Free Internet Press Newsletter - Tuesday July 15 2008 - (813)

Tuesday July 15 2008 edition
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Banking Stocks Take Worse Loses In Decades 2008-07-15 04:00:12 Banking stocks suffered some of their worst losses in a generation yesterday as investors' confidence in the U.S. financial system continued to erode despite the dramatic initiative by the federal government Sunday evening to bolster mortgage giants Fannie Mae and Freddie Mac. Some banks have become increasingly vulnerable because of the risky approach they have used to raise money after traditional sources of finance on the credit markets evaporated last summer, according to banking executives and regulators. Outside branches of California-based IndyMac Bancorp, people lined up as early as 4 a.m. Monday to withdraw money after the bank shuttered its doors last week, becoming the third-largest bank in U.S. history to fail. Federal regulators said Monday that IndyMac's predicament was not widespread and that most banks remained financially stable. The concerted effort to calm the public came as shares of Washington Mutual, the country's largest savings and loan, tumbled 35 percent, its biggest decline ever. Trading in National City, a large, Ohio-based bank, was briefly suspended during a panicked sell-off, its shares sinking to a 24-year low even as it issued an urgent statement that it was experiencing no unusual activity by depositors or creditors. Read The Full Story Poll: Americans Split On Iraq Withdrawal Timelines 2008-07-14 20:17:11 A new Washington Post-ABC News poll finds the country split down the middle between those backing Sen. Barack Obama's 16-month timeline for withdrawal from Iraq and those agreeing with Sen. John McCain's position that events, not timetables, should dictate when troops are withdrawn. Obama, the presumptive Democratic presidential nominee, will deliver what his campaign is billing as a "major address" on Iraq Tuesday in Washington, D.C., part of an effort to convince voters that he can serve effectively as commander in chief. The public is also evenly divided on that question, with 48 percent saying he would be an effective leader of the military and 48 percent saying he would not. On Iraq policy generally, Americans continue to side with Obama and McCain in roughly equal numbers, with 47 percent of those polled saying they trust McCain more to handle the war, and 45 percent having more faith in Obama. The poll results suggest that months of Democratic attacks on McCain's Iraq position have not dented voters' basic trust in his ability to lead the country's armed forces: Seventy-two percent said McCain would make a good commander-in-chief. "The most important number by Election Day is whether a majority of the electorate has achieved a comfort level with Obama as commander-in-chief," said Geoff Garin, a Democratic pollster who was a strategist for Sen. Hillary Rodham Clinton's campaign, and sees Obama's 48 percent as strong starting position. "I think this is the one dimension on which he will be tested and where Republican will try hard to raise big doubts about Obama." The polling data underscore why the war over the war is being fought so fiercely by the two campaigns. Ahead of tomorrow's speech and a planned trip to Iraq, Obama penned an opinion piece in Monday's New York Times, saying the call last week by Iraqi Prime Minister Nouri al-Maliki for a timetable for the withdrawal of U.S. forces was an opportunity the United States must embrace. Read The Full Story Pledges To Support Fannie Mae, Freddie Mac Fail To Impede Growing Alarm On Wall Street 2008-07-14 20:16:41 Buyers showed no hesitation in bidding on Freddie Mac's $3 billion debt sale on Monday, just hours after the U.S. government pledged support for the nation's top mortgage finance agencies, but the steps failed to stem growing alarm on Wall Street. Global stock markets had rallied after the Treasury Department and Federal Reserve stepped in on Sunday with offers of richer credit lines, equity purchases and direct access to central bank coffers should Freddie and its sister agency Fannie Mae run into deeper financial trouble. However, stocks quickly shed initial gains as investors feared the steps will do little stem the losses spreading through the financial sector in the wake of a deflating housing market and stalling economy. Friday's failure of mortgage lender IndyMac Bancorp Inc, the third-largest bank collapse in U.S. history, was a pointed and painful reminder of the financial strains. Shares of a host of banks, including National City and Washington Mutual,  fell sharply. "This incident (with Fannie and Freddie) is not the last one," billionaire investor George Soros told