Goldman Sachs reports huge loss

US financial giant Goldman Sachs reports a $2.12bn (£1.41bn) quarterly loss, its first since it went public in 1999.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 1:51 pm

US inflation falls still further

US inflation drops by a record amount for the second month in succession, due to continuing falls in oil and other energy costs.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 1:48 pm

Stock futures up after data on inflation, housing (AP)

AP - Wall Street is headed for a higher open, even after the government reported huge declines in consumer inflation and new home construction.

Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 1:44 pm

Consumer prices post second record drop in November (Reuters)

Reuters - Consumer prices plunged at a record rate for a second straight month during November, according to a government report on Tuesday that is likely to fan fears that economic recession is rapidly heightening risks of deflation.

Source: Yahoo! News: Business | 16 Dec 2008 | 1:42 pm

Best Buy posts lower net, looks to cut jobs (Reuters)

Reuters - Best Buy Co , the top consumer electronics retailer, reported a lower third quarter profit on Tuesday and said it was offering buyout packages to its corporate workers in a bid to cut expenses.

Source: Yahoo! News: Business | 16 Dec 2008 | 1:41 pm

Goldman Sachs posts first loss since going public (Reuters)

Reuters - Goldman Sachs Group Inc reported its first quarterly loss since going public nine years ago as the plunging value of stocks, debt and real estate caught up with a Wall Street leader that had largely avoided fallout from the global credit crisis.

Source: Yahoo! News: Business | 16 Dec 2008 | 1:40 pm

Goldman Sachs Sighs, Amputation Trumps Guillotine (GS)

Source: 24/7 Wall St. | 16 Dec 2008 | 1:37 pm

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

Stocks expected to move substantially in trading on Tuesday include ABM, Air Products, Beckman Coulter, Best Buy, Credit Suisse, FactSet, Goldman Sachs, ITT and Office Depot.

Source: MarketWatch.com - Top Stories | 16 Dec 2008 | 1:35 pm

Goldman Sachs reports fourth-quarter loss

(Reuters) - Goldman Sachs Group Inc reported on Tuesday earnings per common share of $4.47 for
Source: Reuters: Business News | 16 Dec 2008 | 1:34 pm

Blackberry Bold unveiled in South Korea

Canada's Research in Motion and South Korea's SK Telecom announced Tuesday the launch of corporate service for the BlackBerry Bold smart phone, which will be available in South Korea on the
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 1:33 pm

Best Buy 3Q profit sinks, offers staff buyouts

Best Buy says its third-quarter profit sank and says it will offer buyout packages to nearly all its corporate employees in an effort to cut costs. The nation's biggest consumer...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 1:32 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 Dec 2008 | 1:31 pm

Economic Report: Housing starts plunge 18.9% to record low

U.S. home builders threw in the towel in November, slashing construction of new homes far below the worst levels seen in 50 years, according to Commerce Department data.

Source: MarketWatch.com - Top Stories | 16 Dec 2008 | 1:31 pm

US interbank lending rates drop ahead of Fed

The cost of three-month dollar loans between banks fell further Tuesday ahead of an expected interest rate cut from the U.S. Federal Reserve later in the day. The interbank lending rate...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 1:29 pm

Goldman Sachs posts first loss since going public

Goldman Sachs says it had its first quarterly loss since it went public in 1999, losing $2.29 billion during its fiscal fourth quarter. Goldman's loss amounted to $4.97 per share,...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 1:27 pm

Currencies: Dollar steadies ahead of Fed's decision on U.S. interest rates

The. dollar steadies but remains in a fragile state as markets prepare for a widely expected interest-rate cut by the Federal Reserve later Tuesday.

Source: MarketWatch.com - Top Stories | 16 Dec 2008 | 1:24 pm

Sarkozy: Others must match EU climate change cuts

French President Nicolas Sarkozy says the United States and others must match the European Union's commitment to make deep cuts in greenhouse gas emissions. Sarkozy has told the European
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 1:23 pm

Air Products & Chemicals cuts jobs, lowers quarterly outlook

Air Products & Chemicals plans to shed some 1,300 workers in a bid to lower overhead costs as the company faces one of the “weakest business environments” in its history.

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

China economic growth 'could slow to near 20-year low'

China's economy could end 2008 with its weakest growth in nearly two decades, economists said Tuesday, following the release of data for November that was far worse than expected.
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 1:19 pm

Shock waves spread from Madoff scandal

NEW YORK/LONDON (Reuters) - Shock waves from Bernard Madoff's alleged fraud spread globally on Monday, as charities, wealthy individuals and banks disclosed losses from the prominent Wall Street trader's investment management business.
Source: Reuters: Business News | 16 Dec 2008 | 1:14 pm

Best Buy plans significant spending reductions

(Reuters) - Best Buy Co Inc said on Tuesday the company continues to prepare for difficult economic environment and it plans significant spending reductions.
Source: Reuters: Business News | 16 Dec 2008 | 1:12 pm

Wall Street set for pre-Fed boost

U.S. stocks were poised for a higher open Tuesday, lifted by hopes that an anticipated rate cut by the Federal Reserve would help boost economic growth.
Source: Business and financial news - CNNMoney.com | 16 Dec 2008 | 1:05 pm

Poland's car industry warns PM of possible crisis

Polish car makers have asked the prime minister to take steps to protect the domestic industry from a worldwide drop in demand, an industry representative said Tuesday. Poland's Chamber...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 1:02 pm

Pay raises in 2009 will be measliest in 32 years, survey finds

Thanks in large part to the hit companies are taking from the current financial crisis, millions of U.S. workers will find their 2009 pay raises are less than 3%, the lowest average in 32 years.

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

OPEC delegates say oil cut of 2 million bpd likely

ORAN, Algeria (Reuters) - OPEC delegates said on Tuesday the producer group was likely to agree a cut of two million barrels per day (bpd) at its meeting on Wednesday.
Source: Reuters: Business News | 16 Dec 2008 | 12:58 pm

France slaps record fines on steel cartel

France's competition authorities Tuesday slapped a record euro575 million ($776 million) in fines on 11 companies, including subsidiaries of global steel giant ArcelorMittal, for running a...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 12:56 pm

London Markets: Mineral extractors fall as London manages modest gains

Mining shares and retailers come under selling pressure in London, but the FTSE 100 benchmark manages modest gains as drugmakers and energy suppliers trade higher.

Source: MarketWatch.com - Top Stories | 16 Dec 2008 | 12:55 pm

UK inflation rate falls to 4.1%

Lower energy costs helped to push the UK inflation rate down to 4.1% in November, official figures show.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 12:53 pm

Ford F-150 named Motor Trend Truck of the Year

Motor Trend said Tuesday it has voted Ford Motor Co.'s F-150 model truck as its 2009 Truck of the Year, the third time in its production history that the half-ton pickup has taken top...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 12:52 pm

Watchdog queried over Madoff case

The US financial authorities are criticised for not detecting earlier the alleged $50bn fraud by US trader Bernard Madoff.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 12:52 pm

Fortis could lose up to euro1B in alleged Madoff case

Troubled Dutch bank Fortis stands to lose up to euro1 billion ($1.35 billion) as a result of the fraudulent investment scheme allegedly orchestrated by Wall Street money manager Bernard...
Source: Infocious RSS raw feed - channel BNewsBusiness | 16 Dec 2008 | 12:51 pm

Top 10 Pre-Market Analyst Upgrades (BAM, CEPH, CYPB, FCEL, KR, SWY, XNPT)

These are some of the top analyst upgrades and positive research calls we have seen from Wall Street this Tuesday morning:

• Brookfield Asset Management (BAM) Started as Buy at TD.
• Cephalon (CEPH) Started as Buy at Piper Jaffray.
• Cypress Bioscience (CYPB) Started as Buy at Piper Jaffray.
• FuelCell Energy (FCEL) Started as Overweight at Thomas Weisel.
• Kroger (KR) Raised to Neutral from Underweight at JPMorgan.
• Safeway (SWY) Raised to Neutral from Underweight at JPMorgan.
• Xenoport (XNPT) Started as Buy at Piper Jaffray.

