Frozen Funds: Tens of thousands of Australians, many of them retirees, are now unable to get immediate access to their capital

PRESSURE on the Federal Government over its bank deposit guarantee has escalated after three big financial institutions hit with a spate of withdrawals by customers last night froze their accounts.

Tens of thousands of Australians, many of them retirees, are now unable to get immediate access to their capital after AXA Asia Pacific, Perpetual Investment Management and Australian Unity suspended withdrawals from some funds.

Treasurer Wayne Swan responded last night by advising people adversely affected to go to Centrelink to see if they were eligible for income support.

Read moreFrozen Funds: Tens of thousands of Australians, many of them retirees, are now unable to get immediate access to their capital

INFLATION VS. DEFLATION… NOPE – STAGFLATION

By Krassimir Petrov, PhD:

Once again the Fed, the mainstream media, and Bubblevision continue to relentlessly propagate the myth that the slowing U.S. and global economy will ease inflationary pressures. In addition, the current Credit Crisis and the ongoing collapse in commodity prices have encouraged deflationists to reiterate their beliefs that deflation is inevitable. These views represent two different approaches of the same myth. Investors should not fall for it.

Given the recent fall in prices in a broad range of commodities, we are assured that inflation is no longer a problem, indeed that the real threat is deflation; inflation is supposedly transitory and inflationary expectations are “well anchored”. We are led to believe that “recessions cure inflations.”

Nothing can be further from the truth. On the contrary, given the current macroeconomic environment, the massive government stimulus of hundreds of billions of dollars in rebate checks and a series of bailouts will most certainly translate in much higher inflation and little or no economic growth. One must prepare for the reality that the government’s “cure”, as Peter Schiff has repeated so often, will be worse than the disease.

In coming years, investors must expect a lot more inflation and adjust their portfolios accordingly – their survival depends on it. Our job here is to outline the importance of the inflation-deflation debate, interpret its meaning, provide some historical evidence, and present the arguments for future economic development with its investment implications.

1. Importance of the Inflation-Deflation Debate

For any investor, the most important issue in today’s macroeconomic environment is the correct forecast of future inflation. Its essence boils down to strategic asset allocation. In a strong deflationary environment, the prices of stocks, commodities, and risky bonds fall; cash, cash equivalents, and safe bonds are the winning investments. On the other hand, in an inflationary environment, cash, cash equivalents, safe bonds, and most stocks rapidly lose value for two reasons – due to rising interest rates and due to loss of purchasing power; commodities, gold, and other tangible assets are the winning investments.

Read moreINFLATION VS. DEFLATION… NOPE – STAGFLATION

Taiwan dumps Fannie Mae and Freddie Mac

Despite bailout, GSE debt is eschewed by major foreign investor, and ally.

WHO LOST TAIWAN?

After Mao drove the Nationalists off the Mainland in 1949, the cry went up among U.S. conservatives, “Who lost China?”

Now Washington might well worry about who lost Taiwan as a major investor in U.S. agency securities as the Republic of China has openly questioned their credit quality — even after the federal government has committed hundreds of billions of dollars to bail out mortgage giants Fannie Mae and Freddie Mac.

Beyond that, Washington might well worry that other nations also no longer view its agencies — and now, by extension, the very credit of the United States of America — beyond question.

Taiwan’s financial regulators reportedly have ordered that nation’s insurance companies to pare their holdings of the debt and mortgage-backed securities of Fannie Mae (ticker: FNM), Freddie Mac (FRE) and Ginnie Mae securities, according to a report on the Internet site of Asian Investor magazine.

Such an order would be a stunning rebuke to Washington, coming a little more than a month after the federal government effectively nationalized the mortgage giants. Fannie and Freddie last month were placed into conservatorships with the Treasury standing ready to inject up to $100 billion through purchases of preferred shares in the government sponsored enterprises.

Read moreTaiwan dumps Fannie Mae and Freddie Mac

Hedge Fund Withdrawals Stress Market

Oct. 25 (Bloomberg) — Hedge funds are aggravating the worst market selloff in 50 years as they dump assets to meet investor redemptions and keep lenders at bay.

U.S. hedge-fund managers may lose 15 percent of assets to withdrawals by year-end while their European rivals shed as much as 25 percent, Huw van Steenis, a Morgan Stanley analyst in London, wrote yesterday in a report to clients. Combined with investment losses, industry assets may shrink to $1.3 trillion, a 32 percent drop from the peak in June.

