Credit crunch misery deepens for UBS


Photograph: Fabrice Coffrini/AFP

UBS has underlined its status as one of the biggest losers in the credit crunch by announcing £5.1bn of fresh writedowns and its fourth quarterly loss in a row.

The Swiss bank said this morning that it made a net loss of 358m Swiss francs (£173m) in the second quarter of this year. The loss was caused by its continuing exposure to the US housing market, and a huge outflow of funds as wealthy individuals took their money elsewhere.

The new writedowns push UBS’s total since the crisis started to $42bn, bringing it closer to Citigroup ($47bn) and Merrill Lynch ($46bn).

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Bear Stearns: Insider Trading

Aug. 11 (Bloomberg) — On March 11, the day the Federal Reserve attempted to shore up confidence in the credit markets with a $200 billion lending program that for the first time monetized Wall Street’s devalued collateral, somebody else decided Bear Stearns Cos. was going to collapse.

In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.

Whoever placed the bet used so-called put options that gave purchasers the right to sell 5.7 million Bear Stearns shares for $30 each and 165,000 shares for $25 apiece just nine days later, data compiled by Bloomberg show. That was less than half the $62.97 closing price in New York Stock Exchange composite trading on March 11. The buyers were confident the stock would crash.

“Even if I were the most bearish man on Earth, I can’t imagine buying puts 50 percent below the price with just over a week to expiration,” said Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities & Futures LP. “It’s not even on the page of rational behavior, unless you know something.”

`Lottery Ticket’

The 57,000 puts that traded March 11 at the $30 strike price and the 1,649 that traded at $25 were collectively worth about $1.7 million, Bloomberg data show. Each put is equal to 100 shares of stock.

“That trade amounted to buying a lottery ticket,” said Michael McCarty, chief options and equity strategist at New York-based brokerage Meridian Equity Partners Inc. “Would you buy $1.7 million worth of lottery tickets just because you could? No. Neither would a hedge fund manager.”

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One Third of New Owners Owe More Than House Is Worth

Aug. 12 (Bloomberg) — Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.

Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said.

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Berkeley Scientists: Mass Extinction of Species

Scientists: Humans To Blame

Devastating declines of amphibian species around the world are a sign of a biodiversity disaster larger than just the deaths of frogs and salamanders, University of California, Berkeley scientists said Tuesday.

Researchers said substantial die-offs of amphibians and other plant and animal species add up to a new mass extinction facing the planet, the scientists said in an online article this week in the journal Proceedings of the National Academy of Sciences.

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“There’s no question that we are in a mass extinction spasm right now,” said David Wake, professor of integrative biology at UC Berkeley.

“Amphibians have been around for about 250 million years. They made it through when the dinosaurs didn’t. The fact that they’re cutting out now should be a lesson for us.”

Read moreBerkeley Scientists: Mass Extinction of Species

China to overtake US as largest manufacturer

China is set to overtake the US next year as the world’s largest producer of manufactured goods, four years earlier than expected, as a result of the rapidly weakening US economy.

The great leap is revealed in forecasts for the Financial Times by Global Insight, a US economics consultancy. According to the estimates, next year China will account for 17 per cent of manufacturing value-added output of $11,783bn and the US will make 16 per cent.

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U.S. troops still in Georgia


Tracy J. Smith/Courtesy of the U.S. Army
Spc. Joseph Noble of the Georgia Army National Guard takes part in field training alongside Republic of Georgia soldiers during Immediate Response 08 at Vaziani Military Base, Georgia, in July. The training wrapped up Thursday.

U.S. personnel responsible for training members of the Georgian military remain stationed inside the volatile country, where fighting erupted Friday between Russia and Georgia over the breakaway province of South Ossetia.

The U.S. European Command said on Monday that there were no plans at this time to withdraw the U.S. military trainers from the country. There are still 127 U.S. trainers in Georgia, where the American forces had been preparing the Georgian army for operations in Iraq.

Meanwhile, U.S. civilians started to make their way out of the country over the weekend, according to the U.S. Embassy in Tbilisi.

Convoys carrying family members of diplomats, government workers and ordinary citizens bound for the embassy in neighboring Armenia continued on Monday.

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Iran warns against ‘surprise attack


Iran’s Defense Minister Mostafa Mohammad-Najjar

Iran’s Defense Minister Mohammad-Najjar has warned that its response to a surprise enemy attack would be a greater surprise for the aggressor.

He said Iran has developed an extensive defense force to repel any possible attack, adding the Islamic Republic is currently a major defensive power.

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Fed auctions another $25 billion to combat a serious credit squeeze

WASHINGTON (AP) – The Federal Reserve has auctioned another $25 billion in loans to the nation’s banks and given them more time to pay the money back in an effort to combat a serious credit squeeze.

The Fed announced Tuesday that the money would be loaned at a rate of 2.754 percent. In the latest auction, the Fed offered the loans for an extended period of 84 days, rather than the 28-day period for the previous loans.

It marked the Fed’s latest attempt to be innovative in providing the nation’s banking system with the cash it needs to combat a serious credit crisis stemming from mounting mortgage loan losses.

Read moreFed auctions another $25 billion to combat a serious credit squeeze

Moderate Exercise Greatly Extends Lifespan

(NaturalNews) A moderate increase in fitness level can decrease a man’s risk of dying by between 50 and 70 percent, according to a study conducted by the Exercise Testing and Research Lab at the Veterans Affairs Medical Center in Washington, and published in the journal Circulation.

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“It is important to emphasize that it takes relatively moderate levels of physical activity – like brisk walking – to attain the associated health benefits,” said researcher Peter Kokkinos. “Certainly, one does not need to be a marathon runner. This is the message that we need to convey to the public.”

Researchers studied more than 15,000 male U.S. veterans, 6,749 black and 8,911 white. The men had been given standardized treadmill tests, in which they were encouraged to walk until they were tired, then monitored for an average of 7.5 years each.

Read moreModerate Exercise Greatly Extends Lifespan