August 2009

Commercial Real Estate Lurks As Next Potential Mortgage Crisis

August 30, 2009

Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.

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Discount extends fresh loans to Delek Real Estate

August 30, 2009

Delek Real Estate is showing signs of recovery, and Israel Discount Bank has been enlisted to help them survive by extending loans totaling several hundred million shekels. Discount is thus joining parent

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Default Rates Lower than Expected

August 30, 2009

At the beginning of this year Moody’s was taking a lot of heat for missing many financial company blow-ups, as well as the whole Mortgage-backed securities area where the grade AAA was clearly misapplied. So they forecast a scenario …

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Kennedy Widow Should Be Considered as Appointed Replacement, Senators Say

August 30, 2009

By Jeff Plungis Aug. 30 (Bloomberg) — The widow of the late U.S. Senator Edward Kennedy should be considered as an interim appointee to represent Massachusetts in his place, two U.S. senators said. Senators Orrin Hatch , a Utah Republican, and Christopher Dodd , a Connecticut Democrat, said on CNN’s “State of the Union” they could support Kennedy’s widow Victoria Reggie Kennedy as an interim senator if Massachusetts allows a temporary appointment before a special election. “Vicki ought to be considered,” Hatch said. “She’s a very brilliant lawyer. She’s a very solid individual. I have nothing but great respect for her.” Current Massachusetts law requires a special election be held within five months to fill a seat that comes open before the end of a term. The issue has taken on urgency for Democrats in the U.S. Congress, who are struggling to pass health-care legislation before the end of the year. Victoria Kennedy has said she’s reluctant to serve, but she may change her mind after talking with her children and others, Dodd said. The people of Massachusetts would welcome filling the seat, he said. “If she did, I’m for it,” Dodd said. “I think she’d be great. We could certainly use her in the Senate. Whatever she thinks is best, I’m for.” Kennedy was buried at Arlington National Cemetery across the Potomac River from Washington yesterday. At a funeral Mass earlier in the day in Kennedy’s hometown of Boston, President Barack Obama said described him as “a champion for those who had none, the soul of the Democratic Party, the lion of the United States Senate.” Dodd, who is serving as acting chairman of Kennedy’s Health, Education, Labor and Pensions Committee, said the Massachusetts senator would expect lawmakers to continue to fight for their priorities on issues like health care. “He expects us to get up this morning and do battle,” Dodd said. To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net .

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Kennedy Death Lessens Chance of Passing Broad Health-Care Bill, Hatch Says

August 30, 2009

By Nicole Gaouette Aug. 30 (Bloomberg) — Congress is less likely to pass sweeping health-care overhaul legislation following the death of Senator Edward Kennedy , a leading Republican said. “You’re not going to get this big, broad Democrat spending bill — you’re not going to get Republican support,” Senator Orrin Hatch , a Utah Republican and close friend of the Massachusetts Democrat, said on CNN’s “State of the Union” program. Hatch said Kennedy’s status as Congress’s leading liberal often convinced Democrats they could support deals he had struck with Republicans. “That’s why Senator Kennedy was so important,” Hatch said. “I don’t know if another Democrat has the same clout in Congress.” Expanding coverage to nearly 50 million uninsured Americans and lowering health-care costs was Kennedy’s life’s work, colleagues said, and is now President Barack Obama’s top domestic priority. Lawmakers failed to get health-care bills through Congress before the August recess. Obama, who is pushing lawmakers to overhaul a health-care system that accounts for about 18 percent of the nation’s economy, said Aug. 20 that “we’re going to get this done one way or another.” Hatch said Kennedy provided deep experience on health care, united factions within the Democratic Party and worked well with Republicans. Kennedy’s Work “Kennedy could bring together all of the base groups of the Democratic Party,” Hatch said on ABC’s “This Week,” recalling that Kennedy worked on health legislation for more than three decades. “In every case, he fought as hard as he could, but when he recognized that he couldn’t get everything he wanted, he worked with the other side. If he was here, I don’t think we’d be in the mess we’re in right now.” Kennedy’s illness meant he was absent from Congress for much of the past year, though his staff said he kept abreast of the health debate through frequent phone calls. Senator Christopher Dodd , the Connecticut Democrat who temporarily took over from Kennedy as chairman of the Senate Health, Education, Labor and Pensions Committee , told the panel that Kennedy was watching their debate on C-SPAN television and calling him daily to offer feedback. Four of the five congressional committees with jurisdiction over health have passed bills that would cost about $1 trillion over 10 years. The Senate Finance Committee has stalled over a number of issues, including whether to create a government-run insurance plan, require employers to provide workers with insurance, and impose new taxes that could range from taxing the richest Americans to levies on generous health plans. Public Plan Not all Democrats support the idea of a public plan, which Obama has said would be his preferred way to generate more competition among health insurers. Louisiana Senator Mary Landrieu told CNN she would “tend not to” support a bill that included a public option. “I think we can do it without a public option,” the third-term Democrat said. “Hopefully we can keep working. That’s what Ted Kennedy would want us to do.” John Kerry , now the senior Democratic senator from Massachusetts and a member of the Finance Committee, said he was confident a health-care bill would be passed and he urged Republicans to avoid being “bound by ideology.” “When we get reality on the table we can have a good conversation,” Kerry said on the ABC program. “I believe we can do this. I think better judgment will prevail.” Senate Bill When the Senate returns in September, it will take up the bill the Senate health committee put together in July, Dodd said on NBC’s “Meet the Press.” He said the bill is “sitting there,” ready to be worked on with the Finance Committee. “If we can get these bills together and sit down with each other, we can produce a strong, vibrant, vitally needed national health care legislation on accessibility, quality and affordability,” Dodd said. Health-care costs now account for about 18 percent of GDP, according to the president’s Council of Economic Advisers, and are projected to rise to 34 percent by 2040. “The country cannot afford this, Dodd said on CNN. “How we get there is the challenge before us.” Senator Maria Cantwell , a Washington Democrat, said bipartisan cooperation on the issue was crucial. “Doing nothing and thinking that we’re going to get out of this expense is not an option,” Cantwell said on CNN’s “State of the Union.” “Getting true competition into the system and giving consumers choice is what the Democrats and Republicans should be joining ranks on,” Cantwell said. Democrats Alone Democrats including Senator Charles Schumer of New York have said that if Senate Finance negotiators — three Republicans and three Democrats — can’t reach a deal by Sept. 15, Democrats may have to pass the bill on their own. The majority party could use a legislative maneuver called reconciliation which allows the Senate to pass a bill with 51 votes instead of the 60 typically needed for controversial pieces of legislation. During the August recess, Finance Committee Chairman Max Baucus convened meetings of the six senators on the committee who are working on a bipartisan compromise. Any agreement they reach would have to be coordinated with a plan passed by the Senate HELP committee. The three House committees with jurisdiction over health will meld their bills together after lawmakers return from recess. The House and Senate bills would have to be reconciled before being voted on by both chambers. Protests at Meetings The Senate adjourned on Aug. 7 and will reconvene on Sept. 8. Many of the town hall meetings lawmakers held to discuss health-care during the recess were disrupted by protests. Administration officials have urged lawmakers to honor Kennedy by getting health reform passed. “The best possible legacy is to pass health reform this year,” Secretary of Health and Human Services Kathleen Sebelius said recently. “Hopefully every step along the way they’ll ask themselves ‘What would Teddy do?’” Dodd said Kennedy’s death will push his colleagues to work harder at passing legislation. “We don’t have the luxury of wallowing in our grief; we’ve got to get up and get this done,” Dodd said. “We’re going to roll up our sleeves and do what Teddy would have done and get health-care done.” — With assistance from Jeff Plungis in Washington. Editors: Ann Hughey , Bill Schmick To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net .

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Japan’s Industrial Output Rises at the Slowest Pace in Four Months in July

August 30, 2009

By Aki Ito Aug. 31 (Bloomberg) — Japanese manufacturers increased output in July at the slowest pace in four months as effects of the global stimulus and inventory restocking began to fade. Production climbed 1.9 percent from June, when it rose 2.3 percent, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News expected a 1.4 percent gain. July’s increase marked the third month of decelerating growth, signaling a recovery from the nation’s worst postwar recession may be gradual. Sustaining a rebound will be a challenge for the Democratic Party of Japan, which ousted the Liberal Democratic Party out of power in yesterday’s general election. “Production so far has been boosted by pent-up demand, global stimulus measures, and inventory adjustments. These effects will be temporary,” said Azusa Kato , an economist at BNP Paribas in Tokyo. “Exports to Asia have already slowed, and so production may slow earlier than we initially expected.” Toyota Motor Corp. , Japan’s largest automaker, said last week it plans to reduce output by about 220,000 vehicles. The automaker cut domestic production by 29.5 percent in July. Today’s report adds to evidence that the economy is losing momentum since it emerged from a recession last quarter. Data last week showed the jobless rate reached a postwar high of 5.7 percent in July and household spending fell at the fastest pace in five months. As the effects of the stimulus begin to wane, the deteriorating job market makes it unlikely that domestic demand for manufactured products will recover. Record Plunge Manufacturers trimmed production at a record pace in the first quarter in the wake of the global financial crisis. The cuts left them with leeway to rebuild stockpiles as demand recovers. “Companies reduced their inventories by a considerable amount, and they are still rapidly rebuilding that loss,” said Yoshiki Shinke , senior economist at Dai-ichi Life Research Institute. There are signs that plunges in overseas demand are stabilizing, paving the way for sustained increases in output later this year, economists say. “Overseas demand will improve in small increments,” said Junko Nishioka , chief economist at RBS Securities Japan Ltd. in Tokyo. Exports fell 36.5 percent in July, a report last week showed. Declines have stabilized since demand plunged a record 49 percent in February. Panasonic Corp. , the world’s largest maker of plasma televisions, raised its earnings forecast for the first fiscal half, projecting its net loss to be 100 billion yen, from an earlier estimate of 195 billion yen. Some 25 trillion yen in Japan’s stimulus spending has included incentives for consumers to buy fuel-efficient cars and eco-friendly home appliances. Shipments of flat-panel TVs, which qualify for the government’s “eco-point” incentives, rose 41 percent in July from a year earlier, the Japan Electronics and Information Technology Industries Association said last week. To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net