Jon C. Ogg
December 16, 2008

Source: 24/7 Wall St. | 16 Dec 2008 | 12:50 pm

Top Pre-Market Analyst Downgrades (ADTN, AZ, CY, F, GPS, GM, IFX, LEN, ERIC, MXIM, PGR, WFMI)

These are some of the key analyst downgrades and negative calls we have seen this Tuesday morning:

• ADTRAN (ADTN) Cut to Neutral at Baird.
• Allianz (AZ) Started as Underperform at Jefferies.
• Cypress Semi (CY) Cut to Underweight at JPMorgan.
• Ford (F) Started as Sell at Societe Generale.
• Gap Inc. (GPS) Cut to Market Perform at FBR.
• General Motors (GM) Started as Sell at Societe Generale.
• Infineon (IFX) Cut to Neutral at UBS.
• Lennar (LEN) Cut to Neutral at UBS.
• LM Ericsson (ERIC) Cut to Sell at Deutsche Bank.
• Maxim Integrated (MXIM) Cut to Underweight at JPMorgan.
• Progressive (PGR) Cut to Sell at Citigroup.
• Whole Foods (WFMI) Cut to Underweight at JPMorgan.

Jon C. Ogg
December 16, 2008

Source: 24/7 Wall St. | 16 Dec 2008 | 12:46 pm

Stock index futures rise

NEW YORK (Reuters) - Stock index futures rose on Tuesday as investors awaited an expected interest rate cut from the Federal Reserve and signs of how the U.S. central bank plans to fight the year-long recession.
Source: Reuters: Business News | 16 Dec 2008 | 12:44 pm

Stock index futures rise (Reuters)

Reuters - Stock index futures rose on Tuesday as investors awaited an expected interest rate cut from the Federal Reserve and signs of how the U.S. central bank plans to fight the year-long recession.

Source: Yahoo! News: Business | 16 Dec 2008 | 12:44 pm

Stock index futures rise (Reuters)

Reuters - Stock index futures rose on Tuesday as investors awaited an expected interest rate cut from the Federal Reserve and signs of how the U.S. central bank plans to fight the year-long recession.

Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 12:44 pm

Venezuela and Iran urge Opec to double cut

Opec's two most hawkish members called on the cartel to double the number of barrels it has already promised to withhold from the market as oil prices continued to trade far below the group's pain threshold
Source: Financial Times - US homepage | 16 Dec 2008 | 12:42 pm

Oil ticks up above $45 ahead of expected OPEC cut

LONDON (Reuters) - Oil rose above $45 on Tuesday, bolstered by expectations that OPEC will agree on its largest ever supply cut this week, after prices fell 4 percent the previous day on worries of a deepening economic slump.
Source: Reuters: Business News | 16 Dec 2008 | 12:39 pm

FTSE-100 up 18.97 at 4,296.53 (AP)

AP - Share prices on the London Stock Exchange were higher at midday Tuesday.
Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 12:39 pm

Auto bailout could be announced by Wednesday

WASHINGTON (Reuters) - The Bush administration could act as early as Wednesday to approve an automaker bailout from its bank rescue fund, with conditions likely to reflect at least those approved by the U.S. House of Representatives last week, key lawmakers and other sources said on Monday.
Source: Reuters: Business News | 16 Dec 2008 | 12:16 pm

European markets edge higher ahead of Fed decision (AP)

AP - European stock markets edged higher Tuesday following a mixed performance in Asia earlier, as investors eyed an expected interest rate cut from the U.S. Federal Reserve later.

Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 12:15 pm

Dollar stable ahead of Fed decision

The dollar edged higher against the euro on Tuesday after posting sharp losses in the previous session as traders awaited the Federal Reserve's decision on interest rates.
Source: Financial Times - US homepage | 16 Dec 2008 | 12:10 pm

Biggest car sales fall since 1999

European new car sales dropped by 25.8% in November, figures show, as the economic downturn continues to hit the industry.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 12:07 pm

FTSE rises as inflation figures surprise

Retail stocks were under pressure in London on Tuesday, after another profit warning from the sector.Financial stocks also continued to fall ahead of earnings news from Wall Street banks and on worries...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 12:06 pm

Glencore plans to buy back debt

Glencore announced on Tuesday that it was considering a debt buyback after the cost of insuring against its default rose to a level that did not reflect its financial situation, the world's largest commodities...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 12:05 pm

Kesa halves dividend as profits slide

Losses in Kesa Electricals' UK and Spanish retail chains were largely behind a 71 per cent fall in first-half retail profits from 45.1m to 13m, the European group said on Tuesday. The owner of the Comet...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 12:04 pm

PartyGaming founder to pay out $300m

The biggest shareholder in the UK-listed online gambling company has agreed to plead guilty to a charge relating to illegal web betting
Source: Financial Times - US homepage | 16 Dec 2008 | 11:53 am

PartyGaming founder to pay out $300m

The biggest shareholder in PartyGaming, the UK-listed online gambling company, has agreed to pay US authorities $300m and plead guilty to a charge relating to illegal web betting in the most prominent...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 11:53 am

Global stocks and dollar swing ahead of Fed meeting

LONDON (Reuters) - Volatility spread across stock and foreign exchange markets on Tuesday as investors eyed a Federal Reserve meeting expected to cut interest rates and hint at future unorthodox monetary policies to lift the U.S. economy.
Source: Reuters: Business News | 16 Dec 2008 | 11:52 am

HK stocks rise amid China rate cut hopes (AP)

AP - Hong Kong stocks rose modeslty Tuesday after the head of China's central bank said more interests rate cuts were likely.
Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 11:51 am

The Car Czar: Auto Firms May Go Bankrupt Anyway

The car czar is a joke, a way to get a few billion dollars to GM (GM) and Chrysler while they move their companies in better shape for certain Chapter 11 filings.

The two car companies are not likely to get what they want from the UAW, suppliers, and creditors without some kind of fight. Who wants to walk away with the smallest piece of the pie?

While The Big Three may come to the car czar with excellent plans and he may force the union and suppliers to their knees, the one thing he cannot do is increase sales.

By many estimates, total domestic vehicles sales could drop to 11 million next year. That would mean units shipped would drop another 10% from the already catastrophic levels they hit in 2008. On top of this, the Japanese are likely to take more market share aided by concerns among consumers that buying cars from companies which might go bankrupt is a bad idea.

According to Bloomberg, "The U.S. Treasury may adopt a plan that would let a car czar or the Treasury Secretary force General Motors Corp. and Chrysler LC into bankruptcy if the automakers don’t show they can survive without government aid."

That will give the new king of Detroit time to pour over balance sheets, UAW contracts, supplier pricing, plant production, and product development programs. Between when he steps into his job and the end of March, which is the deadline for the auto firms to put in their restructuring programs, enough information will have been collected to hand a road-map to a bankruptcy judge.

The czar will also have December, January, February, and March sales and market share data and a very good look at April.

Sales number for The Big Three will still be sliding and sliding sharply in Q1 2009. That will give the czar only one choice.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Dec 2008 | 11:47 am

Cadbury warns of slower growth as downturn bites (Reuters)

Reuters - British confectionery giant Cadbury on Tuesday warned of slower growth and retailer destocking as the economic downturn starts to bite into the chocolate eating and gum chewing habits of consumers.

Source: Yahoo! News: Business | 16 Dec 2008 | 11:47 am

European stocks rebound on PMI figures

European shares edged up on Tuesday morning led by defensive stocks as a key sentiment indicator for eurozone business did not fall as sharply as expected. In late morning trade, the FTSE Eurofirst 300...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 11:41 am

Global stocks mixed ahead of US interest rate decision (AFP)

AFP - World stocks markets were mixed on Tuesday as investors awaited the outcome of a US Federal Reserve meeting that some analysts forecast would see interest rates cut close to zero.

Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 11:37 am

An iPhone Nano?

Source: Business and financial news - CNNMoney.com | 16 Dec 2008 | 11:33 am

Bank Stocks Get Ready For New Lows (HBC)(C)(BAC)

Despite all the capital the Treasury has put into large US banks, their stocks may be about to make new multi-year lows.

While the housing market is still hurting their derivative holdings, consumer credit and corporate lending troubles may just be beginning.

According to Reuters, Friedman, Billings, Ramsey Group cut its rating on Bank of America (BAC) to "underperform" and put a price target of $9 on the bank. Earlier in the day news reports said that HSBC (HBC) would have to raise $14 billion to cover losses.

Since BAC has not traded below $10 in several years and it is unlikely that large banks will be profitable for several quarters, the next round of losses will force them to bring in more capital. If this is private money, it will come dearly, probably below market and with large warrant coverage. If the money comes from Treasury, Congress will expect a higher price tag than it did with the last round. Either path leads to more dilution.

Bank of America may actually be the next victim of bank numbers. Its purchase of mortgage giant Countrywide could lead to a string of quarterly losses as the housing market drops. It has a market cap of $64 billion. If it has to raise $15 billion at a below market price, its stock could actually drop to $7.

The notion that the government will have to nationalize the banks is almost certainly wrong. It would send a message the the US financial system cannot be repaired. That does no mean that the Treasury will be able to avoid buying more preferred stock, diluting shareholders by tremendous amounts once again.

Douglas A. McIntyre

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

Ofgem targets £500m bill savings

A probe by energy regulator Ofgem should remove £500m in unfair bill premiums, it says, but it wants firms to move faster.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 11:22 am

December PMI data signal deepening euro-zone recession

The euro-zone’s recession is likely to have deepened in the fourth quarter, economists believe, as a closely watched gauge of activity in the manufacturing and services sectors falls to yet another record low.

Source: MarketWatch.com - Top Stories | 16 Dec 2008 | 11:16 am

Laptops for the toughest job sites

As the owner of a firm that specializes in major home renovations, I know that a construction site is not an ideal place for a computer. But I also know that my office laptop plays an increasingly crucial role in my daily routine. I use it to track my schedules, orders and budgets. I also e-mail photos to clients who can't make it to building sites.
Source: Business and financial news - CNNMoney.com | 16 Dec 2008 | 11:13 am

Even GE (GE) Does Not Know Where It is Going

Over the last decade or more no company has been more meticulous about its earnings forecasts than GE (GE). The conglomerate even talks freely about its prospects between its quarterly conference calls and occasional analyst meetings.

Now, even GE may have to admit that the economy is so badly crippled that with businesses stretched across much of the industrial and services sectors and around the world, it can no longer see the future of its own operations clearly.

According to The Wall Street Journal, when GE meets with Wall St. today, "One change analysts suspect may be coming: a decision to stop offering quarterly earnings forecasts."

The move would be a profound admission that even the largest and most sophisticated of corporations has lost its way. If GE expected even modest stability in the economy taking a measure as drastic as saying that it cannot see one quarter ahead would be unthinkable.

The move should cause special concern because so much of GE's business and revenue is determined long before earnings are announced. Many of its big ticket items are ordered months, and in some cases years, in advance of when they show up as sales.

If GE takes the measure of suspending guidance it is almost certainly a signal that it sees, or does not see, the worst ahead in both the US and overseas economies.

If, with all of its management prowess and analytic expertise, GE cannot see around the corner, who can?

Douglas A. McIntyre

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

The Holiday Sales Mirage (M)(SHLD)

The news about what will happen to retail spending ends at December 31. All of the analysis is focused on the period from November 1 to the end of the year.

So far the news about consumer spending for the holidays is not too awful, at least compared with predictions.

Retail sales at many chains are off 5%, in some cases less. Most analysis of e-commerce spending shows buying is flat from last year.

Beyond Christmas, things could actually get worse for the industry. National chains which do only marginally well in 2008 could be pulled under in 2009, or at least forced to cut expenses sharply again. Operators like Macy's (M) and Sears (SHLD) may only post relatively small losses for the last quarter of 2008. They may post deep losses next year.

According to Reuters, "A total of 44 percent of consumers surveyed by America's Research Group said they planned to cut back spending further after the holidays. That number would typically be in the low-to-mid 20s."

That is likely to add to the number of companies in the industry that do not see the 2009 holidays.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Dec 2008 | 11:01 am

Indications: Futures point higher ahead of rate decision, Goldman earnings

U.S. stock-market futures pointed higher Tuesday ahead of an interest-rate decision from the Federal Reserve and the latest quarterly earnings from Goldman Sachs Group.

Source: MarketWatch.com - Top Stories | 16 Dec 2008 | 11:01 am

Credit card crackdown coming soon

Some reprieve for cash-strapped consumers could come ahead of the holidays, as the Federal Reserve Board votes Thursday to reign in controversial credit card practices.
Source: Business and financial news - CNNMoney.com | 16 Dec 2008 | 10:54 am

New Poll: More Americans Want To Lose Their Jobs

The recession has caused so much panic among Americans that it has addled their minds.

According to a new poll from The Washington Post and ABC News, most citizens do not favor a bailout of the auto companies. Fifty-five percent don't think Detroit should get a dime of government money.

According to MSNBC, "Most Americans continue to oppose a government-backed rescue plan for Detroit's Big Three automakers as majorities blame the industry for its own problems and are unconvinced failure would hurt the economy." The survey data show that most US workers are fools

While the estimates about unemployment caused by a failure of the auto industry are too high when they come from the mouths of car executives cowering in front of Congress, it is entirely believable that a bankruptcy of GM (GM) and Chrysler would kill several thousand jobs. If the two companies were combined many estimates are that 60,000 jobs would be lost. A bankruptcy judge would undoubtedly void all or some portion of the UAW contracts, allowing the Big Two to take out more jobs. Auto suppliers would almost certainly get cents on the dollar for their receivables. They would have to cut people to survive.

There would be some ripple effect from a Chapter 11 at GM and Chrysler, beyond auto company employees and supplier personnel. States and charities which need auto money to survive would have to let people go. Most of the stores in downtown Pontiac and Flint would be shuttered.

The car companies want the public to think that if they are forced into receivership that three million people could lose jobs. They want to public to believe that the event would cause the next Depression. The majority of economists don't buy that, but the idea that a collapse of Detroit would have only the most modest effect on the economy is naive.

A bailout may make people feel that socialism is at their doors, but the rescue of the banks has already made that a reality.

Maybe no one favors a bailout until he is laid off.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Dec 2008 | 10:47 am

European shares advance; Asia mixed

Europe's major markets were trading higher Tuesday, looking ahead to an expected interest rate cut by the U.S. Federal Reserve later in the day.
Source: Business and financial news - CNNMoney.com | 16 Dec 2008 | 10:39 am

Russia's industrial output slumps

Russian industrial output dropped 10.8% during November, fuelling fears the economy faces a recession.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 10:38 am

Asia Markets: Asian shares end mixed as Tokyo retreats, Bangkok extends rally

Asian markets were mostly lower Tuesday after a retreat on Wall Street and ahead of a decision on interest rates by the U.S. Federal Reserve, with Japanese stocks dragged down by steelmakers on a report Toyota Motor Corp. plans to ask its suppliers to cut prices sharply.

Source: MarketWatch.com - Top Stories | 16 Dec 2008 | 10:32 am

Apple (AAPL) Get Dragged Off Olympus

It must be hard for Apple (AAPL) to be dragged off the top of the hill. It has been there so long. Steve Jobs has been hailed as the best CEO in America. Apple has long been considered one of the champions of US inventiveness and marketing prowess.

