World economy talk

[uls]

haha

**** industry meltdown will be the end of civilization

[uls]

yep the ADP numbers are scary

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less macro news:

for loyal Marks and Spencer customers...

M&S chief pleads for government help after sales slump
http://www.guardian.co.uk/business/2...er-jobs-stores

Wednesday 7 January 2009 11.21 GMT
Marks & Spencer chief Sir Stuart Rose today called on the government to do all it could to restore consumer confidence as the high street giant unveiled dire Christmas trading, the closure of 27 stores and confirmed more than 1,200 staff were to be axed in a bid to cut costs.

Rose said: "The government has got to make sure it keeps sending the same message out that things are going to get better." He said the impact on consumer confidence of tomorrow's anticipated interest rate cut – which is expected to take the cost of borrowing to its lowest level since the Bank of England was set up in 1694 – would be only marginal. "If interest rates fall by another 1% it is not going to make much difference, though I recognise it may be done for other reasons," he said.

The 125-year-old retailer, which has 600 outlets, said like-for-like sales were down 7.1% in the 13 weeks to 27 December, despite holding two one-day pre-Christmas sales, when 20% was slashed off the price of all goods. Like-for-like sales of general merchandise – clothing and homewares – were down nearly 9% and food sales declined 5.2% from 2007 levels.

[tidus1203]

They are asking the governments as if the governments have infinite money... PATHETIC!

[uls]

everyone is asking for help

in the following weeks and months, there will be more companies/industries asking for govt help

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I'm sure you guys know what happened to Satyam Computer Services

BANGALORE, Jan 7 (Reuters) - The chairman of India's Satyam Computer Services (SATY.BO) (SAY.N) resigned on Wednesday, saying profits had been inflated over the last several years.

here's a part of the letter of the chairman to board members:

To the Board of Directors Satyam Computer Services Ltd.
From B. Ramalinga Raju Chairman, Satyam Computer Services Ltd.

January 7, 2009

Dear Board Members,

It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice:

1. The balance sheet carries of September 30, 2008 a. Inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books) b. An accrued interest of Rs 376 crore which is non-existent c. An understated liability of Rs 1,230 crore on account of funds arranged by me. d. An overstated debtors position of Rs 490 crore (as against Rs 2,651 reflected in the books)

2. For the September quarter (Q2) we reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24 per cent of revenues) as against the actual revenues of Rs 2,112 crore and an actual operating margin of Rs 61 crore (3 per cent of reve nues). This has resulted in artificial cash and bank balances going up by Rs 588 crore in Q2 alone.

The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual opera ting profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September q uarter, 2008 and official reserves of Rs 8,392 crore).

The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations - thereby significantly increasing the costs.

Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was that poor performance would result in take-over, thereby exposing the gap. It was like riding a tiger, not knowing how to get off withou t being eaten.

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas’ investors were convinced that this is a good divestment opportunity and strategic fit. Once Satyam’s problem was solved, it was hoped that Ma ytas’ payments can be delayed. But that was not to be. What followed in the last several days is common knowledge.

[uls]

Closer to home...

New Philippine bonds rise after big demand

HONG KONG, Jan 8 (Reuters) - Newly sold dollar bonds from the Philippines, the first offshore issuance from Asia in 2009, traded higher on Thursday after the $1.5 billion offer was four times oversubscribed.

The 10-year global bond which was sold overnight at a price of 99.158 cents on the dollar, was trading at 100.125/100.25 for a yield of around 8.35 percent, according to traders.

At the offer price the yield was 8.5 percent, the lower end of indicative yields that extended to as high as 8.75 percent and it represented a spread of 599.9 basis points over corresponding U.S. Treasuries.

A source close to the deal said the issue had 281 participants with Asia accounting for 41 percent, the United States 38 percent and Europe 21 percent of the allotment.

By investor type, banks represented 20 percent; funds 58 percent; pension funds, insurance companies and government institutions 16 percent and retail and corporate investors 6 percent of the allotment.