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World Economy May Have Bottomed, Demand Improving, Frontline’s Jensen Says

August 30, 2009

By Alistair Holloway Aug. 28 (Bloomberg) — The world economy may be improving from its worst slump in six decades, bolstering demand, said Jens Martin Jensen , head of the management unit of Frontline Ltd., the world’s biggest operator of supertankers. The company , based in Hamilton, Bermuda, posted a better- than-expected 91 percent drop in second-quarter profit today. “On the demand side, maybe the world economy has hit the bottom and things are starting to improve,” Jensen said by phone today from Oslo. European confidence in the economic outlook increased twice as much as economists forecast in August, a European Commission report showed today. The U.S. economy, the world’s biggest oil user, shrank less than expected in the second quarter, and France and Germany returned to growth in the same period. The Baltic Dirty Tanker Index , an overall measure of crude oil shipping costs, including rates for tankers smaller than Frontline’s, averaged 527 points in the second quarter, the lowest since at least the fourth quarter of 2001, according to the London-based Baltic Exchange. The Organization of Petroleum Exporting Countries pumped an average of 13 percent less oil than in the same quarter last year, while the carrying capacity of the fleet expanded 5.6 percent, according to Lloyd’s Register-Fairplay data. Global oil demand fell 3.1 percent to 83.7 million barrels a day from a year earlier, according to the Paris-based International Energy Agency. Demand will drop 2.7 percent to 83.9 million barrels a day this year, according to the adviser. Saudi Arabian Crude On the benchmark route for supertankers that deliver 2 million-barrel cargoes of Saudi Arabian crude to Japan, earnings averaged $16,818 a day, according to the Baltic Exchange. They averaged $40,393 in the first quarter. Rates have probably fallen enough to spur owners of single- hulled tankers to scrap their vessels, Jensen said. The tankers will be barred by International Maritime Organization regulations starting next year, with some exemptions until 2015. There are 566 single-hull tankers with a combined carrying capacity of 57.5 million deadweight tons, according to Clarkson Plc, the world’s biggest shipbroker. The combined carrying capacity of the crude-oil tanker fleet is at 321 million tons, according to Lloyd’s Register-Fairplay data. Rates also continue to benefit from demand for tankers for storage, Frontline said. About 50 supertankers are being used for storage at sea, compared with about 55 to 60 at the start of the second quarter, Jensen said. That’s equal to about 9 percent of the global fleet, restricting supply and buttressing rates. Oil Contango By storing oil and oil products at sea, traders are seeking to profit from contango, where longer-dated contracts are more expensive than near-term supply. That may allow traders to buy consignments now, store them and sell them at a profit later, assuming storage, financing and insurance costs are exceeded. Frontline closed 1.9 percent lower at 141.75 kroner in Oslo, valuing the company at 11 billion kroner ($1.8 billion.) The stock slumped 29 percent this year. Second-quarter net income fell to $27.8 million, or 36 cents a share, from $318.4 million, or $4.25, a year earlier. Frontline joins rivals including New York-based Overseas Shipholding Group Inc. , the biggest U.S.-based owner, and Antwerp-based Euronav NV in reporting falling earnings. A.P. Moeller-Maersk A/S , Denmark’s largest owner of crude oil carriers, said Aug. 21 that lease rates for crude oil tankers have dropped to a record because of reduced cargo supply. To contact the reporters on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net Alistair Holloway in London at aholloway1@bloomberg.net

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U.K. Home Prices Post First Gain Since 2007 on Low Supply, Hometrack Says

August 30, 2009

By Brian Swint Aug. 31 (Bloomberg) — U.K. house prices rose for the first time in two years in August as a dearth of homes for sale pushed up prices in London and the southeast, Hometrack Ltd. said. The average cost of a home in England and Wales rose 0.1 percent from July to 155,800 pounds ($253,000), the London-based property research company said in an e-mailed statement today. The increase, the first since July 2007, left house prices 6.7 percent lower than a year earlier, the smallest annual decline in a year. The report adds to signs that Britain is emerging from the sharpest recession in more than six decades. The slump has pushed house prices down 12 percent since the peak in September 2007 on Hometrack’s measure. Bank of England Governor Mervyn King said this month that any recovery will be “slow.” “After seven consecutive months of rising demand, agents and surveyors now believe that prices can be pushed upwards without any detrimental impact on sales volumes,” said Richard Donnell , director of research at Hometrack. “The headline figures are being skewed by price rises that are restricted to relatively small pockets of the market suffering from a lack of housing for sale.” Prices rose in Greater London, East Anglia and the southeast of England, Hometrack said. Prices were unchanged across the other seven regions surveyed. Other reports show home values rising at a faster pace. Prices in England and Wales rose 1.7 percent in July, the most since 2004, the government said Aug. 28. House prices increased 1.6 percent in August, the fourth consecutive monthly gain and the biggest since 2006, Nationwide Building Society said last week. ‘Fundamental Obstacles’ The economy shrank 0.7 percent in the second quarter and unemployment is the highest since 1995. Banks are still restricting lending even after the Bank of England cut its key rate to a record 0.5 percent and flooded the banking system with cash by buying billions of pounds of assets with newly created money. The difference between the average two-year mortgage rate of 5.18 percent and the two-year swap rate of 3.14 percent is the widest on record, Moneyfacts Plc said last week. “Some of the fundamental obstacles to a sustainable housing market recovery still remain,” Donnell said. “Mortgage availability continues to be an issue for first-time buyers who require large deposits to access the market, while unemployment levels, set to rise further, will continue to impact buyer confidence.” To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net .

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Singh’s 100-Day Stock Rally Best Since 1991 as Sensex Set to Extend Gains

August 30, 2009

By Anoop Agrawal and Rajhkumar K Shaaw Aug. 31 (Bloomberg) — Indian stocks rose more in the first 100 days of Prime Minister Manmohan Singh ’s leadership than under any new government since 1991. Investors predict more gains as he opens up the world’s second-fastest growing economy. The Bombay Stock Exchange’s Sensitive Index climbed 16 percent since Singh started a second term on May 22 as international investors bought $4.9 billion more shares than they sold, data compiled by the bourse show. The advance is the biggest since the 40 percent rally after Prime Minister P.V. Narasimha Rao came to power, and compares with the 8.4 percent increase for the Standard & Poor’s 500 in the first 100 days of U.S. President Barack Obama ’s administration. Investors are optimistic Singh will accelerate road construction, ease limits on foreign ownership of banks and sell stakes in state companies. The economy may grow 9 percent annually in the coming three years, pushing the benchmark index beyond the record high of 21,206.77 reached in January 2008, according to Mirae Asset Financial Group, South Korea’s biggest money manager. The Sensex is 25 percent below that level. “India is well-positioned to play the global recovery story,” said Gopal Agrawal , head of equities in Mumbai for Mirae, which has $2.5 billion invested in India and favors automobile, metal and oil stocks. “The policy framework is in place and we have to see how it’s executed and how the people will benefit.” The Sensex has risen 65 percent this year to close at 15,922.34 on Aug. 28. It may reach 20,000 by March 2011, UBS AG analyst Suresh Mahadevan wrote in an Aug. 26 report. He advises buying Mumbai-based Tata Steel Ltd. , the nation’s largest producer, and Mumbai-based JSW Steel Ltd. , the third-biggest. Singh’s Rally Singh, 76, was educated at Oxford University and was governor of the central bank from 1982 and 1985. He was Rao’s finance minister and championed free-market policies such as cutting import tariffs and opening the stock market to foreign investors. In 2004, he became the fourth prime minister to run India since Rao. His coalition was reelected in May with a majority large enough to separate from communist allies, who had blocked plans for asset sales and the scrapping of a 10 percent cap on the voting rights of foreign investors in non-state banks. Selling shares in state-owned companies is vital to fund the budget deficit forecast by the government to swell to 6.8 percent of gross domestic product in the year ending March 31, from 6.2 percent last fiscal year. Asset Sales Oil India Ltd. , the nation’s second-biggest oil explorer, plans to raise as much as 27 billion rupees ($552 million) by selling a 10 percent stake to the public starting Sept. 7, according to finance director T.K. Ananthkumar. NHPC Ltd., the leading hydroelectric power generator, is seeking 40 billion rupees in an initial public offering that started this month, Chairman S.K. Garg said. “The government is going ahead aggressively with reforms,” said Pauli Laursen , a fund manager who oversees $150 million of Indian equities at SydInvest Asset Management in Copenhagen. “The IPO of a company like Oil India is a positive.” Lower monsoon rainfall may undermine the rally by reducing farm output, according to Bank of America-Merrill Lynch, which predicted in an Aug. 17 report the Sensex could slide as much as 15 percent in coming months. India’s goods exports, which account for 15 percent of GDP , fell for a ninth month in June. Lack of Confidence “We don’t see the level of confidence in emerging markets that we have been used to and India is no exception,” said Gavin Redknap , a strategist in London for Tokyo-based Nikko Asset Management Co., which oversees $6 billion in developing nations. “We aren’t seeing Indian equities at a level where we can call them attractive.” India’s economy expanded 6.2 percent in the three months to June 30 after a 5.8 percent gain in the previous quarter, according to the median forecast of 27 economists in a Bloomberg News survey. The Central Statistical Organisation will release the figure at 11 a.m. in New Delhi today. The economy may expand faster than China’s next year because investors underestimate manufacturing and service industry growth, Puneet Nanda , an executive vice president at ICICI Prudential Life Insurance Co., with $6 billion in equities, said in an interview. Faster Growth Economic growth may exceed 7 percent in the fiscal year to March 31, and as much as 10 percent in the following year, Nanda said. China may expand 7.2 percent this year and 7.7 percent in 2010, the World Bank forecast on June 22. The rupee, which dropped 3 percent in the past three months, may strengthen more than 5 percent to 46.22 per dollar by March 31, from 48.67 on Aug. 28, according to the median forecast in a survey of 20 analysts by Bloomberg News. Funds set up to target Indian stocks have attracted $1.2 billion more cash than was withdrawn since June 1, with nine consecutive weeks of inflows, according to Cambridge, Massachusetts-based research firm EPFR Global . Stocks in the Sensex trade for 18.7 times estimated earnings compared with the 21.4 times for China’s Shanghai Composite Index . “India is under-priced compared to China,” said Venkatraman Anantha-Nageswaran , the global chief investment officer in Singapore at Bank Julius Baer & Co., which oversees the equivalent of $281 billion worldwide. “The relative performance gap in economies and assets markets between India and China will not only narrow considerably, but also move in favor of India.” To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net ; To contact the reporters on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net

