German Economy Enters Worst Recession in at least 12 Years

Nov. 13 (Bloomberg) — The German economy, Europe’s largest, contracted more than economists expected in the third quarter, pushing the nation into the worst recession in at least 12 years.

Gross domestic product dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.2 percent decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last contracted this much over two consecutive quarters — the technical definition of a recession — in 1996.

German companies are struggling with dwindling export orders. Siemens AG, Europe’s biggest engineering company, reported a profit decline today and plans to cut 16,750 jobs by 2010. The Organization for Economic Cooperation and Development lowered its global forecast for the second time, saying the economy of its 30 members will contract 0.3 percent in 2009 after growing 1.4 percent this year.

“The German recession has begun in earnest and it’s very serious,” said Holger Schmieding, chief European economist at Bank of America Corp. in London. “It raises the risk of a German contraction of more than 1 percent next year and we will have to revise down our forecast for the euro area as well.”

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Change, change, change … Obama’s Bailout Bunch Brings Us More of the Same Bullshit

Change you cannot possibly believe in.

Nov. 11 (Bloomberg) — It’s hard to believe Barack Obama would even think of calling this change.

Take a good look at some of the 17 people our nation’s president-elect chose last week for his Transition Economic Advisory Board. And then try saying with a straight face that these are the leaders who should be advising him on how to navigate through the worst financial crisis in modern history.

First, there’s former Treasury Secretary Robert Rubin. Not only was he chairman of Citigroup Inc.’s executive committee when the bank pushed bogus analyst research, helped Enron Corp. cook its books, and got caught baking its own. He was a director from 2000 to 2006 at Ford Motor Co., which also committed accounting fouls and now is begging Uncle Sam for Citigroup- style bailout cash.

Two other Citigroup directors received spots on the Obama board: Xerox Corp. Chief Executive Officer Anne Mulcahy and Time Warner Inc. Chairman Richard Parsons. Xerox and Time Warner got pinched years ago by the Securities and Exchange Commission for accounting frauds that occurred while Mulcahy and Parsons held lesser executive posts at their respective companies.

Mulcahy and Parsons also once were directors at Fannie Mae when that company was breaking accounting rules. So was another member of Obama’s new economic board, former Commerce Secretary William Daley. He’s now a member of the executive committee at JPMorgan Chase & Co., which, like Citigroup, is among the nine large banks that just got $125 billion of Treasury’s bailout budget.

There’s More

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UN suspends food distribution in Gaza

Labourers work at a UN Relief and Works Agency food distribution center in the Gaza City Shati refugee camp

GAZA CITY (AFP) – The United Nations announced it was suspending food distribution to half of Gaza’s 1.5 million people on Thursday after Israel failed to allow emergency supplies into the Palestinian territory.

Israel had said it would allow 30 trucks to deliver supplies to Gaza on Thursday after it sealed off the Gaza Strip on November 5, but later said rocket and mortar fire by Gaza militants made it impossible to do so.

“They have told us the crossings are closed today. At the end of today we will suspend our food distribution,” said UN Relief and Works Agency spokesman Chris Gunness.

“Our warehouses are effectively empty,” he told AFP.

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George Soros says deep recession inevitable, depression possible

Chairman of Soros Fund Managment George Soros speaks at the Massachusetts Institute of Technolog, October 28, 2008.

WASHINGTON (Reuters) – George Soros, chairman of Soros Fund Management, testified at a House Oversight and Government Reform Committee hearing on Thursday. Highlights:

* Said “a deep recession is now inevitable and the possibility of a depression cannot be ruled out.”

* Said hedge funds were an integral part of the financial market bubble which now has burst.

* Said hedge funds will be “decimated” by the current financial crisis and forced to shrink their portfolios by 50-75 percent.

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Hedge-Fund Assets Shrink by $100 Billion Last Month (Correct)

(Corrects to remove reference to Man Group redemptions in first paragraph, adds breakdown for asset drop in sixth.)

Nov. 13 (Bloomberg) — The global hedge-fund industry lost $100 billion of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co. were hammered by investor withdrawals.

