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Wednesday, April 29, 2009

Stress Testing (Banks)

Stress Testing
http://www.investopedia.com/terms/s/stresstesting.asp

What Does Stress Testing Mean?
A simulation technique used on asset and liability portfolios to determine their reactions to different financial situations. Stress tests are also used to gauge how certain stressors will affect a company or industry. They are usually computer generated simulation models which test hypothetical scenarios. Also known as "stress test"

Investopedia explains Stress Testing
Stress-testing is a useful method of determining how a portfolio will fare during a period of financial crisis. The Monte Carlo simulation is one of the most widely used methods of stress testing.
A stress test is also used to evaluate the strength of institutions. For example the Treasury Department could run stress tests on banks to determine their financial condition. Banks often run these tests on themselves. Changing factors could include interest rates, lending requirements, or unemployment.

Bank stress test results released May 4
Evaluation of top 19 U.S. banks will include a capital recovery plan.

http://money.cnn.com/2009/04/16/news/economy/stress_test_results.reut/index.htm?section=money_latest

WASHINGTON (Reuters) -- The results of tests to gauge how the top 19 U.S. banks would fare should the deep U.S. recession worsen will be publicly disclosed on May 4, a regulatory official said Thursday.
The so-called stress test results will include a capital recovery plan for banks that regulators determine would be short of capital if the economy's downturn gathered steam and unemployment shot unexpectedly higher, the official said.
Regulators have not made final decisions on how to present the results, the official said. Regulators will disclose at least some of the information, but no decision has been made on on whether banks themselves will disclose some as well. Read article...
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Forse winstdaling voor Shell

Forse winstdaling voor Shell

DEN HAAG (AFN) - (Bron: De Telegraaf, DFT) Olieconcern Shell heeft in het eerste kwartaal 3,3 miljard dollar winst geboekt. Dat is ruim de helft minder dan vorig jaar in dezelfde periode. Het betreft de winst op basis van geschatte actuele kosten.
Dat heeft Shell woensdag bekendgemaakt. De winst viel lager uit door de lagere olieprijs in het afgelopen kwartaal ten opzichte van vorig jaar. Door de economische crisis is de olieprijs gedaald van bijna 150 dollar vorig jaar zomer tot 50 dollar per vat (van 159 liter).
De nettowinst exlusief bijzondere baten van 337 miljoen dollar kwam uit op 2,96 miljard dollar. Dat is meer dan marktvorsers hadden voorspeld. Analisten verwachtten in doorsnee een winst van 2,62 miljard dollar. Lees artikel...
http://www.telegraaf.nl/dft/bedrijven/royal_dutch_shell_a/3809115/__Forse_winstdaling_voor_Shell__.html

First quarter 2009 results and interim dividend announcement
29/04/2009

http://www.shell.com/home/content/investor/news_and_library/press_releases/2009/q1_2009_results_newsitem_29042009.html

At 07.00 BST (08.00 CEST and 02.00 DST) on Wednesday 29 April, 2009 Royal Dutch Shell plc released its first quarter results and first quarter interim dividend announcement for 2009.
"First quarter 2009 performance was affected by the weaker global economy, with a challenging Upstream and Downstream business environment. As we announced previously, our dividend for first quarter 2009 will be $0.42 per share, an increase of 5%. We continue to make significant investments in the company for future profitability. Industry conditions remain challenging, and our focus is on capital discipline and costs. We are taking a prudent approach to this downturn, focused on sustaining a strong position in the energy landscape. Shell people, operational excellence, good investments and technology are our cornerstones for the future."

First quarter 2009 interim dividend
http://www.shell.com/home/content/investor/share_price/dividend/2009/q1/q1_2009_dividend_announcement_29042009.html

Downloads PDF
Quarterly Results Announcement (results in full)
http://www-static.shell.com/static/investor/downloads/financial_information/quarterly_results/2009/q1/q1_2009_qra.pdf

Key Financial Data in dollars, euros and pounds sterling
http://www-static.shell.com/static/investor/downloads/financial_information/quarterly_results/2009/q1/q1_2009_keyfinancials.pdf
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Officials trying to reduce impact of swine flu

Officials trying to reduce impact of swine flu
With anxiety spreading faster than swine flu, authorities try to reduce the outbreak's impact

http://finance.yahoo.com/news/Officials-trying-to-reduce-apf-15064393.html?sec=topStories&pos=main&asset=&ccode=

WASHINGTON (AP) -- With global anxiety spreading even faster than the new swine flu -- and a vaccine still months away -- health authorities are struggling to reduce the impact of an outbreak that can't be contained by simply shutting borders.
The world has no vaccine to prevent infection but U.S. health officials aim to have a key ingredient for one ready in early May, the big step that vaccine manufacturers are awaiting. But even if the World Health Organization ordered up emergency vaccine supplies -- and that decision hasn't been made yet -- it would take at least two more months to produce the initial shots needed for human safety testing.
"We're working together at 100 miles an hour to get material that will be useful," Dr. Jesse Goodman, who oversees the Food and Drug Administration's swine flu work, told The Associated Press.
Meanwhile, health authorities are preparing for the worst. "I fully expect we will see deaths from this infection," said Dr. Richard Besser, acting director of the Centers for Disease Control and Prevention.
The U.S. is shipping to states not only enough anti-flu medication for 11 million people, but also masks, hospital supplies and flu test kits. President Barack Obama asked Congress for $1.5 billion in emergency funds to help build more drug stockpiles and monitor future cases, as well as help international efforts to avoid a full-fledged pandemic.
"It's a very serious possibility, but it is still too early to say that this is inevitable," the WHO's flu chief, Dr. Keiji Fukuda, told a telephone news conference.
Cuba and Argentina banned flights to Mexico, where swine flu is suspected of killing more than 150 people and sickening well over 2,000. In a bit of good news, Mexico's health secretary, Jose Cordova, late Tuesday called the death toll there "more or less stable."

Mexico City, one of the world's largest cities, has taken drastic steps to curb the virus' spread, starting with shutting down schools and on Tuesday expanding closures to gyms and swimming pools and even telling restaurants to limit service to takeout. People who venture out tend to wear masks in hopes of protection.

The number of confirmed swine flu cases in the United States rose to 66 in six states, with 45 in New York, 11 in California, six in Texas, two in Kansas and one each in Indiana and Ohio, but cities and states suspected more. In New York, the city's health commissioner said "many hundreds" of schoolchildren were ill at a school where some students had confirmed cases.

New Zealand, Australia, Israel, Britain, Germany, Spain and Canada have also reported cases.
But only in Mexico so far are there confirmed deaths, and scientists remain baffled as to why.

The WHO argues against closing borders to stem the spread, and the U.S. -- although checking arriving travelers for the ill who may need care -- agrees it's too late for that tactic.
"Sealing a border as an approach to containment is something that has been discussed and it was our planning assumption should an outbreak of a new strain of influenza occur overseas. We had plans for trying to swoop in and knockout or quench an outbreak if it were occurring far from our borders. That's not the case here," Besser told a telephone briefing of Nevada-based health providers and reporters. "The idea of trying to limit the spread to Mexico is not realistic or at all possible."
"Border controls do not work. Travel restrictions do not work," WHO spokesman Gregory Hartl said in Geneva, recalling the SARS epidemic earlier in the decade that killed 774 people, mostly in Asia, and slowed the global economy.
Authorities sought to keep the crisis in context: Flu deaths are common around the world. In the U.S. alone, the CDC says about 36,000 people a year die of flu-related causes. Still, the CDC calls the new strain a combination of pig, bird and human viruses for which people may have limited natural immunity.

