November 2008 – Page 11 – Infinite Unknown

GM Says It May Not Have Enough Cash to Operate This Year

November 7, 2008 by Infinite

Nov. 7 (Bloomberg) — General Motors Corp., seeking federal aid to avoid collapse, said it used $6.9 billion in cash in the third quarter and may fall below the minimum it needs to operate before the end of this year.

GM said it will be near its minimum threshold for operating cash for the remainder of 2008 and will be “significantly short” of that level by the end of June without an improvement in market conditions, a major asset sale or access to new loans or cash support. GM has said it needs at least $11 billion in cash to pay its bills each month.

“GM is making a pretty direct plea for help,” said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. “The message is, `we’ve done all the things we can do, and we need help.’ And if we don’t get help, fill in the blank.”

Deportation reaches all-time high

November 6, 2008 by Infinite

The pace of deportations of illegal immigrants from the Pacific Northwest has reached an all-time high.

U.S. Immigration and Customs Enforcement deported 10,602 people from Washington, Oregon and Alaska in fiscal 2008, which ended Sept. 30. That’s a 37 percent increase over fiscal 2007 when 7,688 illegal aliens were sent back to their home countries, according to an ICE press release.

Credit Swap Disclosure Obscures True Financial Risk

November 6, 2008 by Infinite

Nov. 6 (Bloomberg) — The most comprehensive report on unregulated credit-default swaps didn’t disclose bets in the section of the more than $47 trillion market that helped destroy American International Group Inc., once the world’s biggest insurer.

A report by the Depository Trust and Clearing Corp. doesn’t include privately negotiated credit-default swaps that insurers such as AIG, MBIA Inc. and Ambac Financial Group Inc. sold to guarantee securities known as collateralized debt obligations. It includes only a “small fraction” of contracts linked to mortgage securities, according to Andrea Cicione at BNP Paribas SA in London.

New York-based DTCC’s data, released on its Web site Nov. 4, showed a total $33.6 trillion of transactions on governments, companies and asset-backed securities worldwide, based on gross numbers. While designed to ease concerns about the amount of risk banks and investors amassed on borrowers from companies to homeowners, the report may have missed as much as 40 percent of the trades outstanding in the market, Cicione said.

The data are “likely to underestimate the amount of net CDS exposure,” Cicione, who correctly forecast in January that the cost of protecting European companies from default would rise, said in an interview. “A broadening of the coverage to the entire market is what investors really need.”

Hundreds of small firms to go bust by Christmas

November 6, 2008 by Infinite

Business Secretary Peter Mandelson, is being urged to do more to help small businesses

Hundreds of small firms will go bust by the end of the year if ministers fail to deliver quickly on their pledge to increase bank lending, business leaders have warned.

Despite repeated calls for action from Gordon Brown and Chancellor Alistair Darling, it emerged that companies were still suffering from banks doubling overdraft charges and increasing interest rates.

The squeeze on bank lending puts huge pressure on the Government amid public expectation of a return for its £37 billion bailout with taxpayer cash.

Abbey yesterday increased rates by half a percentage point and Mr Brown was facing further embarrassment today as the nationalised northern Rock was expected to axe its tracker mortgages.

As Business Secretary Lord Mandelson prepared for a grilling by the House Of Lords, it emerged he had been personally warned by business leaders yesterday that firms were facing bankruptcy before Christmas.

Hong Kong Mandatory Pension Plan Loses 15% April to September

November 6, 2008 by Infinite

Nov. 6 (Bloomberg) — Hong Kong’s Mandatory Provident Fund, the city’s compulsory retirement savings plan, may be headed for its largest annual loss since inception after declining 15 percent between April and September.

Net asset values of MPF dropped to HK$223.8 billion ($28.9 billion) at the end of September, from HK$248.2 billion in April, according to the latest statistics posted on the Web site of the Mandatory Provident Fund Schemes Authority Oct. 31. The fund covers more than two-thirds of the 3.5 million employees and self-employed workers in the city.

Hong Kong, which doesn’t have a universal government pension plan like the Social Security in the U.S., started MPF in December 2000 to provide a basic safety net for the city’s elderly, as the portion of people over 65 is projected to more than double to 27 percent of the population by 2033 over 2004.

Citigroup, Goldman Said to Begin Eliminating More Than 12000 Jobs

November 6, 2008 by Infinite

Nov. 6 (Bloomberg) — Citigroup Inc. and Goldman Sachs Group Inc., faced with a weakening economy and the prospect of mounting losses, began firing workers as part of the firms’ plans to cut more than 12,000 jobs, people with knowledge of the matter said.