With the average hedge fund down 18 percent this year, as measured by the HFRX Global Index, managers are selling assets to repay departing investors and meet demands from lenders for more collateral. Others including Paulson & Co. and Winton Capital Management LLC are hoarding cash to soothe nervous clients and wait for signs the worst is over. When stocks rally, hedge funds take advantage to unload what they can.

“I have never seen a market as full of panic as I’ve seen in the last seven or eight weeks,” Kenneth Griffin, founder of Citadel Investment Group LLC, a Chicago-based hedge-fund firm, said yesterday.

Read moreHedge Fund Withdrawals Stress Market

Georgia’s Alpha Bank & Trust Seized as U.S. Closings Rise to 16

Oct. 25 (Bloomberg) — Alpha Bank & Trust in Alpharetta, Georgia, with $346 million in deposits, was seized by regulators and closed as the collapse of the housing market and loan defaults claimed a 16th U.S. bank this year.

Alpha, with $354 million in assets, was shut by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corp. sold the deposits to Stearns Bank N.A., of St. Cloud, Minnesota. Alpha’s two offices north of Atlanta will open on Oct. 27 as branches of Stearns Bank, the FDIC said yesterday.

Regulators have closed the most banks in 15 years, and the collapses of Washington Mutual Inc. and IndyMac Bancorp Inc. were among the biggest in history. About 4.4 percent of Alpha’s assets were defaulted real-estate loans it took back on its balance sheet, quadruple the total for most U.S. banks, based on data compiled by Charlottesville, Virginia-based SNL Financial.

Read moreGeorgia’s Alpha Bank & Trust Seized as U.S. Closings Rise to 16

$16.3 trillion in stock value lost since Sept. 1; some brokers fear more drops

Signs of slowdown spiral around the world

Pessimism about the global economy deepened yesterday as fresh evidence of a worldwide slowdown showed up in feeble corporate profit reports from Asia, sinking commodities prices, and a scramble by emerging economies to prop up their sagging currencies and avert credit defaults.

The signs of trouble popped up around the globe. Japanese giants Sony and Toyota, as well as South Korea’s Samsung, the world’s largest maker of memory chips, flat-screen televisions and liquid crystal displays, posted weakened profits and sales outlooks. Toyota’s quarterly sales fell for the first time in seven years. Britain reported its first economic contraction since 1992.

Gloom about economic growth translated to low expectations for oil consumption. The Organization of the Petroleum Exporting Countries yesterday announced a cut of 1.5 million barrels a day in output – a move that still failed to arrest the slide in crude prices. Meanwhile, copper prices fell to a three-year low.

Investors around the world fled stocks and rushed to the relative safety of the U.S. dollar by pouring money into 30-year Treasury bonds, a refuge in times of uncertainty. That drove down the value of foreign currencies, from the ruble to the rupee and the zloty to the peso, forcing central banks to spend billions of dollars to prevent even further deterioration. The turmoil in currency markets threatened to reorder trade relations and complicate recovery efforts.

Read more$16.3 trillion in stock value lost since Sept. 1; some brokers fear more drops

Russian default risk tops Iceland as crisis deepens

Russia’s financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.


S&P has cut its outlook for Russia, which has been propping up the rouble: a man on a phone passes a board displaying currency exchange rates in Moscow Photo: Reuters

Russia’s financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.

The cost of insuring Russian bonds against bankruptcy rocketed to extreme levels yesterday. Spreads on credit default swaps (CDS) reached 1,123, higher than Iceland’s debt before it sought a rescue from the International Monetary Fund.

Moves by Hungary, Ukraine and Belarus to seek emergency loans from the IMF have now set off a dangerous chain reaction across Eastern Europe.

Romania had to raise overnight interest rates to 900pc on Wednesday to stem capital flight, recalling the wild episodes of Europe’s ERM crisis in 1992. The CDS spreads on Ukraine’s debt have topped 2,800, signalling total revulsion by investors.

Rating agency Standard & Poor’s issued a downgrade alert on Russian bonds yesterday, warning that a series of state rescue packages worth $200bn (£124bn) could start to erode the credit-worthiness of the state.