Much of that has changed in the last few days. Goldman Sachs wrote that Apple will be a victim of the recession.

Apple has sold nearly 200 million iPods in just over five years. That can't continue.

Now the Mac has hit the skids. According to The Wall Street Journal, "Sales of Macs in U.S. stores last month declined 1% from a year ago, while industry-wide PC sales rose 2%, according to research firm NPD Group." Many analysts covering Apple thought that Mac sales might slow, but it had not occurred to anyone that they could "go negative."

Apple has become the victim of its own success and its own arrogance. Most iMac desktop models start at $1,199. MacBooks start at $1,299. Dell (DELL) is selling desktop models for under $500 and laptops for under $480. Apple's response to that is that these PCs are not a Mac. They don't have the same functions. They don't look as good. They are not as cool. They don't have the superior Mac OS.

The counter to the Apple argument about buying a Mac is that during a recession when people feel poor, they will often buy the least expensive product as long as it works reasonably well. That would hold true of most PCs from major manufacturers. Holiday buyers are defaulting to what they can afford.

The simple truth is that Apple has priced itself out of the market. It will have to cut prices if it wants to get Mac sales to grow.

Douglas A. McIntyre

Source: 24/7 Wall St. | 16 Dec 2008 | 10:29 am

Rate cut expected as Fed mulls emergency tools

WASHINGTON (Reuters) - The U.S. Federal Reserve is expected to lower interest rates closer to zero on Tuesday and point toward emergency tools it could deploy to end a year-long recession, with room to cut borrowing costs running out.
Source: Reuters: Business News | 16 Dec 2008 | 10:20 am

US rate cut towards zero expected

Interest rate-setters are expected to cut rates from 1% and may say what other tools they now plan to use.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 10:17 am

Toshiba to cut Nand flash output by 30%

Toshiba, the Japanese electronics and engineering group, is to cut its production of Nand flash memory chips by 30 per cent beginning in January, responding to slumping worldwide demand for electronic...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 10:09 am

Mail report 'to suggest sell-off'

A report into the future of the Royal Mail due out later is expected to call for the service to be part-privatised.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 10:08 am

EDF close to buying half of Constellation: report

(Reuters) - Electricite de France SA is close to an agreement to buy half the nuclear power business of Constellation Energy Group Inc for $4.5 billion, Bloomberg reported, citing people familiar with the situation.
Source: Reuters: Business News | 16 Dec 2008 | 10:02 am

Lawyers use Facebook to serve papers

An Australian court permitted a solicitor to use Facebook to serve legal documents on a couple that had defaulted on a housing loan in what solicitors claim may be a world first
Source: Financial Times - US homepage | 16 Dec 2008 | 9:52 am

Asia-Pacific braced for poor US data

Stocks in Pakistan declined for a second day on Tuesday after the removal of the artificial floor on the country's stock markets, underperforming the minor falls in major markets across the region, ahead...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 9:39 am

Aer Lingus rejects Ryanair offer

Irish airline Aer Lingus rejects a hostile 750m euro takeover bid from its rival Ryanair.
Source: BBC News | Business | World Edition | 16 Dec 2008 | 9:27 am

Retail stocks plunge on fresh warnings

London stocks were weaker on Tuesday, after another profit warning from the retail sector. Financial stocks continued to fall ahead of earnings news from big US banks. The FTSE 100 was 0.5 per cent lower...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 9:06 am

More Madoffs To Come: The Heart Of Darkness Gets Legs

Source: 24/7 Wall St. | 16 Dec 2008 | 9:04 am

Madoff mess: Black eye for banks

The losses in the Madoff mess are still being tallied. But even if U.S. financial firms avoid a big hit, this episode won't exactly bolster their tattered reputation.
Source: Business and financial news - CNNMoney.com | 16 Dec 2008 | 9:00 am

Volvo reports negative order intake in Europe

Sweden's Volvo had more cancelled orders in Europe than new ones in October and November as customers continued to postpone their investment decisions due to the uncertain economic environment.The world's...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 8:59 am

Why Toyota wants GM to be saved

Detroit's Big Three aren't the only automotive companies that want to see the government step in with some much needed financial help.
Source: Business and financial news - CNNMoney.com | 16 Dec 2008 | 8:55 am

Cadbury appoints new finance director

Cadbury on Tuesday appointed Andrew Bonfield, the former chief financial officer of Bristol-Myers Squibb, as its new head of finance, as it confirmed its full-year guidance and announced plans to sell...
Source: Infocious RSS raw feed - channel BNPaperBusiness | 16 Dec 2008 | 8:43 am

Japan stocks fall ahead of Fed rate decision (AP)

AP - Japanese stocks retreated Tuesday, with cautious investors awaiting an interest rate decision by the Federal Reserve as well as earnings reports from the two biggest U.S. investment banks.
Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 7:57 am

Obama picks Nobel physicist for energy job

Insisting on the need to develop new forms of energy, US president-elect Barack Obama chose as his energy secretary a Nobel physics laureate who is a major promoter of alternative fuels
Source: Financial Times - US homepage | 16 Dec 2008 | 7:50 am

Australian stocks: Market closes weaker

SYDNEY - Heavy trading in Telstra Corporation and a weaker resources sector led Australian share market to close around one per cent weaker. At 1615 AEDT, the benchmark S&P/ASX200 index was down 35.2 points, or 0.98 per cent, at...
Source: New Zealand Herald - Business | 16 Dec 2008 | 7:30 am

NZ stocks: Shares post moderate gains

The sharemarket shrugged off concerns in overseas markets to close nearly 0.7 per cent higher today, with leading stocks notching up moderate gains. After closing almost flat yesterday, the benchmark NZSX-50 index rose 18.65 points...
Source: New Zealand Herald - Business | 16 Dec 2008 | 6:10 am

Rate cut expected as Fed mulls emergency tools (Reuters)

Reuters - The U.S. Federal Reserve is expected to lower interest rates closer to zero on Tuesday and point toward emergency tools it could deploy to end a year-long recession, with room to cut borrowing costs running out.

Source: Yahoo! News: Business | 16 Dec 2008 | 5:48 am

Currency: Dollar regains ground ahead of US rate cut

The New Zealand dollar recouped earlier losses against the US dollar ahead of an expected US Federal Reserve rate cut to near-zero. By 5pm, the kiwi was at US55.86c from US55.35c late yesterday afternoon. Against the Australian...
Source: New Zealand Herald - Business | 16 Dec 2008 | 5:38 am

Goldman Gone Wrong

Today, Goldman Sachs will report a huge quarterly loss—said to be as much as $2 billion.
 
The losses, though, are the least of Goldman's troubles. The larger problem may be that the company's transformation into a giant hedge fund has left it without the culture to again be an operation that exists for its clients.
 
"It went from being a firm that was all about its clients to a counterparty" on client transactions, one former Goldman soldier told me, adding that a crucial part of the firm's culture was destroyed when trading became such a huge driver of its revenues.
 
Back in 1998, when Goldman's fixed-income/commodities trading unit sustained losses in the Long-Term Capital Management meltdown, the desk was dubbed the "FI-Tanic." Yet in the trading boom that followed, the fixed-income operation at Goldman came to wield considerable influence across the entire firm.
 
Some say the biggest casualty of the economic crisis has been Goldman's sparkling reputation. The firm that started the prop-trading game in a big way didn't heed the signs to scale back its investments in distressed assets that grew only more distressed in the past year.
 
Some make the case that if Goldman had gotten less drunk on principal investing, it could've come out of this crisis in a better competitive position, especially relative to Morgan Stanley, also slated to report nightmarish earnings today. Instead, both had to raise money (though, to be fair, Goldman's did come from Warren Buffett) and become commercial banks, moves that could curtail growth for years to come.
 
