Free Internet Press Newsletter - Friday October 17 2008 - (813)

Friday October 17 2008 edition
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Stocks Stage Late Trading Rally 2008-10-16 20:54:40 Stocks staged a late-day rally Thursday and ended a volatile day of trading in positive territory despite lingering recession concerns. The Dow Jones industrial average was down as much as 376 points at one point, but closed up 4.7 percent, or 401 points, at 8,979. The Standard & Poor's 500-stock index gained 4.3 percent, or 39 points, to end the day at 946. The tech-heavy Nasdaq rose 5.5 percent, or 89 points, to 1,718. It was helped by a 10.5 percent surge in Yahoo's share price. The Internet firm received a boost from reports that Microsoft's chief executive, Steve Ballmer, said a deal between the companies might still make economic sense. Yahoo rejected a previous offer from Microsoft, which closed up 6.8 percent. Both firms were among the most actively traded companies in the Nasdaq Thursday. There is a battle between investors who are confident stocks have reached their bottom and others who see more downside to come amid gloomy economic data and corporate earnings. "This is a sucker's rally," said Joseph Brusuelas, chief U.S. economist at California-based Merk Investments. "There's a very difficult period ahead." Read The Full Story German Industry Wants A Bailout, Too 2008-10-16 20:54:17 With the real economy beginning to show signs of strain, industrial leaders in Germany say Berlin should do what it can to limit the pain. Global markets on Thursday continued their freefall. If the world's stock markets were human, they would all be diagnosed with bipolar disorder and immediately put on a strict regimen of anti-psychotics. All major indexes across the globe fell off a cliff last week, only to recover rapidly on news of bank bailout plans in Europe designed to jump start the financial markets. On Tuesday and Wednesday of this week, the markets plunged once again. Now, many are calling for further treatment. This time though, the remedy should not be on multi-billion euro bank bailouts, rather it is the real economy that needs a panacea. Jurgen Thumann, president of the Federation of German Industries (BDI), said on Thursday that the German government needs to take action to lessen the real economic effects of the financial crisis as much as possible. "Under no circumstances should the government reduce its level of investing," he told the Berlin daily Tagesspiegel. "Rather, investments should be sped up and increased. Infrastructure should be upgraded in partnership with private companies." Read The Full Story Hank Paulson And His Wall Street Cronies Move To Plan B 2008-10-16 20:53:43 How do you stop a ship from sinking, and simultaneously rebuild it to prevent its future destruction? That was the question in the minds of the world's central bankers as they sat down over the weekend to figure out how to right the global financial Titanic. European leaders came up with a plan to inject "unlimited short-term funds" into the system in addition to $2.3 trillion of guarantees and various emergency measures (pledged by Germany, Britain, France, The Netherlands, Spain, Portugal and Austria). This could be like dumping money into a black hole, since most of these funds will be given in the form of loans, which means banks must come up with adequate collateral to back them, which is in short supply these days. But it's more decisive than anything the Treasury or Federal Reserve has done so far. Indeed, the coordinated efforts of the European central banks have had a more positive initial impact on the markets than the bipartisan passage of Treasury Secretary Henry Paulson's $700 billion rescue fund did. That announcement preceded an eight-day market selloff and the global freezing of credit. This one sent the Dow zooming up 11.1 percent, its biggest percentage gain since 1933. But the week is young. Meanwhile, the question addressed by Paulson Monday is what to do with that $700 billion? To answer this, he sat down with his friends, the leaders of the largest financial institutions in America that got us into this mess. Namely, Ken Lewis, CEO of Bank of America; Jamie Dimon, CEO of J.P. Morgan Chase; Lloyd Blankfein, Paulson's successor at Goldman Sachs; John Mack, CEO of Morgan Stanley; and Vikram Pandit, CEO of Citigroup. Read The Full Story Orhan Pamuk: 'I'm For Europe, Democracy And Freedom Of Opinion' 2008-10-16 20:53:07 Intellpuke: The following interview with Turkish novelist and Nobel laureate Orhan Pamuk was conducted