Hence the need for a vaccine. Using samples of the flu taken from people who fell ill in Mexico and the U.S., scientists are engineering a strain that could trigger the immune system without causing illness. The hope is to get that ingredient -- called a "reference strain" in vaccine jargon -- to manufacturers around the second week of May, so they can begin their own laborious production work, said CDC's Dr. Ruben Donis, who is leading that effort.

Outbreak Like Mexican Swine Flu Predicted 14 Months Ago
(Source By Robin Lloyd, LiveScience Senior Editor)
posted: 27 April 2009 04:12 pm ET

A team of scientists predicted more than a year ago that Mexico and other tropical locales were emerging "hotspots" for so-called zoonotic diseases that jump from animals to humans, getting it right on the newly reported swine flu.
This week, the scientists are analyzing the patterns of the new swine flu virus's spread and trying to predict its next moves. The researchers "should have preliminary findings by the weekend," team leader Peter Daszak of the Wildlife Trust told LiveScience.
Daszak and his colleagues cautioned in February 2008 that infectious disease-fighting resources are not effectively deployed around the globe and that the U.S. government has not always accurately investigated how flu strains will arrive here.

Hot spots
The tropics prediction came from an analysis of 335 "disease events" involving emerging infectious diseases between 1940 and 2004 examples include Ebola, HIV, yellow fever and SARS. The analysis showed that such events peaked in the 1980s and that the threat of these diseases to global health is increasing.
The events, mostly caused by zoonotic diseases, were found to be correlated with socio-economic, environmental and ecological factors.
That allowed the scientists to make a predictive map of where emerging diseases are most likely to emerge pointing to Latin America, tropical Africa and Asia. The map also pointed up that global resources to fight disease emergence are misguided focusing on richer, developed countries of Europe, North America, parts of Asia and Australia, rather than in developing countries. The report was published in the Feb. 21, 2008, issue of the journal Nature. Read Article...
http://www.livescience.com/health/090427-flu-prediction.html

The disease event prediction map is like an earthquake risk map, Daszak said. "If we live in one of these 'hotspots,' we need to protect ourselves, and our trading and traveling partners from the risk of new diseases," he said.
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Monday, April 27, 2009

Barron's Big Money Managers are bullish for next year

Big Money Managers---Short Term Skittish
4/25/2009
With stock market indexes down almost half the levels they were a year ago, Barron's Big Money Managers are bullish for next year. But they're pretty pessimistic about the rest of 2009. They look for things to improve next year.


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Spanish unemployment tops 17%

Spanish unemployment tops 17%
Spain posts the E.U.'s highest unemployment rate, with more than 4 million out of work.

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Sunday, April 26, 2009

The Next Big Bailout: State and Local Governments

The Next Big Bailout: State and Local Governments

With state and local governments suffering from a steep decline in tax revenues, there's "another S&L crisis" coming, says Diane Garnick, investment strategist at Invesco.
And since every crisis deserves its own bailout, get ready for the Federal Government to step in an prop up state and local municipalities, says Garnick, whose firm has about $350 billion of assets under management.
While states like Michigan and California are the most likely candidates for a bailout - especially the former if Chrysler and/or GM files for bankruptcy - other states will be quick to raise a hand if Federal funds are flowing, she says. And even the states in stronger financial position may not have a choice Garnick says, recalling that automakers like Ford and financial firms like Goldman Sachs were compelled to take Federal monies they may not have wanted or needed.

OPEC chief says oil prices are too low

OPEC chief says oil prices are too low
Secretary general al-Badri says non-member nation, including Russia, should cut production to boost prices.


ALGIERS, Algeria (Reuters) -- An oil price of $50 per barrel is too low for OPEC producers to invest in production and non-member countries, including Russia, should cut output to help boost prices, OPEC's secretary general said Sunday.
Asked at a news conference during a visit to Algeria about the prospect of further output cuts at OPEC's next meeting on May 28, Abdalla Salem al-Badri said: "It depends on the economic situation, but if we face any problem OPEC will not hesitate to take any further decision to stabilize the market."
He said there were still 722,000 barrels of oil on the market which needed to be removed if the Organization of Petroleum Exporting Countries (OPEC) -- whose members pump more than a third of the world's oil -- is to reach full compliance with output cuts agreed at a previous meeting.

http://money.cnn.com/2009/04/26/news/international/opec.reut/index.htm?postversion=2009042612

Swine influenza

Swine influenza
Influenza-like illness in the United States and Mexico (WHO statement)

24 April 2009 -- The United States Government has reported seven confirmed human cases of Swine Influenza A/H1N1 in the USA (five in California and two in Texas) and nine suspect cases. All seven confirmed cases had mild Influenza-Like Illness (ILI), with only one requiring brief hospitalization. No deaths have been reported.
The Government of Mexico has reported three separate events. In the Federal District of Mexico, surveillance began picking up cases of ILI starting 18 March. The number of cases has risen steadily through April and as of 23 April there are now more than 854 cases of pneumonia from the capital. Of those, 59 have died. In San Luis Potosi, in central Mexico, 24 cases of ILI, with three deaths, have been reported. And from Mexicali, near the border with the United States, four cases of ILI, with no deaths, have been reported.
Of the Mexican cases, 18 have been laboratory confirmed in Canada as Swine Influenza A/H1N1, while 12 of those are genetically identical to the Swine Influenza A/H1N1 viruses from California.
The majority of these cases have occurred in otherwise healthy young adults. Influenza normally affects the very young and the very old, but these age groups have not been heavily affected in Mexico.
Because there are human cases associated with an animal influenza virus, and because of the geographical spread of multiple community outbreaks, plus the somewhat unusual age groups affected, these events are of high concern.
The Swine Influenza A/H1N1 viruses characterized in this outbreak have not been previously detected in pigs or humans. The viruses so far characterized have been sensitive to oseltamivir, but resistant to both amantadine and rimantadine.
http://www.who.int/csr/don/2009_04_24/en/index.html

Swine influenza frequently asked questions, Download PDF (WHO)
http://www.who.int/csr/swine_flu/swineflu_qanda_20090425.pdf

Science (New York Times Permalink)
Dot Earth: Contagion on a Small Planet
By By Andrew C. Revkin Published: April 26, 2009
A spreading outbreak of swine flu is showing the global reach of disease on a small planet.

Swine flu deaths rise
(01:54) Report Reuters Video

Apr 26 - Governments around the world rush to halt the spread of a new strain of flu.



Pandemic fears over U.S-Mexico flu
(01:26) Report Reuters Video

Apr. 25 - The World Health Organisation says the outbreaks of swine flu could lead to a worlwide pandemic but it is too early to tell.

Saturday, April 18, 2009

A Russian Economic Picturebook


A Russian Economic Picturebook
(Source La Russophobe)
The Russian economy has taken another plunge deeper into the abyss. Yulia Latynina exposing the more barbaric aspects, and on Monday in our editorial we’ll take a hard look at Russia’s announcement that as a result of Putin’s failures it will be forced to go begging for foreign loans for the first time in ten years.

