Japanese consumers became the most pessimistic they've been in at least 26 years, making it unlikely they will spend to aid an economy weakened by slower global demand.
The sentiment index dropped to 30.1 last month from 31.4 in July, the Cabinet Office said today in Tokyo. It's the lowest since the government began compiling the figures in 1982.
The economy had its sharpest contraction in seven years last quarter, the government said last week. Households pared spending for a fifth month in July as consumer prices rose at the fastest pace since 1997 and wages grew the least this year.
“Consumers can't be optimistic with inflation and sluggish wage growth,'' said Yasuhide Yajima, a senior economist at NLI Research Institute in Tokyo. “Consumer spending will remain too weak to support the economy.''
Of the four components used by the government to gauge consumer sentiment, the willingness to purchase durable goods and the outlooks for livelihood and wages fell to the lowest level ever, today's report showed http://easy-quick-payday-loans.com.
Some 88.2 percent of households predict prices will rise a year from now, down from a record 89.3 in July, today's report said.
“Higher prices are the major drag for sentiment,'' said Akira Maekawa, an economist at UBS AG in Tokyo.
Some 57.2 percent of households said their livelihood is “tough,'' rising to a record for the sixth straight year in 2007, the Labor Ministry reported last week.
Wages grew 0.3 percent in July, when the cost of daily necessities rose 3.6 percent. Job prospects also worsened, with the ratio of positions available to each applicant fell for a sixth month to 0.89, the lowest since October 2004.
Lehman Brothers employees face the bleakest employment conditions in recent Wall Street history, and experts say there will likely be more painful financial sector job losses to come.
Lehman Brothers (LEH, Fortune 500) announced it would file for Chapter 11 bankruptcy protection after all rescue plans fell through and many employees at the 158-year old investment bank went to their offices Monday morning and began to pack up their desks.
"Most people are assuming that they’re out of a job at Lehman Brothers," said David Schwartz, head of executive search firm DN Schwartz & Co in New York. Schwartz said he wouldn’t be surprised if upwards of 20,000 Lehman workers lose their jobs. That would amount to more than 75% of the company’s total workforce.
At the same time, a merger between Bank of America (BAC, Fortune 500) and Merrill Lynch (MER, Fortune 500) will also "inevitably result in more layoffs," said John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas, adding to the tens of thousands of layoffs that have already occurred this year on Wall Street.
When Bear Stearns was acquired by JPMorgan Chase (JPM, Fortune 500) earlier this year, about 9,000 workers, or more than half of Bear Stearns’ employees, lost their jobs - many of whom are still looking for full-time employment.
"Unfortunately, we’ve not seen the end of the layoffs on Wall Street and I think it’s going to get worse before it gets better," Schwartz said.
Other experts also said the worst is yet to come credit report. Between now and the end of the year, "the Wall Street layoffs are going to be enormous," said Paul Bernard, a veteran executive coach and career management adviser who runs his own firm.
Unlike past downturns, this will not just be a period of cutbacks, Bernard said. Rather, "the [financial] industry is going to be shrinking and shrinking rapidly." And that means that there will be economic repercussions felt throughout the city of New York and the country, he said.
Through August, financial firms have already eliminated an estimated 65,400 jobs over the past year, according to the latest employment figures from the Department of Labor.
But the pain has been particularly acute on Wall Street. Investment banks and brokerages there have shed about 9,300 jobs, or roughly 5% of their workforce, according to August’s figures from the New York State Department of Labor.
"It’s like a game of musical chairs with too many people chasing the jobs that are left," Challenger said.
The sex and drugs scandal revealed earlier this week at the Interior Department may be just the start.
A Government Accountability Office study set for release Friday says the department lacks basic procedures for monitoring the oil industry, and that these shortfalls could be cheating taxpayers out of billions of dollars in revenue. CNN received a draft of the report on Thursday.
The Interior Department tracks production from the energy industry and collects royalties based on that output. Oil and gas royalties are the federal government’s second-largest source of revenue, after tax collections.
