Lehman posts $4 billion quarterly loss, plans sales

NEW YORK (Reuters) – Lehman Brothers Holdings Inc plans to sell a majority stake in its asset management unit and spin off commercial real estate holdings, hoping to restore investor confidence and ensure its survival after reporting a record quarterly loss of about $4 billion.

Shares failed to rebound on Wednesday morning after plunging 45 percent a day earlier, reflecting Wall Street disappointment that Lehman did not announce more concrete actions.

Read moreLehman posts $4 billion quarterly loss, plans sales

U.S. Companies Cut 33,000 Jobs in August

Sept. 4 (Bloomberg) — Companies in the U.S. cut an estimated 33,000 jobs in August, a private report based on payroll data showed today.

The decrease followed a revised gain of 1,000 for the prior month that was lower than previously estimated, ADP Employer Services said.

The extended housing slump, high raw material costs and weaker demand are prompting employers to cut staff. Economists forecast the Labor Department will report tomorrow that the U.S. lost jobs for an eighth straight month last month.

Read moreU.S. Companies Cut 33,000 Jobs in August

Lehmans puts another 1,500 jobs on the block

Lehman Brothers is planning to axe up to 1,500 more jobs, as part of its desperate struggle to reduce costs, raise money and rebuild its battered balance sheet.

The job losses, which are still being planned by executives at the company’s New York head office, are expected to be spread among its 26,000-strong global workforce, including at its European headquarters in London, where it employs more than 4,500 people.

Rumours of the cuts began circulating internally at Lehman late on Thursday, adding to the gloom at the company, which is engaged in a fire sale of assets in order to replace billions of dollars lost on mortgage investments since the credit crisis began.

Read moreLehmans puts another 1,500 jobs on the block

Consumer prices rise at double the expected rate

WASHINGTON (AP) – Consumer prices shot up in July at twice the expected rate, pushed higher by surging energy and food costs. The latest surge left inflation running at the fastest pace in 17 years.

Read moreConsumer prices rise at double the expected rate

Jobless rate climbs as 51,000 jobs vanish

WASHINGTON – Stores, factories and other businesses large and small showed workers the door last month, sending unemployment to its highest rate in four years and adding to the evidence an economic recovery remains far off.

Employers clamped down on hiring and cut 51,000 jobs in July, the Labor Department said Friday. The economy has shed jobs each month this year – 463,000 in all.

The unemployment rate rose to 5.7 percent, up from 5.5 percent in June.

Read moreJobless rate climbs as 51,000 jobs vanish

Wachovia Has Record $8.9 Billion Loss, Cuts Dividend

If Wachovia fails, then you can probably forget about the FDIC.

And remember that there are no more bailouts left:
Fed: No more bailouts, except Fannie Mae and Freddie Mac.
_______________________________________________________________________________________

July 22 (Bloomberg) — Wachovia Corp., the U.S. bank that hired Treasury Undersecretary Robert Steel as chief executive officer two weeks ago, reported a record quarterly loss of $8.9 billion, slashed the dividend and announced 6,350 job cuts. The stock slumped as much as 10 percent in New York trading.

The second-quarter loss of $4.20 a share compared with net income of $2.3 billion, or $1.23, a year earlier, the Charlotte, North Carolina-based company said today in a statement. The loss included a $6.1 billion charge tied to declining asset values.

The writedown, job cuts and second dividend reduction in three months reflect Steel’s response to the worst housing market since the Great Depression, which cost former CEO Kennedy Thompson his job after eight years. Wachovia has dropped more than 75 percent since it spent $24 billion two years ago to buy Golden West Financial Corp. just as home prices were peaking.

Read moreWachovia Has Record $8.9 Billion Loss, Cuts Dividend

Citigroup posts another big loss


Citigroup has reported another big loss, although it lost less money than had been expected.

The biggest US bank by assets lost $2.5bn (£1.3bn) in the three months to the end of June, weighed down by another $11.7bn of write-downs.

Citigroup said it had cut 11,000 jobs in the first six months of the year and planned to continue at the same rate.

Related article: US: Financial system is a house of cards

Read moreCitigroup posts another big loss

Ron Paul: This coming crisis is bigger than the world has ever experienced

The following statement is written by Congressman Paul about the pending financial disaster.

He will introduce this statement as a special order and insert it into the Congressional Record next week. Fortunately, we have the opportunity to debut it first on the Campaign for Liberty blog. It reads as follows:

I have, for the past 35 years, expressed my grave concern for the future of America. The course we have taken over the past century has threatened our liberties, security and prosperity. In spite of these long-held concerns, I have days-growing more frequent all the time-when I’m convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed.

Though the world has long suffered from the senselessness of wars that should have been avoided, my greatest fear is that the course on which we find ourselves will bring even greater conflict and economic suffering to the innocent people of the world-unless we quickly change our ways.

America, with her traditions of free markets and property rights, led the way toward great wealth and progress throughout the world as well as at home. Since we have lost our confidence in the principles of liberty, self reliance, hard work and frugality, and instead took on empire building, financed through inflation and debt, all this has changed. This is indeed frightening and an historic event.

The problem we face is not new in history. Authoritarianism has been around a long time. For centuries, inflation and debt have been used by tyrants to hold power, promote aggression, and provide “bread and circuses” for the people. The notion that a country can afford “guns and butter” with no significant penalty existed even before the 1960s when it became a popular slogan. It was then, though, we were told the Vietnam War and a massive expansion of the welfare state were not problems. The seventies proved that assumption wrong.

