Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Wed 07.02.2008
Gold futures fall, as traders eye dollar, oil Gold futures declined Wednesday, as traders trimmed positions following the metal's surge in the previous session. Gold for August delivery fell $8 to $936.50 an ounce on the New York Mercantile Exchange. On Tuesday, gold rose $16.20 to finish at $944.50 an ounce. Jon Nadler, senior analyst at Kitco Bullion Dealers, said that some profit-minded traders opted to "cash in a few chips." "However, bullion remains fairly well-supported near the $920 and $930 marks at the moment, as participants factor in a small ECB rate hike ... and little in the way of a Fed response to inflationary pressures in the near term," Nadler said.
Small Banks' Reckoning Day Is Coming $$ Billions in Troubled Construction Loans Promise to Pose Test for Regional Lenders Wall Street is bracing for regional and small banks to fess up to large losses from their mounting volume of soured construction loans made primarily to home builders. According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. When banks announce second-quarter results in coming weeks, they are expected to report sharp increases in loans that builders can't repay. Banks are also facing intensifying pressure from federal and state regulators to deal with the problem loans on their books.
Currency Intervention Won't Halt the U.S. Dollar's Nosedive Last week the U.S. Federal Reserve moved one step closer to acknowledging reality. Unfortunately, it didn’t let that admission move it from a policy course firmly guided by fantasy - meaning the central bank opted to stand pat on interest rates, despite the clear escalation of inflationary pressures.In the policy statement that accompanied that decision last week, Fed Chairman Ben S. Bernanke and the other members of the interest-rate-setting Federal Open Market Committee (FOMC) took an important step in noting that inflationary concerns had taken hold in the country at large.
Paulson Calls for Process to Liquidate Failing Firms U.S. Treasury Secretary Henry Paulson called for regulatory changes that would allow financial firms to fail without threatening broader market stability. The Treasury chief also proposed steps providing for the president to approve of any use of taxpayer funds to aid a financial company. In excerpts of a speech for delivery in London today, Paulson identified a legal gap that leaves unspecified how to deal with failures of companies that don't take deposits, such as investment banks. Paulson's proposals aim to tighten supervisors' oversight of lenders and dealers while at the same time discourage companies from depending on a government rescue if their bets go wrong. His speech comes a week before a congressional hearing to debate a regulatory overhaul in the wake of the credit crisis that caused the near-bankruptcy of Bear Stearns Cos.
Paulson sees U.S. and Europe in similar economic straits As Treasury Secretary Henry Paulson Jr. travels through Europe this week, he wants to reassure jittery audiences that the United States will right its economy and its financial markets. But with both sides of the Atlantic now suffering from a similar combination of sagging growth, rising inflation and shaky banks, Paulson's visit is turning into a case of misery loves company. Overdue Home-Equity Credit Lines Rise Most Since 1987 Consumers fell behind on loans secured by their homes at the fastest pace in two decades in the first quarter, signaling deeper distress in the U.S. economy, the American Bankers Association reported. Home-equity lines of credit at least 30 days past due rose 14 basis points to 1.1 percent of accounts for the quarter, the Washington-based group said today in a statement. Delinquent credit-card accounts increased 13 basis points to 4.51 percent, the highest level since 2006. "People are looking for any source of funds to pay their daily expenses," Carol Kaplan, spokeswoman for the bankers' group, said yesterday in an interview. "It's a sign of the overall condition of the economy that people are having trouble making their payments."
Forecast for U.S. workers: Gloom As automakers dropped their latest batch of awful sales numbers on the market on Tuesday, reinforcing the gloom spreading across the economy, the troubles confronting American workers seemed to intensify. Plummeting home prices have in recent months eliminated jobs for hundreds of thousands of people, from bankers and real estate agents to construction workers and furniture manufacturers. Tighter lending standards imposed by banks in the wake of huge mortgage losses have made it hard for many Americans to secure credit - the lifeblood of expansion in recent years - crimping the appetite of consumers, whose spending amounts to 70 percent of the economy.