In fiscal year 2007, the Department of Interior’s Minerals Management Service (MMS) collected the equivalent of $9 billion in oil and gas royalties - some of which was shared with states as well as Native American tribes.
On Wednesday, a report by the Interior Department’s Inspector General found MMS staffers in Colorado were having sex and engaging in illegal drug use with employees of some of those oil companies. The investigation also found an MMS supervisor had sex with two subordinates and engaged in illegal drug use with at least one of them.
But the GAO study suggests that scandal might be more far reaching.
The department’s failure to consistently check oil-company supplied production data, the report found, "raises questions about the accuracy of royalty payments."
The study’s author, Frank Rusco, acting director of natural resources and environment at the GAO, said, "there are significant risks when you’re relying on self-reported information." Rusco added that there is third-party data they could use to check the production amounts.
The GAO report also found MMS is not inspecting many meters that measure oil and gas production, and sometimes doesn’t know when oil companies fail to submit royalty reports free credit report and score. "As a result, MMS cannot be entirely confident that it is receiving all the royalties when they are due," the study concluded.
"This report shows that the U.S. has one of the most lenient royalty collection systems in the world and calls into question whether taxpayers are getting a fair return for the resources they own," said Rep. Nick Rahall, D-West Virginia and chairman of the House Natural Resources Committee.
GAO previously found MMS failed to properly track precisely how much oil was being transferred into the Strategic Petroleum Reserve.
"We found there isn’t good coordination between the Department of Energy and MMS in terms of handover oil and the accounting for how much was handed over," said Rusco.
Government data show new applications for unemployment benefits fell less than expected last week as the struggling economy continues to take a toll on workers.
The Labor Department reported Thursday that applications for jobless benefits dropped to a seasonally adjusted 445,000, down by 6,000 from the prior week cash til payday loan. That is above analysts’ expectations of 440,000.
The four-week moving average, which smoothes out week-to-week fluctuations, rose slightly to 440,000.
South Korea delayed its $1 billion bond sale, the first in two years, as concern over the future of Lehman Brothers Holdings Inc. and the health of North Korean leader Kim Jong Il forced up borrowing costs.
The government didn't want to pay more than 200 basis points over the 10-year U.S. Treasury yield, according to Choi Jong Ku, a director general at the finance ministry in Gwacheon. South Korea's last offer of similar dollar-denominated debt in November 2006 was priced at 69.6 basis points above Treasuries.
“The government can wait until market jitters over Lehman Brothers and the North Korean leader's health calm to get better terms,'' said Seo Chul Soo, a fixed-income analyst at Daewoo Securities Co. in Seoul.
Korea's won has risen since the bond sale was announced last week, as concern recedes the country is heading for another financial crisis. The currency slumped 7 percent in August as global investors sold stocks and bonds, raising speculation there would be a repeat of the 1997 meltdown, when the won lost half its value and government had to turn to the International Monetary Fund for a bailout.
The finance ministry said a presentation it held this week about the offer “helped eliminate investor concerns'' over the rumored crisis and the soundness of the nation's foreign exchange reserves.
“We plan to pursue the sale swiftly next time, without separately holding investor presentations, when global financial markets conditions improve,'' it said in statement from Gwacheon faxless payday advance.
Bond Spread
South Korea's 5.125 percent bonds maturing in 2016 traded at 185 basis points above U.S. Treasuries at 10:40 a.m. in Hong Kong, down 7 basis points from yesterday, data compiled by Bloomberg show.
The won fell 0.3 percent to 1,112.35 versus the dollar today. The currency has gained almost 2 percent since the Sept. 4 bond sale announcement.
Moody's Investors Service said last week South Korea won't face a repeat of the 1997 currency collapse because local banks and companies have more robust finances, and the government has ample currency reserves.
Total foreign-exchange reserves now exceed short-term external debt by about $72 billion. In 1997 short-term external debt exceeded reserves by more than $40 billion, according to Credit Suisse.
The government may want to wait until it has more information about the health of the North Korean leader before proceeding with the sale.
