Soaring Food Prices To Persist

From the AP

Even with bigger crops, soaring food prices that have sparked unrest across the globe are likely to persist, threatening millions of people worldwide, a U.N. agency said Friday.

Prices of bread, rice, milk, cooking oil and other basic foodstuffs have sharply increased in the past months in many developing countries, according to a report by the Rome-based Food and Agriculture Organization. Prices of wheat and rice have doubled compared to last year, while those of corn are more than a third higher.

Grain prices have risen as a result of steady demand, especially from China and India, supply shortages and new export restrictions, FAO said.

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Wall Street Stumbles After GE Reports A Disappointing First Quarter

From the AP

Wall Street stumbled Friday after a disappointing first-quarter report from General Electric Co. surprised the market and stoked concern about the health of both corporate profits and the wider economy. The major indexes fell more than 2 percent, with the Dow Jones industrials giving up more than 250 points.

A weaker-than-expected reading showing consumer confidence at a 26-year low subdued any positive sentiment.

GE, which is regarded as a bellwether of big business, said its financial-services divisions have been challenged by the slowing U.S. economy and difficult capital markets. The company, whose orbit extends into entertainment, consumer and industrial manufacturing, finance and health care, also lowered its projections for the entire year.

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Wall Street Investment Firms Pull Back Slightly On Borrowing From Fed Reserve

From the AP

Big Wall Street investment companies are pulling back slightly on their borrowing from the Federal Reserve’s emergency lending program.

A central bank report Thursday said they averaged $32.6 billion in daily borrowing over the past week. That compares with $38.1 billion in the previous week and $32.9 billion before that.

T.J. Marta, a fixed-income strategist at RBC Capital Markets, viewed the pullback as a positive sign. “Conditions in this particular part of the financial markets are easing up somewhat,” he said.

The program, which began March 17, is part of the Fed’s effort to aid the troubled financial system, whose problems threaten the nation’s economic health. In the program’s first week, investment firms borrowed $13.4 billion.

The Fed has agreed, for the first time, to let big investment houses temporarily get emergency loans right from the central bank. This mechanism, similar to one available for commercial banks for years, will continue for at least six months. It was the broadest use of the Fed’s lending authority since the 1930s.

Fed Chairman Ben Bernanke and his colleagues started the program as policymakers raced to deal with the sudden crash of the venerable Wall Street firm Bear Stearns Cos., which was on the brink of bankruptcy.

The Fed feared that other investment houses could be in jeopardy given the intense fear that gripped the markets at that time. So the Fed acted to give them a place to go for overnight cash loans.

The program is seen as similar to one the Fed has for commercial banks, where the Fed acts as a lender of last resort. Commercial banks and investment companies pay 2.5 percent in interest for overnight loans from the Fed.

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Grounded Flights To Potentially Catastrophic To US Economy

From the AP

It’s not just angry passengers who are suffering. The grounding of thousands of flights is disrupting cargo, mail and other crucial business for financially strapped airlines, and that means painful new strains on a U.S. economy teetering on the edge of recession.

Apologetic airlines suggest the cancellations won’t extend beyond this weekend. But there are indications the problems may just be beginning as federal regulators step up their scrutiny of carriers’ compliance with safety rules.

Air traffic systems, computers and other crucial equipment are aging, as are many of the planes themselves. Critics of the industry say that cutbacks on maintenance and inadequate government safeguards are starting to take a toll.

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Senate Passes Bill To Help Builders And Homeowners In Housing Crisis

From the AP

The Senate on Thursday passed a bipartisan package of tax breaks and other steps designed to help businesses and homeowners weather the housing crisis.

The measure passed by an impressive 84-12 vote, but even its supporters acknowledge it’s tilted too much in favor of businesses such as home builders and does little to help borrowers at risk of losing their homes.

The plan combines large tax breaks for homebuilders and a $7,000 tax credit for people who buy foreclosed properties, as well as $4 billion in grants for communities to buy and fix up abandoned homes.

The measure, titled the Foreclosure Prevention Act, will be significantly redrawn by House critics who say it favors businesses such as home builders instead of borrowers.

“Quite candidly, what we’ve done does not quite live up to the title,” said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee and the measure’s top sponsor. “We have more work to do. We do not do enough in preventing more foreclosures in the country.”

Democrats failed to win approval of ideas such as giving people threatened with losing their homes the right to seek more favorable loan terms from their lenders in bankruptcy courts. At the same time, a proposal to have the government back up refinanced loans for people facing foreclosure has yet to win GOP support.

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Gaming Recession Proof? Not In The US Today.

From the AP

In a town enthralled with its own mythology, Las Vegas would like to hold on to one myth in particular these days: Gambling is recession proof.

It’s conventional wisdom characteristic of a city and an industry far more accustomed to boom than bust, but it’s just not true, experts say. Gamblers, whether motivated by compulsion or hope, don’t necessarily double down when the economy spirals and belts tighten.

“It’s an old idea that has very little relevance and maybe no relevance to the United States today,” industry analyst Eugene Christiansen said.

Christiansen and others trace the notion to decades old economic research conducted when gamblers’ options in the U.S. were limited to horse racing and a handful of Nevada resorts. Such tight supply ensured demand for gambling was steady.

 

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Grocery Bills Going Up All Over The World

From the AP

If you’re seeing your grocery bill go up, you’re not alone.

From subsistence farmers eating rice in Ecuador to gourmets feasting on escargot in France, consumers worldwide face rising food prices in what analysts call a perfect storm of conditions. Freak weather is a factor. But so are dramatic changes in the global economy, including higher oil prices, lower food reserves and growing consumer demand in China and India.