Reuters in a telephone interview, adding that the year-long global market turmoil represented "the most serious financial crisis of our lifetime." Read The Full Story 86 Accused Of Plotting Secular Coup In Turkey 2008-07-14 20:15:47 Prosecutors on Monday charged 86 nationalists, including former army officers and a best-selling writer, of plotting to overthrow Turkey's Islamic-oriented government, escalating a power struggle between the ruling party's supporters and secular forces. Aykut Cengiz Engin, the chief prosecutor in Istanbul, said the suspects were charged either with forming or belonging to a terrorist organization, or of provoking an armed uprising with the aim of bringing down Prime Minister Recep Tayyip Erdogan's government. The suspects are believed to be part of a nationalist network called Ergenekon, which takes its name from a legendary valley in Central Asia believed to be the ancestral homeland of Turks. The opposition says the case smacks of a political revenge against secularist groups - including the military - at a time when the country's top court is deliberating whether to disband the ruling party for alleged anti-secular activity. Erdogan's supporters on the other hand, say the lawsuit will help strengthen democracy in a country that has experienced several military interventions in the past half century. The military staged three coups since the 1960s and in 1997 pressured an Islamic party out of power. Read The Full Story Bush Lifts Presidential Ban On Offshore Drilling 2008-07-14 18:59:53 President Bush Monday lifted a long-standing presidential ban on new oil and gas drilling off the nation's coastlines and urged Congress to remove its own restrictions on offshore energy exploration, stoking the battle over how Washington should respond to high gasoline prices. Yet the wall of opposition on Capitol Hill to relaxing the drilling ban, though softening, appeared to be holding. A congressional moratorium remains in place, but expires Oct. 1 unless Congress acts. Lawmakers are growing increasingly nervous in the election year about high gasoline prices, and polls show increasing support for expanded domestic energy production. Sen. John McCain of Arizona, the Republican presidential candidate, recently changed his position on the offshore drilling ban, coming out in favor of letting states decide whether to allow energy exploration off their coasts. In his announcement at the White House, Bush shifted pressure on the issue directly onto Congress. Read The Full Story Lack Of Bank Note Paper Threatens Zimbabwe Economy 2008-07-14 18:59:22 It has come to this: Zimbabwe is about to run out of the paper to print money on. Fidelity Printers & Refiners, the state-owned company that tirelessly churns out bank notes for the Robert Mugabe regime, was thrown into a crisis early this month after a German company stopped supplying bank note paper because of concerns over Zimbabwe's recent violent presidential election, widely seen as fraudulent by international observers. The printing operation drastically slowed. Two-thirds of the 1,000-strong workforce was ordered to go on leave, and two of the three money-printing shifts were canceled. The result on the streets was an immediate cash crunch. "If you think this currency shortage is bad, wait two weeks. By then it will be a disaster," said a senior Fidelity staffer, who spoke to the Los Angeles Times on condition of anonymity because he would face dismissal and possible violence for talking to a Western journalist. The paper will run out in two weeks, he said. Fidelity Printers is Mugabe's lifeline. It prints the money to pay the police, soldiers and intelligence organs that keep the regime in power. Lately, the money has been used to set up a network of command bases around the country staffed by liberation war veterans and youth militias, hired muscle to terrify the population into voting for Mugabe in the June 27 presidential runoff election. Read The Full Story Analysts Say More U.S. Banks Will Fail 2008-07-14 02:53:59 As home prices continue to decline and loan defaults mount, federal regulators are bracing for dozens of American banks to fail over the next year. After a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next? The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion. The troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, say analysts. Other lenders are likely to shut branches or seek mergers. “Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard X. Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?” Read The Full Story InBev Reportedly Buys Anheuser-Busch For $52 Billion 2008-07-14 02:53:16 Anheuser-Busch agreed to be acquired by Belgian brewer InBev for about $52 billion in a deal that would shift ownership of the nation's largest brewer overseas, The Wall Street Journal reported Sunday. The deal, which is subject to shareholders' and regulators' approval, would create the world's largest brewer and create the fourth-largest consumer product company worldwide. The newspaper cited anonymous sources who said Anheuser-Busch-InBev would be the new company's name and Anheuser would have two seats on the board. Anheuser-Busch Cos. Inc. did not return messages seeking comment Sunday evening. The newspaper said the deal was for $70 a share, a $5 increase over the offer Anheuser-Busch rejected in June. InBev, the maker of Stella Artois and Becks, is the world's second-largest beer-maker behind SABMiller. Anheuser-Busch is by far the largest brewer in the U.S. with more than 48 percent of the market share. Read The Full Story Who Killed Chandra Levy? A Host Of Questions For Congressman, Aide 2008-07-14 02:52:40 Chandra Levy came to Washington, D.C., in the fall of 2000, a fresh-faced intern awestruck by her surroundings. She was one of many ambitious young people who arrive in the nation's capital excited by their proximity to power. Chandra's ticket to Washington was an internship for the Federal Bureau of Prisons during her final semester of graduate school. She was a smart California girl, fit and petite at 108 pounds, who liked to work out at the gym. At 23, she exuded a blend of innocence and sensuality, but she was not a party girl. At heart, Chandra was a bit of a nerd. In high school, she liked to wear her Modesto police explorer uniform as she strode down the hallways, ignoring the ridicule from the cool kids. She was fiercely independent, stubborn to a fault. She was free-spirited but could be cautious. Once, when her family went camping in Yosemite National Park, Chandra slept in the car, fearing a bear attack. Chandra, whose name meant "moon" in Sanskrit, was raised in a spacious ranch home with horses out back in the almond groves of small-town Modesto, a 90-minute drive east from San Francisco. Its motto: "Water, Wealth, Contentment, Health." Chandra had big-city dreams of leaving the flat, dusty town in the middle of nowhere and seeing the world as an FBI agent. She was driven. She had liked older men as far back as high school, when she swooned for everything Harrison Ford. She dated a police officer in Modesto. Read The Full Story	Scramble Led To Bush Rescue Plan On Mortgages 2008-07-15 03:58:23 The Bush administration hastily arranged the dramatic Sunday evening rescue of Fannie Mae and Freddie Mac after Wall Street executives and foreign central bankers told Washington that any further erosion of confidence could have a cascading effect around the world, officials said on Monday. Treasury Secretary Henry M. Paulson, Jr., and other top officials were warned, after Fannie and Freddie lost nearly half their stock market value on Friday morning, that any more turmoil threatened to reduce the value of trillions of dollars of the companies’ debt and other obligations, which are held by thousands of domestic and foreign banks, pension funds, mutual funds and other investors, said government officials. The warnings of a potential systemic failure led to the resulting rescue package, and one of the most striking - though unspoken - regulatory shifts in modern times. For decades, Treasury secretaries and Federal Reserve chairmen have insisted that the government did not stand behind the debt of Fannie and Freddie, but the safety net Paulson announced on Sunday sends the opposite message: that the government is determined not to let either one fail. For the second time in four months, the housing crisis prompted the government to scramble over a weekend to rescue a major financial institution. While the danger of a systemic failure arising from Fannie and Freddie’s market problems was not as immediate as in March when Bear Stearns stumbled, the stakes were exponentially bigger. Fannie and Freddie have combined debts of $1.5 trillion. They own or guarantee $5 trillion in mortgages. They have contracts with other institutions worth $2 trillion more to hedge the risks behind those mortgages. Read The Full Story Stocks Tumble As Wall Street Worries Spread To Banking Sector 2008-07-14 20:16:59 Government efforts to support mortgage giants Fannie Mae and Freddie Mac drew a restrained response from investors Monday, with the stock prices of the two companies rising only modestly after last week's steep collapse but, by midday,  investors turned to a new target of the credit crisis: banks. Shares of several banks tumbled, and trading at one - National City Corp. - was temporarily halted as the company quickly issued a statement to address "market rumors," saying