[uls]

the biggest buyer of US treasuries is not so enthusiastic in buying more...

at a time when the US needs buyers of its debt paper...

the US needs to raise trillions to fund bailouts and stimulus

China Losing Taste for Debt From the U.S.
http://www.nytimes.com/2009/01/08/bu...n.html?_r=2&hp

By KEITH BRADSHER
Published: January 7, 2009

HONG KONG — China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.

The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time.

On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits “for years to come,” even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasuries, which are government i.o.u.’s.

In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.

But now Beijing is seeking to pay for its own $600 billion stimulus — just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.

“All the key drivers of China’s Treasury purchases are disappearing — there’s a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates,” said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland.

Fitch Ratings, the credit rating agency, forecasts that China’s foreign reserves will increase by $177 billion this year — a large number, but down sharply from an estimated $415 billion last year.

China’s voracious demand for American bonds has helped keep interest rates low for borrowers ranging from the federal government to home buyers. Reduced Chinese enthusiasm for buying American bonds will reduce this dampening effect.

yield rising

Jan. 7 (Bloomberg) -- Ten-year Treasuries declined, pushing the yield up one basis point to 2.47 percent as of 10:35 a.m. in London, according to BGCantor Market Data. Two- year note yields increased three basis points to 0.81 percent.

[uls]

News Release
Bank of England Reduces Bank Rate by 0.5 Percentage Points to 1.5%
http://www.bankofengland.co.uk/publi...s/2009/001.htm

8 January 2009 The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 0.5 percentage points to 1.5%.

The world economy appears to be undergoing an unusually sharp and synchronised downturn. Measures of business and consumer confidence have fallen markedly. World trade growth this year is likely to be the weakest for some considerable time.

In the United Kingdom, business surveys suggest that the pace of contraction in activity increased during the fourth quarter of 2008 and that output is likely to continue to fall sharply during the first part of this year. Surveys of retailers and reports from the Bank’s regional Agents imply that consumer spending has weakened. The outlook for business and residential investment has deteriorated. And the availability of credit to both households and businesses has tightened further, pointing to the need for further measures to increase the flow of lending to the non-financial sector. But the substantial depreciation in sterling over recent months may help to moderate the impact on UK net exports of the slowdown in global growth.

CPI inflation fell to 4.1% in November. Inflation is expected to fall further, reflecting waning contributions from retail energy and food prices and the direct impact of the temporary reduction in Value Added Tax. Measures of inflation expectations have come down. And pay growth remains subdued. But the depreciation in sterling will boost the cost of imports.

[uls]

Due to storage problems for WTI crude oil, WTI price has fallen to $42

the price of Dubai crude (which the Phils imports) has strengthened against WTI

$45.92 ang average price ng Dubai and Oman

WTI is now $42

Dubai crude is supposed to be lower than WTI

[Monseratto]

I wonder how the markets will react later when this report comes out. Bad end to Bush's rather sullied legacy...

U.S. Job-Market Collapse in 2008 Was Probably Biggest Since ’45

“The labor market is clearly not functioning at all,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. “This will be a big hit to consumer spending and confidence. It suggests a very long, challenging recession.”

The report, the last one under President George W. Bush’s watch, is due from the Labor Department at 8:30 a.m. in Washington. Economists’ estimates for December ranged from job losses of 350,000 to 750,000. Forecasts for the unemployment rate ranged from 6.5 percent to 7.1 percent.

The projected decline would be the 12th consecutive loss, and follow a 533,000 November decrease that was the largest in three decades. The economy created 1.1 million jobs in 2007.

[uls]

here it is...

WASHINGTON, Jan 9 (Reuters) - U.S. employers slashed payrolls by 524,000 in December, driving the unemployment rate to its highest level in almost 16 years, a government report showed on Friday, suggesting that the year-long recession was deepening.

The Labor Department said the national unemployment rate rose to 7.2 percent in December, the highest level since January 1993. The jobless rate was 6.8 percent in November.