by Spiegel magazine and appeared on its website edition for Thursday, October 16, 2008. The interview follows: Turkish novelist and Noble laureate Orhan Pamuk speaks with Spiegel about his new novel, "The Museum of Innocence", memory, Turkey's longing to be part of Europe and the price he pays for championing Europe and democracy in his country. SPIEGEL: Mr. Pamuk, in your most recent work, you describe the joys and sorrows of the son of a businessman in the 1970s. While describing the love that your protagonist, Kemal, has for a young relative, you are also drawing a critical portrait of Turkey. With more than 500 pages, "The Museum of Innocence" is by far your largest work. Do you also consider it your most important work, your magnum opus? Orhan Pamuk: My ex-wife, with whom I'm very friendly, had also read the book. She made a comment I agree with. She said: "Oh, you wrote everything you knew about." She's right. SPIEGEL: You describe the milieu in which you grew up, the upper class of Istanbul. Pamuk: The book covers 50 years of a portrait of the upper classes. There are also the lower classes, but it is prominently a portrait of Turkey's ruling bourgeoisie. There is a sort of broken, hesitating, strange bourgeoisie in Turkey - half suppressed, half victim, half aggressively arrogant. It's a very little group of people; it's their portrait. Through them, I had a glimpse of the spirit of the nation, so to speak, of the big cultural problems of Turkey. SPIEGEL: Is the character of the protagonist, Kemal, based on you? Pamuk: If you're a leftist or a politically motivated guy, you just want to forget that you had this kind of life. Well, I'm a novelist, so why shouldn't I? I wrote about it and enjoyed the glitzy details. What Kemal and his friends experience was my life, too - and my family's, and especially my father's. Then, there is also a new generation of my character Kemal's friends. Some of them are based on my bourgeois friends at Robert College in Istanbul. They have their father's cars and go to strange places and night clubs. Read The Full Story Sen. Ted Stevens Testifies At His Corruption Trial 2008-10-16 20:52:20 U.S. Sen. Ted Stevens, R-Alaska, taking the stand in his own defense, denied this afternoon that he lied on financial disclosure forms to hide receipt of gifts and extensive home renovations financed by a powerful business executive. The powerful Republican's testimony capped a dramatic day in his corruption trial during which his wife, Catherine, also testified on Stevens' behalf. Within moments of the senator taking the witness stand, his lawyer got right to the point: "Senator, when you signed those financial disclosure forms, did you believe them to be accurate and truthful?" asked Brendan Sullivan. "Yes, sir," said Stevens. "Did you intentionally file false financial disclosure forms?" Read The Full Story Britain Pledges 80 Percent Emissions Cut By Mid-Century 2008-10-16 20:51:21 Britain became the first country in the world to make a legally-binding commitment to cut its greenhouse gas emissions by 80% by the middle of the century, in a dramatic effort to counter global warming. The pledge came as the European Union reaffirmed its target of slashing carbon dioxide emissions by 20% by 2020, despite complaints from Italy and Poland that the tough standards will be unaffordable during the current economic downturn. New Energy and Climate Change Secretary Ed Miliband told Parliament members an amendment to the Government's Climate Change Bill will increase the U.K.'s target for emissions cuts in all greenhouse gases by 2050 from 60% to 80%, compared to 1990 levels. "In tough economic times, some people ask whether we should retreat from our climate change objectives," he said. "In our view it would be quite wrong to row back and those who say we should, misunderstand the relationship between the economic and environmental tasks we face." Read The Full Story Global Markets Sink As Worries Over Economy Spread 2008-10-16 15:34:51 Fears of recession are trumping fears of inflation. A crucial barometer of inflation came in flat last month, temporarily halting Wall Street's slide. But stocks seesawed in a wide range Thursday. The Dow Jones industrials, down 380 at one point, later rose more than 100; the major indexes were also seeing wide swings. Stock prices fell globally, credit markets remained tight and oil prices declined to a 14-month low. After more than a month of unprecedented government intervention, it's unclear what policymakers can do next to calm markets. Treasury Secretary Henry Paulson