Goldman, which converted last month from the biggest U.S. securities firm into a commercial bank, yesterday began telling about 3,200 employees, or 10 percent of its workforce, they were out of a job, according to one of the people who declined to be identified because the decisions were confidential.

Citigroup has been notifying staff this week who are affected by the bank’s plan to discard 9,100 positions over the next 12 months, or about 2.6 percent of its headcount, another person said.

The ousted workers add to the swelling ranks of Wall Street’s unemployed, their lives upended by the credit crisis. Both New York-based firms have already cut staff, and are among the banks and brokerages worldwide that have shed almost 150,000 jobs since the subprime mortgage market collapsed last year. Led by Chief Executive Officer Lloyd Blankfein, Goldman said in April it would fire more after culling about 1,500 underperformers. Vikram Pandit, Citigroup’s CEO, shed 12,900 over the past year.

“We haven’t hit bottom yet,” said Henry Higdon, managing partner at Higdon Partners LLC, a New York-based search firm specializing in financial services. “They have to adjust the size of their businesses to the realities, not only today, but what it’s going to look like in the next two or three years.”

Government black boxes will collect every email

November 6, 2008 by Infinite

Home Office says all data from web could be stored in giant government database

Internet “black boxes” will be used to collect every email and web visit in the UK under the Government’s plans for a giant “big brother” database, The Independent has learnt.

Home Office officials have told senior figures from the internet and telecommunications industries that the “black box” technology could automatically retain and store raw data from the web before transferring it to a giant central database controlled by the Government.

Plans to create a database holding information about every phone call, email and internet visit made in the UK have provoked a huge public outcry. Richard Thomas, the Information Commissioner, described it as “step too far” and the Government’s own terrorism watchdog said that as a “raw idea” it was “awful”.

National road toll devices to be tested by drivers next year

November 5, 2008 by Infinite

Trial could lead to £1.30-a-mile charges

Hundreds of drivers are being recruited to take part in government-funded road-pricing trials that could result in charges of up to £1.30 a mile on the most congested roads.

The test runs will start early next year in four locations and will involve fitting a satellite-tracking device to the vehicles of volunteers. An on-board unit will automatically deduct payments from a shadow account set up in the driver’s name.

Paul Clark, the Transport Minister, confirmed yesterday that the trials would proceed despite previous statements from the Government suggesting that it had abandoned the idea of a national road-pricing scheme. In 2004 a feasibility study considered a range of possible prices, up to £1.30 a mile. It said that the highest rate “would be paid by only 0.5 per cent of traffic”.

The on-board unit could be used to collect all road charges, such as congestion charges in London and Manchester and tolls for crossing bridges and using new lanes on motorways.

In the longer term the technology could be used to introduce pricing on all roads, with the price varying according to the time of day, direction of travel and the level of congestion.

Drivers would use the internet to check all their payments on a single bill. They would choose whether the bill showed where they had travelled or simply the amounts they had paid.

U.S. Stocks Post Biggest Post-Election Drop on Economic Concern

November 5, 2008 by Infinite

Traders work on the floor of the New York Stock Exchange in New York, Nov. 5, 2008. Photographer: Ramin Talaie/Bloomberg News

Nov. 5 (Bloomberg) — The stock market posted its biggest plunge following a presidential election as reports on jobs and service industries stoked concern the economy will worsen even as President-elect Barack Obama tries to stimulate growth.

Citigroup Inc. tumbled 14 percent and Bank of America Corp. lost 11 percent as the Standard & Poor’s 500 Index and Dow Jones Industrial Average sank more than 5 percent. Nucor Corp., the largest U.S.-based steel producer, slid 10 percent after bigger rival ArcelorMittal doubled production cuts amid slowing demand. Boeing Co., the world’s second-largest commercial planemaker, lost 6.9 percent after UBS AG forecast a 3 percent drop in global air traffic next year.

Boeing, Airbus May End Up With 200 Planes `Parked in Desert’ Amid Crunch

November 5, 2008 by Infinite

Nov. 6 (Bloomberg) — Airbus SAS and Boeing Co. may end up with as many as 200 new planes without buyers next year because airlines are unable to obtain funds to pay for them amid a global credit squeeze, a consultant said.

“There’s a funding gap and we don’t really know where the money is coming from,” Eddy Pieniazek, a director of aviation adviser Ascend, said at a conference in Hong Kong yesterday. “If the money doesn’t arrive, you can quite easily see 200 new aircraft, or whitetails, parked in a desert.”