Read moreRussian default risk tops Iceland as crisis deepens

GLG chief Emmanuel Roman warns thousands of hedge funds on brink of failure

Emmanuel Roman, the co-chief executive of Europe’s biggest hedge fund GLG, has warned that thousands of hedge funds are on the brink of failure as the global economy contracts with unexpected severity.

Emmanuel Roman, of GLG Partners, said 25pc-30pc of the world’s 8,000 hedge funds would disappear “in a Darwinian process”, either going bust or deciding meagre profits are not worth their efforts.

“This will go down in the history books as one of the greatest fiascos of banking in 100 years,” said Mr Roman, who with Noam Gottesman, co-runs GLG, a former division of Lehman Brothers Holdings with assets of $24bn (£14.8bn). “There need to be some scapegoats, and the regulators are going to go hunt people. That will be good in the long run.”

His views were echoed by Professor Nouriel Roubini, a former US Treasury and presidential adviser known for his accurate prediction of financial crises, who estimated that up to 500 hedge funds would fail within months.

Both men were speaking at the same hedge fund conference in London yesterday, and Prof Roubini said he would not be surprised if the US and other countries soon had to close their stock markets for more than a week to halt descent into “sheer panic”.

The economist warned that the world is heading for a protracted recession that will end the US’s financial dominance.

“It’s the beginning of the decline of the US financial empire. The Great Depression ended in a massive war. I hope that’s not going to happen but it’s pretty ugly now,” Prof Roubini said.

Read moreGLG chief Emmanuel Roman warns thousands of hedge funds on brink of failure

Roubini: Hundreds of hedge funds are going to go bust; Panic May Force Market Shutdown

Oct. 23 (Bloomberg) — Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

“We’ve reached a situation of sheer panic,” Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. “There will be massive dumping of assets” and “hundreds of hedge funds are going to go bust,” he said.

Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close.

“Systemic risk has become bigger and bigger,” Roubini said at the Hedge 2008 conference. “We’re seeing the beginning of a run on a big chunk of the hedge funds,” and “don’t be surprised if policy makers need to close down markets for a week or two in coming days,” he said.

Roubini predicted in July 2006 that the U.S. would enter an economic recession. In February this year, he forecast a “catastrophic” financial meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a “sharp drop” in equities.

Read moreRoubini: Hundreds of hedge funds are going to go bust; Panic May Force Market Shutdown

Darpa Wants to See Inside Your House

The Pentagon wants to be able to peer inside your apartment building — picking out where all the major rooms, stairways, and dens of evil-doers are.

The U.S. military is getting better and better at spotting its enemies, when they’re roaming around the streets. But once those foes duck into houses, they become a whole lot harder to spot. That’s why Darpa, the Defense Department’s way-out research arm, is looking to develop a suite of tools for “external sensing deep inside buildings.” The ultimate goal of this Harnessing Infrastructure for Building Reconnaissance (HIBR) project: “reverse the adversaries’ advantage of urban familiarity and sanctuary and provide U.S. Forces with complete above- and below-ground awareness.”

By the end of the project, Darpa wants a set of technologies that can see into a 10-story building with a two-level basement in a “high-density urban block” — and produce a kind of digital blueprint of the place. Using sensors mounted on backpacks, vehicles, or aircraft, the HIBR gear would, hopefully, be able to pick out every room, wall, stairway, and basement in the building — as well as all of the “electrical, plumbing, and installation systems.”

Darpa doesn’t come out and say it openly. But it appears that the agency wants these HIBR gadgets to be able to track the people inside these buildings, as well. Why else would these sensors be required to “provide real-time updates” once U.S. troops enter the building? Perhaps there’s more about the people-spotting tech, in the “classified appendix” to HIBR’s request for proposals.

Read moreDarpa Wants to See Inside Your House

Top world military leaders meet in Lake Placid


U.S. Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, and top military commanders from four nations – Britain, France, Germany and Italy – flew into the Adirondack Regional Airport in Lake Clear this weekend aboard the jumbo jet that is used as Air Force 2 when the vice president is aboard. The group of powerful military leaders met in Lake Placid to discuss mutual security issues, including Afghanistan. Photo: Larry Miller

Chairman of Joint Chiefs of Staff and military leaders from several countries discuss Afghanistan and other issues.

LAKE PLACID – Some of the most powerful military commanders in the world met in Lake Placid over the weekend.

Speculation was rife after a C-32, the military equivalent to a Boeing 757 airliner, touched down Friday at the Adirondack Regional Airport in Lake Clear.