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ANZ Bank Profit Rises `Slightly’ on Lending; Bad Debts Less Than Estimated

August 30, 2009

By Angus Whitley Aug. 31 (Bloomberg) — Australia & New Zealand Banking Group Ltd. , the Australian bank buying assets across Asia, said profit in the 10 months ended July climbed from a year earlier as lending at home grew and bad debts trailed initial estimates. Underlying profit after tax in the first 10 months of the fiscal year was “slightly above” last year’s figure, ANZ said in a statement today. Growth of provisions for loan defaults “moderated for all divisions and geographies other than New Zealand,” the Melbourne-based bank said. “The 2009 year will be the peak of bad debts for all the Australian banks,” said Tom Quarmby , an analyst at Macquarie Group Ltd. in Sydney with a “neutral” rating on ANZ. “It looks like the bottom or the worst point may be sooner and shallower; not as bad as we’d been thinking a month ago.” ANZ, Australia’s fourth-biggest bank, this month agreed to buy Royal Bank of Scotland Group Plc’s units in six Asian countries as earnings growth slows at home. Chief Executive Officer Michael Smith bolstered the bank’s balance sheet with A$4.7 billion from stock sales since May and the bank’s first dividend cut since the 1991 recession. Net loans and advances for the group increased 3 percent from the year-ago 10-month period, ANZ said. Provisions are “trending slightly better than expectations,” the bank said. Still, the company reiterated a forecast that charges will rise about 20 percent from the A$1.44 billion in the first half. ‘Cautious Optimism’ “In Australia and Asia, the economies are showing early positive signs of recovery, and although the cycle is still playing out, there are reasons for cautious optimism,” Smith said in the statement. “In New Zealand, economic conditions remain difficult with the economic recovery likely to be much slower.” Fiscal-year net income at ANZ will fall 9.6 percent to A$3 billion, the second straight annual decline, according to the mean of eight analysts’ estimates compiled by Bloomberg. Growth will resume in the 12 months ending September 2010, the estimates show. Like local rivals such as Westpac Banking Corp. , ANZ has avoided the losses suffered by European and U.S. lenders. Shares of ANZ have climbed 34 percent this year, more than the 21 percent gain by the benchmark S&P/ASX 200 index . Westpac has surged 43 percent, while Commonwealth Bank of Australia has jumped 56 percent. ‘Encouraging Signs’ Westpac , Australia’s largest lender, said on Aug. 21 that cash earnings in the three months ended June 30 were about A$1.1 billion, matching the figure a year earlier. Chief Executive Officer Gail Kelly said the pace of defaults to date wasn’t likely to be repeated in the next few months. She said there were “encouraging signs of improvement.” Commonwealth Bank of Australia, the second-biggest lender, said Aug. 12 that profit fell 11 percent in the second half ended June 30 as business loans soured and earnings at its wealth management unit declined. Even before the RBS deal, ANZ had more investments in Asia than its Australian rivals, including stakes in Shanghai Rural Commercial Bank, Saigon Securities Inc. and Malaysia’s AMMB Holdings Bhd. CEO Michael Smith, who previously headed HSBC Holdings Plc’s Asian division, is aiming to double the proportion of income ANZ derives from Asia to 20 percent. Analysts have said ANZ’s balance sheet is strong enough to digest more takeovers. ANZ said today its Tier 1 capital ratio, a measure of financial strength , at the end of June was 10.2 percent after the purchase, the highest among the nation’s four top lenders and above the bank’s internal goal of 7.5 percent to 8 percent. More ‘Firepower’ Such a ratio means the bank has more “firepower” before slipping below its own targeted capital ratio range, according to a Aug. 28 report by Matthew Davison , an analyst at Merrill Lynch. Such a situation can’t be sustained indefinitely because it’s not the most efficient use of funds and risks eroding ANZ’s return on equity, said James Ellis , an analyst at Credit Suisse. It’s a “tactical advantage” when bidding for assets around Asia because there’s less need to tap capital markets or shareholders to fund acquisitions, said Ellis. The bank has “substantial funds” ready for acquisitions, he said. ANZ’s profit fell 28 percent to A$1.42 billion in the six months ended March 31 from a year earlier as credit impairment charges almost doubled. To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

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Japan’s Record Unemployment Threatens Short `Honeymoon’ for Hatoyama’s DPJ

August 30, 2009

By Keiko Ujikane Aug. 31 (Bloomberg) — Democratic Party of Japan leader Yukio Hatoyama , fresh from a sweeping election victory, may have limited options to address record unemployment and deflation that threaten to hobble the nation’s economic recovery. The DPJ won power for the first time yesterday on a pledge to support households battered by two decades of economic stagnation. Hatoyama has also committed to avoid increasing government bond issuance, leaving his main initiative as a redistribution of the former Liberal Democratic Party government’s stimulus efforts, which focused on public works. Economic reports indicate the expansion that began last quarter may already be in danger: the jobless rate rose to a record 5.7 percent in July, and household spending dropped the most in five months. That leaves Japan “more dependent on exports that it’s ever been,” said Hugh Patrick , a professor at Columbia University in New York. “Japan’s economy is emerging from the deep woods but will be in the shallow woods for some time,” putting pressure on a party with factions that differ on policies including deficit reduction, said Patrick, who heads Columbia’s Center on Japanese Economy and Business and wrote 15 books on Japan. “Politically, the next nine to 10 months will be very exciting.” Naoki Iizuka , a senior economist in Tokyo at Mizuho Securities Co., predicted the DPJ will draw up a job-creation package as soon as October. “The most urgent priority for the new government is stopping the rising jobless rate,” he said. Election Victory Hatoyama, 62, led the DPJ to win 308 seats yesterday in the 480-seat lower house, public broadcaster NHK said, ousting the party that ruled Japan for all but 10 months since 1955. The DPJ gained control of the upper house two years ago. The party assumes power as outgoing Prime Minister Taro Aso’s 25 trillion yen ($267 billion) in stimulus may already be wearing off. Consumer prices fell an unprecedented 2.2 percent in July, threatening to erode corporate profits in the aftermath of the nation’s worst postwar recession . Companies such as Aeon Co., Japan’s second-largest retailer, have been forced to offer discounts to attract consumers. The DPJ plans to increase spending on child care and tuition aid, cut gasoline taxes and eliminate highway tolls. It also promises 100,000 yen a month for job seekers enrolled in training, a minimum wage boost and higher employment insurance. Debt Pledge It may be hard to fulfill the pledges without worsening a public debt already nearing 200 percent of gross domestic product . Hatoyama said on TV Asahi Aug. 23 he won’t let new bond sales for the next fiscal year exceed this year’s record 44.1 trillion yen. In a sign of differences in the party, DPJ policy chief Masayuki Naoshima last month said higher bond sales may be unavoidable should there be a need for additional stimulus. “The DPJ has promised far more than it can possibly deliver,” said Edward Lincoln , director of the Center for Japan-U.S. Business and Economic Studies at New York University’s Stern School of Business, who advised Walter Mondale , the former U.S. ambassador to Japan. “If they don’t do much on the things they promised and if the economy remains sluggish, then the honeymoon will be very short.” “The DPJ must realize that public frustration with the LDP is going to turn into high expectations,” said Hiroshi Miyazaki , chief economist in Tokyo at Shinkin Asset Management Co. “The DPJ may try to appease voters and that would only worsen the economy and debt.” Finance Minister Hatoyama’s choice of finance minister may be key to assuring investors the DPJ will restrain debt issuance, analysts said. The new government will need to show “it has a competent and steady hand on the tiller at the Finance Ministry,” said Tobias Harris , author of the “Observing Japan” political blog and a former aide to ex-DPJ lawmaker Keiichiro Asao . Hatoyama may pick Hirohisa Fujii , 77, Kyodo News reported on Aug. 26, without citing anyone. Fujii, a former finance ministry official, served in the post in the coalition government that ousted the LDP for 10 months in 1993-94. That experience might make Fujii best suited to work with ministry staff, economists said. The DPJ has committed to shift power from the bureaucracy to elected politicians, setting the stage for potential clashes with government officials. Other candidates include DPJ Secretary-General Katsuya Okada , 56, and Vice President Naoto Kan , 62, economists said. The party has said it will pay for its promises by cutting what it terms wasteful spending, shrinking the public service, tapping money from special accounts managed by bureaucrats and abolishing some tax deductions. Economists and investors have questioned whether that’s realistic, given tax revenue is falling and welfare costs are swelling as the population ages. “These are deep-rooted structural problems that the Japanese economy faces,” said Michael Taylor , a senior economist at Lombard Street Research Ltd. in London. Fixing the pension system and reducing people’s anxiety about retirement, for example, will take time, he said on Bloomberg Television. The next prime minister “has got an awfully big job on his hands to try and sort things out.” To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

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Record LDP Defeat Claims Former Prime Minister, Cabinet Members

