenue rose 3% to $2.52 billion from $2.44 billion. Analysts expected sales of $2.58 billion. Same-store sales, or sales at locations open at least a year, dropped 8% in the U.S. as fewer customers came into the stores.

According to the AP, Seattle-based Starbucks said profit fell 97 percent to $5.4 million, or $.01 a share, from $158.5 million, or $.21, a year earlier. The coffee retailer earned $.10 per share when the costs from closing about 600 stores in the U.S. and 61 locations in Australia are excluded. Analysts expected profit of $.13 cents per share, according to a poll by Thomson Reuters.

So much for Mr. Schultz coming back to turn the company around.

On the poor earnings news, Starbucks fell to $9.78 after hours. The 52-week low for Starbucks is $9.16 against a period high of $24.40.

Although Mr. Schultz has closed a number of outlets and fired several thousand employees, he continues to do remarkably well financially. According to the Starbucks proxy, in the last fiscal year, Mr. Schultz had total compensation of $10.6 million, of which just under $1.2 billion was cash. Schultz also has access to company aircraft, which he has to reimburse the company for personal use, and personal security.

Douglas A. McIntyre

Source: 24/7 Wall St. | 10 Nov 2008 | 11:21 pm

Obama gets first taste of Oval Office

Barack Obama stepped inside the Oval Office for the first time during a visit to the White House for talks with George W. Bush, outgoing president
Source: FT.com - US homepage | 10 Nov 2008 | 11:12 pm

NZ stocks: Sharemarket slips in early trade

The New Zealand sharemarket slipped lower in early trading, following falls in United States equities overnight. After closing 15c higher yesterday, leading stock Telecom was down 6c early today to 235. Contact Energy was also...
Source: New Zealand Herald - Business | 10 Nov 2008 | 11:10 pm

GM shares decline to 60-year low

Shares in US car group General Motors close at a 60-year low after the struggling firm is hit by a broker downgrade.
Source: BBC News | Business | World Edition | 10 Nov 2008 | 11:09 pm

DHL limps out of US market

DHL, battered by five years of trying to take on the giants of the US package delivery industry on their home turf, has announced it will cease deliveries between US cities and eliminate 9,500 jobs. DHL Express, which has lost...
Source: New Zealand Herald - Business | 10 Nov 2008 | 11:00 pm

Starbucks hit as consumers slow spending

Sharp fall in US sales and fewer UK customers in fourth quarter for coffee chain
Source: FT.com - US homepage | 10 Nov 2008 | 10:55 pm

As Consumer Spending Worsens, Sears (SHLD) Moves In The Cross Hairs

Source: 24/7 Wall St. | 10 Nov 2008 | 10:52 pm

US stocks: Worries drive Wall St lower

US stocks slid today after economic and corporate worries wiped out an opening rally on China's four trillion yuan (A$856.5 billion) economic stimulus package and a bigger US record bailout of insurer AIG. The Dow Jones Industrial...
Source: New Zealand Herald - Business | 10 Nov 2008 | 10:45 pm

VIX Index of U.S. Stock Option Prices Advances 6.9% to 59.98

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 10:42 pm

Starbucks sees profits evaporate

Starbucks' fourth-quarter profit is almost wiped out by the cost of closing under-performing outlets and falling customer numbers.
Source: BBC News | Business | World Edition | 10 Nov 2008 | 10:41 pm

Chapin Hill's Boyle Sees Pros and Cons of Inverse ETFs

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 10:33 pm

Financials lead Wall St declines

Wall Street stocks fail to cling onto early gains as China's near $600bn economic stimulus package did little to assuage fears for the growth prospects of some of the biggest names in corporate America
Source: FT.com - US homepage | 10 Nov 2008 | 10:32 pm

Merrill's Matus Sees Positive U.S. Economic Growth in 2010

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 10:06 pm

DHL to cut 9,500 US jobs

DHL is closing its domestic US express delivery service with the loss of 9,500 jobs as Deutsche Post, its parent company, abandons its attempt to compete with FedEx and UPS on their home turf
Source: FT.com - US homepage | 10 Nov 2008 | 9:55 pm

Jordan Says Americans Have `Great Confidence' in Obama

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 9:40 pm

Honda Fit Gets Mileage Yet Misses Out on Looks, Adult Fun

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 9:18 pm

Cadillac's CTS-V Is a Fast, Non-Conventional Commuter Car

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 9:12 pm

Currency: NZ dollar plunges on bad US news

The New Zealand dollar fell rapidly early today against the greenback from around US60.25c to about US58c. The kiwi then recovered a little ground to be buying US58.33c at 8am, down from US59.67c at 5pm yesterday. The pattern...
Source: New Zealand Herald - Business | 10 Nov 2008 | 8:55 pm

Emirates first half profit slumps 88 per cent

Dubai's Emirates airline says its net profit for the first half of the financial year dropped a dramatic 88 per cent to US$77 million ($130.4 million) because of high oil prices. The largest Middle East carrier said its profit...
Source: New Zealand Herald - Business | 10 Nov 2008 | 8:45 pm