The 155-foot-long jumbo jet, which is used as Air Force 2 when the vice president is aboard, was emblazoned with “United States of America” on the side and parked on the eastern edge of the airport.

“I was contacted by the Department of Defense approximately a month ago, and they indicated they had some foreign dignitaries that they wanted to bring in through the airport,” said Ross Dubarry, the airport’s manager.

Following the landing, a motorcade led by State Police rushed Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, and top military commanders from four nations – Britain, France, Germany and Italy – to a resort in Lake Placid.

Read moreTop world military leaders meet in Lake Placid

Panic sets in as Wall Street plunges at the open

The feverish pre-market atmosphere set in on the 79th anniversary of ‘black Thursday’, the start of the 1929 stockmarket crash

American stocks suffered a brutal slump within moments of the opening bell on Wall Street as a sell-off in Asian and European markets spread across the Atlantic.

The Dow Jones industrial average dropped by 450 points in the first 10 minutes of trading to reach 8242, although fears of a full-scale panic proved overblown.

In the run-up to the New York Stock Exchange’s official opening, stock futures had fallen so far that “limit” rules came into force and trading had to be halted. The feverish pre-market atmosphere set in on the 79th anniversary of “black Thursday”, the start of the 1929 stockmarket crash.

Shares pared their losses slightly after a drop of 6% in the Dow and a fall of 7% on the technology-dominated Nasdaq exchange.

“There’s a lot of panic out there today,” said Scott Fullman, director of derivatives investment strategy at WJB Capital Group in New York. “People have been saying that we’re in a recession. This is the realisation.”

Read morePanic sets in as Wall Street plunges at the open

German banks lent most to Iceland borrowers: BIS

FRANKFURT (Reuters) – German banks lent the most to Icelandic borrowers and were owed $21 billion before the recent financial storm swept markets, according to figures released by the Bank for International Settlements.

The research shows that German banks, as well as handing out almost one third of loans in the Nordic outpost, are the most exposed to some of Europe’s fragile economies, such as Spain and Ireland.

In a snapshot taken at the end of June, Germany’s banks lent far more in crisis-stricken Iceland than had rivals in Britain, who were owed just $4 billion, or Iceland’s neighbor Sweden with less than $400 million.

Despite being Europe’s biggest economy, Germany’s levels of lending to countries such as Iceland are disproportionately high.

And in the week that Berlin launched a rescue plan for its banks, the first signs were emerging that lending at the height of the Icelandic bubble had come back to haunt Germany.

BayernLB, a state-backed regional lender that was the first to seek government help this week, said it expected to write off 800 million euros ($1.03 billion) of its 1.5 billion euro exposure to the tiny island state.

Read moreGerman banks lent most to Iceland borrowers: BIS

Half of Doctors Routinely Prescribe Placebos

The placebo effect is created by your perception and belief, so it is really all about the power of your mind that you have given to a certain medicine that it will cure you.

Placebos are estimated to have an effective rate of about 30-50%. If the placebo effect is really the power of your mind then concentrating on healing yourself will bring equal results if you would believe equally in the power of your own mind as you do in useless antidepressants (Antidepressant drugs don’t work – official study).

If 30-50% effectiveness is for ‘untrained’ healers, then what if you would focus to increase your healing ability every day of your life?

Highly recommended:
Dr. Bruce Lipton Ph.D.: The New Biology – Where Mind and Matter Meet
(Please watch this video. It will change your life forever. Bruce Lipton’s book
The Biology of Belief: Unleashing the Power of Consciousness, Matter, & Miracles was awarded to be the best science book 2006.)

PS: Isn’t western medicine accusing alternative medicine practitioners of selling ‘snake oil’ and placebos to their patients?!!!
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Half of Doctors Routinely Prescribe Placebos

Half of all American doctors responding to a nationwide survey say they regularly prescribe placebos to patients. The results trouble medical ethicists, who say more research is needed to determine whether doctors must deceive patients in order for placebos to work.

The study involved 679 internists and rheumatologists chosen randomly from a national list of such doctors. In response to three questions included as part of the larger survey, about half reported recommending placebos regularly. Surveys in Denmark, Israel, Britain, Sweden and New Zealand have found similar results.