Russia's industrial production has contracted at twice the rate of the overall economy and is likely to be further devasted in 2009. It's nowhere near hitting bottom.
http://larussophobe.wordpress.com/2009/04/16/editorial-a-russian-economic-picturebook/

Friday, April 17, 2009

China's economy grew 6.1% in the first quarter, a rate most nations would kill for but amounts to "a recession in China,"

6.1% Growth "Is a Recession in China" But "More Optimistic Tone Justified"

(Source TechTicker)
China's economy grew 6.1% in the first quarter, a rate most nations would kill for but amounts to "a recession in China," says Nariman Behravesh, chief economist at IHS Global Insights.
China needs at least 8% growth or more to absorb surplus labor and materials, he explains.
But Nariman is upbeat about China's growth going forward, noting the government's massive stimulus is starting to kick in. A revival of China could serve as a "mini-growth locomotive for emerging markets" generally and especially for commodity producers, he says.

Google profit beats expectations

Google profit beats expectations

SAN FRANCISCO/NEW YORK (Reuters) - Google's quarterly profit topped expectations, helped by cost controls, but Chief Executive Eric Schmidt said the economic environment remains tough with Internet users still searching but buying less.
Shares of the No. 1 U.S. Internet search company initially rose 5 percent on the stronger-than-expected results, but then erased gains to trade flat after hours.
"We're still basically in uncharted territory," Schmidt said on a conference call. "Google is absolutely feeling the impact. Users are still searching but they're buying less. Ultimately, what that really means is the ads are converting less."
Compared to other Internet and media companies that depend on advertising revenue, Google has been extremely resilient to the economic downturn, though its revenue growth has slowed sharply from the heady 50 percent rates it used to enjoy.
Google reported first-quarter revenue of $5.51 billion, up 6 percent from the year-ago quarter but down 3 percent from the 2008 fourth quarter -- its first ever sequential decline. The figure was in line with average Wall Street expectations.

Monday, April 13, 2009

The Week Ahead in the U.S.

The Week Ahead in the U.S.
4/10/2009
A large batch of economic data and the first big slew of corporate earnings will mark a busy week. Five Dow components are among the dozens of companies putting out financial results. Stacey Delo reports. (April 10)

Market Insider: It's Here — One Ugly Earnings Season

Market Insider: It's Here — One Ugly Earnings Season

(Source: April 13th, 2009) CNBC, Patti Domm)
After a five-week rally, stocks face one of their toughest challenges yet - a very nasty earnings season.
In the coming week, dozens of companies report, including such major names as Goldman Sachs, Johnson and Johnson, Google, Intel, J.P. Morgan, Citigroup and General Electric. For S&P 500 companies, first-quarter earnings are expected to decline nearly 38 percent.
There is also a full calendar of economic data such as retail sales, industrial production and inflation data.
Given the lack of earnings guidance this quarter, traders are debating whether earnings will be a positive or negative catalyst for stocks, since the opportunity for surprises is greater than in the past. Goldman Sachs says just 25 percent of the S&P 500 now give quarterly guidance.
"The divergence in consensus is the widest it's been," said Peter McCorry, who trades bank stocks at Keefe, Bruyette.

"I don't think we'll see the V-shaped turnaround in the market continue from here ... It will be more drawn out," said McCorry. "The volatility we have is no accident. Expectations are very varied right now. We're very emotional, headline driven, minute to minute."
http://www.cnbc.com/id/30144581

The future belongs to India, not China


The future belongs to India, not China
Spring 2009 Series
On May 12, 2009
an important Intelligence Squared debate will take place in London

Event Information:
All bets are now on China as the nation that will soon rival the USA as the world's other superpower. But hasn't anyone been looking across the Himalayas? India, a democracy of over a billion people, has a rate of growth almost as impressive as China's, a burgeoning middle class, a highly skilled work force and an abundance of raw materials. More important still, it operates under the rule of law not the rule of the politburo. Could it be that India ends up the dominant power of the eastern hemisphere?
The debate will take place at: Royal Geographical Society, Ondaatje Theatre.
http://www.intelligencesquared.com/events.php?event=EVT0181

Speakers for the motion:
Gurcharan Das Gurcharan Das is an author and public intellectual. He was CEO of Procter & Gamble India, and later Managing Director (Strategic Planning) of Procter & Gamble Worldwide, before he took early retirement to pursue the life of a full time writer. He is author of the bestseller, "India Unbound", which has been published in 17 languages and has been filmed by the BBC. He writes a regular column for the Times of India and six Indian language newpapers, and occasional pieces for the Wall Street Journal, Financial Times and Foreign Affairs.

Mark Tully Mark Tully was BBC Delhi correspondent from 1972 to 2004. Since 2004 he has been a freelance journalist, writer and broadcaster resident in Delhi. He is author of five books on India, the latest of which is "India's Unending Journey". He was educated at New School in Darjeeling, Marlborough College in the UK, and at Cambridge where he read history and theology.

Deepak Lal Indian-born classical liberal economist. He is the author of numerous articles on development economics, and his books include "In Praise of Empires: Globalisation and Order" and most recently "Reviving the Hidden Hand: The Case for Classical Liberalism in the 21st Century". He is James S. Coleman Professor of International Development Studies, University of California.

Speakers against the motion:
Lord Powell Charles Powell was Private Secretary to both Margaret Thatcher and John Major, and was a key foreign policy adviser to Mrs Thatcher. He was Chairman of the China-Britain Business Council from 1998 to 2007.

Danny Quah Malaysian-born Head of Department and Professor of Economics at the London School of Economics. He has delivered lectures at the United Nations, the Hay Festival Segovia, the World Science Forum, No. 10 Downing Street, and Khazanah Megatrends Forum, and has had his writings translated into 18 different languages. He is a Governor of the National Institute of Economic and Social Research, and has consulted for the World Bank, the Bank of England, and the Monetary Authority of Singapore.

Sir David Tang KBE Hong Kong businessman and socialite best known as the founder of the Shanghai Tang chain, although he sold his interest in the company in 1998. More recently Tang opened the Cipriani in Hong Kong and the China Tang restaurant at the Dorchester Hotel. He is a frequent contributor to publications such as The Spectator, The Daily Telegraph and the International Herald Tribune.

Volgens PWC kost de crisis de Nederlander 26.000 euro en verliezen huishoudens 325 miljard euro tot nu toe

Crisis kost Nederlander 26.000 euro
Huishoudens verliezen 325 Miljard Euro


Het vermogen van de Nederlander is sinds het begin van de financiële en economische crisis met gemiddeld 26.000 euro afgenomen. Dat blijkt uit cijfers van PricewaterhouseCoopers.
In totaal zijn huishoudens 325 miljard kwijtgeraakt. Dat bedrag komt overeen met 56 procent van het BBP, het Bruto Binnenlands Product.
Het verlies komt voornamelijk door de daling van de aandelenkoersen en de huizenprijzen en de lagere waarde van de pensioenopbouw.

N.B. Dit is nog maar een eerste berekening c.q. schatting. In Nederland is de recessie nog maar sinds een klein half jaar voelbaar of volgens het ('samen slaperige') Kabinet Balkenende herkenbaar. De totale schade kan pas in 2012/2013 berekend worden en zal minstens verdubbelen of misschien zelfs wel drie of vier maal zoveel worden.