Goldman's shares are off more than 60 percent in the past year, and palace coups have been know to happen—Hank Paulson joined with John Thain and John Thornton to push out Jon Corzine in the late 1990s ahead of the firm's I.P.O.
 
How long will it be until chief Lloyd Blankfein starts wondering whether the bankers he manages are putting together a plan of their own? The recent New York Magazine cover story on Dick Fuld made it clear that Lehman's bankers were pushing to get control of the firm until it was forced into bankruptcy.
 
Goldman may no longer be in danger of going out of business, but a revolt could make it an interesting 2009.




Source: Portfolio.com: Top 5 | 16 Dec 2008 | 5:00 am

Alleged Madoff fraud has worldwide exposure (AP)

AP - In a Connecticut town, local officials scrambled to get a handle on damage to pension funds held for its police officers and firefighters. A Massachusetts charity announced it was shutting down. In New York, a distinguished economist feared he had lost his $2.2 million nest egg.

Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 2:48 am

Alleged Madoff fraud has worldwide exposure (AP)

AP - In a Connecticut town, local officials scrambled to get a handle on damage to pension funds held for its police officers and firefighters. A Massachusetts charity announced it was shutting down. In New York, a distinguished economist feared he had lost his $2.2 million nest egg.

Source: Yahoo! News: Business | 16 Dec 2008 | 2:48 am

ING told to stand behind its frozen NZ funds

A group of financial advisers is calling on ING New Zealand to "stand behind" two funds it wants to wind up. In March, ING announced it was suspending withdrawals from its ING Diversified Yield Fund and the ING Regular Income Fund,...
Source: New Zealand Herald - Business | 16 Dec 2008 | 2:00 am

Judge signs order to protect Madoff investors (AP)

AP - A federal judge on Monday threw a lifesaver to investors who may have been duped in one of Wall Street's biggest alleged frauds, saying they need the protection of a special government reserve fund set up to help investors at failed brokerage firms.

Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 1:30 am

Telecom credit ratings in line for possible downgrade

Telecom's credit ratings are in line for a downgrade after Moody's placed it under review, concerned about the company's weakened position in an economic slowdown. Moody's action affects Telecom's "long-term A2 issuer", "senior...
Source: New Zealand Herald - Business | 16 Dec 2008 | 1:30 am

Obama denies contact with Blagojevich

Barack Obama insisted there had not been any "inappropriate discussions" between his staff and Rod Blagojevich, the Illinois governor, over who should fill his vacated Senate seat
Source: Financial Times - US homepage | 16 Dec 2008 | 1:22 am

List of duped investors in $US50bn Wall St pyramid scam grows

NEW YORK (AP) - The list of investors who say they were duped in one of Wall Street's biggest pyramid schemes is growing, snaring some of the world's biggest banking institutions and hedge funds, the super rich and the famous, pensioners...
Source: New Zealand Herald - Business | 16 Dec 2008 | 1:00 am

Indonesia says NZ offering too little in trade talks

An Indonesian official says New Zealand is offering too little in bilateral trade negotiations - sparking speculation the talks could end in a deadlock. New Zealand was set to sign a free trade agreement (FTA) with the Association...
Source: New Zealand Herald - Business | 16 Dec 2008 | 12:38 am

Figures will show end of recession - Treasury

Treasury's updated forecasts this week will be roughly in line with the Reserve Bank's - showing New Zealand coming out of its recession - Treasury Secretary John Whitehead says. But Mr Whitehead today said it was a difficult time...
Source: New Zealand Herald - Business | 16 Dec 2008 | 12:30 am

Town & Country's Fiori Says Ad Sales Not Hit by Crisis

Source: Bloomberg - All Podcasts | 16 Dec 2008 | 12:14 am

IBD's Top 10 - Monday (Investor's Business Daily)

Investor's Business Daily - 1 The Nasdaq pared losses late, but still fell 2.1%, led by Apple's (NasdaqGS:AAPL - News) 4% slide. The S&P 500 fell 1.3%, the NYSE composite and Dow 0.8%. Volume fell on another quiet day for most leading stocks. Financials tumbled as banks worldwide disclosed exposure to Bernard Madoff's hedge fund. Consumer groups also slumped. The 10-year Treasury yield fell 7 ticks to 2.51%.
Source: Yahoo! News: Stock Markets News | 16 Dec 2008 | 12:05 am

VIX Index of U.S. Stock Option Prices Advances 4.6% to 56.76

Source: Bloomberg - All Podcasts | 16 Dec 2008 | 12:02 am

YCMNet's Yoshikami Says Energy ETFs Will Continue to Drop

Source: Bloomberg - All Podcasts | 15 Dec 2008 | 11:58 pm

White House to set tough terms on Detroit aid

Democrats and Republicans are trading accusations over the failure of talks to help the US car industry, in a dispute that could shape the future of Detroit
Source: Financial Times - US homepage | 15 Dec 2008 | 11:36 pm

Supertankers store 50m barrels of oil

Oil companies and traders are storing at least 50m barrels of oil in supertankers in a clear sign of supply outstripping demand as the global economy slows
Source: Financial Times - US homepage | 15 Dec 2008 | 11:17 pm

Date set for Bridgecorp directors' depositions

Two executive directors of failed finance company Bridgecorp will reappear in court on February 24 for a depositions hearing. Rod Petricevic and Robert Roest have appeared in Auckland District Court facing charges under the Securities...
Source: New Zealand Herald - Business | 15 Dec 2008 | 10:55 pm

Pelosi Says House Stimulus Plan May Reach $600 Billion

Source: Bloomberg - All Podcasts | 15 Dec 2008 | 10:52 pm

NZ Shares: Market opens flat

The New Zealand sharemarket opened on a flat note today, after stocks fell on Wall Street overnight. The benchmark NZSX-50 index lost 4.050 points, or 0.151 per cent, to 2672.380 in early trading. Telecom was traded heaviest,...
Source: New Zealand Herald - Business | 15 Dec 2008 | 10:51 pm

Soleil's Farrell Says Madoff Has to Have `Some Money Left'

Source: Bloomberg - All Podcasts | 15 Dec 2008 | 10:48 pm

Banc of America's Cloherty Sees U.S. Growth `Below Trend'

Source: Bloomberg - All Podcasts | 15 Dec 2008 | 10:45 pm

Bankruptcy filings rise 30% this year

Bankruptcy filings rose 30% during the government's 2008 fiscal year, which ended Sept. 30, according to figures released Monday by the Administrative Office of the U.S. Courts.
Source: Business and financial news - CNNMoney.com | 15 Dec 2008 | 10:40 pm

Hear: Don't Call It A Hedge Fund

Today on Planet Money:

-- Ecuador became the first country to default in the credit crisis, though the reason may have more to do with the political of President Rafael Correa than with a lack of money.

-- New York fund manager Bernard Madoff stands accused in a $50 billion federal investment fraud that threatens to wipe out private individuals, banks and hedge funds around the world. As blogger Felix Salmon of Portfolio explains, Madoff wasn't running a hedge fund himself -- and things might have turned out better if he had been.

Download the podcast; or subscribe. Intro music: Bloc Party's "Helicopter." Find us: Twitter/ Facebook/ Flickr.