August 30, 2009

By Anna Kitanaka Aug. 31 (Bloomberg) — Political casualties from Japan’s biggest election upheaval since 1955 include a former prime minister, a coalition leader and several ex-cabinet ministers, projections show. Finance Minister Kaoru Yosano lost his electoral district as did predecessor Shoichi Nakagawa , public broadcaster NHK said. They will have to rely on gaining a lifeline from their Liberal Democratic Party , which can allocate a block of seats based on its reduced share of the national vote. The LDP is set to lose two-thirds of its lawmakers, according to NHK, yielding power to the Democratic Party of Japan for the first time. Losses for senior members underscore voter dissatisfaction with a government that struggled to arrest the deepest postwar recession. “It’s time to put the reins of power in different hands” said Masako Nanjo, a 68-year-old Tokyo housewife who said she voted for the DPJ, which won 308 of 480 seats to claim a majority in the lower house, public broadcaster NHK projected. Former Chief Cabinet Secretary Nobutaka Machimura and ex- Defense Minister Yuriko Koike also lost their seats, projections showed. Nakagawa, 56, was defeated in Hokkaido prefecture’s 11th district by 36-year-old DPJ opponent Tomohiro Ishikawa, NHK said. He stepped down as finance minister in February after slurring his words and appearing to be drunk during a press briefing at the Group of 20 meeting in Rome. Former Premier Former Prime Minister Toshiki Kaifu , 78, lost against Mitsunori Okamoto, a candidate half his age, in Aichi prefecture, NHK said. Kaifu, who was first elected in 1960, would be the first former prime minister to get voted out since Tanzan Ishibashi in 1963. Koike, 57, was the first female politician in the LDP to run for head of the party. Her candidacy was endorsed by former Prime Minister Junichiro Koizumi , who led the party to victory in 2005. She lost to Takako Ebata , 49, projections showed. Consumer Affairs Minister Seiko Noda and LDP coalition partner New Komeito party chief Akihiro Ohta also lost their seats, NHK said. When Aso named his Cabinet last year he picked descendents of former lawmakers for 11 of 17 positions, underscoring the lack of fresh politicians within the party. Almost half of 387 LDP lawmakers in both houses at the time had at least one family member who had held public office. To contact the reporter responsible for this story: Anna Kitanaka in Tokyo akitanaka@bloomberg.net

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Dan Dorfman: SEC Investigating Apple Trading

August 30, 2009

Hey, have some investors been screwing around illegally with the shares of high-flying Apple, Inc., a superstar of the investment scene? Apparently, the Securities & Exchange Commission is suspicious this may be the case and has kicked an investigation into the trading in Apple’s securities both here and abroad. This is revealed in a series of documents it recently fired off to the brokerage community. I have obtained copies of those internal SEC documents from a regulatory contact. Interestingly, the nature of its interest shows that the commission is not investigating, as is usually the case, the trading that occurred in a specific time period, but rather, in this instance, in four specific time periods. This suggests the SEC could be looking into more than one potential violation in the trading in Apple shares. What the agency is seeking in its queries to the brokerage community are the names of its clients who specifically bought and sold Apple’s securities in those four time periods and whether anyone did so with a knowledge of non-public, inside information. What’s it all about? The SEC, as usual, declined comment, and Apple refused to respond to calls seeking comment. Wall Street sources, however, speculated that the agency’s investigation likely centered on possible trading that may have been based on the illegal use of inside information involving three particular Apple-related developments. In effect, they raise specific questions: –Whether anyone got an illegal lead on precisely how sales were faring on key items in Apple’s highly successful Ipod product line. –Whether anyone was given a precise insight into the health of the company’s co-founder and CEO, Steve Jobs, a cancer survivor who took a six-month leave of absence last January and then received a liver transplant. Subsequent questions about the viability of his health then led to a great deal of volatility in Apple’s shares. –Whether anyone had exact knowledge of when specific releases would be made by the company with regard to Jobs’ health or Ipod sales and pretty much of an awareness, as well, as to what those announcements would say. Judging from “some uncanny trading” that he saw taking place in Apple, one hedge fund trader told me “it almost looked at times like the buyers and sellers were working at the company.” In any event, if you’re an Apple shareholder, you are one of those lucky investors since 2009 has been a big winner for you. The stock closed last year at 85.35 and is presently trading at $170.05, meaning it has almost doubled in 8 months in a difficult and erratic market environment. Moreover, the shares are trading just a shade below their 52-week high of $176.25. A number of Apple trackers are convinced it’s still gung-ho ahead for the stock. For example, several see substantially greater capital appreciation, with a number, such as Deutsche Bank and Canaccord Adams, projecting gains that could push up Apple’s shares to the $200 to $2.50 level. The stock’s all-time high, $202.96, was recorded in 2007. A word of caution, however, before you dash out and buy some Apple shares. There are also a number of disbelievers out there, as evidenced by a sizable short interest (a bet the stock price will go lower) of 16.3 million shares. This skeptical view is largely based on the belief that the huge rise in the company’s shares more than adequately discounts Apple’s positive fundamentals. Meanwhile, speaking of SEC stock trading investigations, the agency, based on additional copies I’ve obtained of documents it recently sent to brokerage firms, is also looking into the buying and selling action in Biogen Idec, Human Genome Sciences, BioMS Medical Corp., Blackout Media, Location Based Technologies, Advanced Medical Optics and Hansen Medical. Write Dan Dorfman at Dandordan@aol.com

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Merkel Suffers Losses in German Regional Voting as National Election Nears

August 30, 2009

By Brian Parkin and Tony Czuczka Aug. 30 (Bloomberg) — Chancellor Angela Merkel ’s Christian Democratic Union suffered losses in regional voting four weeks before national elections, potentially bolstering her challenger and damaging her bid for a second term. While the Christian Democrats emerged the biggest party in Saxony, Thuringia and Saarland after state elections today, exit polls show in two of those states, Thuringia and Saarland, the CDU lost its majority and will have to seek a coalition partner or could lose power. The CDU will be able to continue in coalition government in Saxony. The state votes offer a final gauge of voter sentiment before the Sept. 27 federal election. National polls since December have given Merkel’s CDU and her preferred ally, the Free Democratic Party, 50 percent or more, enough to ditch Frank-Walter Steinmeier ’s Social Democrats, her current coalition partner. Steinmeier, the foreign minister, is the SPD candidate for chancellor. “Psychologically it’s bad for Merkel just four weeks before elections but this is just a normalization” after a strong showing at the last state elections, Jan Techau , an analyst at the Berlin-based German Council on Foreign Relations, said in an interview. To contact the reporters on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net ; Brian Parkin in Berlin at bparkin@bloomberg.net .

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Time Warner’s `The Final Destination’ Debuts as Top U.S. Film This Weekend

August 30, 2009

By James Callan and Sarah Mulholland Aug. 30 (Bloomberg) — “The Final Destination,” a 3-D horror sequel, opened as the top film in U.S. and Canadian theaters this weekend, taking in $28.3 million in ticket sales for Time Warner Inc.’s Warner Bros. “Inglourious Basterds”, from Weinstein Co., came in second with $20.04 million. “Halloween II,” from Weinstein Co.’s Dimension Films, was third with $17.4 million, researcher Hollywood.com Box-Office said today in an e-mailed statement. “The Final Destination,” the fourth film in the R-rated franchise, follows a group of teens who try to cheat death after one of them has a premonition of a fatal accident. The movie is the seventh top debut this year for Warner Bros., the most recent being “Harry Potter and the Half-Blood Prince.” The studio leads box-office receipts with $1.46 billion through Aug. 27, according to Box Office Mojo, which also tracks receipts. “Halloween II” is the 10th film in the saga of Michael Myers, the psychotic murderer first seen in 1978’s “Halloween,” according to Imdb.com . “Inglourious Basterds” stars Brad Pitt and Diane Kruger and tells the story of a band of Jewish-American soldiers out to kill Nazis in occupied France. “District 9” took in $10.7 million, coming in fourth place for Sony Corp. The science fiction thriller was produced by Peter Jackson . To contact the reporter on this story: James Callan in New York at jcallan2@bloomberg.net .

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Japanese Stocks, Bond Yields May Rise After Opposition DPJ’s Election Win

August 30, 2009

By Theresa Barraclough Aug. 31 (Bloomberg) — Japanese bonds will decline while stocks rise after Japan’s opposition Democratic Party of Japan swept to power, said Yuuki Sakurai , chief executive officer of Fukoku Capital Management Inc. The DPJ won at least 268 of 480 seats to secure a majority in Japan’s lower house, public broadcaster NHK projected. The party may almost triple its seats to more than 300, NHK and Fuji Television reported earlier. Stocks will rise on optimism DPJ policies to stimulate domestic demand will boost growth, while financing for those measures will result in further bond issuance, sending prices down, Tokyo-based Sakurai said. Ten-year government bond yields will probably rise to 1.7 percent by year-end, while the Nikkei 225 Stock Average will advance to as high as 12,000, according to the investor. “It’s a landslide victory for the DPJ and the equity market may remain excited for a couple of days or even a couple of weeks,” said Sakurai, who helps manage about 800 billion yen ($8.6 billion) in assets. Financing for the party’s spending plans “will have to come from government bonds,” he said. The DPJ faces accelerating deflation and record unemployment as it seeks to craft an economic recovery in a nation that only last quarter emerged from its deepest postwar recession. Japan’s consumer prices fell at an unprecedented 2.2 percent in July from a year earlier, while the jobless rate climbed to 5.7 percent, the statistics bureau said Aug. 28. Prime Minister Taro Aso’s Liberal Democratic Party lost about two-thirds of its 303 legislators in the chamber that chooses the premier. The LDP ruled Japan for all but 10 months since 1955. Debt Issuance The Nikkei 225 surged 25 percent through the remaining year after the last general election in 2005. Bonds fell for six straight weeks, the longest stretch in more than a year. A similar result may emerge as the DPJ carries out plans to boost consumption, according to investors and strategists. Bond investors are concerned the new government will increase new issues to finance fiscal measures pledged by the DPJ, adding to public debt that is already almost double the size of Japan’s $4.9 trillion gross domestic product. Debt maturing in more than 10 years handed investors a loss of 2.9 percent this year, according to indexes compiled by Merrill Lynch & Co. Ten-year yields increased one basis point, or 0.01 percentage point, to 1.31 percent on Aug. 28. Shares of companies that rely on domestic spending may benefit as the DPJ focuses on stimulating consumption . The Nikkei 225 rose 0.6 percent on Aug. 28 to 10,534.14. The index has gained 19 percent this year, rebounding from last year’s record 42 percent plunge during the global financial crisis. ‘Stabilizing’ Politics “Stocks will rise as foreign investors regard the stabilizing political situation as a positive,” said Hidenori Suezawa , Tokyo-based chief strategist at Daiwa Securities SMBC Co., a unit of Japan’s second-largest brokerage. Japan’s economy, the world’s second largest, grew at an annual 3.7 percent pace last quarter, the first expansion in more than a year, as more than $2 trillion in stimulus plans worldwide helped revive trade. Aso pledged 25 trillion yen in government spending to combat the recession. Economists expect growth will weaken in coming quarters once government cash injections are exhausted. Japanese companies forecast the yen, which last traded at 93.60 against the dollar on Aug. 28, may average 94.85 in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released July 1. The average of the 10 most recent analyst forecasts is for the yen to end the year at 97.3, and finish March at 99.4, according to data compiled by Bloomberg. ‘Good Strength’ The yen is likely to benefit from the DPJ’s pledge to give the Bank of Japan more autonomy, increasing the scope for the central bank to raise interest rates earlier. JPMorgan Chase & Co. overnight interest-rate swaps signal a 19 percent chance borrowing costs will be lifted by the end of July. “The yen is going to rise,” said Kazuaki Oh ’e, a bond salesman in Tokyo at Canadian Imperial Bank of Commerce, the nation’s fifth-biggest bank. “You may think this fact would hurt Japanese exporters, but this economic expansion is mostly on the domestic side. So this stronger yen won’t hurt as much as before. It’s a good strength.” To contact the reporters on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net .