Japan's Market Outlook

Japan's Market Outlook 4/11/2009

Barron's Leslie Norton says that Japan is in it's worst recession since World War II, which has global investors tiptoeing gingerly into Japanese stocks, hoping corporate returns improve first.

Stocks: Is the Rally on Sound Footing?

Stocks: Is the Rally on Sound Footing?
Almost everyone has been surprised by the stock market's month-long run. But keeping the momentum going could be tricky

(Source: Business Week)
Recession? Financial crisis? Never mind. The stock market just finished an extraordinary month, a big surprise for even the most optimistic observers.
Stocks, measured by the broad Standard & Poor's 500-stock index, hit a low for the current bear market on Mar. 9. A month later, by the close on Apr. 9, the S&P 500 was 26.6% higher.
If this March-April advance were a calendar month, it would be the best month for the S&P 500 since 1933.
"The rally has been surprising in its length and how far it's come," says William Rutherford, president of Rutherford Investment Management. Stock gains are boosting confidence, not just among investors but in the U.S. economy as a whole, he says.
"There is a lot of upward momentum here," says Richard Sparks of Schaeffer's Investment Research. "A lot of buyers are stepping in."
Notes of Cautious Optimism
First-quarter earnings season, which began on Apr. 7, threatened to trip up the market rally. After all, amid a global recession and financial crisis, earnings for the S&P 500 are expected to drop 38%, according to Thomson Reuters (TRI).
But an early earnings announcement from Wells Fargo (WFC) sparked a rally, when the bank reported profits that were double expectations.
"Expectations for earnings season are so low that it's going to be hard to disappoint," says James King, president and chief investment officer at National Penn Investors Trust.
The fact that good news arrived from the financial sector was especially significant.
Read Article...
http://www.businessweek.com/investor/content/apr2009/pi20090410_940389.htm?chan=top+news_top+news+index+-+temp_top+story
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Saturday, April 11, 2009

Showdown Seen Between Banks and Regulators

Showdown Seen Between Banks and Regulators
By STEPHEN LABATON and EDMUND L. ANDREWS Published: April 11, 2009
Industry executives are bracing for fights with the government over repayment of bailout money and forced sales of bad mortgages.
Business / Economy (New York Times Permalink)

YouTube Is Doomed (GOOG)

YouTube Is Doomed (GOOG)
(Source Sillicon Alley and Business Insider)

YouTube, that incandescent tower of video Babel; monument to the sloughed-off detritus of our exponentially-exploding digital culture; a Technicolor cataract of skateboarding dogs, lip-synching college students, political punditry, and porn; has reached the zenith of its meteoric rise; and Icarus-like, wings melting; is spiraling back to earth. Despite massive growth, ubiquitous global brand awareness, presidential endorsement, and the world’s greatest repository of illegally-pirated video content, Google’s massive video folly is on life-support, and the prognosis is grave.
Believers would have us think that Google (GOOG) will sustain YouTube, indefinitely if necessary. Proponents of online advertising argue that increased understanding of the medium will lead to more advertising dollars at better CPMs, lifting all boats in a sea of monetization. In the short term, however, neither celebrity presidents, a rabidly growing customer base, nor a brand which has in three short years injected itself into the global cultural lexicon can forestall the inevitable: YouTube is soaring towards the future like a pigeon towards a plate glass window.

The problem lies with the bean-counters. According to a report by Credit Suisse, YouTube is on track to lose roughly $470 million in 2009. No matter Google’s $116 billion market cap: a half-billion dollar loss on a single property, even one as large as YouTube, is a bitter pill to swallow. Even Eric Schmidt, talking to the New York Times about the YouTube acquisition, was quick to say that, going forward, Google would “be more careful with potential large expense streams, which are of uncertain return.”

Credit Suisse estimates YouTube will manage to rake in about $240 million in ad revenue in 2009, against operating costs of roughly $711 million, leading to a shortfall of just over $470 million. This half-billion dollar loss comes after more than a year of feverish experimentation in various forms of advertising, cross-product embedding, licensing and partnership deals. YouTube is adamant that ultimately they’ll find an advertising solution that will enable the ungainly behemoth to reach profitability. Looking at the math, it doesn’t seem likely.
The economics are hard to overcome. Assuming YouTube delivers the 75 billion streams that Credit Suisse projects for 2009, and assuming YouTube manages to slot an ad for every stream (which is practically speaking, impossible, given the nature of much of their content), YouTube would have to achieve a $9.48 CPM for every video impression shown. Presumably, the videos YouTube is already monetizing represent the best content available, with diminishing returns as they reach deeper and deeper into a repository rife with copyright violation, the indecent, the uninteresting, and the unwatchable. Hulu claims to be charging a $30 CPM, of which roughly 70% goes to the copyright holder. Averages for other proprietary content hover around the $10 CPM mark. CPMs for user-generated content, assuming you can attract the advertisers, tend to be measured in fractions of a dollar. Read Article...
http://www.businessinsider.com/is-youtube-doomed-2009-4

Friday, April 10, 2009

As Stocks Surge, Fears Linger About the Economy

By JACK HEALY and ERIC DASH Published: April 10, 2009
The sudden turnaround has investors wondering if the markets have bottomed out or if larger problems are being ignored.
Business (New York Times Permalink)

Thursday, April 9, 2009

Moody's cut its rating on Warren Buffett's holding company two notches,

Buffett's Berkshire loses top rating
Moody's cut its rating on Warren Buffett's holding company two notches, saying investment losses were hurting the company's ability to meet its funding needs.


(Source CNN Money)
NEW YORK (Reuters) -- Moody's Investors Service cut its credit ratings on Berkshire Hathaway Inc. from Aaa, the top rating, saying the recession and investment losses at insurance operations of investor Warren Buffett's holding company reduced its ability to support funding needs.
Wednesday's cut to Berkshire's rating means Moody's no longer has a Aaa rating on any company with significant financial-services operations.
Moody's cut the ratings on Omaha, Neb.-based Berkshire (BRK-A) to Aa2, the third-highest investment grade, and cut to Aa1, the second-highest, its ratings on Berkshire's reinsurance subsidiary National Indemnity Co and bond insurance arm Berkshire Hathaway Assurance Corp.
The downgrades come more than a month after Berkshire reported a 62% drop in profit, the worst year since Buffett took over 44 years ago. The outlook for all the ratings is stable, Moody's said, indicating an additional rating change is not anticipated over the next 12 to 18 months.
http://money.cnn.com/2009/04/08/news/companies/berkshire_moodys_downgrade.reut/index.htm?postversion=2009040908

Update April 8, 21.00 CET

Berkshire's Class A shares were up $2,330, or 2.6 percent, at $91,290 in afternoon trading after earlier rising to $92,880, their highest since January 16, Reuters data show.
Wells Fargo said on Thursday it expects quarterly profit excluding preferred stock dividends of 55 cents per share, more than twice what analysts expected.
The San Francisco-based bank said it benefited from a surge in mortgage lending, lower credit losses than analysts feared, and strong results from newly-acquired Wachovia Corp.
As of December 31, Berkshire said it held 304.4 million Wells Fargo shares, for a 7.2 percent stake.
Wells Fargo shares rose as much as 32.6 percent on Thursday, which would give Omaha, Nebraska-based Berkshire an instant paper profit from that stake of close to $1.5 billion.