that it had not experienced any "unusual depositor or creditor activity." Shares of National City dropped more than 30 percent over the lunch hour on the New York Stock Exchange but regained some value after trading resumed. The stock closed down nearly 15 percent. As the credit crisis continues to spread, investors are losing confidence in segments of the banking industry, including some smaller banks that overextended themselves into commercial loans. Some large banks also continued to feel the brunt of Wall Street's unease. Shares of Washington Mutual Inc., the biggest U.S. savings and loan, fell nearly 35 percent to $3.23. The company released a statement this afternoon meant to reassure investors about the company's financial position, saying it recently raised $7.2 billion in capital and it "has current excess liquidity of more than $40 billion" and $150 billion in retail deposits. Shares of Sovereign Bankcorp, M&T Bank and, Zions Bancorporation also declined today. On Friday, the Federal Deposit Insurance Corp. took over IndyMac Bancorp Inc. after customers withdrew $1.3 million over 11 business days. The takeover is estimated to cost between $4 billion and $8 billion. Read The Full Story G.M. Plans More Changes, More Cuts 2008-07-14 20:16:15 General Motors is expected on Tuesday to reveal a “wide-ranging” plan to address its deteriorating sales and liquidity by cutting more jobs and taking other steps aimed at reviving its turnaround effort. G.M. said late Monday that its chief executive, Rick Wagoner, would address employees in the morning before appearing at a news conference along with other executives. The latest move comes six weeks after another major restructuring announcement and amid considerable speculation that G.M. could be headed toward a bankruptcy filing. A G.M. spokesman, Dan Flores, said Wagoner would announce a “variety of actions the company is taking to align the business with current market conditions.” He declined to provide details. However, Flores denied that G.M. is nearing insolvency. “Bankruptcy protection is not an option that G.M. is considering,” he said. The job cuts are expected to include both hourly and salaried positions. At G.M.’s annual stockholders meeting last month in Delaware, Wagoner announced plans to close four plants in North America that build slow-selling trucks, but salaried workers were for the most part unaffected. Read The Full Story Nervous Depositors Line Up Outside IndyMac 2008-07-14 19:00:03 Nervous customers of IndyMac Bank Monday lined up at branches in Pasadena and elsewhere, anxious to withdraw their money from the failed institution that was seized by federal regulators late last week. With some arriving as early as 4 a.m., fueled by coffee and packing lawn chairs and stools in anticipation of a lengthy stay, depositors waited for the bank to reopen at 9 a.m. It has been closed since Friday. "I called in sick," said Margie Harbottle, 62, a vocational counselor from Pasadena who arrived around 8:30 a.m. "This is going to take a couple hours. I just hope it doesn't get too hot." Although Harbottle said she "thought it was stupid to do a run on the bank," she said she wanted to take her money and put it somewhere where it would be safe and earn interest. "Even if it's only 3%," she said. "Three percent is better than zero" Read The Full Story Sudan's President Charged With Genocide In Darfur 2008-07-14 18:59:35 The chief prosecutor of the International Criminal Court filed charges Monday against Sudan's president for genocide and crimes against humanity, igniting a debate over whether the move would help end the violence in the country's Darfur region or cause the prospects for peace to collapse. The prosecutor, Luis Moreno-Ocampo, submitted evidence intended to show that Sudanese President Omar Hassan Ahmad Bashir intentionally tried to wipe out three tribes in Sudan's western region based on their ethnicity. Members of the Fur, Masalit and Zaghawa groups rebelled against the government in 2003. When Bashir's army failed to defeat the armed movements, he went after the people, Moreno-Ocampo told the judges. Bashir's "motives were largely political. His alibi was a counterinsurgency. His intent was genocide," the prosecutor said. As the head of the state, the army and the ruling party, Bashir holds ultimate responsibility for the systematic attacks against civilians and methodical rape of women, Moreno-Ocampo argued. While he does not have a smoking gun, such as a master plan authored by Bashir, Moreno-Ocampo portrayed his evidence from victims' testimonies, government documents and other sources as pieces of a puzzle that combine to form a disturbing picture. "He used the whole state apparatus, he used the army, he