The most common placebos the American doctors reported using were headache pills and vitamins, but a significant number also reported prescribing antibiotics and sedatives. Although these drugs, contrary to the usual definition of placebos, are not inert, doctors reported using them for their effect on patients’ psyches, not their bodies.

In most cases, doctors who recommended placebos described them to patients as “a medicine not typically used for your condition but might benefit you,” the survey found. Only 5 percent described the treatment to patients as “a placebo.”

The study is being published in BMJ, formerly The British Medical Journal. One of the authors, Franklin G. Miller, was among the medical ethicists who said they were troubled by the results.

“This is the doctor-patient relationship, and our expectations about being truthful about what’s going on and about getting informed consent should give us pause about deception,” said Dr. Miller, director of the research ethics program in the department of bioethics at the National Institutes of Health.

Read moreHalf of Doctors Routinely Prescribe Placebos

Greenspan shocked at credit system breakdown

Bush was probably equally shocked when he found out that invading other countries causes US soldiers to die.

The Fed under Greenspan and Bernanke has caused this mess in the first place.

Ron Paul warned years ago of exactly this financial crisis.

Now the dollar looks good again – and many say all points to deflation, which is a ‘understandable’ misunderstanding – but very soon you will see hyperinflation and the total destruction of the dollar and the US economy. The US are broke and the US will ‘fail’ in the not too distant future – but there will be no bailout.

And like magic – like the Fed creates dollars out of thin air – there will come forward a new ‘post dollar’ currency. Everything is already set up for that.
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Former Chairman of the Federal Reserve Alan Greenspan testifies before the House Oversight and Government Reform Committee on Capitol Hill in Washington October 23, 2008. REUTERS/Kevin Lamarque

WASHINGTON (Reuters) – Former Federal Reserve Chairman Alan Greenspan told Congress on Thursday he is “shocked” at the breakdown in U.S. credit markets and said he was “partially” wrong to resist regulation of some securities.

Despite concerns he had in 2005 that risks were being underestimated by investors, “this crisis, however, has turned out to be much broader than anything I could have imagined,” Greenspan said in remarks prepared for delivery to the House of Representatives Committee on Oversight and Government Reform.

“Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity — myself especially — are in a state of shocked disbelief,” said Greenspan, who stepped down from the Fed in 2006.

With a general election looming November 4, U.S. lawmakers were sharply divided along political lines in either blaming regulators or bickering for failure to prevent the crisis that has gripped financial markets around the world.

“The reasons why we set up your agencies and gave you budget authority to hire people is so you can see problems developing before they become a crisis,” Committee Chairman Henry Waxman, a California Democrat, told a panel that included Securities and Exchange Commission Chairman Christopher Cox and former U.S. Treasury Secretary John Snow.

“To say you just didn’t see it, that just doesn’t satisfy me,” Waxman said.

Read moreGreenspan shocked at credit system breakdown

Volkswagen: Shares drop sharply; To cut up to 25,000 temp jobs -paper

(For your information only. This is not an investment advice.)

I have been been closely watching Volkswagen shares in the last two weeks.

On Oct. 16 the premium for Volkswagen put options was skyrocketing.

In the past five trading days the VW stock has lost over 42%.

Today’s closing price was € 229,00.

Analyst expectations:

Goldman Sachs Group Inc.: Volkswagen new target price € 90 (Before € 206)
17.10.2008; Source: News (c) finanzen.net.

UBS: Volkswagen sell; Volkswagen new target price € 130
20.10.2008; Source: News (c) finanzen.net.

Sal. Oppenheim jr. & Cie. KGaA: New Fair value € 90 (Before € 125)
22.10.2008; Source: News (c) finanzen.net.

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Volkswagen to cut up to 25,000 temp jobs -paper

FRANKFURT, Oct 23 (Reuters) – Volkswagen plans to cut a majority or all of its 25,000 temporary staff as a response to rapidly deteriorating conditions in the market, Germany’s Frankfurter Allgemeine Zeitung reported on Thursday.

“We cannot avoid hard cuts,” Chief Executive Martin Winterkorn was quoted by the paper as saying in front of 500 managers in the company’s hometown of Wolfsburg.


A spokesman for Volkswagen said no decision had yet been taken.

“Both statements are wrong,” he said, referring to the paper’s report that a majority or all 25,000 would go, without commenting further.