Kim Jong Il suffered a cerebral hemorrhage or a related illness and is recovering, South Korea's Yonhap News reported Sept. 10, citing an unidentified lawmaker who attended a National Intelligence Service briefing. South and North Korea are still technically at war after their 1950-53 conflict ended without a peace agreement.
Wall Street likes Henry Paulson’s plan to break the logjam in the mortgage markets. But the Treasury secretary and other policymakers still have much work to do to get the economy on a more steady footing.
Financial markets rallied Monday in the wake of Treasury Secretary Henry Paulson’s plan to take the two biggest U.S. mortgage-finance companies, Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), into government custody. But Tuesday’s pullback - fed in part by reports that struggling brokerage Lehman Brothers (LEH, Fortune 500) has failed in its bid to sell a stake to investors in Korea - offers a reminder that merely easing the housing bust won’t get the economy humming again.
That said, the early success of the Paulson plan is noteworthy. The stock market got a significant bounce Monday, even as Fannie and Freddie themselves became penny stocks, trading for the first time in history below a dollar each. Far more important, though, was the action in the markets for the mortgage-backed securities Fannie and Freddie traffic in.
As Paulson had hoped, the spread between the yield on mortgage-backed securities and risk-free Treasury bonds narrowed sharply Monday and mostly held those gains Tuesday. The tightening of those spreads has the effect of bringing down rates on the mortgages the companies are eligible to buy or guarantee - so-called conforming loans, typically those of $417,000 or less though up to $729,000 in some pricier areas. The rate for a conforming 30-year fixed mortgage fell to 5.88% Monday from 6.26% a week ago, according to BankRate.com.
The steep decline in mortgage rates will be good news for the housing market if it holds, by allowing some troubled homeowners to refinance and by generally making financing more available.
"Mortgages tightened a ton," says Merrill Lynch mortgage-backed securities strategist Akiva Dickstein. "The question now is whether there’s more tightening to come."
If so, people looking to buy houses could find purchasing a house more affordable. That could bring more buyers into a market struggling to digest near record levels of houses for sale, and slow the decline of prices. Prices in 20 big metro areas have fallen 16% over the past year, according to data from the S&P/Case-Shiller national survey.
In an additional bit of good news, Treasury bond prices rose in the wake of the rally in mortgage-backed bonds, and the dollar continued its two-month-long ascent against other major currencies. There has been some concern that a bailout of the GSEs could prompt a selloff in the dollar and Treasurys, because the sheer scope of Fannie and Freddie’s gross obligations - together they own or guarantee more than $5 trillion of mortgages - stands to add significantly to the government’s liabilities.
But Rebecca Patterson, global head of foreign exchange at J.P. Morgan’s Private Bank, says currency traders are less concerned with the oft-invoked $5 trillion figure than with the putative actual cost of the bailout. The tab associated with Treasury’s plan could run into the hundreds of billions of dollars, given possible outlays tied to a decision to extend Fannie and Freddie an unlimited credit line, to purchase preferred shares in the companies, and to buy mortgage-backed securities payday loans. And it could end up costing a good deal less if the companies’ credit losses don’t spiral out of control.
"The net amount is not that large" in the context of the $5 trillion in existing on-balance sheet government obligations, Patterson says. She adds that investors generally are reacting favorably because the move "removes one more tail risk" - the improbable but highly costly prospect of a default by the companies.
While the early reaction to the Fannie-Freddie takeover has been roundly positive, history shows that could change. Dickstein points out that mortgage spreads initially narrowed in response to Paulson’s decision in July to ask Congress for the authority to use taxpayer dollars to backstop the companies. Paulson famously insisted at the time that he didn’t believe he would have to use the authority, likening his legislative blank check to a bazooka he would never have to fire.
But after the initial success of that shock-and-awe effort, mortgage rates surged again. Dickstein says the problem was that the capital-constrained GSEs were unable to purchase mortgage-backed securities at a time when other investors were fleeing risk as well. That sent the prices for those issues higher at a time when Treasury prices were falling, widening the spreads. "It was more of a supply-demand trade," he says.