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Source: NPR Blogs: Planet Money | 15 Dec 2008 | 10:38 pm

After rate cuts: The Fed's new ball game

After what is likely to be the last in a long series of interest rate cuts Tuesday, the Federal Reserve is expected to continue its new, perhaps more effective monetary strategy: printing lots of money.
Source: Business and financial news - CNNMoney.com | 15 Dec 2008 | 10:08 pm

Madoff fall-out spreads worldwide

The fallout from Bernard Madoff's alleged $50bn fraud spread through the global financial system as more banks revealed exposures to his firm and the beleaguered hedge fund industry braced for withdrawals from worried clients
Source: Financial Times - US homepage | 15 Dec 2008 | 9:38 pm

Siemens in $1.4B corruption settlements

Electronic equipment maker Siemens AG has agreed to pay $1.4 billion Monday to U.S. and German authorities after the company allegedly engaged in bribery, the SEC said in a release.
Source: Business and financial news - CNNMoney.com | 15 Dec 2008 | 9:29 pm

New York state plans soft drink 'obesity tax'

New York state could impose an 'obesity tax' on high-calorie soft drinks such as non-diet versions of Coke and Pepsi as public concerns over obesity turn potentially fattening foods into a politically acceptable target for taxation
Source: Financial Times - US homepage | 15 Dec 2008 | 8:09 pm

AXA's Eric Chaney Says Fed Funds Rate Going to Zero

Source: Bloomberg - All Podcasts | 15 Dec 2008 | 8:03 pm

MFR's Shapiro Says U.S. Consumers Are `Throwing in the Towel'

Source: Bloomberg - All Podcasts | 15 Dec 2008 | 8:01 pm

The 10 Nastiest Ponzi Schemes Ever

Bernard Madoff pulled a shocker last week by revealing that his exclusive investment securities firm was actually the biggest Ponzi scheme in the history of mankind. As the impact of Madoff’s decades-long crime reverberates around the world, it invokes memories of past Ponzi masters, who laid the groundwork for planet-sized schemes like Madoff’s.

Ponzificating–perpetuating a fraud by paying off early investors with new investors’ money–is a concept as old as Indian giving. Honoring everyone involved in the act would be like writing a history of cheating itself. So we narrowed the Ponzi criminals down to the more recent, more nasty ilk, including Madoff himself:

10. The Fraudulent Feminist

(Note: This isn’t Howe. Just an 1880s woman from a catalog.)

In 1880, Boston Ponzian Sarah Howe promised women 8% interest on a “Ladies Deposit.” She said it was only for women, selling an implicit assumption of safety. She took the money and ran.

Nastiness Factor: Bad. Way to break the sisterhood of trust, Sarah.

9. The Haiti Haters >

Ponzi schemes popped up all over Haiti in the early 2000’s. These schemes sold themselves as government-backed “cooperatives.” They ran mainstream-sounding ads, some of which featured Haitian pop stars. As a result, people felt safe investing more than $240 million–60% of Haitian GDP in 2001–into the schemes, which ended up being a massive swindle.

Nastiness Factor: Bad. Haiti is already one of the poorest countries in the world. People there eat mud cakes when times get bad. Cheating them out of their meager savings is sick; alas, it also appears to be systemic.

8. The Scientologist Snake

Earthlink co-founder and Scientology minister Reed Slatkin posed as a brilliant investment advisor for A-list Hollywood residents and corporate bosses. Working out of his garage, Slatkin cheated the rich and famous out of roughly $593 million, creating fake statements referring back to fake brokerage firms to prove his mettle. He fed the Church of Scientology with millions of his winnings. In 2000, the SEC caught wind that Slatkin wasn’t licensed, and busted the scheme.

Nastiness Factor: Mild. Cheating the rich and famous usually results in fewer bankruptcies than, say, misling seniors out of their retirement funds.

7. The Lottery Uprising

When Albania was moving out from behind the Iron Curtain in the mid-1990s, a powerful government and environment of questionable ethics resulted in a financial system dominated by pyramid schemes. The government endorsed various Ponzis, which robbed the majority of the population and netted more than $1 billion in losses. Albanians rioted and overthrew the government.

Nastiness Factor: Deplorable. Don’t government officials realize that endorsing Ponzi schemes might get them overthrown?

6. The Costa Rica Crooks

Three Costa Rican brothers, Enrique, Osvaldo and Freddy Villalobos, defrauded clients–mostly American and Canadian retirees–out of $400 million in a 20-odd-year unregulated loan scheme that started in the late 1980s. They promised interest rates of 3% per month on a minimum investment of $10,000. Villalobos moved money through shell companies before paying investors. Its staying power had to do with the fact that margins were low, the brothers were disciplined, and the outfit just barely skirted past laws.

Nastiness Factor: Mild. The size of the operation gives it a place on this list, but the brothers also had real assets to back them up. It’s Ponzi Lite, but that doesn’t ease the burden on people who lost everything.

5. The Biblical Bilker

In fraud-rich Florida, the Greater Ministries International church used Bible-speak to cheat its flock out of $500 million. Starting in the early 1990s, the church, led by gun-toting minister Gerald Payne, offered worshippers investments in gold coins. Payne then created an investment plan that would “double the ‘blessings’ that people invested” by funneling money towards the church’s fake precious metals investments. According to the Anti-Defamation League,

Payne said that God had modernized the multiplication of the loaves and fishes and asked him to share the secret.

$500 million later, the Feds caught Payne, but most investors never got their money back.

Nastiness Factor: Disgusting. Anyone who uses holy speak to bilk people out of their retirement savings is disgusting, plain and simple.

4. The Boy Band Bandit

Beginning in the late 1980s, Lou Pearlman, Art Garfunkel’s cousin and former manager of ‘N Sync and the Backstreet Boys, offered attractive returns through his FDIC-insured Trans Continental Savings Program. The scheme was neither a savings and loan nor FDIC-approved, but that didn’t stop Pearlman from bilking investors out of nearly $500 million, with which he planned on funding three MTV shows and an entertainment complex.

Nastiness Factor: Deplorable. Pearlman was already a multimillionaire. The fact that he became a compulsive criminal after that means he should sit in a cell for a very long time.

3. The Retiree Plunderer

Mexican resort owner Michael Eugene Kelly schemed retirees and senior citizens out of $428 million. He offered them timeshare investments in Cancun hotels that he called “Universal Leases.” The timeshares came with rental agreements promising investors a nice fixed rate of return. Most of his victims used their retirement savings, thinking they would get solid, low-risk returns. The SEC says that “more than $136 million of the funds invested (came) from IRA accounts.” Kelly, meanwhile, bought himself a private jet, racetrack, and four yachts.

Nastiness Factor: Disgusting. Defrauding senior citizens out of their retirement savings is just about as low as you can go.

2. Madman Madoff

Bernard Madoff’s scam is still unfolding. The facts as we know them now are that Madoff spent decades building the biggest Ponzi scheme in history, bilking nonprofits, famous people, funds, banks, and countless others out of $50 billion.

Nastiness Factor: Deplorable. The man single-handedly destroyed charities, life savings, and other organizations yet to be named. The amount of money involved earns him a spot just below Charles Ponzi himself.

1. The Namesake

The King of Get Rich Quick, Charles Ponzi became a millionaire in six months by promising investors 50% return in 45 days on international postal coupon investments. He earned $15 million, which in 1920s terms was serious money. After Ponzi was caught, investors only received $5 million back.

Nastiness Factor: Mythical. This ancestor of fraudulent men passed his name on to the many schemes that would follow his own. His legacy, and his scheme, are forever memorialized, earning them a unique Nastiness Factor label.