Read moreVolkswagen: Shares drop sharply; To cut up to 25,000 temp jobs -paper

Protesters Block UBS Branch, Seek Return of Bonuses

Oct. 23 (Bloomberg) — Protesters blocked UBS AG‘s private banking branch on Zurich’s Paradeplatz as hundreds gathered in the Swiss financial center to seek curbs on executive pay after the country’s largest bank was forced to ask for government aid.

Dozens sat on the steps of the bank’s entrance from midday shouting “return bonuses!” and waving red flags at bystanders and TV cameras. Unia, Switzerland’s largest trade union with more than 200,000 members, said about 1,000 people protested in front of UBS headquarters at an after-work rally.

“UBS shouldn’t be allowed to just continue this way,” said Olivier Vogel, a 24-year-old politics student at the University of Zurich and a member of the Social Democratic Party’s youth organization, which organized the protest. “If the bank won’t come around, there will be more actions.”

UBS’s $59.2 billion government aid package, announced last week, has prompted a popular backlash against executive pay in a country where tax evasion is not a crime and local governments offer tax breaks to lure millionaires. The bank paid about 12.5 billion francs in performance-related compensation for last year.

Read moreProtesters Block UBS Branch, Seek Return of Bonuses

Financial crisis: demand for gold soars as price tumbles

Investors have rushed to buy gold bars and bought exchange traded funds, worth US$2.8 billion – the biggest inflow on record.

Gold bars - Gold offers safety as the financial crisis rages
Good as gold: investor demand for gold remains high Photo: EDDIE MULHOLLAND

The onset of a global recession and falling stock markets have triggered a stampede for gold – the traditional safe haven during times of uncertainty.

According to the World Gold Council, exchange traded funds are the main beneficiary of the flight to safety. ETFs experienced their strongest quarterly inflow during the third quarter since SPDR®Gold Shares – the first gold ETFs – were launched in November 2004.

But the Council added that bullion dealers around the world reported an unprecedented surge in demand for coins and small bars. It said that there had been reports outright shortages of gold and high premiums over the gold spot price. The US Mint temporarily suspended sales of American Buffalo gold 1 ounce coins after its stocks were depleted, while UK, German and Austrian coin dealers have also reported an enormous increase in demand during the third quarter, it added.

The average gold price edged down slightly between June and September, to $870.88/oz, from $896.11/oz in the previous three months. Gold traded as high as $986/oz on July 15, the day after the US Treasury and Federal Reserve Bank announced plans for a joint bail-out of mortgage giants Fannie Mae and Freddie Mac, but fell sharply later in the quarter to a low of $740.75/oz on September 11. This proved short lived, however. By the end of the quarter, the gold price had rebounded to $884.50/oz.

Yesterday, gold was trading at $729.20 an ounce after hitting intraday low of $718.20 — its lowest level since September 2007.

Read moreFinancial crisis: demand for gold soars as price tumbles

Foreclosure Filings Rose 71% in Third Quarter as Prices Fell


A foreclosure sign is posted outside a house in Stockton, California, on Sept. 18, 2008. Photographer: Kimberly White/Bloomberg News

Oct. 23 (Bloomberg) — U.S. foreclosure filings increased 71 percent in the third quarter from a year earlier to the highest on record as home prices fell and stricter mortgage standards made it harder for homeowners to sell or refinance, RealtyTrac said.

A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, the most since records began in January 2005, the Irvine, California-based seller of default data said in a statement today. Filings rose 3 percent from the second quarter and fell 12 percent in September from August as state laws created to keep people in homes slowed the pace of defaults.

“I wouldn’t be surprised to see foreclosures increase as the economy slows down,” Rick Sharga, executive vice president for marketing at RealtyTrac, said in an interview. “The people living paycheck to paycheck are at risk if they lose their jobs. It will cause more people to lose their homes.”

The worst U.S. housing slump since the 1930s is being compounded by a recession that began in the third quarter and may last a year or more, according to Jay Brinkmann, chief economist for the Mortgage Bankers Association. Home prices in 20 U.S. metropolitan areas fell in July at the fastest pace on record, and sales of previously owned homes in August were 32 percent below the peak reached in September 2005.

Read moreForeclosure Filings Rose 71% in Third Quarter as Prices Fell

Goldman to Cut 10% of Jobs as Downsizing Wave Grows


The Goldman Sachs Tower dominates the Jersey City, N.J. skyline.