No Loans at Mountain 1st Means Credit Drying Up at Local Banks Mountain 1st Bank & Trust Co. Chief Executive Officer Greg Gibson forecast 12 percent loan growth for his North Carolina bank this year. Instead, he's spending more time handing out freshly baked cookies than extending credit. Gibson is "standing on the brakes'" because Mountain 1st, owned by 1st Financial Services Corp. of Hendersonville, North Carolina, can no longer sell trust-preferred stock to raise capital for loans so customers can buy airplanes or build veterinary clinics, Gibson said in a June 20 telephone interview.
Manufacturers struggle to overcome rising prices Each week, Ira Cooper opens a letter from another supplier with the same message as the last: We're raising our prices, effective immediately. We can't tell you how long the new prices will last. "We used to get quotes good for six months," said Cooper, president of QED Inc., a lighting company based in Lexington, Ky. "Now you're lucky if you can get a quote good for 15 days." Manufacturers of everything from wallpaper to cereal are feeling the same hit. The Institute for Supply Management said Tuesday that its index of prices manufacturers pay for raw materials hit 91.5 in June, up from 87 in May and the highest reading since 1979.
Sense of crisis prevails in US healthcare America’s healthcare system is broken. If there is one statement on which the majority of Republicans and Democrats agree – along with employers and individuals and even some health plans – that is it. Fixing it will be another matter. Hard numbers explain the sense of crisis – and why all the presidential candidates in recent US primaries felt the need to offer at least a partial blueprint for reform.
79,000 private sector jobs lost in June The number of private sector jobs fell by 79,000 in June, according to a payroll report released Wednesday, with the decline exceeding economists' forecasts. The National Employment Report from Automatic Data Processing showed a 76,000-job drop for goods-producing businesses, the 19th monthly decline in a row, coupled with a 3,000 job decline in the services sector. A majority of the production job losses came from the manufacturing sector, which lost 44,000. Economists polled by Briefing.com had expected jobs to decline by 20,000 in June. The ADP report measures non-farming private employment based on payroll data.
June car sales plummet; more declines expected GM hangs on to title of US sales leader as auto industry sees worst June sales in 17 years A last-minute no-interest financing offer and strong sales of some cars helped General Motors Corp. keep its U.S. sales over Toyota Motor Corp. last month, but it was still the worst June for the industry in 17 years and a harbinger of more misery ahead. "We're going to continue to see declines for the rest of the year," predicted Jesse Toprak, chief industry analyst for auto information site Edmunds.com.
Car Sales at 10-Year Low NO DEAL Cars and trucks jammed American dealers' lots as sales fell to a 10-year low. Sales of new cars and trucks plunged to their lowest level in more than a decade in June, as high gas prices and a weak economy kept American consumers away from dealer showrooms. With the drop last month of more than 18 percent, automakers now expect to sell well below 15 million new vehicles this year, far fewer than the norm this decade of more than 16 million vehicles a year. Detroit automakers were hit hard.
Starbucks to cut up to 12,000 jobs, close 600 stores Starbucks Corp said on Tuesday it plans to close another 500 underperforming stores and eliminate as many as 12,000 full- and part-time positions, lifting shares nearly 6 percent. The company, which now plans to close a total of 600 underperforming stores versus its previous estimate of 100, said the majority of the stores will be closed by the end of March 2009.
More Misery Ahead for GM, Ford, and Chrysler For a while, it was a long, slow decline. Now, the plight of General Motors, Ford, and Chrysler appears to be a rout. The shift away from trucks and SUVs--and from vehicles built by the Detroit 3 in general--became dramatic earlier this year. And this summer, it's only intensifying. For the first six months of the year, the domestic automakers have seen staggering sales declines of nearly 20 percent, compared with 2007. Their combined share of the U.S. market has fallen below 50 percent for the first time ever. And if gas prices stay near $4 per gallon, it's likely to keep falling. "We see meaningful revenue declines in 2008 and 2009," says Mark Oline of Fitch Ratings. "Market share losses will accelerate through year-end.
New Trend' Begun in Iran Nuclear Talks Iran, which is considering an incentives offer by world powers to halt its uranium enrichment program, said a "new trend" has started in negotiations. "A new trend of change is taking place and it started with Iran putting forward a package," Iran's Foreign Minister Manouchehr Mottaki was quoted as saying by the official Islamic Republic News Agency. European governments joined the U.S., Russia and China in offering on June 14 a package of economic and technology incentives for Iran in exchange for the suspension of uranium enrichment. The sensitive fuel can be used in a reactor or for building weapons.
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