Related articles and videos:
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Fortis Bank Predicts US Financial Market Meltdown Within Weeks
Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
Jim Rogers: Avoid The Dollar At All Costs
Ron Paul on Iran and Energy June 26, 2008
Marc Faber: ‘Misleading’ Fed Should Let Banks Fail

Read moreRon Paul: This coming crisis is bigger than the world has ever experienced

This Recession, It’s Just Beginning


Vincent Quinones works on the floor of the New York Stock Exchange Wednesday after the Federal Reserve issued a mixed assessment of the economy. Yesterday, the Dow Jones industrial average closed down 358 points. (By Andrew Harrer — Bloomberg News)

So much for that second-half rebound.

Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal.

It ain’t gonna happen. Not this summer. Not this fall. Not even next winter.

This thing’s going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge fund meltdowns and 6 percent unemployment. We’re caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.

Only this will be a different kind of recession — a recession with an overlay of inflation. That combo puts the Federal Reserve in a Catch-22 — whatever it does to solve one problem only makes the other worse. Emerging from a two-day meeting this week, Fed officials signaled that further recession-fighting rate cuts are unlikely and that their next move will be to raise rates to contain inflationary expectations.

Since last June, we’ve seen a fairly consistent pattern to the economic mood swings. Every three months or so, there’s a round of bad news about housing, followed by warnings of more bank write-offs and then a string of disappointing corporate earnings reports. Eventually, things stabilize and there are hints that the worst may be behind us. Stocks regain some of their lost ground, bonds fall and then — bam — the whole cycle starts again.

It was only in November that the Dow had recovered from the panicked summer sell-off and hit a record, just above 14,000. By March, it had fallen below 12,000. By May, it climbed above 13,000. Now it’s heading for a new floor at 11,000. Officially, that’s bear market territory. We’ll be lucky if that’s the floor.

In explaining why that second-half rebound never occurred, the Fed and the Treasury and the Wall Street machers will say that nobody could have foreseen $140 a barrel oil. As excuses go, blaming it on an oil shock is a hardy perennial. That’s what Jimmy Carter and Fed Chairman Arthur Burns did in the late ’70s, and what George H.W. Bush and Alan Greenspan did in the early ’90s. Don’t believe it.

Truth is, there are always price or supply shocks of one sort or another. The real problem is that the underlying fundamentals had gotten badly out of whack, making the economy susceptible to a shock. The only way to make things better is to get those fundamentals back in balance. In this case, that means bringing what we consume in line with what we produce, letting the dollar fall to its natural level, wringing the excess capacity out of industries that overexpanded during the credit bubble and allowing real estate prices to fall in line with incomes.

The last hope for a second-half rebound began to fade earlier this month when Lehman Brothers reported that it wasn’t as immune to the credit-market downturn as it had led everyone to believe. Lehman scrambled to restore confidence by firing two top executives and raising billions in additional capital, but even that wasn’t enough to quiet speculation that it could be the next Bear Stearns.

Since then, there has been a steady drumbeat of worrisome news from nearly every sector of the economy.

American Express and Discover warn that customers are falling further behind on their debts. UPS and Federal Express report a noticeable slowdown in shipments, while fuel costs are soaring. According to the Case-Shiller index, home prices in the top 20 markets fell 15 percent in April from the year before, and Fannie Mae and Freddie Mac report that mortgage delinquency rates doubled over the same period — and that’s for conventional home loans, not subprime. United Airlines accelerates the race to cut costs and capacity by laying off 950 pilots — 15 percent of its total — as a number of airlines retire planes and hint that they may delay delivery or cancel orders of new jets from Boeing and Airbus. Goldman Sachs, which has already had to withdraw its rosy forecast for stocks, now admits it was also too optimistic about junk bond defaults, and analysts warn that Citigroup and Merrill Lynch will also be forced to take additional big write-downs on their mortgage portfolios.

Read moreThis Recession, It’s Just Beginning

America’s Aviation System About To Collapse

Industry officials and analysts urge Washington to act to avert a collapse.

New York – America’s aviation system could be at risk of collapsing by the beginning of next year.

That warning from aviation experts has prompted some industry leaders to call for re-regulation, something considered almost heresy until now. Others are urging Washington to do more to rein in the oil speculators pushing up fuel costs.

But there is agreement among airline officials and analysts that Washington and the two presidential candidates need to recognize the severity of the crisis and take some action now to avert an economically crippling collapse in the near future.

“Unless something is done to move toward some kind of fix, we’re going to see every one of our major airlines in bankruptcy,” says Robert Crandall, former chairman of American Airlines. “If that isn’t enough of a crisis to alert everybody, then I don’t know what it will take.”

As a result of the spike upward in oil prices, almost every major airline is now losing millions of dollars each quarter.

Unless the price of oil comes down, most are expected to run out of cash by the end of this year or the beginning of next. In a bid to stave off bankruptcy, they’re already retrenching. They plan to lay off an estimated 25,000 employees, park hundreds of planes, and cut the number of flights they offer.

In addition, a recent study by the Business Travel Coalition, which represents corporate travel managers, estimates that 100 regional and 50 major airports nationwide will lose some of or all their air service by the end of the year.

“I’ve been trying to turn on the emergency sirens to raise awareness in Washington and back home,” says Kevin Mitchell, chairman of the Business Travel Coalition in Radnor, Pa. “And I think people are finally beginning to [wake up].”

Airline officials visit Washington

Representatives of the major carriers were in Congress this week, urging action to discourage speculation in the oil markets. Some analysts blame that speculation for the almost doubling of the price of jet fuel in the past year.

Read moreAmerica’s Aviation System About To Collapse