Volkswagen May Face DAX Ouster as Deutsche Boerse Changes Rules

Oct. 31 (Bloomberg) — Volkswagen AG’s common shares may face removal from Germany’s DAX Index as early as next week after the benchmark’s compiler changed inclusion rules to stem disruptions spurred by gyrations in the automaker’s stock.

Deutsche Boerse AG, operator of the Frankfurt stock exchange, said in a statement today that from Nov. 3 it may at any time remove a DAX stock whose weighting exceeds 10 percent and whose share price over the preceding 30 trading days had annualized volatility of more than 250 percent.

“The exchange wants to guard that indexes are reliable and not exposed to these unusual swings,” said Carlos Sanchez, a sales trader at Interdin Bolsa SVB SA in Madrid. “It would seem like Volkswagen common shares are on the way out.”

Volkswagen’s weighting will be cut to 10 percent at the end of trading today and may increase next week if the shares outperform the benchmark. The stock’s volatility has climbed to about 395 percent in the past 30 days, Bloomberg data show.

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US Economy: Consumers Throw in the Towel as Spending Falls

Oct. 31 (Bloomberg) — U.S. consumer spending tumbled in September and a purchasing managers’ survey showed the biggest deterioration since 1968, foreshadowing a deepening economic slump.

“Consumers have thrown in the towel,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts, who correctly forecast the drop in purchases. “They have no choice but to cut back on spending in a very big way. This is going to be a fairly deep, long recession.”

Read moreUS Economy: Consumers Throw in the Towel as Spending Falls

The Bush gang’s parting gift: a final, frantic looting of public wealth

The US bail-out amounts to a strings-free, public-funded windfall for big business. Welcome to no-risk capitalism

In the final days of the election many Republicans seem to have given up the fight for power. But don’t be fooled: that doesn’t mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700bn bail-out out the door. At a recent Senate banking committee hearing, the Republican Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration. “How much of it do you think may be actually spent by January 20 or so?” Corker asked Neel Kashkari, the 35-year-old former banker in charge of the bail-out.

When European colonialists realised that they had no choice but to hand over power to the indigenous citizens, they would often turn their attention to stripping the local treasury of its gold and grabbing valuable livestock. If they were really nasty, like the Portuguese in Mozambique in the mid-1970s, they poured concrete down the elevator shafts.

Nothing so barbaric for the Bush gang. Rather than open plunder, it prefers bureaucratic instruments, such as “distressed asset” auctions and the “equity purchase program”. But make no mistake: the goal is the same as it was for the defeated Portuguese – a final, frantic looting of the public wealth before they hand over the keys to the safe.

How else to make sense of the bizarre decisions that have governed the allocation of the bail-out money? When the Bush administration announced it would be injecting $250bn into US banks in exchange for equity, the plan was widely referred to as “partial nationalisation” – a radical measure required to get banks lending again. Henry Paulson, the treasury secretary, had seen the light, we were told, and was following the lead of Gordon Brown.

In fact, there has been no nationalisation, partial or otherwise. American taxpayers have gained no meaningful control over the banks, which is why the banks are free to spend the new money as they wish. At Morgan Stanley, it looks as if much of the windfall will cover this year’s bonuses. Citigroup has been hinting it will use its $25bn buying other banks, while John Thain, the chief executive of Merrill Lynch, told analysts: “At least for the next quarter, it’s just going to be a cushion.” The US government, meanwhile, is reduced to pleading with the banks that they at least spend a portion of the taxpayer windfall for loans – officially, the reason for the entire programme.

What, then, is the real purpose of the bail-out? My fear is this rush of dealmaking is something much more ambitious than a one-off gift to big business: that the Bush version of “partial nationalisation” is rigged to turn the US treasury into a bottomless cash machine for the banks for years to come. Remember, the main concern among the big market players, particularly banks, is not the lack of credit but their battered share prices. Investors have lost confidence in the honesty of the big financial players, and with good reason.

Read moreThe Bush gang’s parting gift: a final, frantic looting of public wealth

Hank Paulson’s $125 Billion Mistake

It was only a few weeks ago that most right-thinking economists and left-leaning bloggers were jumping on Treasury Secretary Hank Paulson for his plan to jump-start the markets in asset-backed securities by having the government buy them up at auction. Much better, they argued, to use the $700 billion to “recapitalize” the banking system, just as Gordon Brown was doing in Britain. Even the Federal Reserve thought that a better idea.

So Paulson changed course, called in the nine biggest banks and “forced” them as a group to accept $125 billon in new capital. The critics patted themselves on the back for having been right all along.

Now, many of the same people are shocked — shocked! — to discover that the banks aren’t using the money to make new loans to households and businesses, as they had assumed, but are using it to maintain dividend payments to shareholders, pay this year’s bonuses to executives and traders, or squirrel it away for future acquisitions.

I hate to say it, but I told you so. Sprinkling money around a highly fragmented banking system when markets were panicked and everyone was scrambling to reduce leverage was always akin to shoveling sand against the tide.

Read moreHank Paulson’s $125 Billion Mistake

Air Force: Nuke missile silo fire went undetected

Air Force: Wyo. nuclear missile silo fire caused $1M of damage, went undetected for 5 days

A fire caused $1 million worth of damage at an unmanned underground nuclear launch site last spring, but the Air Force didn’t find out about it until five days later, an Air Force official said Thursday.