Airbus and Boeing, the world’s two-biggest airplane makers, will probably deliver about $65 billion of large commercial aircraft next year, according to a report by JPMorgan Securities Inc. Leasing companies and banks, which will account for about 60 percent of the aircraft financing market in 2008, are likely to “pull back substantially,” creating a funding gap as wide as $20 billion, the report said.

“Nobody is getting out of this alive,” said Bill Cumberlidge, director of aviation asset finance at Allco Finance Group, which on Nov. 4 handed over operations to outside managers after warning it may default on its debt. “The debt market is dead.”

“Zero Liquidity”

UK energy prices rising twice as fast as EU average

November 5, 2008 by Infinite

Energy bills in the UK rise faster than in the EU, figures show. Photo: David Sillitoe

Energy prices in Britain in the past year have risen twice as fast as the European Union average, according to latest figures.

Gas and electricity prices in the UK rose by 29.7% in the last 12 months compared with a 15% increase for the EU.

The figures, released by the Organisation for Economic Co-operation and Development (OECD), show bills are up just 14% in France and 12.2% in Germany.

Ed Mayo, chief executive of government watchdog Consumer Focus, said: “The UK energy consumer is being clobbered faster and harder than those in Europe. Other countries may be doing more to keep their prices down and we should learn from them.

“The UK has a relatively free market, but the freedom to cut prices in the early years now seems to be the freedom to raise prices with impunity.

U.S. Airstrike Reported to Hit Afghan Wedding

November 5, 2008 by Infinite

Afghan men examined a house that was allegedly destroyed by a U.S. airstrike Tuesday.
Humayoun Shiab/European Pressphoto Agency

KABUL, Afghanistan – An airstrike by United States-led forces killed 40 civilians and wounded 28 others at a wedding party in Kandahar Province in southern Afghanistan, Afghan officials said Wednesday. The casualties included women and children, the officials said.

The New York Times

The United States military and Afghan authorities were investigating the reports about the latest attack, the American military said in a statement, but it gave no confirmation of the strikes or any death toll.

The reports of the strike, in a region that has become a renewed front line in the battle against the Taliban, showed the raw tensions between the United States and Afghanistan over the toll suffered by civilians in the war, and came just hours after the election of Barack Obama as the next American president.

The reports recall an assault in August in western Afghanistan that was initially disputed by the United States, in which an American gunship killed at least 30 civilians. On Wednesday, at a news conference called to congratulate Mr. Obama, President Hamid Karzai said his first request to Mr. Obama would be “to end the civilian casualties.”

Euro banks spread gloom as profits, forecasts fall

November 5, 2008 by Infinite

NP Paribas Chief Executive Officer Baudouin Prot speaks during a news conference to announce the bank’s third-quarter results in Paris November 5, 2008.

PARIS (Reuters) – A raft of European bank results did little to lift gloom around the sector on Wednesday, with a recurring trend of falling profits and rising bad debts stemming from the global financial crisis.

France’s biggest bank BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) posted a 56 percent fall in third-quarter profits, Allied Irish Banks (ALBK.I: Quote, Profile, Research, Stock Buzz) cut its earnings forecast, and Greece’s Emporiki Bank (CBGr.AT: Quote, Profile, Research, Stock Buzz) swung to a loss.

Capital rebuilding continued in the face of a tough outlook as Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) looked to raise up to 3 billion pounds ($4.7 billion) from a government-backed bond, and Austria’s Raiffeisen Zentralbank said it may ask the government for 2 billion euros ($2.6 billion).

By 7:15 a.m. EST the DJ Stoxx banking index was down 0.7 percent, led by 4 percent falls for BNP and Allied Irish.

Profits have tumbled across the sector, and several banks have warned of more writedowns and rising bad debts this year, though there is optimism that government rescue packages have left balance sheets strong enough to withstand more losses.

Guardians of the unborn

November 5, 2008 by Infinite

Women in the Netherlands who are deemed by the state to be unfit mothers should be sentenced to take contraception for a prescribed period of two years, according to a draft bill before the Dutch parliament.

The proposed legislation would further punish parents who defied it by taking away their newborn infant. “It targets people who have been the subject of judicial intervention because of their bad parenting,” explained the author of the bill Marjo Van Dijken of the socialist PvDA. “If someone refuses the contraception and becomes pregnant, the child must be taken away directly after birth.”

Medvedev Confronts U.S. on Missile Shield After Obama Victory

November 5, 2008 by Infinite

Nov. 5 (Bloomberg) — Russian leader Dmitry Medvedev said he would deploy new missiles in Europe, confronting the U.S. on the day Barack Obama was declared the winner in America’s presidential election.