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India’s Economic Growth Probably Accelerated for First Time Since 2007

August 30, 2009

By Cherian Thomas Aug. 31 (Bloomberg) — India’s economic growth probably accelerated for the first time since 2007, justifying Finance Minister Pranab Mukherjee ’s assertion that the nation has “weathered the storm” from the global recession. Asia’s third-largest economy expanded 6.2 percent in the three months to June 30 after a 5.8 percent gain in the previous quarter, according to the median forecast of 27 economists in a Bloomberg News survey. The Central Statistical Organisation will release the figure at 11 a.m. in New Delhi today. The recovery may be derailed by a weak monsoon that could reduce farm output in rural areas, where three-fifths of India’s 1.2 billion people live. Subdued growth and the risk of faster inflation caused by higher food and commodity prices pose a “complex dilemma” for the central bank on whether to raise borrowing costs, Governor Duvvuri Subbarao said last week. “The central bank’s job has been made more difficult because of the monsoon effect,” said Vishnu Varathan , a regional economist at Forecast Singapore Pte. “Timing the interest rate hike is the issue. They have to make sure they aren’t behind the curve to check inflation and at the same time they don’t want to hurt growth.” Before the rains turned scanty, the Reserve Bank of India on July 28 forecast the economy would grow 6 percent “with an upward bias” in the year ending March 31, the weakest pace since 2003. It also raised its inflation forecast to 5 percent from 4 percent by the end of the financial year. The key wholesale price inflation index fell 0.95 percent in the week to Aug. 15. ‘Recovery Impulses’ The central bank’s Aug. 27 annual report said withdrawing the cheap money available in the economy runs the risk of weakening “recovery impulses,” while sustaining inexpensive credit for too long “can only increase inflation in the future.” As the global recession hit India, the central bank injected about 5.6 trillion rupees ($115 billion) into the economy, which together with government fiscal stimulus amounts to more than 12 percent of gross domestic product. The Reserve Bank kept borrowing costs unchanged in its last monetary policy statement on July 28 and signaled an end to its deepest round of interest-rate cuts on concern that inflation will “creep up” from October. The next policy meeting is scheduled for Oct. 27. Drought or drought-like conditions has been declared in 278 districts in India, or 44 percent of the nation’s total, as rainfall have been 25 percent below average so far in the four- month monsoon season that started June 1, the farm ministry said Aug. 27. Farm Output Morgan Stanley economist Chetan Ahya and Nomura Securities Co. economist Sonal Varma said the drought will trim farm production though its impact on industry and services will be limited. Services including banking and software make up 55 percent of India’s $1.2 trillion economy, while industry accounts for a quarter. “The lagged impact of monetary and fiscal policy action, improved business confidence in view of increased political stability, and recovery in external demand should ensure that the growth acceleration is sustained,” Ahya said. India’s industrial production in June gained 7.8 percent from a year earlier, the fastest pace in 16 months, the government said Aug. 12. Ahya expects the economy to grow between 5.2 percent and 5.8 percent in the year to March 31. That pace still makes India the fastest growing major economy after China, attracting overseas companies including Harley-Davidson Inc., the biggest U.S. motorcycle maker. The U.S. economy shrank at a 1 percent annual rate last quarter. Chinese GDP rose 7.9 percent in the second quarter from a year earlier. Car Plants Harley-Davidson said last week it plans to start sales in India from next year. Steel Authority of India Ltd., the nation’s second-largest steelmaker, said this month that demand for so-called flat products, mainly used to make automobiles, is rising and increased their prices by 900 rupees, or 3.4 percent, a ton. Volkswagen AG, Toyota Motor Corp. and other car manufacturers have announced plans to spend more than $6 billion through 2012 to build factories in India to offset slumping demand in their home markets. “Economic growth in India is still very good,” said Jnaneswar Sen, vice president in the Indian unit of Honda Motor Co. , Japan’s second-largest carmaker. Honda plans to increase production in India by 50 percent from next month in response to rising demand. To contact the reporter on this story: Cherian Thomas in New Delhi at Cthomas1@bloomberg.net .

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Penny Herscher: Ratcheting Up CEO Pay — Or Competing For Talent?

August 30, 2009

If you were on the compensation committee of a public company board how would you set the CEO’s pay? There is so much written about fat cat CEOs and their unfair pay packages that this is a question worth pondering (if you care). The really hard part about it is judging what is a) fair, b) necessary to get the talent you want and c) the market. One tool compensation committees use is the “peer group.” This is the list of companies that are “like” your company. They are supposed to be similar in size, similar in market reach, something you can compare with to figure out what your CEO should be paid. But as the Wall Street Journal points out recently, the very use of the peer group can cause CEO pay to ratchet up. The problem goes like this. Most companies are planning to grow and want to have a CEO that can grow the company and make it larger and more competitive. As a result, they pick peer groups that, while they have some companies that are smaller, include many companies that are larger, and have higher paid CEOs than the current executive — two studies cited by the Journal confirm this. (The SEC only started requiring companies to publish their peer groups in 2006, so there is now enough data for the pundits and researchers to start to dig.) At the same time, over 40 percent of companies say that they want to pay their CEO’s above market average — numbers like 60 percent and 75 percent of market are often used. So, if your peer group is larger companies where the CEO pay is higher, and you want to pay your CEO above market, you will take CEO pay up. It’s a compounding phenomenon. Sounds like a conspiracy, right? Well, sitting on two very quality compensation committees, I can tell you from experience it isn’t. It’s a very real challenge for boards to figure out the right level of pay. High enough to attract a great CEO who can take the company on the growth journey you want (which takes both smarts and courage) and not so high that it hurts the financial results of the company or creates too great a gap to other executives and the employees. The good news is the peer group is just one tool we use. We also look carefully at internal executive pay to make sure we are not creating an internal problem, and more importantly at the job the CEO is doing and how he is conquering our strategic objectives. Most senior executives’ compensation is now made up of three major components — base salary, variable bonus based on company performance, and some form of stock (stock options or restricted stock grants). Having these levers allows the board to align the CEO’s pay directly with the interest of the shareholders. This has happened to most technology companies over the last year — there are very few bonuses being paid because performance hasn’t been there as a result of the recession. Of course you do still see companies that offer their CEO compensation that doesn’t seem very aligned to shareholder interest to me: use of the private jet, special health care, tax advice, golf club membership, etc. — and even a key to the executive washroom. Something I don’t understand, but I guess I am an egalitarian when it comes to building company culture.

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High Foreclosure Rates Create a Huge Burden on Communities | Al's …

August 30, 2009

When a property goes into foreclosure , there can be enormous costs to deal with the foreclosure process, and then with the maintenance of an abandoned home after the foreclosure is over. Homeowners, banks, and local governments all have …

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AIG’s New CEO Mends Fences With Old

August 30, 2009

AIG CEO Robert Benmosche said he would consult with former AIG chief Greenberg to help revive the insurer, marking a shift from a rancorous relationship.

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The Economist: America’s New Antitrust Policy: Return Of The Trustbusters

August 30, 2009

THE new head of the antitrust division of America’s Department of Justice, Christine Varney, sees Thurman Arnold, a predecessor who took office in 1938, as a model. Arnold’s appointment created an uproar. His book, “The Folklore of Capitalism”, published a year earlier, was widely seen as a satire on the inadequacy of the country’s antitrust laws. He was, in his own words, “responsible for the first sustained programme of antitrust enforcement on a nationwide scale.” This vigorous approach, in Ms Varney’s view, was an important part of “that era’s legacy for modern economic policy”. In other words, Ms Varney means business.

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Evernote: Using A ‘Free’ Product To Turn A Profit

August 30, 2009

GIVING away a product has always been a great marketing concept. Even an unsavvy consumer can see a benefit in snatching free products. Free has also become a mantra for business gurus who advocate giving Web start-ups a shot at fast growth by bringing the price of most of their wares to zero.

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Evernote: Using A ‘Free’ Product To Turn A Profit

August 30, 2009

GIVING away a product has always been a great marketing concept. Even an unsavvy consumer can see a benefit in snatching free products. Free has also become a mantra for business gurus who advocate giving Web start-ups a shot at fast growth by bringing the price of most of their wares to zero.

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Loan Modification – Part 3: Home Mortgage Bailout – Real Estate …

August 30, 2009

Loan Modification Attorneys Negotiate Home Mortgage Bailout – Foreclosure Assistance Plan – Real Estate Foreclosure Prevention Alternative To Fraud and Scams.