Jim O'Neil and Nouriel Roubini discuss the economy

Jim O'Neil and Nouriel Roubini discuss the economy
April 6th. The roundtable discussion at the Financial Times, the road to recovery, video.

Jim O'Neil and Nouriel Roubini discuss the economy, video link at FT

BoE keeps UK interest rate held at historic low of 0.5%

BoE keeps UK interest rate held at historic low of 0.5%
(Source The Times)
The Bank of England paused for breath today in its battle to combat the economic slump, holding interest rates at 0.5 per cent and staying its hand over any other changes in its recession-fighting strategy of quantitative easing.
The Bank switched to a “wait and see” stance after a six-month long scramble to shore-up the economy with drastic interest rate cuts and, since last month, a radical move to jump-start growth by “printing money”.
The noon verdict (09 April)from the Bank’s Monetary Policy Committee confirmed City predictions that official interest rates would be left on hold at their present 315-year low of just 0.5 per cent.
Mervyn King, the Bank’s Governor, had made clear last month that he saw little scope for further cuts. The record of the Monetary Policy Committee's last meeting showed it was anxious that further rate cuts could backfire, deterring banks from lending and hitting savers.

The Bank had also been widely expected to order no change for the moment in its drastic “quantitative easing” plan to pump extra, newly-created money through the economy by buying up a range of assets from the financial markets.
The controversial move to buy assets worth a total of £75 billion over three months began only last month, and is less than a third complete, with the Bank having so far purchased some £26 billion of UK government bonds or gilts, and about £400 million of corporate bonds — company IOUs. Read Article...
http://business.timesonline.co.uk/tol/business/economics/article6065520.ece

ING to sell off $10 billion in operations

ING to sell off $10 billion in operations
ING, the Dutch bank and insurer, plans to sell operations that could raise up to $10.6 billion

AMSTERDAM (AP) -- ING NV, the Dutch bank and insurer, said Thursday it plans to sell operations it says could raise up to euro8 billion ($10.6 billion).
The move, unveiled alongside a reshuffling of business units to simplify the company structure, is an increase from a previous target announced in January to raise euro3 billion.
So far, ING has sold its Canadian operations for euro1.4 billion.
"Next to a number of leading positions in key markets, a group of smaller businesses with no clear outlook for market leadership consumes a disproportionate amount of capital," the company said in a statement.
Shares rose 9.9 percent to euro 5.775. They have had a wild ride, falling from above euro25 a year ago and trading as low as euro2.30 in March.
The company's statement Thursday didn't specify which business it would definitely sell or set any time frame for achieving the target. It also didn't say whether there was any interest from buyers.
ING said it now plans to focus mostly on European banking, with extra focus on Belgium and the Netherlands. However, it intends to continue offering both banking and insurance in Europe, Asia and the United States.
It said it doesn't plan to sell its online banking service, ING Direct, and that its life insurance businesses in China and Japan were "under review."
Incoming Chief Executive Jan Hommen was to address investors at a meeting later Thursday. His predecessor, Michel Tilmant, resigned in January after saying ING expected to post a large loss in the fourth quarter, which turned out to be a loss of euro3.1 billion.
ING has received significant aid from the Dutch government since the financial crisis began. Last year it received a euro10 billion investment lifeline to shore up its equity base.
And in January the state assumed most of the risk for euro27.7 billion in troubled U.S. mortgage-backed securities ING owns.

ING said Thursday it has cut 3,500 jobs so far since announcing plans to cut 7,000 in January, around 5 percent of its work force. As of Thursday, ING said it employs 25,000.
Hommen, a former chief financial officer of both Philips Electronics and Alcoa, said that ING's tier 1 capital ratio -- the most widely used measure of a bank's solvency -- was 9.3 percent at year end.

SPLITTING OPERATIONS
(Source Reuters)
ING will start managing its bank and insurance activities separately but Hommen declined to comment directly when asked if this could lead to a future split of the group, saying only "it is a way to make our organization easier and focused."
ING, which ranked as the world's twelfth-largest bank by market value last February, is organized along six business lines, with three focusing on retail banking, wholesale banking and ING Direct, and three on regional insurance groups.
ING will wind down its retail bank operations in the Ukraine, review life insurance activities in China and Japan, and divest U.S. insurance activities such as financial products, group reinsurance, and annuity books when possible.
When ING sold its ING Canada stake in February, analysts earmarked ING's stake in Brazilian insurance group Sul America as a possible divestment.
http://www.reuters.com/article/newsOne/idUSTRE5380Y020090409

Vastgoedmarkt.nl: ING wordt opgedeeld
(Bron RTL.nl, rtlz)
Het einde van ING Real Estate als aparte onderneming van ING lijkt nabij. ING gaat de organisatie richten op de kerntaken en zich concentreren op Europa. Ook zou bankieren en verzekeren worden gesplitst.
Bronnen
Twee bronnen hebben tegenover Vastgoedmarkt bevestigd dat ING waarschijnlijk al donderdagmorgen bekend zal maken dat de ING Group wordt gestroomlijnd en dat de activiteiten van de bank en de verzekeringstak uit elkaar worden gehaald.
Door deze strategie wordt ING Real Estate opgesplitst. Eind vorig jaar had de vastgoedonderneming met ruim 100 miljard euro mondiaal de grootste portefeuille vastgoed.
Saneren
De divisies Development en Finance zullen worden ondergebracht bij de verzekeringstak, terwijl Investment Management wordt gestald bij de bank. Het zou de bedoeling zijn de grote vastgoedportefeuille van ING snel in omvang te verkleinen om daarna te verzelfstandigen of te verkopen.

Wednesday, April 8, 2009

Europees Commissaris voor Concurrentie Neelie Kroes onderzoekt staatssteun Fortis Bank Nederland en ABN Amro

Europees Commissaris voor Concurrentie Neelie Kroes onderzoekt staatssteun Fortis Bank Nederland en ABN Amro

(Bron Trends.be)
Europees Commissaris voor Concurrentie Neelie Kroes is een "diepgaand onderzoek" opgestart naar de staatssteun die Fortis Bank Nederland ontving en de door Fortis overgenomen onderdelen van ABN Amro. Dat heeft Kroes woensdag meegedeeld.
Kroes wil met haar onderzoek uitpluizen of de steunmaatregelen al dan niet in strijd zijn met de EU-regels voor overheidssteun. De Nederlandse staat nam in oktober 2008 (tijdens de het eerste weekend van het eerste reddingsplan van Fortis) Fortis Bank Nederland over en maakte voor tientallen miljarden euro's aan leningen vrij voor de bank. In december nam de staat vervolgens voor 6,5 miljard euro ABN Amro van Fortis Bank Nederland over.
Kroes zegt nu een aanleiding gevonden te hebben om aan te nemen dat de maatregelen misschien niet in overeenstemming zijn "met de regels voor staatssteun aan banken die van toepassing zijn tijdens de huidige financiële crisis." Het gaat daarbij in de eerste plaats over de looptijd van en de vergoeding voor de kredietfaciliteiten en de overnameprijs van de onderdelen ABN Amro. Die zouden niet voldoen aan de criteria van de Europese Commissie.
Lees artikel... http://www.trends.be/nl/economie/bedrijven/4-222-52930/europa-onderzoekt-staatssteun-fortis-bank-nederland-en-abn-amro-.html#

Competition Commissioner Neelie Kroes commented: "The past six months have shown that state aid control plays a key role in tackling the challenges of the economic crisis in a coordinated way across Europe. The EU's tried and tested state aid rules have clearly been part of the solution. Our intervention and – sometimes tough – conditions have prevented Member States from falling into the trap of protectionism and exporting their problems to other Member States, while allowing Member States to avoid financial meltdown. The responsibility now lies with the financial sector to clean up their balance sheets and restructure to ensure a viable future.