said Thursday that he's not proud of the mistakes leading up to the crisis, but insisted the administration is pursuing the right course to end it. Federal Reserve Chairman Ben Bernanke has left the door open for another rate cut, saying Wednesday that inflation pressures are moderating, but the Fed's emergency half point cut on Oct. 8, which brought its target short-term rates to 1.5 percent, did little to affect the actual rates banks charge borrowers and each other, which remain dramatically higher. Read The Full Story Switzerland Sets $60 Billion Bailout For UBS 2008-10-16 15:34:29 Switzerland, a banking redoubt considered until recently to be literally and figuratively above the global financial tumult, succumbed Thursday and announced a bailout plan for its biggest bank, UBS. Hit harder than any other European financial institution by losses stemming from bad investments in subprime American mortgage debt, UBS will receive a lifeline worth as much as $60 billion from the Swiss National Bank. The country’s other banking powerhouse, Credit Suisse, announced that it would raise $8.75 billion in fresh capital from private backers, including the Qatar Investment Authority, after turning down the offer of direct government help. Jean-Pierre Roth, president of the Swiss National Bank, said: “This operation is highly unusual, both with regard to its scope and the reasons for it. In carrying it out, we are making a contribution to an essential element of the Swiss financial system at a time when financial markets have been in turmoil for some months now.” Read The Full Story Citigroup Reports $2.8 Billion Loss On Write-Downs 2008-10-16 15:34:05 Citigroup reported a $2.8 billion loss in the third quarter, the fourth consecutive period that the global banking giant has been swamped by write-downs on investments and steeper losses on consumer loans. The bank took more than $13.2 billion in charges in the third quarter, bringing the total amount of write-offs and credit losses since the credit crisis began last year to more than $64 billion. As more signs of a global slowdown surface, the bank continues to come under pressure. Although the write-downs in its investment bank declined for the third quarter, losses in Citigroup’s global consumer businesses rose sharply. Credit costs increased 84 percent, to $9.1 billion, driven by charge-offs and reserve increases in the bank’s credit card, consumer finance and banking operations. Every major region of the world where Citigroup operates, with the exception of the one anchored by the Middle East, reported a decline in revenue. Read The Full Story Weakening Hurricane Omar Veers Toward Atlantic 2008-10-16 15:33:27 He came, he saw, he fizzled? Hurricane Omar, a powerful storm capable of inflicting yet more damage near the tail-end of a hurricane season that has already produced sweeping devastation, sliced through the southern Caribbean on Thursday, stirring up panic and widespread hurricane warnings. But instead of heading northwest on a course toward the Gulf of Mexico - a region still reeling from the impact of two previous hurricanes - Omar appeared to weaken as it veered off on a less perilous path into the vastness of the Atlantic Ocean, said  the National Hurricane Center. As of noon Eastern time on Thursday, the storm was deteriorating rapidly, having already been downgraded from category 3 (with sustained winds of up to 125 miles an hour) to category 1 (up to 85 miles an hour) in the span of just a few hours. It was about 180 miles northeast of the Leeward Islands at midday and was expected to weaken even further as it spins east. Read The Full Story Home Prices Likely To Continue Falling Through Late 2009 2008-10-16 03:54:54 The American housing market, where the global economic crisis began, is far from hitting bottom. Home prices across much of the country are likely to fall through late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession. In hard-hit areas like California, Florida and Arizona, the grim calculus is the same: More and more homes are going up for sale, but fewer and fewer people are willing or able to buy them. Adding to the worries nationwide are rising unemployment, falling wages and escalating mortgage rates - all of which will reduce the already diminished pool of would-be buyers. “The No. 1 thing that drives housing values is incomes,” said Todd Sinai, an associate professor of real estate at the Wharton School at the University of Pennsylvania. “When incomes fall, demand for housing falls.” Despite the government’s move to bolster the banking