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Japan Opposition Sweeps to Power, Ends LDPs Half-Century Reign

August 30, 2009
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Israeli Ex-Prime Minister Olmert Indicted for Fraud, Falsifying Documents

August 30, 2009

By Calev Ben-David Aug. 30 (Bloomberg) — Former Israeli Prime Minister Ehud Olmert was indicted on charges of fraud, breach of trust, failure to report income and falsifying documents, the Justice Ministry said. Attorney-General Menachem Mazuz issued the indictment to the Tel Aviv District Court, the ministry said in an e-mailed statement today. The charges relate to actions Olmert, 63, took as industry and trade minister from 2003 to 2006 and before that as mayor of Jerusalem from 1993. Also charged was his former office manager, Shula Zaken , 52. Olmert announced his resignation as prime minister in September last year in the face of the fraud allegations. He was succeeded as head of government by Likud leader Benjamin Netanyahu after elections in February. The charges against Olmert stem from several separate investigations. In one case, he is charged with failing to properly report cash payments he received over a number of years from Morris Talansky , a New York businessman and fundraiser. Olmert is also alleged to have used his position as industry minister to aid the interests of his former law partner and political associate, Uri Messer, who served as a go-between between him and Talansky. Other charges stem from the allegation that Olmert utilized the Rishon Tours travel agency to engage in multiple billing of public and private institutions for trips he made abroad on their behalf in the period before he became prime minister. Olmert has denied all the allegations against him. A spokesman for Olmert, Amir Dan, told the Haaretz newspaper that the former prime minister will prove his innocence in court. To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net .

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Kennedy Buried Next to Brothers as Nation Bids Farewell to Senate’s ‘Lion’

August 30, 2009

By James Rowley and William McQuillen Aug. 30 (Bloomberg) — Senator Edward M. Kennedy , the last lion of a storied U.S. political dynasty, was laid to rest yesterday beside the graves of his two slain brothers on a hilltop above the capital where he made his legislative legacy. The burial at Arlington National Cemetery across the Potomac River from Washington followed a Roman Catholic funeral Mass earlier in the day in Kennedy’s hometown of Boston. At the two-hour service, President Barack Obama and the nation’s political elite bade farewell to the Massachusetts senator whose legislative career spanned almost a half century. “The world will long remember” Kennedy as “heir to a weighty legacy, a champion for those who had none; the soul of the Democratic Party; the lion of the United States Senate,” Obama said in his eulogy for the youngest brother of President John F. Kennedy , slain in 1963, and New York Senator Robert Kennedy , who was murdered during a 1968 quest for the nation’s highest office. Kennedy was given “the gift of time that his brothers were not and he used that gift to touch as many lives and right as many wrongs as the years would allow,” Obama said. Kennedy’s body was taken to its final resting place outside Washington after the funeral motorcade carrying family members and members of Congress stopped briefly outside the U.S. Capitol. “As we think of Teddy, we know that his new life begins,” Cardinal Theodore McCarrick , a friend of the senator, said before offering a prayer at the Arlington burial ceremony as darkness fell. ‘Passion for the Underdog’ “We always knew and were always touched by his passion for the underdog,” McCarrick said. “His legacy will surely place him among the dozen or so greats” of the Senate. The cardinal read a letter that Kennedy had asked Obama to deliver to Pope Benedict during the president’s trip to Rome in July, in which the ailing senator said “I know that I have been an imperfect human being but with the help of my faith I have tried to right my path.” A reply from the Vatican said the pope would pray for him. Seven riflemen fired three volleys and taps was played. The Washington delegation of Cabinet officials and lawmakers who joined members of the Kennedy clan for the two- hour service at Boston’s Basilica of Our Lady of Perpetual Help included House Speaker Nancy Pelosi and Republican Senator John McCain. Three former presidents, George W. Bush , Bill Clinton and Jimmy Carter , attended along with California Governor Arnold Schwarzenegger , who is married to the late senator’s niece, Maria Shriver . ‘Compassion and Service’ In a tribute to Kennedy’s religious faith, the Reverend J. Donald Monan said that the late senator’s “zealously private” life of faith and prayer “held the secret to the extraordinary public life of compassion and service.” The body of Kennedy, who died Aug. 25 at age 77 of brain cancer, was borne to the church by a hearse from where it had lain in repose at the John F. Kennedy Presidential Library and Museum. A steady rain fell as Kennedy’s widow, Victoria Reggie Kennedy , and other family members waited outside the basilica as the senator’s flag-draped coffin was carried into the church by a military honor guard. Ten of Kennedy’s grandchildren, nieces and nephews led the congregation in prayers, paraphrasing some of the late senator’s most familiar lines. These included Kennedy’s plea for universal health-care legislation, now pending in Congress. ‘Cause of His Life’ “For what my grandpa called the cause of his life, as he said that every American have decent quality health care as a fundamental right and not a privilege, we pray to the Lord,” said Max Allen, one of Kennedy’s grandsons. “The work begins anew, the hope rises again and the dream lives on,” said another grandson, Teddy Kennedy. Obama urged politicians in the church to emulate Kennedy’s ability to put aside partisan differences and find common ground. “He was a product of an age when the joy and nobility of politics prevented differences of party” from being “barriers to cooperation and mutual respect, a time when adversaries still saw each other as patriots,” the president said. Cellist Yo-Yo Ma played the Sarabande from Bach’s Cello Suite No. 6. During communion, tenor Placido Domingo , accompanied by Ma, sang Cesar Franck’s “Panis Angelicus.” And during lulls in the service, the sound of raindrops could be heard pounding on the church’s stained-glass windows. Jackson, Quayle, Hatch Those in attendance included Jesse Jackson , former Vice President Dan Quayle and Republican Senator Orrin Hatch of Utah, one of Kennedy’s closest collaborators on health-care legislation. “It is terribly sad that Ted is no longer here,” Blackstone Group Chief Executive Officer Stephen Schwarzman said as he waited outside the church to pass through a security checkpoint. The president and the first lady, Michelle Obama , appeared somber as they entered the packed church. The congregation stood up as the president entered the sanctuary. Traffic signs on the highway that Obama’s motorcade traveled to the church flashed signs saying “Thanks, Ted.” The church is located in Roxbury, a working-class section of Boston where Kennedy had prayed daily for Kara Kennedy’s health while she was undergoing treatment for cancer. Private Prayer “This church was a place of private prayer for a public man,” Kennedy’s parish priest, the Reverend Mark Hession, said in the homily. It “sits in a neighborhood where the important issues that animated Senator Kennedy’s career as so plainly visible, the needs of the poor” so that “the senator’s choice of this church for his funeral mass resonates with the meaning and purpose of his life and work,” Hession said. Crowds lined up for the security check before 6 a.m. Many storefronts and apartment buildings in the neighborhood displayed large American flags. One storefront posted a large banner adorned with a peace sign read: “Teddy, Your Service Will Be Remembered.” Blue and white Kennedy campaign signs were posted over windows and brick walls with a one-word message: “Thanks.” Crowds of residents clutching multicolored umbrellas gathered several blocks away at the street corners that had been blocked off. Honorary pallbearers included Supreme Court Justice Stephen Breyer , a former Kennedy staffer, and Senators Christopher Dodd of Connecticut and John Kerry of Massachusetts. Another former Kennedy aide, Kenneth Feinberg , the U.S. Treasury’s special master for compensation of executives of financial firms that received U.S. bailout money, was also an honorary pallbearer. Family Members Family members at the funeral, led by Kennedy’s widow, included Kennedy’s three children, Kara, Edward Kennedy Jr . and Patrick Kennedy , a Rhode Island congressman, and his niece Caroline Kennedy , daughter of the late President Kennedy. Also in attendance was Kennedy’s first wife, Joan Kennedy, the mother of the couple’s children. Kennedy served in the Senate almost 47 years and was the last surviving son of the political dynasty that included his brothers John, the nation’s 35th president, and Robert, who served as attorney general in his brother’s Cabinet and later as a New York senator. Stop at Capitol Following a flight to Washington, a motorcade carrying Kennedy’s casket and family members arrived in late afternoon at the U.S. Capitol for a brief prayer. Legislators and about 900 current and former staffers stood on the steps leading to the Senate’s entrance and about 4,000 people gathered on the Capitol plaza and along Constitution Avenue. Cheers and applause erupted as the motorcade arrived, and Kennedy’s widow, Victoria Reggie Kennedy and other family members stepped out to embrace staffers on the front steps before the motorcade headed to Arlington. The cemetery was contacted “a couple weeks ago,” about preparing for the burial, according to John Metzler, the superintendent. When the cemetery opens tomorrow, there will be a glossy white oak cross at the head of the grave, and a marble foot stone that will say “Edward Moore Kennedy. 1932-2009,” Metzler said. To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net ; Alison Fitzgerald in Boston at +1- a.fitzgerald@bloomberg.net

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U.A.E., Qatar Shares Advance on Oil Prices, Global Economy; Shuaa Surges

August 30, 2009

By Vivian Salama Aug. 30 (Bloomberg) — United Arab Emirates and Qatari shares advanced to their highest levels in almost three weeks as oil held above $70 a barrel and evidence builds that the global recession is ending. Qatar’s DSM 20 Index climbed 2.4 percent to 7,088.17, the highest level since Aug. 11. The Dubai Financial Market General Index added 1.9 percent and Abu Dhabi’s measure gained 0.9 percent. “The backdrop to international markets remains encouraging and the recent U.S. and European corporate results remain good, as well,” Ali Khan , head of cash-equity trading at Dubai-based Arqaam Capital Ltd. wrote in an e-mail. “This is positive for commodities and commodity-based economies.” Crude closed out last week at $72.74 a barrel, above the levels seen as break-even points for the six countries of the Gulf Cooperation Council, or GCC, which together supply 20 percent of the world’s oil. The U.A.E. and Saudi Arabia, the world’s largest holder of crude reserves, must sell oil for an average of about $70 a barrel in 2009 to finance imports and domestic projects, Citigroup Inc. said in November. Consumer spending in the U.S. rose in July as households took advantage of the government’s “cash for clunkers” program to buy new cars, the Commerce Department said Aug. 28. Employers in the U.S. probably cut jobs in August at a slower pace and manufacturing grew for the first time in more than a year, economists said before reports scheduled for release this week. Shuaa Surges Shuaa Capital PSC closed at its highest level since June 29, gaining 15 percent to 1.73 dirhams. The U.A.E.’s biggest investment bank received regulatory approval to issue new shares, representing 48 percent of the company, to Dubai Banking Group, in an exchange for convertible bonds. Qatar Shipping Co., a marine freight transportation company, soared the most in almost six months, adding 7.9 percent to 31.3 riyals. The shares jumped 10 percent in intraday trading, the maximum a stock is allowed to gain or lose on the Doha bourse. The stock has gained 7.2 percent since announcing Aug. 24 that it established a new logistics firm. Barwa Real Estate Co ., Qatar’s second-largest property developer, gained the most since Aug. 4, adding 3.6 percent to 34.6 riyals. Saudi Arabia’s Tadawul All Share Index fell 0.8 percent to 5,691.77 at 1:38 p.m. in the kingdom. The Kuwait Stock Exchange lost 0.1 percent while Bahrain’s measure declined 0.2 percent. Oman’s MSM30 Index gained 0.9 percent. The Islamic holy month of Ramadan, which began Aug. 21, is traditionally a time of low-volume trading in the Gulf region. Qatar’s index traded at 19 percent of its three-month volume average today while Saudi Arabia’s measured at 37 percent of the average, according to Bloomberg data. To contact the reporter on this story: Vivian Salama in Dubai vsalama@bloomberg.net