enrolled the militia janjaweed. They all report to him, they all obey him. His control is absolute," said Moreno-Ocampo. The janjaweed are militias loyal to the government that have been accused of widespread violence against citizens in Darfur. Read The Full Story Cuba Revives Its Private Farms 2008-07-14 18:59:00 Speckled chickens in Geraldo Pinera's garden will be on his family's dinner table soon, stewed with herbs and tomatoes and garnished with creamy slices of the avocados now ripening on a pair of spindly trees. Pinera, a member of a 25-family farming cooperative in this village outside Havana, tends a private half-acre plot tucked between the state-owned mango orchards where he works a day job. He raises guava, passion fruit, sweet potatoes and poultry to augment a $20 monthly income and the government ration of starches. Like other Cuban families, the Pineras are eating more fruits and vegetables as a result of a national campaign to boost food output and curb costly imports. Their efforts represent a small but significant step toward the government's ultimate goal to vastly reduce its dependence on more efficient foreign producers, especially for favorite foods such as rice, meat and dairy. President Raul Castro spurred the planting of idle lands around cities with a series of reforms in recent months aimed at improving self-sufficiency. The moves included making land available free to those willing to till it and easing a strangling national bureaucracy that once controlled a farmer's every step, from seed procurement to sales price. Castro has unleashed an ambitious effort to lift output of high-ticket items, raising prices paid to meat and milk producers and freeing growers from obligations to sell their food to the state. He has made seeds, tools and fertilizers available through a new network of country stores and challenged a population that is 80% urban to grow what it eats. Read The Full Story U.S. Unveils Plan To Aid Fannie Mae, Freddie Mac 2008-07-14 02:53:44 The federal government unveiled a broad program yesterday evening to bolster troubled mortgage giants Fannie Mae and Freddie Mac,extending unprecedented support to the companies and proposing new authority to lend them money and even buy their stock. Scrambling to announce the initiative before the trading week began, federal officials said they would allow the firms for the first time to borrow money from the Federal Reserve. Officials are also seeking permission from Congress to temporarily increase the amount the companies can borrow from the Treasury and enable the government to invest directly in the firms if conditions worsen. The two firms, which dominate the market for U.S. mortgages, have been reeling amid investor concern that the companies might not have enough capital to handle their losses due to the rising number of bad home loans. Both firms' stocks plummeted by almost half last week. Treasury officials said last night that they were confident Congress will be able to pass the new laws they seek by the end of the week as part of a broad housing bill under consideration on Capitol Hill. The Federal Reserve announced that it would allow Fannie Mae and Freddie Mac to borrow money on an emergency basis. The firms, should they experience a cash crunch, will be able to exchange certain assets for cash at the Fed's discount window, a privilege long enjoyed by commercial banks and extended in March to struggling investment banks. Read The Full Story 9 Americans Die In Afghanistan Attack 2008-07-14 02:53:00 Taliban insurgents carried out a bold assault on a remote base near the border with Pakistan on Sunday, NATO  reported, and a senior American military official said nine American soldiers were killed. The attack, the worst against Americans in Afghanistan in three years, illustrated the growing threat of Taliban militants and their associates, who in recent months have made Afghanistan a far deadlier war zone for American-led forces than Iraq. The assault on the American base in Kunar Province was one of the fiercest by insurgents since the American-led invasion of Afghanistan routed the Taliban and al-Qaeda militants in late 2001. The militants have since regained strength in the tribal areas of Pakistan, which they have often used as a base for raids into Afghanistan, an increasingly sore point for the American and Afghan governments. The new American commander of NATO forces in Afghanistan emphasized that issue on Sunday in an interview that took place before details of the Kunar attack were disclosed, asserting that the militants were not only entering Afghan territory but also firing at targets from the Pakistan side. Read The Full Story
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