Source: Business Pundit | 15 Dec 2008 | 7:56 pm

Levitt Sees Madoff Case Leading to New Securities Rules

Source: Bloomberg - All Podcasts | 15 Dec 2008 | 7:46 pm

Gadgets smaller in price and size

Hard up on gift ideas for your friends, family and the person who has everything? Tess Vigeland speaks with Kevin Pereira from G4 TV about some great budget-conscious gadgets for the techies and non-techies in your life.
Source: Marketplace | 15 Dec 2008 | 6:49 pm

Glossy catalogs endure in tough times

Sales of luxury goods are down. But even for shoppers who can afford to splurge, flaunting your moneybags is not so cool. So, high-end shoppers are turning to catalogs to spend their money and it's working out pretty well. Stacey Vanek-Smith reports.
Source: Marketplace | 15 Dec 2008 | 6:49 pm

Foreign debt puts Hungarians in crunch

Hungarians have experienced a rise in the quality of life since communism ended. But to support their new lifestyles, many Hungarians depended on foreign loans. Now, Hungarians with loans in foreign currency may be hungry for change. Stephen Beard reports.
Source: Marketplace | 15 Dec 2008 | 6:49 pm

We'd all benefit from higher gas prices

There may be a large contingent of greener cars on the road, but gas guzzlers and other fuel-consuming vehicles are still zooming down the freeways. Commentator Virginia McConnell says that higher gas prices and taxes could be good for the auto industry and us.
Source: Marketplace | 15 Dec 2008 | 6:49 pm

Fannie Mae to help renters stay

Fannie Mae is developing a policy to allow renters who live in foreclosed properties to stay in their homes and avoid eviction. The new policy comes on the heels of the mortgage finance company's current holiday eviction moratorium. Sam Eaton reports.
Source: Marketplace | 15 Dec 2008 | 6:49 pm

Will rate cut get banks lending again?

The Federal Reserve Board will likely announce Tuesday it is cutting interest rates. But what happens next? As John Dimsdale reports, it may take more than just low rates to get banks back in the game.
Source: Marketplace | 15 Dec 2008 | 6:49 pm

How Madoff could change hedge funds

The fallout from Bernard Madoff's massive investment scam is being felt worldwide and has some people calling for more regulation on hedge funds. Jeremy Hobson reports.
Source: Marketplace | 15 Dec 2008 | 6:49 pm

So Much For Pay Limits

The Washington Post reports today the $700 billion bailout's ballyhooed limits on executive pay may be all bally and no hoo. Here you go:

[A]t the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.

Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.

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Source: NPR Blogs: Planet Money | 15 Dec 2008 | 5:50 pm

3 Thoughts on the Madoff Fraud

Here’s a recap of the Madoff case, from the Wall Street Journal:

Bernard L. Madoff, a former chairman of the Nasdaq Stock Market and a force in Wall Street trading for nearly 50 years, was arrested by federal agents Thursday, a day after his sons turned him in for running what they said their father called “a giant Ponzi scheme.”

The Securities and Exchange Commission, in a civil complaint, said it was an ongoing $50 billion swindle, and asked a judge to seize the firm and its assets. “Our complaint alleges a stunning fraud that appears to be of epic proportions,” said Andrew M. Calamari, associate director of enforcement in the SEC’s New York office.

In a separate criminal complaint, Federal Bureau of Investigation agent Theodore Cacioppi said Mr. Madoff’s investment advisory business had “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.”

Clusterstock has a pretty comprehensive list of Madoff’s victims. The case is still unfolding, but it’s big. Huge. More massive than Enron.

Not again. Three prominent things came to mind for me:

1. Wikipedia:

He has been active in the National Association of Securities Dealers (NASD), a self-regulatory organization for the U.S. securities industry. His firm was one of the five most active firms in the development of the NASDAQ, and he served as its chairman of the board of directors, and on its board of governors.

No wonder regulators didn’t catch him earlier in his scheme. He was one of their own.

2. The criminal complaint alleges that investors lost $50 billion because of the scheme. He was charged with a single count of securities fraud. Madoff was released on the same day of his arrest after posting $10 million bail.

I feel sorry for the people whose $10 million he used to get himself out of jail.

3. He provided impossibly steady returns, but people kept investing with him anyway.

This gives insight into the nature of greed. Greed isn’t just limited to “I can get more? Great! Sign me up.” Greed is your friends calling you up and telling you that you have to put your money in a certain fund. Greed is knowing that it’s too good to be true, but thinking that fate will exempt you from consequences. Greed is thinking you have an inroad to privileged returns, without stopping to ponder where those returns are actually coming from. Greed goes hand-in-hand with ignorance and laziness. It’s culturally embedded.

No wonder so many people were misled.

Source: Business Pundit | 15 Dec 2008 | 5:40 pm

Fannie to help renters stay in foreclosed homes (AP)

AP - Fannie Mae said Monday it's finalizing a plan to help renters stay in their homes even if their landlord enters foreclosure.
Source: Yahoo! News: Business | 15 Dec 2008 | 4:42 pm

Suicide Tourism: An Ethical Business?

This is actually a nonprofit, but it’s interesting to think about the ramifications of running a business that helps people die:

Switzerland, in a law dating back to 1942, permits foreigners to come and kill themselves, placing few restrictions on the how, when and why. Doctors have relative freedom to prescribe a veterinary drug for that very purpose. Now the country’s suicide practices are under the spotlight after British TV last week showed Craig Ewert, a 59-year-old Chicago man with a severe form of motor neuron disease, killing himself in Switzerland two years ago.comes to die.

Like Ewert, most foreigners turn to Dignitas, one of several Swiss organizations dedicated to the cause. Dignitas’ founder, Ludwig A. Minelli, has built the group into a thriving nonprofit operation. Dignitas says its members’ right to self-determination is paramount. The only criteria for assisting a suicide are that the person “suffers from an illness that inevitably leads to death, or from an unacceptable disability, and wants to end their life and suffering voluntarily.”

Dignitas says it charges 10,000 Swiss francs ($8,300) for its services, which include taking care of legal formalities and arranging consultations with a doctor willing to prescribe the deadly medicine. The group says it pays its staff salaries and invests any profit in its advocacy and counseling work, which includes suicide prevention efforts.

Other such organizations in Switzerland say they are cheaper and do not charge the patient directly, relying instead on membership fees and donations. “We need to ensure that there’s no economic incentive for these organizations to encourage people to commit suicide,” says (a critic).

The drug they use is pentobarbital, generally used in veterinary clinics. Here in the States, people sometimes travel to buy a drinkable dose of the stuff in Tijuana, then take it back home with them.

I’m going to make two assumptions here:

1. People have the right to choose assisted suicide

2. Writing a check for $8,300, booking a ticket to Switzerland, checking into a death hotel, and drinking a cup of pentobarbital are the only barriers to entry for your assisted suicide

If those assumptions are true, does that make setting up a nonprofit and charging a flat fee for assisted suicide ethical? I don’t think so. The Swiss laws provide a fruitful environment for that kind of business, but that doesn’t justify making it easy to sign up.

Capitalism is a useful philosophy, but it has a tendency to usurp ethical limits in the name of profit. Allowing the seed of a profit-off-death industry to flourish is a bad idea. For now, Dignitas has a certain set of parameters, but what if a money-hungry outfit sets up shop across the street, one that costs less and has fewer requirements? I shudder to think of what kinds of people could slip through the cracks.

Doctors, ethicists, and terminally ill patients need to advocate an additional layer of requirements before allowing patients to admit themselves, a system designed to give sufferers access to as many life-affirming options as possible before they decide to die. A year of therapy, for example, or a year of participating in a social network comprised of people who suffer from similar afflictions.

It’s a shame to see a system so accommodating to the loss of hope.

Source: Business Pundit | 15 Dec 2008 | 4:36 pm

Little Number, Big Implications

We've gotten some listener questions about a relatively obscure indicator, the Baltic Dry Index. Its precipitous fall has eclipsed that of most other indices: nearly 95% in six months. What is this number and why has it plummeted?

Although the Baltic Dry Index is not known for its stability, its unprecedented plunge has indeed worried many economists. The BDI provides a baseline measurement for the cost of shipping raw materials around the world. If the cost of sending copper from Bolivia to Canada rises while the price of sending coal the other way falls by a similar amount, the index should not move. The increase and the decrease cancel each other out.

The index is compiled by brokers at the Baltic Exchange in London who call shipping companies and price out various routes. The BDI is affected by everything from changing consumer demand and investor confidence to political squabbles and national holidays.