Medvedev said he would place a short-range missile system designed to carry conventional warheads in Russia’s exclave of Kaliningrad, wedged between Poland and Lithuania.

“An Iskander rocket system will be deployed in the Kaliningrad region to neutralize the missile-defense system if necessary,” Medvedev said, referring to U.S. plans to place elements of a missile shield in Poland and the Czech Republic.

Medvedev blamed the U.S. for failure to coordinate its economic policy with other countries so that a “local” crisis turned into a global one, leading to “a fall on the markets of the whole planet.” He also renewed his assertion that the U.S. provoked the war between Russia and Georgia in August.

Hamas fires rockets at Israel after 6 killed

November 5, 2008 by Infinite

Palestinians carry a man who was wounded in an Israeli army raid, into hospital in Deir El Bahlah in the central Gaza Strip, early Wednesday, Nov. 5, 2008. Israel launched an airstrike on Gaza early Wednesday after its troops clashed with Hamas militants who fired mortars into Israel, leaving six Palestinians dead. It was the first battle since a June truce mostly quieted violence in the volatile territory.(AP Photo/Khalil Hamra)

GAZA CITY, Gaza Strip (AP) – Hamas militants pounded southern Israel with a barrage of rockets Wednesday, hours after Israeli forces killed six gunmen in a fresh bout of violence that threatened to unravel a five-month-old truce that has brought relief to both Gaza and southern Israel.

The clashes began late Tuesday after the Israeli forces burst into Gaza to destroy what the army said was a tunnel being dug near the border to abduct Israeli troops.

Despite the outbreak of violence, both Israeli authorities and officials with Gaza’s Hamas government said they wanted to restore the calm that has largely prevailed over the past five months.

After the Israeli incursion, Hamas gunmen battled Israeli forces and Gaza residents reported the sound of explosions, gunshots and helicopter fire. One Hamas fighter was killed, prompting a wave of mortar fire at nearby Israeli targets.

An Israeli airstrike then killed five Hamas militants preparing to fire mortar shells. Hamas responded with the barrage of rockets.

Israel launches deadly airstrike in Gaza

November 5, 2008 by Infinite

Medical workers wheel a wounded man to hospital in the central Gaza strip on Tuesday after clashes.

GAZA CITY (CNN) — Israel launched an airstrike Tuesday night on southern Gaza after clashing with Hamas militants in central Gaza, Palestinian sources and Israel Defense Forces said.

Four were killed in the airstrike, which occurred east of Khan Younis, Palestinian sources said. They said a drone and an apache helicopter could be seen.

Obama Is Elected 44th U.S. President, First African-American to Win Office

November 4, 2008 by Infinite

Nov. 5 (Bloomberg) — Barack Obama was elected the 44th president of the United States, opening a new chapter in the country’s history as the first African-American to hold the world’s most important job.

The Illinois senator capped his 21-month quest with a sweeping electoral victory that also enhanced the Democrats’ majority in Congress and marked the end of an era of Republican dominance in Washington.

Obama crossed the requisite threshold of 270 electoral votes to defeat Republican rival John McCain, when television networks declared him the winner in the state of California.

That gave the Democratic nominee at least 275 electoral votes, according to the projections, and his tally is likely to grow as more results come in and states that backed Republican President George W. Bush in 2004 switch sides.

Obama’s victory, along with Democratic gains in congressional contests, puts him and his party in firm control of the federal government for the first time since the early 1990s. That gives Obama an opportunity to turn his victory into a pivotal moment in the country’s political history.

Missing ballots, balky machines hamper voting in key states

November 4, 2008 by Infinite

Florida lines
Voters wait in line to cast their ballots in Orlando, Florida today.

Voters in Florida, Ohio and Virginia are among those reporting long lines and problems with ballots and voting machines. Voting-rights groups sound the alarm.

Reporting from Miami and Washington — Heavy voter turnout overwhelmed polling places in the key battleground states of Florida, Ohio and Virginia, prompting tens of thousands of complaints about long waits, missing ballots and malfunctioning voting machines.

RBS unveils capital plan as writedown hits £6.1bn

November 4, 2008 by Infinite

Royal Bank of Scotland (RBS) today revealed that the value of its assets has fallen by £6.1 billion this year as it “regretfully” laid out plans to raise £19.7 billion to prop up its balance sheet.

Related article: Rescued RBS to pay millions in bonuses

RBS hopes to raise £15 billion through offering new ordinary shares to investors at 65.5p each, above today’s share price, which fell slightly to 64.8p.The offer is fully underwritten by the Government so, if investors choose not to buy stock, the Treasury will buy the shares, using taxpayers’ funds.