Clients took about $60 billion out of funds, Singapore-based Eurekahedge said in a statement. Funds fell 3.3 percent on average, based on preliminary figures from the Singapore-based data provider, as measured by the Eurekahedge Hedge Fund Index, which tracks the performance of more than 2,000 funds that invest globally. That compares with a 19 percent slide in the MSCI World Index last month.

The biggest market losses since the Great Depression and investor withdrawals hurt the $1.7 trillion hedge-fund industry that manages largely unregulated pools of capital. The index of global funds has lost 11 percent this year, set for the worst performance since 2000 when Eurekahedge began tracking the data.

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New York Gov. seeks $2 bln spending cuts, led by aid to schools and health care for the poor

NEW YORK, Nov 12 (Reuters) – New York Gov. David Paterson on Wednesday proposed $2 billion of spending cuts, led by aid to schools and health care for the poor, to clip a widening budget deficit as fallout from the financial crisis crimps revenues.

Paterson said the legislature agreed not to increase personal income taxes at a special session set for next week to reduce the state’s $121 billion budget.

Paterson, a Democrat who says the state must reform its long history of over-spending, said he hoped to avoid an income tax hike next year — though he did not rule one out.

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Lawmakers, Investors Ask Fed for Lending Disclosure of Almost $2 Trillion in Emergency Loans

Nov. 13 (Bloomberg) — Members of Congress, taxpayers and investors urged the Federal Reserve to provide details of almost $2 trillion in emergency loans and the collateral it has accepted to protect against losses.

At least five Republican members of Congress yesterday called for the Fed to disclose which financial institutions are borrowing taxpayer money and what troubled assets the central bank is accepting as collateral. More than 300 more investors and taxpayers also pressed for more disclosure in e-mails and interviews with Bloomberg News.

“There cannot be accountability in government and in our financial institutions without transparency,” Texas Senator John Cornyn said in a statement. “Many of the financial problems we are facing today are the direct result of too much secrecy and too little accountability.”

House Republican Leader John Boehner and Republican Representatives Jeb Hensarling of Texas, Scott Garrett of New Jersey and Walter Jones of North Carolina also are pressing Fed Chairman Ben S. Bernanke to elaborate on the Fed’s emergency lending. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in the separate $700 billion bailout of the banking system that was approved by Congress last month.

European Central Bank President Jean-Claude Trichet today urged greater disclosure to help strengthen the global financial system.

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Swiss Banker Charged With Conspiring in Massive Tax Fraud

The Justice Department today announced that a senior Swiss banker has been indicted on charges of conspiring to defraud the U.S. government by helping about 20,000 U.S. clients hide $20 billion in assets from the Internal Revenue Service.

The indictment of Raoul Weil alleged that he conspired with a host of others at his bank, overseeing a business that employed encrypted laptops, numbered accounts and counter-surveillance techniques to help American clients conceal their identities and evade taxes.

Weil oversaw the bank’s cross-border business that catered to U.S. clients, generating about $200 million a year in revenue for the bank, the Justice Department said in a news release.

The announcement did not name the bank, describing it only as a large Swiss bank with offices worldwide.

A report on UBS’s Web site says an executive name Raoul Weil was head of UBS’s wealth management international business between 2002 and 2007. The indictment says the Raoul Weil charged in the case was head of the unnamed Swiss bank’s wealth management business from 2002 through 2007.

Weil was named chairman and chief executive of UBS’s global wealth management and business banking operations in 2007, the UBS site said.

Other bank executives “at the highest levels of management” are unindicted co-conspirators, according to the indictment.

The action announced today is part of a larger clash between the U.S. government and the tradition of secrecy that has been central to Switzerland’s lucrative banking industry.

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Family homelessness rising in the United States

A man sweeps the area outside his tent with a broken broom at “tent city”, a terminus for the homeless in Ontario, a suburb outside Los Angeles, California December 19, 2007. REUTERS/Lucy Nicholson

WASHINGTON (Reuters) – President-elect Barack Obama has vowed to help middle-class U.S. homeowners facing foreclosure, but he has said little about how he will help low-income families made homeless by a worsening economy.

Obama has spoken broadly about boosting affordable housing and restoring public housing subsidies. But with economists forecasting a deep recession in 2009, he may find it hard to find the money to fulfill those promises soon.

