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The jobs
report comes out tomorrow and the overwhelming odds are it will be the 9th
consecutive month of job losses. Here are some interesting headlines and
quotes from the past week.
Asian Stocks Fall
to Three-Year Low, Led by Toyota, Hang Seng
"In
my adult lifetime I don't think I've ever seen people as fearful,
economically, as they are right now," billionaire Warren Buffett said in
an interview with PBS's Charlie Rose yesterday. "They are not wrong to
be worried."
Ford, Honda U.S.
Sales Plummet as Credit Tightens
Sales
at Ford, the second-largest U.S. automaker, fell 35 percent from a year
earlier, the Dearborn, Michigan-based company said in a statement today. Honda
reported a 24 percent drop.
Industrywide sales probably will fall for the 11th month in a row, the
longest slide in 17 years. Ford said its sales fell to 120,788 cars and
trucks from 184,612 a year earlier, the 22nd decline in the past 23 months.
U.S. dealership
closures to increase into 2009
The
number of U.S. car dealerships closing is expected to increase into 2009 with
as many as 3,800 dealerships at risk of closure because of dwindling sales
and tighter credit, according to a newly released study by Grant Thornton LLP
on Wednesday.
"An increasing number of dealers are simply closing their doors because
sales have plummeted, credit has dried up, the overall retail environment is
increasingly challenging and potential investors are sitting on the
sidelines," said Paul Melville, a partner with Grant Thornton LLP.
Bill Heard Enterprises Inc, one of the biggest General Motors Corp Chevrolet
dealerships, filed for bankruptcy on Sunday, citing operating losses,
decreased demand for vehicles and lack of credit.
U.S. September Job
Cuts Rise 33% From Year Ago, Challenger Says
Job
cuts announced by U.S. employers climbed 33 percent in September from a year
earlier, led by reductions at computer- and automakers, according to a
private placement firm.
Firing announcements rose to 95,094 last month from 71,739 in September 2007, Chicago-based Challenger, Gray & Christmas Inc. said in a statement
today. Hewlett-Packard Co., the world's largest computer-maker, said last
month it would eliminate 24,600 jobs, accounting for much of September's
increase, Challenger said.
Major Insurance
Company On Verge Of Bankruptcy: Senator Reid
Credit-default
swaps on Hartford jumped 165 basis points to a mid-price of 675 basis points,
according to broker Phoenix Partners Group. Contracts on Prudential rose 125
basis points to 617 basis points, while MetLife climbed 97 basis points to
583 basis points, CMA Datavision prices show.
"We don't have a lot of leeway on time," Reid told reporters after
a luncheon in Washington. "One of the individuals in the caucus today
talked about a major insurance company -- a major insurance company -- one
with a name that everyone knows that's on the verge of going bankrupt. That's
what this is all about."
CalPERS loses $24.9
billion but stays strong, analysts say
The
California Public Employees' Retirement System, the pension fund used to pay
the retirements of millions of government employees, has lost $24.9 billion
over the last three months. The 10.4 percent loss is less than the Standard
& Poor's 500, which dropped 13.6 percent in that time.
If the losses continue, California taxpayers could be faced with demands to
make up shortfalls in funding the giant pension system. On Monday alone, a
dive in the stock markets wiped out $7.8 billion of the pension fund's
investments.
UBS Cuts 2,000
Investment Bank Jobs, Reposition Unit
UBS
AG, the European bank hardest hit by the credit crisis, said it will cut
2,000 more jobs from its investment banking unit and reposition the division
to reduce costs and improve efficiency.
The reductions will bring job cuts at the unit to around 6,000 since the
third quarter of 2007, the Zurich-based bank said today in an e-mailed
statement. At the end of the year, the investment bank will have around
17,000 employees, UBS said.
UBS said it will exit commodities, apart from precious metals, scale back
real estate and securitization as well as proprietary trading. Chairman Peter
Kurer "categorically" ruled out a sale of the securities unit
yesterday
Office Space Is
Emptying Out
Businesses
are dumping office space at the fastest pace since the months after the Sept.
11 attacks, increasing the financial stress on commercial-real-estate owners
and their lenders, many of them already ailing financial institutions.
Nationwide, rents on office properties -- including landlord concessions and
discounts -- were flat in the third quarter, the worst result for
office-property owners since late 2004 -- when commercial real estate began
to emerge from a prolonged slump, according to Reis Inc., a New York
real-estate research firm.
Rent stagnation and increasing vacancies put "strain on borrowers to
make payments on mortgages," said Sam Chandan
Asian Money Market
Rates Advance on Bank Collapse Concerns
Asian
banks' borrowing costs rose to the highest levels in nine months or more
after the collapse of lenders in the U.S. and Europe deepened a global credit
freeze.
Hong Kong's three-month interbank rate jumped 41 basis points this week to
3.81 percent, and Tokyo's increased 1 basis point to 0.87 percent, both the
highest since December.
``The interbank lending market remains clogged up as banks hoard cash,'' said
Joshua Williamson, a senior strategist at TD Securities in Sydney. ``Funding
pressures look likely to remain high and the longer they stay up there the
greater the chance banks will pass on those costs to clients.''
Credit markets have frozen, driving rates higher, as banks including Lehman
Brothers Holdings Inc. and the U.K.'s Bradford & Bingley Plc failed. Central
banks pumped an unprecedented $1 trillion into the global financial system to
ease the turmoil, which has prompted businesses including Australian iron-ore
miner Fortescue Metals Group Ltd. and PGG Wrightson Ltd., New Zealand's largest agricultural services provider, to scale back or review expansion
plans.
Icelanders Worry
'House of Cards' May Collapse After Glitnir
The government bailed out Glitnir after the bank was unable to secure
short-term funding. Glitnir had a deposit-to-loan ratio of about 30 percent,
the lowest among Iceland's biggest banks, meaning it had to rely on money
markets for financing.
``Because Iceland is so small and because there are extensive
cross-shareholdings, if one part collapses, the rest follows like a house of
cards,'' said the 48-year-old Glitnir customer.
France, Germany
Clash Over Proposal to Bail Out Banks
France and Germany clashed over whether to create a fund to bail out banks pounded by the global credit crunch,
kicking off a European version of the debate that has been raging in the U.S. for two weeks.
The conflict between the two biggest euro-region economies undermined efforts
to build a consensus European response to the financial crisis as a recession
looms. Other fissures emerged, as Ireland's decision to guarantee bank
deposits and debts prompted criticism by British bankers yesterday that it
"distorted competition."
Before we throw $700
billion down a black hole, someone ought to be asking how it will solve
anything. Unfortunately the urge is for Congress to "do something
quickly" because of the Bush, Bernanke, and Paulson statements scaring
people to death with impending economic mushroom cloud warnings.
Not a single job will be created in the Paulson bail out plan, now renamed by
the media as the "rescue plan". Close analysis shows the taxpayer
was tossed the anchor in an attempt to give wall street the lifeboat.
Mish
GlobalEconomicAnalysis.blogspot.com
Mish's Global Economic
Trend Analysis
Thoughts on the great inflation/deflation/stagflation debate
as well as discussions on gold, silver, currencies, interest rates, and
policy decisions that affect the global markets.
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