industry, home loan rates rose again on Tuesday, reflecting concern that the Treasury will borrow heavily to finance the rescue. Read The Full Story Switzerland Pumps Billions Into Banks Rescue Plan 2008-10-16 03:54:14 The Swiss government says it will help banking giant UBS raise billions of dollars in new capital. The government says the measure is part of a wider package to support the country's banking system. It includes lending UBS up to 54 billion Swiss francs (US$47.23 billion) so that it can part with bad securities. UBS has suffered losses and writedowns totaling about 45 billion francs (US$40 billion) over the past year. Read The Full Story	Ohio Appeals Voter Data Ruling 2008-10-16 20:54:29 As many as 200,000 votes in the pivotal state of Ohio could be at stake in a legal battle between Republicans and Secretary of State Jennifer Brunner, and Ohio officials have appealed to the Supreme Court to block efforts to turn aside a lower court order to alter procedures to check new voter registrations. The battleground state already has become the setting for a series of lawsuits over voter eligibility. About 660,000 new voters have registered since January with an edge to Democrats. Ohio's attorney general filed an emergency appeal to the U.S. Supreme Court late Wednesday night on behalf of Brunner, a Democrat. It contends that upholding a Tuesday decision by the U.S. Court of Appeals for the 6th Circuit would create havoc on Election Day and cause many voters to cast "provisional" ballots that may or may not ultimately be tallied depending on judgments by local elections boards. Brunner's request asks the Supreme Court to put a hold on a federal judge's order to take steps making it easier for counties to verify a voter's registration information when it does not match other records. The Ohio officials argued in their appeal that current efforts to validate registrations are sufficient and that a change in procedures now would create problems. Read The Full Story West's Financial Disease Strikes Globe 2008-10-16 20:53:56 The western financial crisis is turning global as capital-flows throughout the developing world have been transformed by the credit crunch into destructive riptides for scores of economies. Many boom nations of eastern Europe, Asia and Latin America are among those abruptly stalling, leaving governments wrong-footed by an investment exodus. Economists have been drawing up a critical list of vulnerable countries - identifying those struggling with giant current account deficits, under capitalized banks, overheated stock markets and exposures to short-term overseas borrowing. "The three Baltic states along with Ukraine, Kazakhstan, Bulgaria and Romania - and of course Iceland - are at the top of the list," said Nick Chamie, of RBC Capital Markets. He singled out Hungary, Romania, Latvia, Lithuania and Estonia as least able to mimic the recent western bank bail-outs that have helped more mature economies reduce some of the most damaging effects of the crunch. Officials from the International Monetary Fund (IMF) rushed to Kiev earlier this week. A succession of Ukrainian governments have failed to tame a foreign credit-fueled consumer boom and soaring inflation. An emergency IMF loan of up to $14 billion (£8.1 billion) is being lined up as the local currency, the hryvnia, plummets. Read The Full Story As Banks Are Rescued, Will The World's Hungry Be Overlooked? 2008-10-16 20:53:27 A dramatic increase in food prices over the last years has pushed nearly a billion people to the brink of starvation. The international aid organization Oxfam warns in a new report that the global financial crisis could exacerbate the situation. As markets plunge around the world and rich countries become increasingly preoccupied with the global financial crisis, 923 million around the world are going hungry waiting for their own multibillion dollar rescue plan. According to a new study released on Thursday by the international aid organization Oxfam, the world hunger crisis threatens to slip entirely under the radar as developed countries grow more and more obsessed with the turmoil in financial markets. "At the same time when billions of dollars are being allocated to address the financial crisis, it seems as if the world hunger crisis has been totally forgotten," said Marita Wiggerthale, an expert with Oxfam Germany told Spiegel Online. Last May, the prospects for fighting world hunger looked much brighter. At a conference held in Rome, industrialized nations pledged $12.3 billion to help combat the problem. So far, though, only $1 billion has been paid out. To put these figures in perspective, German Chancellor Angela Merkel that would commit up to €500 billion ($669 billion) to help bailout German banks and financial institutions. A stark increase in food prices over the last year is putting an ever larger portion of the globe at risk for starvation. Over the last 14 months, for example, the price of rice has gone up 66 percent in Bangladesh while the price of wheat has doubled in Senegal and quadrupled in Somalia. Read The Full Story Lobbyist Speaks Out, Denies Affair With McCain 2008-10-16 20:52:32 A female telecommunications lobbyist who became part of an explosive story early this year about John McCain has broken months of silence to deny the main subtext of the account - that she was suspected of being romantically involved with the Republican presidential candidate. "I did not have a sexual relationship with Senator McCain," Vicky Iseman told the National Journal magazine. Iseman was the subject of an article by the New York Times in February that said in 1999 McCain aides worried that the Arizona senator and the lobbyist may be having an affair. The newspaper did not publish any evidence of such a relationship. The story alleged that McCain wrote letters and pushed legislation involving television station ownership that would have benefited Iseman's clients. Iseman, 41, defended herself in what National Journal described as a series of interviews and e-mail exchanges. Read The Full Story Searching For An Antidote To Ahmadinejad 2008-10-16 20:51:49 In Tehran, reformers and conservatives are preparing to fight for the Iranian presidency in 2009. The opposition is pinning its hopes, once again, on former president Mohammad Khatami. But will he run? The group consists of 120 men, from students to old men, all of them dressed in their best jackets, shirts and trousers. Without much in the way of provisions, but filled with courage, they board rickety long-distance buses in Semirom, a town in far western Iran, or squeezed into private cars. The nighttime journey takes eight hours, with only one stop for morning prayers, somewhere along the road between Isfahan and Tehran. The destination of this caravan from rural Iran is a house at Yassir Street No. 4, in the far northern section of the Iranian capital, where a single square meter of construction land costs more than most Iranians earn in a year. The house, an old villa hidden by high walls, is the home of a man who, according to the teacher Amir Hossein Rashidi, is "the only one who can still save us." He is Mohammad Khatami, 65, a man celebrated as a reformer, and a former president of the Islamic Republic. The black iron gate opens quickly, and Rashidi and his cohorts are led past an empty swimming pool with missing tiles to the man on whom they have pinned their hopes. In a large prayer room with heavy Persian rugs, the men step forward to present their wish: "We have come to ask you to run for the next presidential election." Khatami, visibly moved, invites his visitors to join him in prayer. Read The Full Story Texas Lawmakers Profit From Company With State Contracts 2008-10-16 20:50:51 A company that became a national leader in providing patrol cameras to police was built on the strength of a Texas contract obtained while two state lawmakers were shareholders in the firm - a possible violation of state ethics laws. WatchGuard Video points with pride to the legislators who became early investors in the company as it grew from a tiny startup into a government contracting powerhouse. The two men said they never pulled strings on behalf of WatchGuard; but they voted for the spending bills that gave state business to the company, and both turned a profit after selling some of their shares. Their actions might violate the state constitution and disclosure rules established by the Texas Ethics Commission. Read The Full Story Sen. Ted Stevens' Wife Testifies At His Corruption Trial 2008-10-16 15:34:41 Alaska Sen. Ted Stevens' wife told jurors in her husband's corruption trial Thursday that she was in charge of the home renovation project at the center of Stevens' indictment. Catherine Stevens also testified that she believed that workers on the project were paid by a residential construction contractor and not the top executive of an oil services company who is both a close friend of Stevens' and the prosecution's star witness. Prosecutors allege that Stevens lied on financial disclosure forms to hide more than $250,000 in gifts and remodeling work to his home in Girdwood, Alaska, between 