The May 23 fire burned itself out after an hour or two, and multiple safety systems prevented any threat of an accidental launch of the Minuteman III missile, Maj. Laurie Arellano said. She said she was not allowed to say whether the missile was armed with a nuclear warhead at the time of the fire.

Arellano said the Air Force didn’t know a fire had occurred until May 28, when a repair crew went to the launch site – about 40 miles east of Cheyenne, Wyo., and 100 miles northeast of Denver – because a trouble signal indicated a wiring problem.

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Panic Strikes East Europe Borrowers as Banks Cut Franc Loans


The Hungarian National Bank stands in Budapest, Hungary, on Oct. 16, 2008. Photographer: Balint Porneczi/Bloomberg News

Oct. 31 (Bloomberg) — Imre Apostagi says the hospital upgrade he’s overseeing has stalled because his employer in Budapest can’t get a foreign-currency loan.

The company borrows in foreign currencies to avoid domestic interest rates as much as double those linked to dollars, euros and Swiss francs. Now banks are curtailing the loans as investors pull money out of eastern Europe’s developing markets and local currencies plunge.

“There’s no money out there,” said Apostagi, a project manager who asked that the medical-equipment seller he works for not be identified to avoid alarming international backers. “We won’t collapse, but everything’s slowing to a crawl. The whole world is scared and everyone’s going a bit mad.”

Foreign-denominated loans helped fuel eastern European economies including Poland, Romania and Ukraine, funding home purchases and entrepreneurship after the region emerged from communism. The elimination of such lending is magnifying the global credit crunch and threatening to stall the expansion of some of Europe’s fastest-growing economies.

Read morePanic Strikes East Europe Borrowers as Banks Cut Franc Loans

FDR’s Response to the Plot to Overthrow Him

Perhaps the most alarming slice of twentieth-century U.S. political history is virtually unknown to the general public, including most scholars of American history.

In 1934 a special Congressional committee was appointed to conduct an investigation of a possible planned coup intended to topple the administration of President Franklin D. Roosevelt and replace it with a government modelled on the policies of Adolf Hitler and Benito Mussolini. The shocking results of the investigation were promptly scotched and stashed in the National Archives. While the coup attempt was reported at the time in a few newspapers, including The New York Times, the story disappeared from public memory shortly after the Congressional findings were made available to president Roosevelt. It was the recent release from the Archives of the Congressional report that prompted the BBC and Horton commentaries.

Related article: G. W. Bush and Adolf Hitler signed a Directive 51

The Congressional committee had discovered that some of the foremost members of the economic elite, many of them household names at the time, had indeed hatched a meticulously detailed and massively funded plot to effect a fascist coup in America. The plotters represented prominent families – Rockefeller, Mellon, Pew, enterprises like Morgan, Dupont, Pew, Remington, Anaconda, Bethlehem and Goodyear, along with the owners of Bird’s Eye, Maxwell House and Heinz. Totaling about twenty four major businessmen and Wall Street financiers, they planned to assemble a private army of half a million men, composed largely of unemployed veterans. These troops would both constitute the armed force behind the coup and defeat any resistance this in-house revolution might generate. The economic elite would provide the material resources required to sustain the new government.

Read moreFDR’s Response to the Plot to Overthrow Him

Chinese melamine scandal widens

There are fears contamination could be widespread throughout the food chain

The toxic chemical melamine is probably being routinely added to Chinese animal feed, state media has reported.

Correspondents say the unusually frank reports in several news outlets are an admission that contamination could be widespread throughout the food chain.

The melamine scandal began early in September, when at least four Chinese babies were killed by contaminated milk, and thousands more became ill.

The news led firms across Asia to recall products made from Chinese milk.

The problem widened last weekend when the authorities in Hong Kong reported that melamine had also been detected in Chinese eggs.

Four brands of eggs have since been found to be contaminated, and agriculture officials speculate that the cause was probably melamine-laced feed given to hens.

Melamine is high in nitrogen, and the chemical is added to food products to make them appear to have a higher protein content.

‘Open secret’

Several state newspapers carried reports on Thursday suggesting that the addition of melamine to animal feed was widespread.

Read moreChinese melamine scandal widens

California to cut water deliveries to cities, farms

SACRAMENTO, Calif. – California said Thursday that it plans to cut water deliveries to their second-lowest level ever next year, raising the prospect of rationing for cities and less planting by farmers.

The Department of Water Resources projects that it will deliver just 15 percent of the amount that local water agencies throughout California request every year.

Since the first State Water Project deliveries were made in 1962, the only time less water was promised was in 1993, but heavy precipitation that year ultimately allowed agencies to receive their full requests.

The reservoirs that are most crucial to the state’s water delivery system are at their lowest levels since 1977, after two years of dry weather and court-ordered restrictions on water pumping out of the Sacramento-San Joaquin Delta. This year, water agencies received just 35 percent of the water they requested.

Farmers in the Central Valley say they’ll be forced to fallow fields, while cities from the San Francisco Bay area to San Diego might have to require residents to ration water.

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CIA allowed concealing torture documents

The CIA can hide statements made by the terror suspects that the spy agency has tortured in its secret prisons, a federal judge has ruled.

Chief Judge Royce Lamberth of the Washington D.C. Circuit Court declined to review torture allegations from men held in the CIA’s prisons-because it could put the nation at risk of grave danger if allowed to be made public.

The American Civil Liberties Union said it filed in March, a Freedom of Information Act request for the documents from the Combatant Status Review Tribunals, which decide if prisoners at the US naval base in Guantanamo Bay, Cuba, qualify as “enemy combatants.”

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