HSBC chief hits at state bank bail-outs

State-sponsored bail-outs of western banks risk rewarding management teams for failure, Michael Geoghegan, HSBC chief executive said as the bank indicated that recovery in its US consumer finance division might take longer than it had expected
Source: FT.com - US homepage | 10 Nov 2008 | 7:52 pm

Wachovia's Wren Sees `Above Average' Equity Returns Next Year

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 7:43 pm

Economic Diary on U.S. Retail Sales, Euro-Zone Growth

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 7:33 pm

Inside corruption in poor countries

How can poverty remain pervasive in African, Asian and Latin American countries that have received billions in aid? Corruption, says Edward Miguel, author of "Economic Gangsters." He talks with Kai Ryssdal about it.
Source: Marketplace | 10 Nov 2008 | 7:25 pm

Time to update Economic Theory 101

Some economists believe that economic models are dated and deficient, and they're looking for theories that would help make sense of the financial crisis and global economy. Janet Babin has more.
Source: Marketplace | 10 Nov 2008 | 7:24 pm

What I'm doing: John Serrantino

Marketplace presents "Here's What I'm Doing," a series asking people from all walks of life how they're coping with the financial crisis. John Serrantino owns a pizza place in New York's financial district.
Source: Marketplace | 10 Nov 2008 | 7:24 pm

Airfares dropping in time for holidays

Travelers, at least, are in for a happier holiday season. The price of airline tickets is dropping fast amid discount airfare wars between the major carriers. But those extra fees are likely to stay. Stacey Vanek-Smith reports.
Source: Marketplace | 10 Nov 2008 | 7:24 pm

The advantage of primary care doctors

In Pierre, S.D., where few medical specialists practice, people live longer than those living in an upscale retirement community in Florida with specialists of all kinds. Commentator Robert Martensen explains why.
Source: Marketplace | 10 Nov 2008 | 7:24 pm

Will Circuit City gift cards fulfill wishes?

When a store goes into bankruptcy, what happens to the plastic gift cards people haven't redeemed? Circuit City, for example, has asked the bankruptcy court to allow it to honor the cards, but no decision yet. Renita Jablonski reports.
Source: Marketplace | 10 Nov 2008 | 7:24 pm

China to embark on its own New Deal

China intends to use its $586 billion stimulus package on railways, airports and other infrastructure. Scott Tong reports that the money will boost investor confidence, but won't save the world.
Source: Marketplace | 10 Nov 2008 | 7:24 pm

Why AIG is getting more bailout money

The government is reworking the AIG bailout package, modifying loans already offered and preparing to spend another $40 billion to buy preferred shares. Kai Ryssdal gets details from Steve Henn.
Source: Marketplace | 10 Nov 2008 | 7:24 pm

Picking Winners in a Grim Holiday Season

The writing has long been on the wall that holiday sales figures this year will be grim, but as December draws nearer, more surveys and studies continue to emerge predicting where some of the bright spots may be for retailers.

Even in the worst of years, there are certain items that sell briskly despite a challenging economy.

According to the Deloitte Holiday Survey, out today, Nintendo's Wii gaming system, Apple's iPod, Sony's PlayStation, and the Microsoft Xbox will be this season's best sellers.

When it comes to generic categories, televisions (HD, plasma, and flat-screen), computers, GPS systems, and digital cameras top the list.

Despite Circuit City's fate, the recession-proof nature of consumer electronics would be consistent with what happened in the downturn of 2001, when the PlayStation, Xbox, and DVD players were the biggest holiday gift items.

In terms of which retail channels will win out this season, it's not surprising that online retail is expected to be second only to discounters like Wal-Mart, Costco, and Target as consumers' favorite places to shop.

Deloitte estimates that more than one in five consumers plan to shop primarily or entirely online this holiday season, and that about one-fourth of all holiday sales will occur on the internet—an incremental gain of 2 percent from last year.

Somewhat more surprising is the continued interest professed by the almost 14,000 consumers surveyed by Deloitte in "eco-friendly" holiday giving.

That runs contrary to the findings of a study led by Duke University business professor Christine Moorman (as reported in Advertising Age), which suggest that as economic concerns have mounted, consumers have become less attuned to "greening" their lifestyles.

The fact that 21 percent of respondents in Deloitte's survey said they would consider not wrapping holiday gifts to conserve paper could be explained by the added benefit of saving money; but consumers also claimed that they would be willing to pay a premium for environmentally friendly items.

Of the consumers surveyed, 44 percent said they would be willing to pay extra for green gifts this holiday season—half said they are willing to pay from 10 percent to 25 percent more.Related Links
Questionable Sale? Xbox Marks the Spot
Microsoft Pays for Xbox Defects
Sony Wants Back in the Game


Source: Portfolio.com: Top 5 | 10 Nov 2008 | 7:00 pm

General Motors Price Estimate Cut to Zero by Deutsche Bank

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 5:31 pm

Jessop Sees U.S. Unemployment Rate as High as 8.5% by 2010

Source: Bloomberg - All Podcasts | 10 Nov 2008 | 5:24 pm

Short-Circuited City

A week after trying a Hail Mary pass of closing stores and seeking to renegotiate leases, Circuit City has succumbed to the inevitable and filed for bankruptcy protection.