At the same time, advocacy groups and the country’s czar for combating homelessness say immediate action is needed to halt the foreclosures of tens of thousands of homes and rehouse thousands of families amid the worst financial crisis since the Great Depression of the 1930s.

“President-elect Obama understands the economy will only get back on track if we end the foreclosure crisis. And he realizes that part of ending the crisis is both preventing and ending homelessness for families losing their homes,” said Jeremy Rosen of the National Policy and Advocacy Council on Homelessness.

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Record Fine in EU Cartel Case

A worker checks a plate glass on the production line at the Saint-Gobain Chantereine glass factory in Thourotte, France, on Oct. 17, 2007. Photographer: Fabrice Dimier/Bloomberg News

Nov. 12 (Bloomberg) — Cie. de Saint-Gobain SA, Asahi Glass Co., and a Nippon Sheet Glass Co. unit were fined a record 1.38 billion euros ($1.7 billion) by the European Union over claims the companies fixed the price of car windows.

Saint-Gobain, Europe’s largest building-materials supplier, was fined 896 million euros, the highest against a single company, the European Commission said in a statement today. Asahi Glass was fined 113.5 million euros, Nippon’s Pilkington unit 370 million euros. A fourth company, Belgium’s Soliver, got a 4.4 million-euro penalty.

The penalties were increased because the companies are repeat offenders, the commission said. Saint-Gobain, Pilkington and two competitors were fined a total of 487 million euros for participating in a separate cartel to set the prices of glass used in the construction industry. Saint-Gobain shares fell 5.2 percent.

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US drops plans to purchase toxic mortgage assets

US authorities are scrapping plans to buy up toxic mortgages securities and shifting the focus of a massive financial rescue plan, Treasury Secretary Henry Paulson, seen here in October 2008 in Washington, DC said Wednesday.

WASHINGTON (AFP) – – US authorities are scrapping plans to buy up toxic mortgages securities and shifting the focus of a massive financial rescue plan, Treasury Secretary Henry Paulson said Wednesday.

Paulson said the 700-billion-dollar plan would focus now on continued capital injections to struggling banks, but would also look at ways to help the “nonbank” financial sector under the Troubled Asset Relief Program (TARP).

“Over these past weeks we have continued to examine the relative benefits of purchasing illiquid mortgage-related assets,” he said.

“Our assessment at this time is that this is not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role.”

The program approved by Congress was initially aimed at buying up so-called toxic mortgage securities that were clogging the financial system, but analysts had warned that such a plan could prove difficult to implement with prices hard to fix.

In the meantime, US officials had moved to emulate plans in Britain and elsewhere to tackle the credit squeeze by investing directly in banks.

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Iraq Signs $3.5 Billion Deal for China to Develop Oil Field

BAGHDAD – North Oil, an Iraqi-owned company, has signed a contract with a Chinese state-owned oil corporation, CNPC, that was first negotiated during Saddam Hussein‘s government, an official in Iraq‘s Oil Ministry said Tuesday.

The deal is worth $3.5 billion, said the official, Ahmed al-Shamaa, the deputy oil minister. It is the first major oil-development deal that Iraq has made with a foreign company since the American-led invasion in 2003.

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Merrill CEO says economic environment recalls 1929 – UPDATE 2

(Recasts; adds Thain comments, share prices, byline)

NEW YORK, Nov 11 (Reuters) – Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz) Chief Executive John Thain said the global economy is in a deep slowdown and will not recover quickly, and the environment recalls 1929, the advent of the Great Depression.

Speaking Tuesday at his bank’s annual financial services conference, Thain said he was “cautiously optimistic” about the outlook for the industry. But he said credit remains constricted and asset prices generally are still falling.

“The U.S. economy is contracting very rapidly,” creating uncertainty “at least over the next few quarters,” Thain said. “We are going to be in a very difficult economic environment for a significant period of time.”

Conditions deteriorated as the U.S. housing market collapse mushroomed into a more general crisis of confidence.

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Guantanamo Closure Called Obama Priority

There are about 250 detainees at the U.S. facility at Guantanamo Bay, Cuba. President-elect Barack Obama has said he wants to close the detention center. (By Brennan Linsley — Associated Press)

The Obama administration will launch a review of the classified files of the approximately 250 detainees at Guantanamo Bay immediately after taking office, as part of an intensive effort to close the U.S. prison in Cuba, according to people who advised the campaign on detainee issues.