Daimler Expects 'Significant' Loss in First Quarter

Daimler Expects 'Significant' Loss in First Quarter
(Source Wall Street Journal)
BERLIN -- Daimler AG Wednesday said it expected to report a significant first-quarter loss and that it had initiated cost-cutting and efficiency programs in all divisions in response to the downturn in world auto markets.
It added that it doesn't expect the recession to ease until the second half of this year at the earliest.
"Daimler intends to manage the crisis ... [by] rigid cost management, reduced labor costs and reduced working capital, as well as by maintaining financial flexibility and executing further efficiency programs," the German auto maker said in a statement ahead of its annual general meeting in Berlin.
In the first quarter, sales at the company's core Mercedes-Benz brand plummeted 25% from year-earlier period to 216,000 cars. Demand for trucks has virtually collapsed in recent weeks because of the economic downturn. Daimler's truck division is the world's largest producer of commercial vehicles by sales. Read Article...
http://online.wsj.com/article/SB123917438316000505.html


The Annual Report 2008. Download PDF
http://www.daimler.com/Projects/c2c/channel/documents/1677323_DAI_2008_Annual_Report.pdf

Toxic debts could reach $4 trillion, IMF to warn

Toxic debts could reach $4 trillion, IMF to warn

(Source The Times)
Toxic debts racked up by banks and insurers could spiral to $4 trillion (£2.7 trillion), new forecasts from the International Monetary Fund (IMF) are set to suggest.
The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia.
Banks and insurers, which so far have owned up to $1.29 trillion in toxic assets, are facing increasing losses as the deepening recession takes a toll, adding to the debts racked up from sub-prime mortgages. The IMF's new forecast, which could be revised again before the end of the month, will come as a blow to governments that have already pumped billions into the banking system.
Paul Ashworth, senior US economist at Capital Economics, said: “The first losses were asset writedowns based on sub-prime mortgages and associated instruments. But now, banks are selling ‘plain vanilla' losses from mortgages, commercial loans and credit cards. For this reason, the housing market will play a crucial part in how big the bad debt toll is over the next year or two.”

Reshaping the Global Economy Download PDF
The crisis and the national responses to it have started to reshape the global economy and shift the balance between the political and economic forces at play in the process of globalization. The drivers of the recent globalization wave are being undermined, and the spirit of protectionism has reemerged.
http://www.imf.org/external/pubs/ft/fandd/2009/03/pdf/pisani.pdf

Tuesday, April 7, 2009

Alcoa swings to loss as aluminum prices plunge

Alcoa swings to loss as aluminum prices plunge

SAN FRANCISCO (MarketWatch) - Alcoa Inc, on Tuesday reported a first-quarter loss $497 million, or 61 cents a share, vs. a profit of $303 million, or 37 cents a share a year ago. Excluding discontinued operations, Alcoa would have posted a loss of 59 cents a share. Analysts polled by FactSet Research were looking for a loss, on average, of 51 cents a share. A Reuters Estimates survey came up with a target of a 54-cent loss. Sales fell to $4.1 billion from $5.7 billion a year ago. Wall Street had forecast sales of $4.68 billion.

Adviescommissie Toekomst Banken presenteert 'Naar herstel van vertrouwen'

Adviescommissie Toekomst Banken presenteert 'Naar herstel van vertrouwen'
http://www.nvb.nl/
Het klantbelang voorop, een versterking van het risicobeheer binnen banken, een versterkte rol voor de Raad van Commissarissen, een nieuw beloningsbeleid en een bankiersverklaring. Dat is een aantal aanbevelingen uit het vandaag gepresenteerde rapport 'Naar herstel van vertrouwen' van de Adviescommissie Toekomst Banken. Met het rapport beoogt de Adviescommissie een bijdrage te leveren aan het verantwoord en duurzaam bankieren in Nederland. Met aanbevelingen op de toekomst gericht hoopt zij een stap te zetten richting het herstel van vertrouwen.

Persbericht: Aanbevelingen Adviescommissie belangrijke stap naar herstel van vertrouwen
http://www.nvb.nl/index.php?p=290341

Segway introduces futuristic urban transport vehicle


Segway introduces futuristic urban transport vehicle

Check out our Post with more info and links at our emerging trends, Trendsbridge Blog



The Baltic Dry Index dropping again

Soros on the crisis and currencies

George Soros on the crisis and currencies
3 Clips from TechTicker (07 April)

Soros: "Danger of Collapse Has Passed," But Stock Rally Not Sustainable


Soros: Dollar's Strength a Measure of System's "Sickness"; Euro Will Remain Viable




Soros "Very Concerned" About Rising Global Unrest, But Sees Positive Signs in Russia

Wereldbank verwacht: lagere groei in Oost-Azië

Wereldbank: lagere groei in Oost-Azië
7 april 2009, 10:26 uur | FD.nl

(Bron Het Financieële Dagblad)
De opkomende economieën in Oost-Azië groeien dit jaar veel minder hard dan in de voorgaande jaren . Door een 'pijnlijke toename' van de werkloosheid en een daling van de lonen kunnen miljoenen mensen in de regio niet aan de armoede ontsnappen. Volgens de prognoses van de Wereldbank vertraagt de economische groei in Oost-Azië dit jaar tot 5,3 %, tegenover 8 % in 2008 en meer dan 11 % in 2007. Als China buiten beschouwing wordt gelaten, valt de groei nog 'veel lager' uit, stelde Wereldbankeconoom Vikram Nehru in een toelichting.
China is dan ook het enige lichtpuntje dat de ontwikkelingsbank in Oost-Azië ontwaart. Volgens de Wereldbank kan het economisch herstel daar al in de tweede helft van dit jaar inzetten. Lees artikel...
http://www.fd.nl/artikel/11370893/wereldbank-lagere-groei-oost-azie

Statement of World Bank Senior Economist Eric le Borgne at the Launch of the East Asia and Pacific Half-Yearly Update
Statement by Eric LE BORGNE, Senior Economist, World Bank Office in Manila
Pasig City, April 7, 2009
PHILIPPINES-Battling the forces of global recession. Download PDF
http://siteresources.worldbank.org/INTPHILIPPINES/Resources/PHILIPPINESBattlingtheforcesofglobalrecessionFINAL.pdf

Chance Of A Bottoming Out In China Provides Ray Of Hope On An Otherwise Gloomy Horizon, Says World Bank’s Review Of East Asian And Pacific Economies
http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22131602~pagePK:34370~piPK:34424~theSitePK:4607,00.html

Tokyo, April 7, 2009 – As countries in the East Asia and Pacific region prepare themselves for an expected surge in joblessness resulting from the global slowdown, a ray of hope may be emerging with signs of China’s economy bottoming out by mid-2009, says the World Bank's latest half-yearly assessment of the region's economic health.
The latest East Asia and Pacific Update, titled Battling the Forces of Global Recession, says a recovery in China – fueled largely by the country’s huge economic stimulus package – is likely to begin this year and take full hold in 2010, potentially contributing to the region’s stabilization, and perhaps recovery. But with China still heavily reliant on exports to world markets that continue to contract, the Update warns that a truly sustainable recovery in the East Asia and Pacific region ultimately depends on developments in the advanced economies.