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Democratic Party of Japan Sweeps to Power, Ending LDP’s Half-Century Reign

August 30, 2009

By Sachiko Sakamaki and Stuart Biggs Aug. 30 (Bloomberg) — The Democratic Party of Japan swept to power for the first time, ending a half-century of almost unbroken single-party rule in the world’s second-largest economy. The DPJ won at least 241 of 480 seats to secure a majority in Japan’s lower house, public broadcaster NHK projected. The party may almost triple its seats to more than 300, NHK and Fuji Television reported earlier. Prime Minister Taro Aso ’s Liberal Democratic Party lost about two-thirds of its 303 legislators. DPJ leader Yukio Hatoyama , 62, who is set to become prime minister 16 years after he left the ruling party, told journalists “a change in government is about to be reality.” His party becomes the first to single-handedly defeat the LDP since its establishment in 1955. “Japan has at last truly become a democracy,” said Jiro Yamaguchi , a political science professor at Hokkaido University in Sapporo, northern Japan. “The voters clearly said ‘No’ to the LDP, which can no longer deliver innovative policies.” Aso indicated he will step down as head of the LDP, saying he “must accept responsibility” for the election results. Japan is struggling to emerge from the deepest recession since World War II. The next government must address record unemployment, soaring welfare costs and an aging, declining population. The DPJ has pledged to increase child care, lower corporate taxes and curtail the power of Japan’s bureaucrats to end almost 20 years of economic stagnation. Stocks, Bonds Japan’s stocks and bond yields may rise on prospects the DPJ will increase spending to boost growth. Ten-year government bond yields will probably rise to 1.7 percent by year end, while the Nikkei 225 Stock Average will advance about 14 percent to as high as 12,000, said Tokyo-based Yuuki Sakurai , chief executive officer of Fukoku Capital Management Inc. “It’s a landslide victory for the DPJ and the equity market will remain excited for a couple of days or even a couple of weeks,” said Sakurai, who helps to manage about 800 billion yen ($8.5 billion) in assets. The yen is also likely to benefit from the DPJ’s pledge to give the Bank of Japan more autonomy, increasing the scope for the central bank to raise interest rates earlier. JPMorgan Chase & Co. overnight interest-rate swaps signal a 19 percent chance borrowing costs will be lifted by the end of July. Change of Government Agriculture Minister Shigeru Ishiba said on NHK that “a change in government is certain.” The Democrats had 112 seats before Aso last month dissolved the lower house and called the election. The LDP and its coalition partner New Komeito has 334. Several veteran LDP lawmakers may lose their seats in the projected rout. Former Prime Minister Toshiki Kaifu will lose his constituency, NHK said. Finance Minister Kaoru Yosano said this month he’s in the toughest election fight of his career. “It’s about time for change,” said Yuichi Tauchi, 25, a project manager at a truck manufacturer in Tokyo after voting today for the DPJ. “People have been losing faith in the LDP, and a change in politics will hopefully bring about optimism.” NHK estimated voter turnout at 69 percent of Japan’s 104 million voters. The Liberal Democrats have dominated Japan’s postwar political landscape, governing for all but 10 months since 1955. The party’s first premier was Ichiro Hatoyama, grandfather to the man now aiming to break the LDP’s stranglehold. Ichiro was a rival of Shigeru Yoshida , prime minister from 1948-1954 and Aso’s grandfather. Japan’s Economy Japan’s economy grew an annualized 3.7 percent in the three months ended June 30, the first growth in five quarters, after an 11.7 percent decline in the first quarter of the year. The unemployment rate rose to a record 5.7 percent in July and the national debt is approaching 200 percent of gross domestic product last year, the highest in the world. Priorities for the next government include coping with a population of 127 million that is rapidly aging: Japan has the world’s highest proportion of people over 65 years old and the lowest ratio of those under 15. Welfare outlays already make up a quarter of the 88.5 trillion-yen ($945 billion) budget this year. To finance an economic aid package that would total 16.8 trillion yen by 2013, the DPJ says will eliminate 9.1 trillion yen in unnecessary spending, tap special accounts managed by the nation’s bureaucrats and abolish some tax deductions. Hatoyama is a scion of Japan’s most prominent political family. His great-grandfather was speaker of the lower house and his father was foreign minister. His younger brother, Kunio, is a senior member of the LDP. To contact the reporters on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net ; Stuart Biggs in Tokyo at Sbiggs3@bloomberg.net

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ABN takes RBS mantle at last

August 30, 2009

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Free finance magazines and white papers from top industry sources

August 30, 2009

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HOW A BOARD LOST A BANK: Cape Fear shareholders were left with nothing. Investigators want answers.

August 30, 2009

WILMINGTON As the coastal building boom swept this area’s beaches, John Davie Waggett gambled for a piece of the action. Waggett was a successful pharmacist in this historic port city, but he had no experience in real estate development. Nevertheless, in

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A new day after bank's failure: Name's different as M & T acquires Bradford, but officials say it's business as usual

August 30, 2009

An advertisement for a low interest rate brought Colette Searol to Bradford Bank in Towson yesterday morning, where instead of hearing a pitch by bank officials detailing the deal, she received a question-and-answer sheet explaining the company’s

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Wall Street Journal: One Year Later, Lessons For Investors From The Financial Crisis

August 30, 2009

Today, the Dow Jones Industrial Average stands roughly 2000 points below where it was on this end-of-summer weekend one year ago. No one knew then, of course, but the U.S. stock market and the world economy were just days from historic calamity, unprecedented in the lives of anyone born in the last 80 years.

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Fallout from ‘Yale Investment Model’ Continues

August 30, 2009

… the model has been subject to the real world mega stress test of the past … were ideal for the likes of real estate, leveraged buyouts and distressed debt. Yale beat markets by a wide …

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Merrill Wealth Unit Adds 11 Advisers

August 30, 2009

Merrill Lynch Global Wealth Management has added 11 financial advisers to its team

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Legg Mason Shuffles Fund Managers

August 30, 2009

Two fund managers at ClearBridge Advisors have resigned from their portfolio responsibilities

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CalPERS Seeks Not To Pay Lehman 172M

August 30, 2009

The California Public Employees Retirement System is seeking not to pay Lehman Brothers 172 million for its terminated swap contracts

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AD Vallett Hires Retirement Services VP

August 30, 2009

AD Vallett Company has named Courtenay Shipley as vice president retirement services

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Democratic Party of Japan Decisively Ousts LDP in Voting, Exit Polls Show

August 30, 2009

By Sachiko Sakamaki and Stuart Biggs Aug. 30 (Bloomberg) — Yukio Hatoyama ’s Democratic Party of Japan headed toward an historic election victory, ending a half- century of almost unbroken single-party rule, exit polls showed. Public broadcaster NHK predicted the DPJ will win between more than 300 of the 480 seats in Japan’s lower house of parliament, which chooses the prime minister, citing its exit survey. Prime Minister Taro Aso ’s Liberal Democratic Party , which has governed for all but 10 months since 1955, will win about 100 seats, NHK said. Fuji Television predicted the DPJ would capture 321 seats. A victory by the opposition would bring about the first change in power in 15 years and comes as Japan is emerging from its worst recession since World War II. The next government must address record unemployment, soaring welfare costs and a declining, aging population. Some long-time LDP lawmakers are facing serious challenges for their seats. Finance Minister Kaoru Yosano said this month he’s in the toughest election fight of his career. Others who may lose include three former prime ministers: Yasuo Fukuda , Yoshio Mori and Toshiki Kaifu . No ex-premier has lost his seat since Tanzan Ishibashi in 1963. Long-time LDP supporter Shoji Tamura, 69, voted for the Democratic Party this time “to punish” politicians he says brought the country to the brink of economic disaster. “If the DPJ can handle things well, I’ll keep voting for them in the future,” Tamura said after voting today in Tokyo. “People are anxious about the aging of Japanese society; this is our biggest problem.” Post War Politics The Liberal Democrats have dominated Japan’s postwar political landscape. The party’s first premier was Ichiro Hatoyama, grandfather to the man now aiming to break the LDP’s stranglehold. Ichiro was a rival of Shigeru Yoshida , prime minister from 1948-1954 and Aso’s grandfather. Japan’s economy grew an annualized 3.7 percent in the three months ended June 30, the first growth in five quarters, after an 11.7 percent decline in the first quarter of the year. The unemployment rate rose to a record 5.7 percent in July and the national debt is approaching 200 percent of gross domestic product last year, the highest in the world. Priorities for the next government include coping with a population of 127 million that is rapidly aging: Japan has the world’s highest proportion of people over 65 years old and the lowest ratio of those under 15. Welfare outlays already make up a quarter of the 88.5 trillion-yen budget this year. To contact the reporters on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net ; Stuart Biggs in Tokyo at Sbiggs3@bloomberg.net

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Democratic Party of Japan Decisively Ousts LDP in Voting, Exit Polls Show