Announcing the closure of the controversial detention facility would be among the most potent signals the incoming administration could send of its sharp break with the Bush era, according to the advisers, who spoke on the condition of anonymity because they are not authorized to speak for the president-elect. They believe the move would create a global wave of diplomatic and popular goodwill that could accelerate the transfer of some detainees to other countries.

But the advisers, as well as outside national security and legal experts, said the new administration will face a thicket of legal, diplomatic, political and logistical challenges to closing the prison and prosecuting the most serious offenders in the United States — an effort that could take many months or longer. Among the thorniest issues will be how to build effective cases without using evidence obtained by torture, an issue that attorneys for the detainees will almost certainly seek to exploit.

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GM Judged Too Big to Fail as Pelosi Embraces Rescue

Vehicles are parked at the Jefferson Chevrolet dealership in Detroit on Nov. 7, 2008. Photographer: Jeff Kowalsky/Bloomberg News

Nov. 12 (Bloomberg) — House Speaker Nancy Pelosi has thrown her support behind the premise that General Motors Corp., the largest U.S. automaker, is too big to be allowed to fail.

In urging Congress to enact emergency aid for the ailing auto industry, Pelosi rejected calls to let GM collapse and sided with the company and its allies in trying to prevent a “devastating” domino effect that would cost millions of jobs.

“Trying to reorganize the auto industry in bankruptcy would be as close to reorganizing the whole U.S. economy as you could get,” said Alan Gover, a bankruptcy lawyer with White & Case LLP in New York. “The vast supply chain involves thousands of businesses, millions of existing jobs and just as many retirees, as well as whole communities and states.”

Passage of an industry bailout plan may keep GM from running out of operating cash by year’s end, which it says may happen without U.S. help. GM is the second-biggest provider of private health-care benefits and was the third-biggest advertiser in this year’s first half.

“It’s truly one of those companies that’s too big to fail, and everybody understands that,” said Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts. “If it does collapse, it could make the recession deeper and longer.”

Behravesh said a GM bankruptcy could send the U.S. jobless rate as high as 9.5 percent, up from a 14-year high of 6.5 percent in October, and produce a recession comparable in length to that of 1980-82.

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Israel blocks foreign media from Gaza

JERUSALEM: Israel has barred foreign journalists from entering the Gaza Strip for a week, in a move media have assailed as a serious violation of press freedom.

Israeli military spokesman Peter Lerner said the restrictions were imposed because Palestinian militants have resumed their rocket fire from Gaza, in violation of a 5-month-old truce. The only people allowed to enter and leave Gaza under the policy are international aid workers and Palestinian patients seeking medical treatment outside the territory, he said.

Because the Islamic militant Hamas group that rules Gaza “is not doing anything to stop the rockets firing into Israel, the decision is that only humanitarian movement is allowed,” Lerner said.

Journalists dismissed that explanation as implausible and said current hostilities did not justify the ban on access.

“It is absolutely essential that international journalists be allowed to enter the territory and deliver their news reports to Israel and the rest of the world,” said a statement from the Foreign Press Association, which represents international media covering Israel and the Palestinain territories.

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UN says Gaza running out of food

The UN says it feeds about 750,000 needy people in the Gaza Strip [EPA]

“They are telling children in Gaza that they have to respect rights universally. How can we tell those same children, ‘Oh by the way you have to respect rights of people in Israel but they are actually stopping us giving you food?” Christopher Guness, UN aid agency spokesman

The UN relief and works agency has said it will run out of food within the next 48 hours as the blockade imposed on Gaza by Israel continues.

Christopher Gunness, the agency’s spokesman, told Al Jazeera the people in Gaza were being put through not just a “physical sense pf punishment but also a mental one”.

“That’s how serious it is. We feed 750,000 people in Gaza and these are some of the poorest and most disadvantaged people in the Middle East,” he said on Wednesday.

“Something very unusual is happening here. This is becoming a blockade against the UN itself.”