Battling the forces of global recession, Download PDF
http://siteresources.worldbank.org/INTEAPHALFYEARLYUPDATE/Resources/550192-1238574864269/5976918-1239010682147/update_april09_fullreport.pdf

Rising Oil Prices Will Benefit Offshore Drillers

Rising Oil Prices Will Benefit Offshore Drillers 3/31/2009

Deepwater drillers Transocean, Diamond and Noble will be key beneficiaries as oil supplies get tighter and prices trend higher.

Poll Finds New Optimism on Economy Since Inauguration

Poll Finds New Optimism on Economy Since Inauguration
By ADAM NAGOURNEY and MEGAN THEE-BRENAN Published: April 7, 2009
(New York Times Permalink)
President Obama is enjoying some success in rebuilding confidence in a troubled nation, according to the latest New York Times/CBS News poll.

Monday, April 6, 2009

Japan: $100 billion new stimulus

Japan: $100 billion new stimulus
Apr 6, 2009 filed under Markets CNN Video
Japan's Prime Minister intends to increase the stimulus to over 2% of the country's GDP

Manifesto 'Europe And The Retail Trade: Working At The Shop!'

Manifesto 'Europe And The Retail Trade: Working At The Shop!'
In the Manifesto 'Europe And The Retail Trade: Working At The Shop!', Platform Detailhandel Nederland enunciates its vision on European developments important to (Dutch) retail trade.
http://www.platformdetailhandel.nl/index.cfm/30,608,html

Also, the manifesto explains the way Dutch retail trade portrays itself in the Brussels arena and what this sector's economic chances and threats are.
Among other things, the manifesto goes more deeply into simplifying European law, diminishing Europe's administrative burden and changing European guide lines into national legislation. The main points of interest to the Platform, like organised crime threats from Eastern-European countries, the international research on shoplifting, drive back counterfeiting and introducing the rounding rule on European level are also discussed. Further, the Platform would like the European Union to give serious priority to accessibility of city centres to both consumers and supplying traffic.

Download PDF Manifesto 'Europe And The Retail Trade' [111KB]
http://www.platformdetailhandel.nl/index.cfm/30,608,c,html/Manifesto%20Europe%20and%20the%20retail%20trade.pdf

The Big Rich

The Big Rich Oliedynastieën
(Bron Fem)
Het is een anekdote uit Bryan Burroughs nieuwste boek. Burrough is bekend van Barbarians at the Gate , de reconstructie van de leveraged buyout van tabaksgigant RJR Nabisco. Nu, negentien jaar later, brengt hij The Big Rich uit: een relaas van de opkomst en de ondergang van oliedynastieën in Texas.
Zijn onderwerpkeuze is niet vreemd: zoals een handjevol koppige ruziemakers op Wall Street de weg vrijmaakte voor de uitverkoop van miljardenbedrijven, zo maakten vier Texanen met hun oliegeld de Amerikaanse politieke macht verhandelbaar.
Die olievermogens zijn een product van de Grote Depressie. In de jaren dertig, toen oliemajors krap bij kas zaten, stroomden duizenden zogenoemde wildcatters naar Texas om zelf lukraak te boren. Met hun branie en intuïtie voor oliebronnen – ze noemden zichzelf creekologists – waren ze de majors vaak genoeg te slim af om miljardenvermogens op te bouwen.

The Big Rich. Editorial Review from Publishers Weekly
Starred Review. Capitalism at its most colorful oozes across the pages of this engrossing study of independent oil men. Vanity Fair special correspondent Burrough (coauthor, Barbarians at the Gate) profiles the Big Four oil dynasties of H.L. Hunt, Roy Cullen, Clint Murchison and Sid Richardson, along with their cronies, rivals, families and, in Hunt's case, bigamous second and third families. The saga begins heroically in the early 20th-century oil boom, with wildcatters roaming the Texas countryside drilling one dry hole after another, scrounging money and fending off creditors until gushers of black gold redeem them. Their second acts as garish nouveaux riches with strident right-wing politics are entertaining, if less dramatic. Decline sets in as rising production costs and cheaper Middle Eastern oil erode profits, and a feckless, feuding second generation squanders family fortunes on debauchery and reckless investment—H.L.'s sons' efforts in 1970 to corner the silver market bankrupted them and almost took down Wall Street. This is a portrait of capitalism as white-knuckle risk taking, yielding fruitful discoveries for the fathers, but only sterile speculation for the sons—a story that resonates with today's economic upheaval. (Jan. 27)

Is the Almighty Dollar Doomed?

Is the Dollar Doomed?

(Permalink Time Magazine)
So it has been throughout the world, from North Korean souvenir shops to Ethiopian bazaars, for the past six decades. Government officials measure the health of national economies by how many dollars are stashed away in their central bank vaults. The international prices of everything from crude oil to cocoa beans are denominated in dollars. The dollar is a universal medium of exchange, because it is liquid, readily available and backed by the largest economy in the world. There has been little reason for global commerce to function any other way.

Arguments against the status quo have their merits. Over the past two years, global dependence on the dollar has been at the heart of the world's nastiest economic problems. Early in 2008, a weakening dollar was a factor in spiking prices of energy, commodities and food, which placed a disproportionate burden on the limited incomes of the poor. The dollar-dominated system has also allowed the U.S. to finance its budget and trade deficits at a low cost, which perpetuated the global imbalances that contributed to the current economic crisis. A system like the one proposed by Beijing, argues Deutsche Bank economist Jun Ma, would make it possible "for China and many other countries to avoid being victims of the systemic risks generated by domestic economic problems and policy mistakes in issuing countries of major reserve currencies."

Mortgage Fraud Epidemic: How the FBI Blew It and Why There's No 'Perp Walks'

Mortgage Fraud Epidemic: How the FBI Blew It and Why There's No 'Perp Walks'

The Society of Motor Manufacturers and Traders (SMMT) reports British car sales

The Society of Motor Manufacturers and Traders (SMMT) reports British car sales: March market disappoints – call for assistance grow

New car registrations fell 30.5% in March to 313,912 units

· Market in first three months of 2009 has fallen by over 200,000 units, or 29.7%

· Diesels and small cars see market share improve in March

· Recovery hopes pinned on Alistair Darling announcing market incentives in Budget

“March new car registrations are a barometer of confidence in the economy, from businesses and consumers alike. The fall in the market shows that government needs to do more to boost confidence,” said Paul Everitt, SMMT chief executive. “A scrappage scheme will provide the incentive needed and the evidence is clear that schemes already implemented across Europe do work to increase demand. The UK is the only major European market not to implement a scheme.”

Investing in Innovation in a Downturn

Investing in Innovation in a Downturn
4/5/2009

Many companies pull back on research and development in tough times. WSJ's Jennifer Merritt speaks with Martin S. Roth of the University of South Carolina about how this move could leave them to peril.

Video Link on MarketWatch

From Bubble to Depression?