The electronics chain, battered by a drop-off in consumer spending and fierce competition from Wal-Mart and Best Buy, is the latest big retailer to file for bankruptcy. Mervyns, Linens 'n Things, Levitz, Sharper Image, and Lillian Vernon have all filed for Chapter 11 this year.

What is unusual about the wave of filings is how many retailers decided that they could not survive through the holiday shopping season—the busiest and, for many retailers, the only profitable time of the year. January is typically the time when troubled retailers filed for bankruptcy.

The woes of Circuit City underscore how bleak the picture is for retailers. The October employment report on Friday showed that more than 38,000 jobs in retail were lost last month.

Circuit City, founded in Richmond, Virginia, in 1949, listed $3.4 billion in assets and $2.32 billion in liabilities in its Chapter 11 petition in the federal bankruptcy court in Richmond.

Last week, the chain announced it would close 155 stores in the United States and "aggressively" renegotiate leases on some of the remaining 566 stores with the aim of lowering rents.

Those steps were not enough.

"Despite aggressive efforts to secure vendor support, vendor concerns about the company's liquidity and ability to pay for its purchases in this difficult economic climate have escalated considerably," the company said in a statement. "Faced with the need to secure ongoing vendor support and to ensure adequate merchandise flow to stores during the important holiday season, the company has determined that it would be in the best interest of its stakeholders to file for reorganization relief under Chapter 11."

Related Links
The Way the Cookie Crumbles
The Case for Chapter 11
Retailers Hurt by Locked Pocketbooks


Source: Portfolio.com: Top 5 | 10 Nov 2008 | 2:00 pm

Reinsuring A.I.G.

Things change so quickly in this financial crisis that a bailout created in mid-September is already getting a complete overhaul.

The U.S. government is essentially throwing out the old $85 billion rescue (later raised to $123 billion) of American International Group for a new $150 billion rescue. At a time when automakers and others are looking in vain for federal help, the revised A.I.G. bailout raises many questions about how Washington is choosing winners and losers in the economy.

The Treasury is buying a $40 billion stake in A.I.G., allowing the Federal Reserve to cut its now five-year credit line to the insurance company to $60 billion from $85 billion. And that lending will be less punitive than before, with the interest rate on the borrowed money being reduced to the three-month Libor rate plus 300 basis points, down from 850 basis points previously.

More important, the new deal creates two vehicles to buy troubled assets. One will buy residential mortgage-backed securities from A.I.G., backed by a loan of $22.5 billion from the Federal Reserve Bank of New York. The company is lending $1 billion and will bear the risk for the first $1 billion in losses.

The second vehicle will involve buying collateralized debt obligations on which A.I.G. has written credit default swap contracts. The New York Fed will lend as much as $30 billion to this effort, while A.I.G. will kick in $5 billion. A.I.G. is also on the hook for the first $5 billion in losses.

"These new measures establish a more durable capital structure, resolve liquidity issues, facilitate A.I.G.'s execution of its plan to sell certain of its businesses in an orderly manner, promote market stability, and protect the interests of the U.S. government and taxpayers," the Federal Reserve said in a statement.

The revised deal is an admission that the original bailout was not working. And while the recent focus of Treasury has been on pumping equity into financial institutions, the new bailout shows that that the original intent of the $700 billion TARP—buying troubled assets—may be just as important.

Even with the $85 billion infusion in September, A.I.G. still had to scramble to come up with collateral to counterparties on its credit default swaps. The new government-funded company to buy the underlying C.D.O.'s should go a long way toward propping up A.I.G. and steadying the financial system.

As the Financial Times’ Alphaville blog notes, A.I.G. is no longer an insurance company, but "a slightly more sophisticated TARP."

"Taxpayers' capital will continue to go towards meeting collateral calls on C.D.S. contracts: These calls will be direct liquidity-like cash infusions into the banking system. Meeting such calls will also allow the C.D.S. contracts to remain in place, which will allow banks to pretend they don't own any risky assets, as far as regulatory risk-weighting and capital requirements are concerned."

No longer an insurance company? One is tempted to say that after the company reported an ugly loss of $24.5 billion for its third quarter.

Related Links
Hit the Panic Button
Firing Blanks on Banks
The Man Who Saved (or Got Suckered by) Wall Street


Source: Portfolio.com: Top 5 | 10 Nov 2008 | 1:30 pm

India's auto sales plunged in October (AP)

AP - Sales of passenger vehicles in India fell by 9.1 percent in October, as high interest rates and tight consumer credit took their toll on what had been one of the world's fastest growing automobile markets, according to the Society of Indian Automobile Manufacturers, an industry group.
Source: Yahoo! News: Business | 10 Nov 2008 | 12:44 pm