Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 02.25.2008
The dollar versus gold? No contest In the early 1950s I was reading history at Balliol College, Oxford. I learnt a good deal from my tutors, whom I remember with gratitude, but even more from my contemporaries, such as Dick Taverne or Bernard Williams, the philosopher. There was, even then, no doubt who was the most erudite undergraduate, with, as it seemed, total recall of the whole corpus of European literature. It was George Steiner, the polymath whose encyclopaedic learning has been creating envy in academic circles ever since. In the mid-1960s, I was visiting New York and met George's father, a quiet Jewish banker, who, like the great Siegmund Warburg, had been trained in the tradition of European banking of the pre-Nazi era.
Gold Fields May Cut 6,900 Jobs on Power Restrictions Gold Fields Ltd., Africa's second- biggest gold producer, will eliminate as many as 6,900 jobs, or 13 percent of its South African workforce, as the state-run utility fails to provide enough power for the company's mines. The cuts are the first by a South African mining company since utility Eskom Holdings Ltd. said power shortages will last for four years. Gold Fields will close part of its operations at Driefontein, Africa's largest gold mine, and redesign its South Deep mine, the company said today. Production may fall as much as 20 percent, at a time when gold prices have never been higher. The rand has slumped 12 percent against the dollar in 2008 because of declining confidence in an economy where 25.5 percent are unemployed, the highest level among 64 countries monitored by Bloomberg.
Lenders cut off the home-equity tap Thousands of homeowners are getting notices that their lines of credit have been frozen, and it's harder to get new second mortgages. Here's what your bank is doing and whether you're at risk. For more than a decade, banks encouraged homeowners to tap their equity for everything from paying off credit cards to covering college tuition. Now lenders are abruptly shutting off the spigot. More than 100,000 homeowners at one lender already have been told that their home-equity lines of credit have been frozen and that they can't use them to borrow more money. Others have seen their credit limits abruptly lowered. Meanwhile, lenders are tightening standards so that getting a home-equity loan in many markets is more difficult, even when the value of your home is still well above what you owe on it.
Shoppers warned bigger bills on way When William Lapp, of US-based consultancy Advanced Economic Solutions, took the podium at the annual US Department of Agriculture conference, the sentiment was already bullish for agricultural commodities boosted by demand from the biofuels industry and emerging countries. He added a twist – that rising agricultural raw material prices would translate this year into sharply higher food inflation. "I hope you enjoy your meal," Mr Lapp told delegates during a luncheon. "It is the cheapest one you are going to have at this forum for a while." His warning that a strong wave of food inflation is heading towards the world economy was met by nods from agriculture traders, food industry executives and western’s government officials at the USDA’s annual Agricultural Outlook Forum.
The ultimate sell signal The resignation of America's unheeded and under-funded chief accountant and watchdog, along with the billion-dollar bullhorn he's been given, are the ultimate sell signals for America's stock investors. David Walker, comptroller general of the General Accountability Office (GAO) has since 1998 been the objectively informed and outspoken critic of America's balance sheet. He has criticized supporting Iraq's dysfunctional government, pork barrel spending by Congress, unrealistic "universal health care plans" we can ill-afford or support, the escalating risks of huge deficits, fiscal vulnerability to hostile foreign governments, and a lack of will to reform our government.
Who's stuck with $400 billion in losses? Wall Street sometimes calls the subprime mortgage packages and other risky investments troubling the world's financial system "toxic waste." Analysts estimate foreigners own a quarter to a third of this dangerous stuff. Losses on subprime-related investments alone could reach $400 billion, the finance ministers of the Group of Seven leading industrial nations were told earlier this month at a meeting in Tokyo. If so, banks and other investors in Europe and elsewhere participating in the global financial market could suffer losses of perhaps $100 billion to $133 billion. Often these investments had been characterized as AAA, or quite safe, by the leading American agencies that rate bonds and more complicated investments known as derivatives and asset-backed securities.
After subprime debacle, U.S. wrestles with question of bank bailouts Over the past two decades, few industries have lobbied more ferociously or effectively than banks to get the government out of its business and to obtain freer rein for "financial innovation." But as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives about a major government rescue plan is suddenly coming into fashion. A confidential proposal that Bank of America circulated earlier this month to members of Congress provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government, now that it is in trouble. The proposal warns that as much as $739 billion in mortgages is at "moderate to high risk" of default over the next five years and that millions of families could lose their homes.
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