Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
01.31.2008
Gold Fields may close shafts due to power crisis Gold Fields, the world's fourth-largest gold producer, on Thursday warned that it may be forced to close shafts and restructure as a result of Eskom's request that the mining industry reduce its power use by 10%. Gold Fields CEO Ian Cockerill warned that the power shortages in South Africa would affect production in the March quarter and into the foreseeable future. Subject to the availability of power, Gold Fields anticipates that production in the March quarter could be between 20% and 25% lower than the December quarter as a result of the power restrictions. The gold producer reported a 3% decline in attributable gold production to 960 000oz for the quarter.
Subprime, CDO Bank Losses May Exceed $265 Billion Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings, according to Standard & Poor's. S&P cut or put on review yesterday the ratings on $534 billion of bonds and collateralized debt obligations tied to home loans made to people with poor credit, the most by the New York- based firm in response to rising mortgage delinquencies. While banks and securities firms such as Citigroup Inc. and Merrill Lynch & Co. accounted for most of the $90 billion in writedowns to date, S&P said the next round will be borne mainly by smaller financial institutions in Europe, Asia and the U.S. The ratings actions may create a ``ripple impact'' that further reduces prices of the securities, S&P said.
Jobless claims surge in latest week First-time jobless claims rocketed higher last week. Initial claims for state unemployment benefits rose 69,000 in the week ended Jan. 26, reaching 375,000, the Labor Department reported Thursday. It marked the highest level since early October -- and the biggest weekly jump since September 2005 in the wake of Hurricane Katrina. Before this sharp rise, jobless claims had fallen by a net of 51,000 since late December, confounding economists who had expected claims to gradually rise as the nation's economy slowed. Analysts had been expecting an increase, but nothing nearly as large as last week's gain: The consensus forecast as compiled by MarketWatch had called for claims to rise to about 320,000.
Consumer spending flat in December U.S. real consumer spending flattened out in December, further evidence that the economy was getting weaker as the fourth quarter sputtered to an end. Real consumer spending, adjusted for inflation, was unchanged in December following a 0.4% gain in November, the Commerce Department reported Thursday. The figures provide monthly detail to the quarterly data released Wednesday in the gross domestic product report, which showed consumer spending climbing at a 2% annual rate in the quarter. The report shows consumer spending weakening as the quarter progressed, giving the first quarter a weak starting point. 'Chain store reports for January have been weak," wrote Nigel Gault, an economist for Global Insight.
Expect more than a typical recession Call this the perfect financial storm or what you will; Wall Street has made fools of financial institutions around the world with their CMOs, CDOs, and greedy boo-boos. At least they didn't lose as much as their customers. The stock market is in distress, bond insurers are looking for a $200 billion bailout, junk-bond markets are at risk of further losses and life-, home- and auto insurers' risk has not yet been fully assessed. We need real ready-to-go financial leadership and we need it now. Tell the presidential candidates, Congress and economists to stay home. We need regulators with clear priorities. Former Federal Reserve Chairman Paul Volcker, former FDIC Chairman Bill Isaacs and anyone they trust would be good choices. They beat inflation and presided over the savings and loan cleanup.
Bond insurer MBIA posts $2.3 billion loss Troubled bond insurer MBIA Inc. on Thursday posted a loss of $2.3 billion during the fourth quarter, after absorbing a huge loss for the securities it guarantees due to the U.S. housing downturn. MBIA took a $3.5 billion loss before tax, which it had announced earlier this month, because of a downturn in the value of its insured credit derivatives portfolio. For the year, MBIA lost $1.9 billion. "We are disappointed in our operating results for the year, as the performance of our insured prime, second-lien mortgage portfolio and three insured CDO-squared transactions led to unprecedented loss reserving and impairment activity," said Chairman and CEO Gary Dunton in a statement released shortly after midnight.
Lou Dobbs alert: Illegal immigrants may get rebates In their bipartisan zeal to quickly cut a deal on an economic stimulus bill, GOP lawmakers overlooked something that will certainly inflame the conservative base _ illegal immigrants could receive a tax rebate check from the government. But late Wednesday, the Senate Finance Committee was scrambling to fix the problem _ contained in the House bill _ by only allowing taxpayers using legitimate Social Security numbers to receive rebates. The text of the House passed bill contains language making "non resident aliens" _ illegal immigrants _ ineligible for the tax rebates. But every year, hundreds of thousands of undocumented immigrants use individual taxpayer identification numbers, known as ITINs, to file income tax returns with the IRS. These ID numbers are used instead of Social Security numbers.
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