Analysts polled by Reuters predicted a reduction of 550,000 jobs in December. November’s job losses were revised to show a cut of 584,000, previously reported as a 533,000 loss, while October’s losses were revised to 423,000 from a decline of 320,000. With those revisions, the total reduction in U.S. nonfarm payrolls in the four months through December was 1.9 million.

The largest number of job losses in December was in services-providing businesses, which shed 273,000 jobs.

[uls]

Citigroup buys a million barrels of oil, and rents an oil tanker

hehe

you can't make up stuff like that

amazing

Citigroup Profits From Contango With Ship Off Orkney
http://www.bloomberg.com/apps/news?p...d=aZSSMtC6ynNY

Jan. 8 (Bloomberg) -- Citigroup Inc.’s commodities-trading unit followed BP Plc and Royal Dutch Shell Plc in anchoring a full oil tanker offshore northern Scotland to profit from higher prices later this year.

Phibro LLC is keeping up to 1 million barrels of the North Sea Forties grade of oil in the Ice Transporter near the Orkney Islands, according to people familiar with the matter. Phibro is seeking to make money from contango, a market where buyers pay more for delivery later in the year than they do today.

who says there are no speculators in the oil market?

[uls]

++++++++++

[leonleon]

it's the nature of the System.

the SYSTEM is now dysfunctional

and the govt wants it to function again

Why not just develop (create, mutate or morph into) a better system instead of just trying to cure this current system (cycle) which seems to have failed us all miserably time and time again?

In computer terms, why not just rewrite the whole program from scratch instead of just fixing the bugs and in the process creating more bugs from fixing the old ones?

Can't we all just return to the basics: Spend only what you earn?

Can't we develop a system where there is no (personal) debt?

Can't we all curb our greed?

Just a simple layman thinking out loud here.

[uls]

leonleon:

Why not just develop (create, mutate or morph into) a better system instead of just trying to cure this current system (cycle) which seems to have failed us all miserably time and time again?

In computer terms, why not just rewrite the whole program from scratch instead of just fixing the bugs and in the process creating more bugs from fixing the old ones?

in the time period between abandoning the current system and setting up an entirely new one, bad things will happen... very bad things

too scary to imagine

politicians will not even consider that

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Can't we all just return to the basics: Spend only what you earn?

Can't we develop a system where there is no (personal) debt?

people want to experience life now

they want that brand new car now

they want that new house now, that new LCD TV now

people are willing to spend future income to satisfy their desires today

the system makes it possible

people love the system

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Can't we all curb our greed?

hehehe

[Monseratto]

Right now people are cutting on non-essentials cuz no one is sure how safe their income/jobs are. If it still works, don't get a new one. Unfortunately, an economy dependent on spending cannot surivive that way. No Spending, inventory buildups, companies cut production, more layoffs...

Jan. 10 (Bloomberg) -- Drivers rattled by the worst U.S. labor market since World War II are hanging on to old autos longer instead of buying new models, threatening to crimp sales again in 2009 after demand plummeted to a 16-year low.

Used vehicles being traded in at dealerships averaged 6.3 years of age after the Wall Street meltdown in late 2008, about 6 months older than before the crisis, according to forecaster J.D. Power & Associates in Troy, Michigan.

“The bankruptcy of Lehman Brothers in September and other financial catastrophes have completely broken consumer confidence,” said Chief Executive Officer Mike Jackson of AutoNation Inc., the biggest U.S. new-car retailer. “People are losing money in ways never thought possible. They’re shook up.”

Yesterday’s unemployment report deepened the industry gloom before next week’s Detroit auto show, with 2008 U.S. job losses marking the biggest annual drop in payrolls in 63 years. General Motors Corp. and Chrysler LLC, which just won $13.4 billion in U.S. loans, are at risk of collapse should sales fall further.

“The key statistic affecting car sales now is job loss,” said Ken Goldstein, an economist for the Conference Board. The New York-based research group’s index of consumer confidence fell to the lowest in 40 years of record keeping in December.