From Bubble to Depression?
(Source Wall Sreet Journal)
Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which -- when first studied in the 1980s -- were considered so transparent that bubbles would not be observed.
We economists were wrong: Even when traders in an asset market know the value of the asset, bubbles form dependably. Bubbles can arise when some agents buy not on fundamental value, but on price trend or momentum. If momentum traders have more liquidity, they can sustain a bubble longer.
But what sparks bubbles? Why does one large asset bubble -- like our dot-com bubble -- do no damage to the financial system while another one leads to its collapse? Key characteristics of housing markets -- momentum trading, liquidity, price-tier movements, and high-margin purchases -- combine to provide a fairly complete, simple description of the housing bubble collapse, and how it engulfed the financial system and then the wider economy.
Read article and analysis...

http://online.wsj.com/article/SB123897612802791281.html

Sunday, April 5, 2009

$3.5 Trillion Spending Plan Paves Way for Obama Goals

Congress Approves Budget
$3.5 Trillion Spending Plan Paves Way for Obama Goals

By Lori Montgomery
Washington Post Staff Writer
Friday, April 3, 2009; Page A01

Congressional Democrats overwhelmingly embraced President Obama's ambitious and expensive agenda for the nation yesterday, endorsing a $3.5 trillion spending plan that sets the stage for the president to pursue his most far-reaching priorities.
Voting along party lines, the House and Senate approved budget blueprints that would trim Obama's spending proposals for the fiscal year that begins in October and curtail his plans to cut taxes. The blueprints, however, would permit work to begin on the central goals of Obama's presidency: an expansion of health-care coverage for the uninsured, more money for college loans and a cap-and-trade system to reduce gases that contribute to global warming. Read article...
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/02/AR2009040203473.html?wpisrc=newsletter

Saturday, April 4, 2009

Meredith Whitney Shuns Bank Stocks

Meredith Whitney Shuns Bank Stocks
Small, regional banks are in better shape, but don't buy the stocks

Link to video, http://video.forbes.com/fvn/ini/meredith-whitney-shuns-bank-stocks

When Home Prices Hit Bottom

When Home Prices Hit Bottom
by Amanda Gengler
Friday, April 3, 2009 provided by Fortune on CNNMoney.com

The end may be in sight -- and getting a better sense of when it's coming can help you make the smartest buying and selling decisions.

Call it the Great Housing Paralysis of 2009. If you're hoping to buy your first home or invest in a second one, you're probably sidelined, unsure when to jump in. If you want to sell, you're thinking it may be better to wait. And even if you don't plan to either buy or sell anytime soon, watching one of your biggest assets tank is about as much fun as being chased by hornets. When will the pain stop?
Nationwide, home prices will bottom out at the end of this year, according to the forecasters at Moody's Economy.com. Median prices will probably fall another 10% on top of the 27% they've plummeted since their 2006 peak. That prediction assumes that President Obama's various recovery efforts - including billions to slow foreclosures and goose bank lending, plus a tax credit to most 2009 buyers who haven't owned in the past three years - will have some effect. If they don't, says Economy.com's Mark Zandi, the bottom could come as late as 2011.
Read article...
http://finance.yahoo.com/real-estate/article/106862/When-Home-Prices-Hit-Bottom

The economic crisis touches Madrid as well


The economic crisis touches Madrid as well

RGE - Reflections on the latest dead cat bounce or bear market sucker's rally

RGE - Reflections on the latest dead cat bounce or bear market sucker's rally

(Source RGE Monitor, Nouriel Roubini)
It is déjà vu all over again. We have already seen this Groundhog Day movie at least six times over and over again in the last year or so: the market starts to rally – this time around about 8% in a week - and the chorus of optimists starts to say that this is the bottom of the economic and financial crisis and that we are at the beginning of a sustained stock market rally that signals the true end of this bear market.

Even before the latest bear market rally started last week I wrote the following on March 2nd:
Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.

Friday, April 3, 2009

Unemployment in U.S. Probably Climbed in March to 25-Year High

Unemployment in U.S. Probably Climbed in March to 25-Year High

April 3 (Bloomberg) -- The U.S. jobless rate rose in March to the highest level in 25 years and payrolls plunged, exposing the economy to the risk of renewed declines in spending that would scuttle a recovery, economists said before a report today.

Unemployment jumped to 8.5 percent from 8.1 percent in February, according to the median of 79 estimates in a Bloomberg News survey. The figures may also show employers cut 660,000 workers from staff, bringing total losses since the recession began to 5 million, the biggest slump in the postwar era.

Evaporating jobs and declining pay mean President Barack Obama’s pledge to create or save 3.5 million jobs through tax cuts and government spending may fall short of what’s needed to revive the world’s largest economy. Federal Reserve Chairman Ben S. Bernanke has conceded joblessness could top 10 percent under a worst-case scenario.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoxQ7YAvdMfU&refer=home

Wednesday, April 1, 2009

IMF, G-20 and the global crisis

World Faces Crisis Crossroads at G-20 Summit, Says IMF
http://www.imf.org/external/pubs/ft/survey/so/2009/POL032709A.htm

Leaders of the Group of Twenty (G-20) advanced and emerging market economies gathering at a summit in London next week face a crossroads in the global economic crisis, with the opportunity to spur a recovery next year if they take the right action, IMF Managing Director Dominique Strauss-Kahn said.
In a video conference with journalists based in London, Paris, and Washington, Strauss-Kahn outlined five key subjects on which the IMF wanted to see progress at the summit to combat the worst economic downturn in 60 years, in addition to considering how to improve regulation of the fractured global financial system.

• Cleanup of the financial sector. Strauss-Kahn said cleaning up the balance sheets of banks and getting the financial sector working again was critical to reviving world growth. “Countries can do it in different ways, but they have to do it and do it now.”

• Ensuring fiscal stimulus is available for next year. Strauss-Kahn said that governments around the world had done very well in announcing stimulus plans to counter the downturn and create jobs. But they now needed to ensure that efforts were sustained in 2010.

• Helping emerging markets hit by the crisis. Although the crisis did not start with emerging markets, the collapse of trade finance and the drying up of capital flows is hurting many emerging markets. The IMF needs enough resources to assist emerging markets, otherwise a collapse in emerging economies would have a devastating impact on developed economies, reinforcing the crisis.

• Aiding low-income countries. Some of the world’s poorest countries are being affected by the slowdown in world growth, with exports “falling off a cliff” and the prices of commodities and flows of aid falling. Strauss-Kahn said he wanted to ensure a doubling of IMF concessional lending to low-income countries to safeguard them during the crisis.

• Boosting IMF resources. The IMF hopes to at least double its lendable resources to more than $500 billion so that it is ready to help out and provide confidence that economies will have access to funds during the crisis. Japan has provided $100 billion in extra money and the European Union has committed EUR 75 billion.

Download PDF. IMF Note on Global Economic Policies and Prospects — Executive Summary
March 19, 2009. http://www.imf.org/external/np/g20/pdf/031909a.pdf
Global economic activity is falling—with advanced economies registering their sharpest declines in the post-war era—notwithstanding forceful policy efforts.
According to the latest IMF forecast, global activity is expected to decline by around ½ to 1 percent in 2009 on an annual average basis, before recovering gradually in the course of 2010.
Turning around global growth will depend critically on more concerted policy actions to stabilize financial conditions as well as sustained strong policy support to bolster demand.

Roubini getting more positive about the market

Roubini getting more positive about the market

(This is not an April Fools' Day joke)