Goldman Sachs Group Inc. is preparing to cut about 10% of its 32,500 employees, according to people familiar with the matter, a sign of deepening job losses on Wall Street.

The cuts, expected throughout the New York-based company, underscore how much even the mightiest securities firms have been shaken by the 16-month credit crisis. Despite avoiding the catastrophic mistakes that sank Bear Stearns Cos. and Lehman Brothers Holdings Inc., Goldman is suffering from the drought in investment banking and trading.

Read moreGoldman to Cut 10% of Jobs as Downsizing Wave Grows

Gates Foundation: Funding for a proposal to turn mosquitos into ‘flying syringes’ delivering vaccines


A group of mosquitos are shown inside a net

WASHINGTON (AFP) – The Bill and Melinda Gates Foundation awarded 100,000 dollars each on Wednesday to scientists in 22 countries including funding for a Japanese proposal to turn mosquitos into “flying syringes” delivering vaccines.

The charitable foundation created by the founder of software giant Microsoft said in a statement that the grants were designed to “explore bold and largely unproven ways to improve global health.”

The grants were awarded for research into preventing or curing infectious diseases such as HIV/AIDS and tuberculosis and limiting the emergence of drug resistance.

They are the first round of funding for the Gates Foundation’s “Grand Challenges Explorations,” a five-year 100-million-dollar initiative to “promote innovative ideas in global health.”

Read moreGates Foundation: Funding for a proposal to turn mosquitos into ‘flying syringes’ delivering vaccines

AIG Agrees to Freeze Executive Payouts

Halt Comes as New York Attorney General Reviews Insurer’s Actions Before Rescue

NEW YORK — American International Group Inc. agreed Wednesday to freeze some $19 million in payments to its former chief executive, Martin Sullivan, while New York Attorney General Andrew Cuomo reviews executive compensation and other expenditures paid out as the company neared collapse earlier this year.

The insurance giant also has agreed not to distribute any funds from its $600 million deferred-compensation and bonus pools of its AIG Financial Products subsidiary, which Mr. Cuomo has said was largely responsible for the company’s near collapse.

The company recently received credit lines of up to $122.8 billion from the federal government, helping it avoid collapse. Last week, AIG had tapped $82.9 billion of those credit lines. Some regulators, including Mr. Cuomo, are troubled by outsized compensation packages being paid to departing executives in the financial industry, particularly if those firms have sought help from the federal government.

“To be clear, it is my position that until the taxpayers are repaid with interest the more than $120 billion that has been used in the rescue financing of AIG, no funds should be paid out of these pools to any executives,” Mr. Cuomo said in a letter Wednesday to Edward M. Liddy, AIG’s chief executive. “As AIG recovers using taxpayer money, these pools should not be used to reward executives ahead of taxpayers.”

Read moreAIG Agrees to Freeze Executive Payouts

Desperate Investors Are Selling Hedge-Fund Stakes

Growing numbers of hedge-fund investors, desperate to redeem their money and avoid further losses, are turning to a secondary market in which to sell their stakes.

It can be difficult for investors to redeem stakes in hedge funds. A flood of investor-redemption requests has triggered the activation of several hedge funds’ automatic “gates,” which limit the percentage of a fund’s assets that can be redeemed in a given quarter. Other funds have voluntarily suspended redemptions altogether, and many people fear that more gates and suspensions are coming.

That concern has forced investors to look for more creative and immediate ways to get out. Right now, buyers and sellers can find one another using their industry contacts, or through a service called Hedgebay Trading Corp., which operates the only secondary market that matches buyers and sellers of hedge-fund stakes. Discounts on such stakes have gotten as high as 50% in extreme cases.

Read moreDesperate Investors Are Selling Hedge-Fund Stakes

Deep recession fears slam Wall Street

Traders work on the floor of the New York Stock Exchange, October 22, 2008.
REUTERS/Brendan McDermid

NEW YORK (Reuters) – Stocks tumbled to 5 year lows on Wednesday as investors grappled with an increasingly dire outlook for the global economy following a raft of disappointing profits and outlooks from major U.S. companies.

Plummeting commodities prices sent energy and materials company shares sharply lower. Exxon Mobil was the top drag on the Dow, down almost 10 percent.

Boeing Co’s shares fell 7.5 percent after the aircraft maker reported a steep drop in quarterly profit and warned it might need to provide financing to some of its customers in 2009.

Read moreDeep recession fears slam Wall Street