1999 and 2006. They have said that Bill Allen, chief executive of VECO, a defunct oil services firm, and his employees either financed or performed much of that work. Prosecutors have said that Stevens turned to Allen for help in the remodeling project because he knew Allen and his workers could do the work free of charge. Stevens, who is running for re-election, is expected to testify as early as Thursday afternoon, according to his defense lawyers. Read The Full Story Merrill Lynch Posts $7.5 Billion 3rd-Quarter Loss 2008-10-16 15:34:14 Merrill Lynch & Co. reported a third-quarter net loss of $7.5 billion on write-downs and credit losses on complex debt securities. The brokerage house, which last month accepted a takeover bid from Bank of America, said on Thursday that the net loss applicable to common shareholders widened to $5.58 per share from $2.3 billion, or $2.82 per share, a year earlier. The loss was worse than analysts' expectations of a $5.18 loss per share, according to Reuters' Estimates. Merrill, like former peers Lehman Brothers and Bear Stearns Cos, has struggled to survive the credit crisis, which has crippled its large mortgage and complex debt businesses. Read The Full Story Actress, Singer Edie Adams Dies At 81 2008-10-16 15:33:41 Actress and singer Edie Adams, the blonde beauty who won a Tony Award for bringing Daisy Mae to life on Broadway and played television foil to husband Ernie Kovacs, has died. She was 81. Publicist Henri Bollinger says Adams died in Los Angeles Wednesday from cancer and pneumonia. Adams was a graduate of the Juilliard School of Music and hoped to become an opera singer. Instead, she gained fame for her sketches with Kovacs and her pivotal roles in Broadway musicals. She also had a long stage and film career. Read The Full Story Debate Analysis: Aggressive Underdog vs. Cool Counterpuncher 2008-10-16 03:55:03 John McCain threw everything he could at Barrack Obama here in Hempstead, New York, Wednesday night. Down in the polls and with time running out, McCain took every opportunity to put Obama on the defensive, looking to turn a race that has been slipping away from him back in his direction in the final 20 days. It was what many of his supporters, including running mate Sarah Palin, had urged him to do, and McCain responded with vigor and seeming enthusiasm. Obama was repeatedly forced Wednesday night to explain himself. But he did not lose his cool under his opponent's persistent criticism, parrying time and again with measured explanations designed to take the sting out of McCain's charges with voters who may still be making up their minds. This debate may have been McCain's strongest performance of the three, but it was also an example of how Obama has used the encounters to try to show that he has not only the knowledge of the issues but also the temperament and the judgment that voters are looking for in a successor to President Bush. In the end, given the overwhelming desire for change in the country, that may be enough to keep him in the driver's seat. McCain will have to continue to press his case relentlessly in the final days to change the shape of the campaign. Read The Full Story World Markets Fall As Investors Weigh Relentless Trouble 2008-10-16 03:54:40 Stock markets plunged anew on Wednesday, nearly wiping out the record gains of Monday and sending another wave of wealth destruction washing over American households. The government’s rescue of the banks has been widely embraced, but the frenzied selling, which pushed the Dow Jones industrial average down 733 points, underscored how the economy’s troubles are too broad to be fixed by the bailout of the financial system. In early trading in Asia on Thursday, the markets followed Wall Street’s lead. The Nikkei was down 10.03 percent, or 957.90 points, the Hang Seng dropped 1,204.27 points, more than 7.5 percent, the South Korean Kospi fell 6 percent, the Standard and Poor’s/Australian Stock Exchange 200 index shed 5.5 percent and Taiwan opened down 3.8 percent. Investors are recognizing that the financial crisis is not the fundamental problem. It has merely amplified economic ailments that are now intensifying: vanishing paychecks, falling home prices and diminished spending. And there is no relief in sight. Wednesday’s rout began in the morning with the latest evidence of the nation’s economic deterioration - reports showing that retail spending slipped in September and broader signs of a pullback among suddenly thrifty American consumers. Read The Full Story
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