August 30, 2009

By Sachiko Sakamaki and Stuart Biggs Aug. 30 (Bloomberg) — Yukio Hatoyama ’s Democratic Party of Japan headed toward an historic election victory, ending a half- century of almost unbroken single-party rule, exit polls showed. Public broadcaster NHK predicted the DPJ will win between more than 300 of the 480 seats in Japan’s lower house of parliament, which chooses the prime minister, citing its exit survey. Prime Minister Taro Aso ’s Liberal Democratic Party , which has governed for all but 10 months since 1955, will win about 100 seats, NHK said. Fuji Television predicted the DPJ would capture 321 seats. A victory by the opposition would bring about the first change in power in 15 years and comes as Japan is emerging from its worst recession since World War II. The next government must address record unemployment, soaring welfare costs and a declining, aging population. Some long-time LDP lawmakers are facing serious challenges for their seats. Finance Minister Kaoru Yosano said this month he’s in the toughest election fight of his career. Others who may lose include three former prime ministers: Yasuo Fukuda , Yoshio Mori and Toshiki Kaifu . No ex-premier has lost his seat since Tanzan Ishibashi in 1963. Long-time LDP supporter Shoji Tamura, 69, voted for the Democratic Party this time “to punish” politicians he says brought the country to the brink of economic disaster. “If the DPJ can handle things well, I’ll keep voting for them in the future,” Tamura said after voting today in Tokyo. “People are anxious about the aging of Japanese society; this is our biggest problem.” Post War Politics The Liberal Democrats have dominated Japan’s postwar political landscape. The party’s first premier was Ichiro Hatoyama, grandfather to the man now aiming to break the LDP’s stranglehold. Ichiro was a rival of Shigeru Yoshida , prime minister from 1948-1954 and Aso’s grandfather. Japan’s economy grew an annualized 3.7 percent in the three months ended June 30, the first growth in five quarters, after an 11.7 percent decline in the first quarter of the year. The unemployment rate rose to a record 5.7 percent in July and the national debt is approaching 200 percent of gross domestic product last year, the highest in the world. Priorities for the next government include coping with a population of 127 million that is rapidly aging: Japan has the world’s highest proportion of people over 65 years old and the lowest ratio of those under 15. Welfare outlays already make up a quarter of the 88.5 trillion-yen budget this year. To contact the reporters on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net ; Stuart Biggs in Tokyo at Sbiggs3@bloomberg.net

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Africa Israel Investments Slumps in Tel Aviv on Plans to Restructure Debt

August 30, 2009

By David Wainer and Alisa Odenheimer Aug. 30 (Bloomberg) — Africa Israel Investments Ltd. , the real-estate company owned by diamond mogul Lev Leviev , said today it will start talks with its bondholders to restructure its debt. The Yehud, Israel-based company is “increasing its preparedness against the risks” that may continue to arise from the global recession, Africa Israel said in an e-mailed statement. The company has been selling property to meet its debt obligation and has paid off 3.3 billion shekels ($864 million) in loans since Jan. 2008, it said. “The company’s assets are not yielding enough to pay back their debt so they’re now facing up to the facts,” said Moti Berliner , an analyst at Meitav Investment House Ltd. in Tel Aviv. “They will be able to reorganize their debt because it is in the interest of the bondholders to see the company survive but there will be a higher cost.” Africa Israel also said its second-quarter loss widened to 1.32 billion shekels from 91 million shekels a year ago. The loss was due mainly to a drop in the value of property under construction and an increase in financing costs, it said. The company’s shares plummeted 91 percent last year as a decline in global property prices drove the value of its assets down, prompting concern it may be forced to default. Since the start of the year the company has focused on selling assets, including a stake in New York’s historic Clock Tower, and buying back bonds to increase liquidity. Africa Israel fell as much as 30.4 percent today, the most in nine months, and was down 26.1 percent to 51.10 shekels as of 10:21 a.m. in Tel Aviv trading. The yield on the company’s notes due 2014 jumped by 7.1 percentage points to 28.6 percent, pushing the price of the 4.8 percent securities down by 11.8 shekels to 44.27. To contact the reporter on this story: David Wainer in Tel Aviv at dwainer1@bloomberg.net

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Africa Israel Investments Slumps in Tel Aviv on Plans to Restructure Debt

August 30, 2009

By David Wainer and Alisa Odenheimer Aug. 30 (Bloomberg) — Africa Israel Investments Ltd. , the real-estate company owned by diamond mogul Lev Leviev , said today it will start talks with its bondholders to restructure its debt. The Yehud, Israel-based company is “increasing its preparedness against the risks” that may continue to arise from the global recession, Africa Israel said in an e-mailed statement. The company has been selling property to meet its debt obligation and has paid off 3.3 billion shekels ($864 million) in loans since Jan. 2008, it said. “The company’s assets are not yielding enough to pay back their debt so they’re now facing up to the facts,” said Moti Berliner , an analyst at Meitav Investment House Ltd. in Tel Aviv. “They will be able to reorganize their debt because it is in the interest of the bondholders to see the company survive but there will be a higher cost.” Africa Israel also said its second-quarter loss widened to 1.32 billion shekels from 91 million shekels a year ago. The loss was due mainly to a drop in the value of property under construction and an increase in financing costs, it said. The company’s shares plummeted 91 percent last year as a decline in global property prices drove the value of its assets down, prompting concern it may be forced to default. Since the start of the year the company has focused on selling assets, including a stake in New York’s historic Clock Tower, and buying back bonds to increase liquidity. Africa Israel fell as much as 30.4 percent today, the most in nine months, and was down 26.1 percent to 51.10 shekels as of 10:21 a.m. in Tel Aviv trading. The yield on the company’s notes due 2014 jumped by 7.1 percentage points to 28.6 percent, pushing the price of the 4.8 percent securities down by 11.8 shekels to 44.27. To contact the reporter on this story: David Wainer in Tel Aviv at dwainer1@bloomberg.net

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Tax Tips & Advice : How To Deduct Home Mortgage Loan Interest …

August 30, 2009

Stop Foreclosure – Foreclosure Listings – News & Blog. Subscribe · Home · Foreclosure · Short Sale · Debt Consolidation · Bankruptcy · Debt Relief. « Antique Estate Auction Preview! Fontaine’s April 4th 2009. Aug 30 2009 …

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Job Losses in U.S. Probably Slowed, Factories Expanded as Recovery Neared

August 30, 2009

By Timothy R. Homan Aug. 30 (Bloomberg) — Employers in the U.S. probably cut jobs in August at a slower pace and manufacturing grew for the first time in more than a year, adding to evidence the worst recession since the 1930s is ending, economists said before reports this week. Payrolls fell by 230,000 workers, the smallest decline in a year, according to the median of 65 estimates in a Bloomberg News survey ahead of a Sept. 4 Labor Department report. Figures from a private group of purchasing managers on Sept. 1 may show the first expansion at factories since January 2008. “We are heading out of the tunnel,” said Jonathan Basile , an economist at Credit Suisse in New York. “It doesn’t mean we’ll have a very rapid recovery because consumers still face many headwinds.” The worst employment slump in the post-World War II era, a record loss of wealth and mounting foreclosures are among the obstacles American households have to overcome before any recovery can gain speed. Government programs, including “cash for clunkers” and credits to first-time homebuyers, may help the economy expand in the second half of the year. The jobless rate in August is likely to climb to 9.5 percent from 9.4 percent the prior month, according to economists surveyed by Bloomberg. Unemployment will reach 10 percent by early 2010, a Bloomberg poll this month showed. Payroll losses peaked at 741,000 in January, the most since 1949. The U.S. has lost 6.7 million jobs since the recession began in December 2007. Job Cuts Some companies continue to eliminate jobs to cut costs and boost profits amid weak sales. Whirlpool Corp., the world’s largest appliance maker, said last week it will close a manufacturing plant in Evansville, Indiana, resulting in the loss of 1,100 jobs, or about 1.6 percent of the company’s workforce. A record reduction in inventories over the first half of the year sets the stage for production to rebound, economists said. Companies including General Motors Co. and Chrysler Group LLC, both out of bankruptcy, may benefit from higher sales and a boost to output from the government’s “cash-for-clunkers” effort. The incentive program, which offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, produced almost 700,000 automobile sales before ending on Aug. 24, the Transportation Department said last week. Auto Sales Ford Motor Co., the second-largest U.S. automaker, posted its first monthly U.S. sales gain in July since 2007. “We had a solid July sales month and we are headed toward an even stronger August,” Ford marketing chief Ken Czubay said last week in a statement. The jobs report is also projected to show manufacturing employment dropped by 60,000 this month, up from 52,000 in July. The pace of industry cutbacks had declined since January, when 262,000 workers lost their jobs, the most since 1975. One reason for the projected increase in factory job cuts this month is that the pace of hiring at carmakers probably ebbed. Automakers added 28,200 workers in July, the biggest one-month increase in more than a decade, the Labor Department said Aug. 7. GM this month called back 1,350 union workers, its biggest one-time increase in jobs since 2006, as it boosts second-half production, in part because of “cash for clunkers.” Sales figures from the auto industry are due this week. Increasing demand will contribute to the stabilization in manufacturing already taking place. Factory Index The Tempe, Arizona-based Institute for Supply Management may report in two days that its manufacturing index climbed to 50.5 in August, according to the Bloomberg survey median. Readings above 50 signal expansion. Orders placed at factories likely jumped 2.2 percent in July, the most in two years, economists said ahead of a Commerce Department report due Sept. 2. Service industries, which make up almost 90 percent of the economy, are also likely to show signs of improving. The ISM’s gauge of non-manufacturing businesses probably increased to 48 last month from 46.4 in July, according to the Bloomberg survey. The report is due Sept. 3. In other reports this week, the number of contracts to buy previously owned homes rose last month for a sixth consecutive time, according to the Bloomberg survey. A government report last week showed new-home sales in July increased the most since February 2005. The S&P 500 homebuilder supercomposite index has climbed 41 percent since the beginning of the year, while the broader S&P 500 has increased 14 percent during the same period. To contact the reporter on this story: Timothy R. Homan in Washington at Thoman1@bloomberg.net

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