U.S. industrywide sales plunged 18 percent last year to 13.2 million, heralding a possible 2009 slide for automakers including GM, Chrysler and Ford Motor Co. GM reiterated Jan. 5 it expects a U.S. market of 10.5 million to 12 million units.

“If the industry sells fewer than 12 million vehicles this year, the government will have to write more checks” to bail out automakers, said John Casesa, a partner at consulting firm Casesa Shapiro Group in New York. “Otherwise GM, Ford and Chrysler will be gone, bankrupt.”

[Monseratto]

Is your job safe?

People stand in line as they wait to talk with potential employers during a job fair at Rutgers University Wednesday Jan. 7, 2009, in New Brunswick, N.J. The nation's unemployment rate bolted to 7.2 percent in December, the highest since early 1993, as nervous employers slashed 524,000 jobs.

And, there's no relief in sight. The new year got off to a rough start with a flurry of big corporate layoffs, and there were more on Friday. Airplane maker Boeing Co. said it plans to cut about 4,500 jobs this year, and uniform maker G&K Services Inc. is eliminating 460 jobs.

Earlier this week, drugstore operator Walgreen Co., managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp., Intermec Inc., which makes electronic devices for tracking inventory, and computer products maker Logitech International announced major layoffs to cope with the recession.

There is no indication that the job situation would stabilize anytime soon," said Sung Won Sohn, economist at the Martin Smith School of Business at California State University. "This could turn out to be one of the worst economic setbacks since the Great Depression."

Economists predict a net total of 1.5 million to 2 million or more jobs will vanish in 2009, and the unemployment rate could hit 9 or 10 percent, underscoring the challenges Obama will face and the tough road ahead for job seekers.

During President George W. Bush's nearly eight years in office, a net total of 3 million jobs were created. In President Clinton's two terms, roughly 21 million jobs were generated.

[tidus1203]

That is how the mass media has brainwashed America. They see Paris Hilton and they wanna copy her but they don't have the money and here comes the plastic being swiped. Imagine the world prior to this crisis has lived off that kind of spending. Its unsustainable and we better get used to a more frugal world.

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Loss of confidence indicator:

Gold rush erupts over financial crisis
http://www.news.com.au/dailytelegrap...014099,00.html

THE global financial crisis has sparked a new gold rush.

Worried investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth, The Daily Telegraph reports.

Demand has now reached such unprecedented levels that the Perth Mint, Australia's biggest wholesaler of gold coins and bars, has been forced to ration its sales.

Perth Mint's bullion sales rose 194 per cent in the December quarter compared with the corresponding period in 2007, while silver bullion sales were up 140 per cent.

The mint has suspended sales of all gold bars and all bullion coins - except its 1oz "Kangaroo" gold bullion coin.

On Monday, after a three-month suspension, it will expand its range of bullion coins for sale but the restrictions remain in place for minted gold bullion bars so the mint can sell some gold to as many customers as possible.

"We are working three shifts a day, six days a week, and still can't keep up with demand," Perth Mint CEO Ed Harbuz said. "I've never known anything like this in the precious metals market.

"We would be working Sundays too but we are having difficulty getting enough staff."

Non-minted gold in the form of cast bars produced by Perth Mint's local refinery can still be bought, although customers who want the bigger bars often have to wait several weeks.

One customer recently bought $500,000 worth of bullion and wanted it delivered so he could hold it personally.

"For very big orders we normally keep the gold in our depository for security reasons," Mr Harbuz said.

"Orders of $10 million or more are not unusual. Often the orders are much larger if we are dealing with pension funds or institutional investors."

[uls]

JPY back below 90

risk aversion

bad news (job losses, corporate earnings) scared the market

market goes back to USD, treasuries

[tidus1203]

Naiinip na ako sa JPY it has been quite slow lately... Medyo vacation mode pa din ako hanggang ngayon haven't been trading yet this year tingin tingin pa lang. Oil drop back down again, another frustrating waiting for the oil bulls.