Dickstein adds that he believes Treasury’s decision to purchase mortgage-backed securities - a move he calls "unprecedented" - will lend substantial backing to the market for MBS paper.
But if the mortgage market is getting a boost, there’s little hope it will help the economy avert the recession it has been heading toward for more than a year. For one thing, economists expect to see further house-price declines, as weak demand and a glut of supply inexorably bring the cost of buying a house back into line with rental rates and incomes.
Meanwhile, there is no end in sight to other dour trends. Banks stuffed with bad loans remain unwilling to extend credit, and joblessness is on the rise. The U.S. has lost private-sector jobs in each of the past eight months. But Ashraf Laidi, currency strategist at CMC Markets in New York, notes that the job-loss cycles in the 1990-91 and 2001-2002 recessions lasted 11 and 15 months, respectively.
Meanwhile, big financial sector employers such as Lehman and AIG confront a souring credit market as they consider how to raise new money to fill holes in their balance sheets left by the multibillion-dollar mortgage-related losses of the past year.
The flood of bad news has some observers saying someone in the nation’s leadership is going to have to come up with a more sweeping answer before the markets, and the economy, are able to make a sustained recovery.
"Government actions continue to attempt to maintain the status quo among financial institutions," Merrill Lynch equities strategist Rich Bernstein writes in a note Monday. "There has yet to be a remedy that approaches the credit crisis as a systemic problem. As with the Bear Stearns situation, the GSEs are being treated as a one-off problem."
Most ads for home auctions these days are reserved for distressed properties. Homeowners who no longer can afford the payments and upkeep make up the bulk of sellers.
But, there are still those who don’t need, but simply want to sell, who turn to auction houses to help them unload.
That’s the case for Clarence E. White. In 2003, he purchased a six-bedroom, six-and-a-half bath home in the Las Olas Boulevard area of Fort Lauderdale for $1.75 million.
White fixed up the tri-level home, adding travertine floors, a gourmet kitchen and custom ironwork to the gated entry. He used it as a vacation home.
White then decided to put it up for sale. The asking price? About $10 million.
It sat on the market nearly a year before White decided to turn to J.P. King Auction Co. in Gadsden, Ala. The company specializes in high-end properties.
Next month, the luxury home heads to absolute auction. That means it will go to the highest bidder. Although selling on reserve – allowing a buyer to turn down an offer – historically has been the norm for such sales, absolute auctions are becoming increasingly common.
And although many auction houses are seeing a huge increase in the number of homes going on the block, Scott King, executive vice president of sales for J.P. King Auction, said most of his clients usually don’t have to sell for hardship reasons.
The tough part, he said, is getting clients to understand that they can’t go into the auction with a price in mind.
“Clients who make the decision they are ready to sell are excellent candidates for our services,” King said.
On the upside, buyers will show because they know they will at least have a shot at getting the home payday loans. On the flip side, the homeowner may not get the price they want. So it could turn out to be a huge gamble.
“The client has to understand that it’s the buyers who determine the value,” King said.
King has been receiving more calls of late from distressed buyers, even those who own premier properties. He has to sort through them to see if they can be of assistance.
“In situations where there’s debt, it takes working with the lender. If someone is upside-down or in a financial pinch, it’s harder to work with them,” King said.
For White, it was more a matter of the traditional way of selling not meeting his needs.
The reason most clients sell at absolute auction is usually because they want to move on with their lives, King said.
ImClone Systems Inc said on Wednesday it has received a takeover offer of $70 a share from a large pharmaceutical company, topping an earlier bid of $60 a share from Bristol-Myers Squibb Co and sending its shares up 7 percent.
The offer values ImClone at $6.1 billion, based on the number of shares outstanding at the time of the company’s latest quarterly report.
Carl Icahn, the billionaire investor and chairman of ImClone’s board, said in a statement he has had several conversations with the chief executive officer of a large pharmaceutical company, culminating in the latest proposal.