Analysts use the number to forecast the profit margins of exporting companies. In addition, the Baltic Exchange lets investors bet on whether the index will rise or fall, by selling them securities. They can use these purchases as insurance against potential losses: for example, if a steel company feared that the cost to ship iron ore would rise, it could buy securities that would pay them if the costs indeed rose.

Just as falling home prices in the U.S. have set off alarm bells, falling shipping prices seem to point to a larger imbalance in global trade. In particular, the current discussion centers around flagging demand from Chinese manufacturers, who have driven up the level of raw material trade (and the BDI) over the past decade. There is great disagreement over the length and depth of the slowdown in the Chinese economy. If China remains in a slump, we could see the BDI similarly depressed.

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Source: NPR Blogs: Planet Money | 15 Dec 2008 | 4:32 pm

The Madoff Tax Break

We're aiming to talk hedge funds with Felix Salmon of Portfolio on the podcast later today. Here's a bit from him on tax implications of the Bernard Madoff affair. Salmon writes:

Let's say you're a successful businessman who has managed to earn $10 million this year, but who also had $10 million invested with Bernie Madoff. Obviously, you're not happy about seeing your savings wiped out -- but if I'm reading this WSJ article correctly, since your loss is a "theft loss", the whole thing is deductible, and you basically get to keep all your income tax-free!

The rest of the item is just as bracing, I'd say. Talking to Salmon should be a world of fun.

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Source: NPR Blogs: Planet Money | 15 Dec 2008 | 4:18 pm

For The Birds

Michel Im took this picture while out shopping in the East Bay this weekend. The Geithner reference, of course, is to Timothy Geithner, who's up for Treasury secretary.

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Source: NPR Blogs: Planet Money | 15 Dec 2008 | 4:08 pm

Explaining That Other $800 Billion

Many of you asked about the new $800 billion effort announced by the Federal Reserve last month to help get lending going. Questions like "$800 billion??" and "Where is this money coming from??"

We have answers...

Q: This is different from the $700 billion bailout we're always talking about?

Yes, this is an effort by the Federal Reserve.

Q: I read that some of the money would be spent buying mortgage-backed securities. I thought we gave up on that approach?

The Fed will buy up to $500 billion of mortgage-backed securities, but not the dicey ones that have come to be called toxic assets. The Fed will be buying high quality, AAA-type stuff produced by Fannie Mae, Freddie Mac and Ginnie Mae, which are guaranteed by U.S. government.

Q: What's the point?

The idea is to get the market moving again for these securities. Even though they are guaranteed by the U.S. government, investors only seem to feel safe in Treasury bonds right now. So the Fed is acting like a big buyer here to try to prime the pump.

Q: Where does the money come from?

That's a tough one. The Federal Reserve is the central bank for the country, which means it has the strange power to be able to create money. Theoretically, it has an infinite amount of money.

Q: This whole thing sounds strange...

What the Fed is doing here is not totally unusual. One way the Fed controls the amount of money in the economy is by buying and selling Treasury bonds. (For instance, when it buys a Treasury bond from a bank, the bank gets money credited to its' account with the Fed, putting more money out there in the world.) In this case, the Fed is going to be buying and selling mortgage-backed securities instead of Treasury bills, but both are backed by the government and should be safe investments.

Q: What is the rest of the $800 billion going for?

The Fed has allocated $500 billion for buying those mortgage-backed securities. Another $100 billion has been allocated for loans to Fannie Mae, Freddie Mac and the Federal Home Loan Banks. (The Fed is buying "direct obligations," meaning bonds issued by these places or short-term debt.) The last $200 billion will be used to try to unfreeze the market for things like student loans, auto loans and credit card debt. (These things, like mortgages, are repackaged and sold to investors. The Fed noted that new issuances of these repacked securities "declined precipitously in September and came to a halt in October." The new program will make allow institutions to use those assets as collateral for loans from the Fed.)

Q: Are we, the taxpayers potentially on the hook for all this?

Yes, but in a kind of weird way, and this will take a full paragraph to explain.

(Deep breath)

The $800 billion the Fed is talking about here does not get approved by Congress. As we mentioned the Fed has a theoretically infinite amount of money since it's a central bank. The Fed is actually a source of revenue for the government. Last year the Fed earned $41 billion, and gave $34 billion of that to the government. (The Fed earns a profit because it gets its initial cash for free, but then lends it to banks or buys securities which pay back with interest. Good deal, huh?) So if the $800 billion effort the Fed is undertaking doesn't go perfectly, then that could reduce the amount the Fed will give to the Treasury, which means the government has less money to spend, which means, yes -- some impact on taxpayers.

Some details on the plans here and here.

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Source: NPR Blogs: Planet Money | 15 Dec 2008 | 2:02 pm

Nightmare at Bernie's

As if there's not already enough reasons not to invest in the United States, Bernard Madoff's Ponzi scheme provides a powerful disincentive.

Many of the victims of what Madoff himself estimated to be a $50 billion scam were prominent foreign institutions and investors, and they are angry.

Nicola Horlick, a well-known fund manager in London, told the BBC: "I think now it is very difficult for people to invest in things that are meant to be regulated in America because they haven fallen down in the job."

Others who have lost money include the Royal Bank of Scotland and Man Group of Britain, Banco Santander of Spain, BNP Paribas and Natixis of France, Nomura of Japan, and the Korea Life Insurance Co. The Financial Times reports that HSBC Holdings could be on the hook for as much as $1 billion.

Many of these investors have lost much more in legitimate investment vehicles that were battered by the collapse of the subprime market and the resulting credit crunch. Many have rightfully asked where the regulators were then.

Yet the Madoff case is more disturbing because it is simpler and, in retrospect, an obvious act of malfeasance. Investors learned they could not trust American International Group or Lehman Brothers, but those companies contend that they were the victims of a financial tsunami they could not control.

The accusations against Madoff show a deception that was coldly calculated and a step removed from what was happening in the real world. And yet no one called him out on it.

It's not just foreign investors who were taken in, of course, The victims also include Mortimer Zuckerman, the owner of the Daily News, Senator Frank Lautenberg's foundation, and a charity of Steven Spielberg.

As Megan Barnett notes, the Securities and Exchange Commission failed to investigate Madoff's fund despite many red flags over the years.

Kara Scannell of the Wall Street Journal says that Madoff's money-management business "appears to have fallen into a regulatory gray zone for years, and the ambiguity may have helped him evade oversight." The business was not technically a hedge fund, and he did not register as an investment adviser until 2006.

Related Links
Lehman Europe and Prime Brokerage Counterparty Risk
The Curse of ABN Amro
World Turned Upside Down



Source: Portfolio.com: Top 5 | 15 Dec 2008 | 2:00 pm

About That $50 Billion

At my breakfast table in Brooklyn, the news was all Bernard Madoff -- the New York investment fund manager accused in a $50 billion fraud case.

From the New York Times: Spain's Banco Santander reports $3 billion exposure to Madoff/ The 17th floor of Madoff's office, where wealth went to vanish.

From the BBC: Banks hit worldwide by alleged Madoff fraud.

From the Wall Street Journal: Fannie Mae to end tenant evictions in foreclosures/ White House sizes up auto rescue/ OPEC races to get ahead of oil demand.

From the LA Times: Car industry woes strand design students/ World Bank chief says China's moves to shore up domestic economy could help global stability.

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Source: NPR Blogs: Planet Money | 15 Dec 2008 | 1:59 pm

Should You Refinance Your Mortgage Now? (BusinessWeek Online)

BusinessWeek Online - Applications for mortgage refinancing tripled in early December on news that the U.S. Federal Reserve will buy up to $600 billion of mortgage debt. BusinessWeek personal finance editor Lauren Young spoke with mortgage guru Keith Gumbinger, of HSH Associates, a financial publisher, about the refinancing climate.
Source: Yahoo! News: Business | 15 Dec 2008 | 1:08 pm