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Pakistan: Militants seize convoy for US-led forces

Local Pakistani tribal people stand near an armored car reportedly hijacked by militants in Khyber tribal region of Landikotel, 55 kilometers (34 miles) northwest of Peshawar, Pakistan on Monday Nov. 10, 2008. An officials says security forces are hunting militants who hijacked 13 trucks carrying military vehicles and other supplies for foreign troops in Afghanistan. (AP Photo)

PESHAWAR, Pakistan (AP) – Suspected Taliban fighters hijacked trucks carrying Humvees and other supplies for U.S.-led troops in Afghanistan, authorities said Tuesday after a brazen attack near the Khyber Pass that underscored the militants’ grip across key mountain strongholds.

The assault highlighted the vulnerability of a vital supply route for the 65,000 U.S. and NATO forces battling a resurgent Taliban in landlocked Afghanistan. A significant amount of supplies for the Western forces go through Pakistan.

Attacks on convoys carrying food, fuel and other supplies are common on the road. But Monday’s raid was especially large and well-organized. It also could further strain U.S.-Pakistani relations over rooting out Taliban and al-Qaida militants along the border, which remain entrenched despite military offensives and U.S. missile strikes.

Some 60 masked militants blocked the route at several points before overpowering the convoy, said Fazal Mahmood, a government official in Khyber tribal region. He identified the attackers as members of Pakistan’s Taliban movement.

Security forces traded fire with the gunmen, but were forced to retreat, he said. The militants took about 13 trucks along with the drivers, who were believed to be Pakistani.

A U.S. military spokesman in Afghanistan confirmed the thefts late Tuesday.

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US May Lose Its ‘AAA’ Rating

The United States may be on course to lose its ‘AAA’ rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

Source: YouTube

“The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system” and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

“In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off,” Hennecke told CNBC.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.

10 Nov 2008 | 07:49 AM ET

Source: cnbc

Radioactive Beer Kegs Menace Public, Boost Costs for Recyclers

Scrap metal is processed at the Jewometaal Stainless Processing B.V. in Rotterdam, The Netherlands, on Tuesday, April 22, 2008. Photographer: Roger Cremers/Bloomberg News

Nov. 11 (Bloomberg) — French authorities made headlines last month when they said as many as 500 sets of radioactive buttons had been installed in elevators around the country. It wasn’t an isolated case.

Improper disposal of industrial equipment and medical scanners containing radioactive materials is letting nuclear waste trickle into scrap smelters, contaminating consumer goods, threatening the $140 billion trade in recycled metal and spurring the United Nations to call for increased screening.

Last year, U.S. Customs rejected 64 shipments of radioactive goods at the nation’s ports, including purses, cutlery, sinks and hand tools, according to data released by the Department of Homeland Security in response to a Freedom of Information Act request. India was the largest source, followed by China.

“The world is waking up very late to this,” said Paul de Bruin, radiation safety chief for Jewometaal Stainless Processing BV in Rotterdam, the world’s biggest stainless-steel scrap yard. “There will be more of this because a lot of the scrap coming to us right now is from the 1970s and 1980s, when there were a lot of uncontrolled radioactive sources distributed to industry.”

On Oct. 21, the French nuclear regulator said elevator buttons assembled by Mafelec, a Chimilin, France-based company, contained radioactive metal shipped from India. Employees who handled the buttons received three times the safe dose of radiation for non-nuclear workers, according to the agency.

Operations at the factory are now back to normal and the company has cut ties with the “source” of the radiation, Mafelec said in a statement. “In the worst-case scenario the exposure would have been under that of a medical scan,” Chief Executive Officer Gilles Heinrich said.

1 Million Missing Sources

Many atomic devices weren’t licensed when they were first widely used by industry in the 1970s. While most countries have since tightened regulations, it is still difficult to track first-generation equipment that is now coming to the end of its useful life.

Abandoned medical scanners, food processing devices and mining equipment containing radioactive metals such as cesium-137 and cobalt-60 are often picked up by scrap collectors and sold to recyclers, according to the International Atomic Energy Agency, the UN’s nuclear arm. De Bruin said he sometimes finds such items hidden inside beer kegs and lead pipes to prevent detection.

There may be more than 1 million missing radioactive sources worldwide, the Vienna-based IAEA estimates.

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