The lender, which raised £12 billion through a rights issue only four months ago, also said today that it will issue £5 billion in preference shares to the Government, which will buy the stock using taxpayers’ money.

Preference shares mean the Government must be repaid before the bank may pay dividends to shareholders.

RBS revealed this morning that it had written down the value of its assets by a further £206 million in the third quarter, adding to the £5.9 billion it declared in the first six months of 2008. The potential third-quarter writedown of £1.2 billion was reduced to £206 million by an accounting change.

Goldman Sachs: Fund Loses $990m After 10 Months

November 4, 2008 by Infinite

One of Goldman Sachs‘s flagship hedge funds, run by two of the Wall Street bank’s most talented traders, has lost close to $1bn since its launch in January in further evidence of the crisis facing the industry.

Goldman Sachs Investment Partners, which was hailed in January as one of the biggest hedge fund launches, raising more than $6bn, has told investors that it had lost $989m by September. It said the fund was down about 13 per cent in the third quarter. Year-to-date performance fell about 15.5 per cent in the year to September.

More Utility Bills Go Unpaid

November 4, 2008 by Infinite

Consumers’ Economic Struggles Spur More Power Shutoffs as Firms Step Up Collections

Utilities are becoming more aggressive about collecting money from delinquent customers, leading to a surge in service shutdowns just as economic woes are pushing up the number of households falling behind on bills.

The utilities say they are under pressure to clean out accounts that are weighing down their books at a time when their stocks are being hammered and earnings growth has slowed.

Meanwhile, the increasing number of homes left without power — which could rise as economic pain deepens — is beginning to worry some consumer advocates and regulators.

In Pennsylvania, PPL Corp. increased shutoffs by 78% in the first three quarters of the year compared with the same period a year earlier. Shutoffs at electric utilities throughout the state increased by 20% in that period. George Lewis, a spokesman for PPL, based in Allentown, Pa., said the utility had been somewhat lax in the past but decided this year to “reverse the trend and prevent people from getting further in debt” by cutting them off sooner. About 3% of the company’s residential accounts have been disconnected for delinquency.

France threatens to seize banks, German bail-outs escalate

November 4, 2008 by Infinite

The French state has threatened to seize control of the country’s banks and fire top staff unless they do their part to stabilise the economy by stepping up lending to companies in need.

“The banks have got to open up credit to business: they have the means to do it,” said prime minister Francois Fillon, accusing lenders of hoarding cash. “We don’t think the banks are stepping up to task as necessary. We can withdraw the credit that we have extended to them under the state’s contract with the banks, and that will put them in difficulty. At that moment the question arises whether we should take an equity stake, change their managers, and assume control over their strategy.”

Speaking on French television, he warned: “Broadly speaking, we’ll be able to judge over the next 10 days whether they are playing the game as they should, or not.”

Some owners deserting factories in China

November 3, 2008 by Infinite

Jianglong Group textile plant
Equipment is moved last month at the shuttered Jianglong Group factory in Shaoxing, China. The textile dye firm was abandoned by the owner. Government officials said recently that he and his wife had been caught.

Financially troubled plants are being abandoned by the boss, leaving behind unpaid workers and debts. Reporting from Shaoxing, China — First, Tao Shoulong burned his company’s financial books. He then sold his private golf club memberships and disposed of his Mercedes S-600 sedan.

And then he was gone.

And just like that, China’s biggest textile dye operation — with four factories, a campus the size of 31 football fields, 4,000 workers and debts of at least $200 million — was history.

Commerzbank accepts €8.2bn state funding

November 3, 2008 by Infinite

Commerzbank, Germany’s second-largest bank, today said it would accept a €8.2bn (£6.44bn) capital injection from the state and a further €15bn in guaranteed funding.

Commerz, which is taking over Dresdner, its smaller rival, said it had agreed to pay no dividends for the next two years. It will also scrap all boardroom bonuses in 2009 and 2010 and cap its chief executive’s salary at €500,000.

The bank made its moves as it reported a net loss of €285m in the third quarter when it was heavily exposed to both Lehman Brothers, the bankrupt US investment bank, and Iceland, the virtually insolvent country.

It said it made a combined operating loss of almost €900m through these two events. In the first nine months its pre-tax earnings of €2.3bn a year ago shrank to €419m.

Germany’s private sector banks have been under considerable pressure from chancellor Angela Merkel to join her government’s €500bn stabilisation package, with the biggest, Deutsche, creating a storm by saying it would be “ashamed” to take part.