Bristol-Myers declined to comment.
A $70 a share offer would represent a premium of 51 percent over ImClone’s closing price of $46.44 on July 30, the day before Bristol-Myers announced its $60 a share offer.
The premium is more in line with such recent deals in the sector as Takeda Pharmaceutical Co Ltd’s offer for Millennium Pharmaceuticals at a premium of 53 percent.
But any pharmaceutical company seeking to acquire ImClone, which makes the cancer drug Erbitux, faces unique challenges cash advance flexible payments. For one thing, Bristol-Myers markets Erbitux in the United States and receives roughly 61 percent of the drug’s revenue.
Erbitux is ImClone’s key product and is approved to treat colon cancer and head and neck cancer.
Borrowing by consumers slipped in July to the weakest pace in seven months, reflecting a big slowdown in demand for car loans.
The Federal Reserve reported Monday that consumer borrowing grew at an annual rate of just 2.1% in July, the slowest pace since a 1.9% rise last December.
The slowdown reflects a tiny 0.5% rate of growth in the category that includes auto loans, down from a 6.1% surge in this category in June. Automakers reported that demand for cars fell in July to the lowest level in 16 years.
The category that includes credit cards grew at an annual rate of 4.8% in July, up from a growth rate of 3.5% in June.
The 2.1% growth rate for total credit represented an increase of $4.5 billion, far smaller than the $8.8 billion increase that economists had been expecting and down from a gain of $10.96 billion in June.
Consumers this year have been forced to charge more of their purchases to credit cards as banks have tightened lending standards cash advance loan no fax. That has curtailed use by consumers of home equity loans to finance their spending.
The concern is that all types of consumer spending will slow dramatically in coming months as the boost from $106.7 billion in economic stimulus payments wears off.
Fewer U.S. employers plan to hire in the fourth quarter, according to a private survey that shows the worst holiday-season job prospects on record at retailers.
Manpower Inc., the world's second-largest provider of temporary workers, said its employment gauge for October through December slumped to 9, the lowest level since 2003. The reading for stores and wholesalers was the weakest for any fourth quarter since Manpower began keeping track in 1972.
“Retailers are bracing themselves for a very weak holiday season,'' Jeffrey Joerres, chief executive officer of Milwaukee- based Manpower, said in an interview. “The weakness has spread beyond construction and the financial sector to other parts of the economy.''
The highest jobless rate in five years, slumping home values and tougher bank-lending guidelines raise concern shoppers will retrench during what's traditionally the busiest time of year for merchants. A slump in consumer spending, which accounts for more than two-thirds of the economy, would bring an end to the expansion.
Employers cut 84,000 workers from payrolls in August, the eighth consecutive decline, and the unemployment rate jumped to 6.1 percent, the Labor Department said last week.
Manpower's index subtracts the percentage of employers planning to cut jobs from those who plan to add them, and adjusts the results for seasonal variations no fax payday loan. On that basis, the net employment outlook fell from 18 in the fourth quarter of 2007.
Industry Breakdown
Hiring plans at six of 10 industries surveyed, including manufacturing and retail, dropped in the fourth quarter from the prior three months. Mining was the only industry that projected an increase in jobs, while construction, education and public administration predicted little change.
Employers in the Midwest held the weakest hiring prospects for the fourth quarter, followed by the South. The Northeast showed the most optimistic hiring plans.
Manpower interviewed more than 14,000 employers in the U.S.
The U.S. slowdown has spread to other major economies, the report showed. Hiring plans in Spain were at a five-year low, while employers in the U.K.'s finance and business-services industries reported the weakest job prospects since 1999.
While job prospects slowed across Asia, the pace of hiring in the fourth quarter compared with a year earlier was predicted to rise in India and Taiwan, and remain little changed in China.
The Manpower survey is conducted quarterly and has a margin of error of plus or minus 0.8 percentage point in the U.S. and no more than plus or minus 3.9 percent for national, regional and global data.
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