The world’s poorest nations still harbor the greatest hunger risk. Clashes over bread in Egypt killed at least two people last week, and similar food riots broke out in Burkina Faso and Cameroon this month.

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Low Consumer Confidence Hurt Stock Market’s Optimism

From the AP

Wall Street paused Tuesday, trading little changed after a disappointing reading on consumer sentiment punctured some of the market’s optimism of the past two sessions.

Concerns about the economy snapped a two-day rally as investors weighed a report that showed consumer confidence sank to a five-year low in March. Further, data showing a slide in home prices signaled more deterioration in the slumping housing market.

Tight credit markets, rising prices and declining housing prices have consumers worrying about a recession. And, the stock market is in turn worrying that consumers will cut back their spending and further weaken the economy.

 

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Ford Sells Jaguar/Land Rover To India’s Tata Motors

From Reuters

U.S. automaker Ford has agreed to sell its luxury brands Jaguar and Land Rover to India’s Tata Motors for more than $2 billion, according to a source familiar with the matter.

Ford, which signed the deal on Tuesday, plans to publicly announce the transaction in New York at 8:00 a.m. EDT on Wednesday, said another source.

The deal will also see Ford pay about 300 million pounds ($598 million) into Jaguar and Land Rovers’ pension funds, according to unions.

Ford declined to comment, adding “our first responsibility is to communicate with our employees.”

The sale had been expected at the start of this month, but it was delayed as the two firms discussed their future relationship, including technology sharing and Ford’s provision of engines and body parts for the two brands.

Tata, India’s top vehicle maker, has been in talks with Ford since it was chosen as the frontrunner to buy Jaguar and Land Rover a few days into 2008.

Tata is pursuing the deal to gain a substantial foothold outside India.

But analysts have questioned how Tata will incorporate the luxury brands into its stable of sturdy trucks and functional passenger cars, including the Nano, the world’s cheapest car which it unveiled in January.

While Land Rover has generated three years of record sales with its iconic SUVs, the fit of Jaguar is far less clear.

 

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Consumer Confidence At 5 Year Low

From Eileen Alt Powell, AP Business Writer

Consumer confidence sank to a five-year low in March as tight credit markets, rising prices and worsening job prospects made many worry that the economy has fallen into recession.

The Conference Board, a business-backed research group, said Tuesday that its Consumer Confidence Index plunged to 64.5 in March from a revised 76.4 in February. That was far below the 73.0 expected by analysts surveyed by Thomson/IFR.

The index has been weakening since July, and is watched because lower consumer confidence tends to result in less consumer spending, which is a drag on the economy.

Lynn Franco, director of the Conference Board’s research center, said the latest index reading was the lowest since 61.4 in March 2003, just ahead of the U.S. invasion of Iraq.

“Consumers’ outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon,” she added.

 

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Home Sales Rise 2.9% In February, Median Sales Price Fell

From the AP

After falling for six straight months, sales of existing homes posted an unexpected increase in February which may have reflected more aggressive price cutting by sellers in some parts of the country, a real estate trade group reported.

The National Association of Realtors said that sales of existing homes rose by 2.9% in February to a seasonally adjusted annual rate of 5.03 million units. It was the biggest increase in a year and caught economists by surprise. They had been expecting a small decline.

The trade group reported that the median existing sales price in February fell to $195,900. That was the largest year-over-year drop on records that go back to 1999.

Lawrence Yun, chief economist for the Realtors, said that prices in some formerly hot markets in California and Florida were seeing significant price declines now as sellers try to attract buyers.

Analysts cautioned against reading too much into the one-month rise in sales. Many economists are predicting that the steep slump in housing will not bottom-out until later this year after prices fall further and allow huge levels of unsold inventories to be reduced

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JPMorgan Increases Its Bid For Bear Stearns

From Ken Sweet, FOXbusiness

JPMorgan Chase (JPM: 47.02, +1.05, +2.28%) increased its bid for troubled investment bank Bear Stearns (BSC: 12.56, +6.60, +110.73%) by fivefold on Monday, a week and a day after JPMorgan said $2 a share was its final offer.

According to the terms of the new deal, JPMorgan will buy Bear Stearns for $10 a share.

Also, JPMorgan will purchase 95 million newly-issued shares, representing 39.5% of Bear Stearns stock, in the next couple weeks in order to bypass shareholder approval. The share purchase is expected to be completed around April 8.

Under Delaware state law, where both banks are incorporated, JPMorgan can purchase up to 39.5% of Bear without shareholder approval. This provides JPMorgan the leverage it needs to take over Bear Stearns without having to get a significant shareholder approval.

“We believe the amended terms are fair to all sides and reflect the value and risks of the Bear Stearns franchise,” said JPMorgan Chief Executive Jaime Dimon in a release. He also said the deal will “bring more certainty for our respective shareholders, clients and the marketplace. We look forward to a prompt closing and being able to operate as one company.”

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Federal Reserve Expected To Cut Interest Rates Again

From the AP

The Federal Reserve is expected to aggressively lower interest rates in its intensified battle against the credit crisis and spreading economic weakness. The question is whether all of the effort will turn the tide.

Federal Reserve Chairman Ben Bernanke and his colleagues have already been working overtime, employing a variety of novel approaches to keep the economy out of a recession or at least moderate the impact of any downturn.
More relief is expected Tuesday when the central bank is expected to cut a key interest rate by between one-half and a full percentage point.

“There is no reason for the Fed not to be aggressive,” said Mark Zandi, chief economist at Moody’s Economy.com. “The economy is in a recession, the financial system is in disarray and inflation is low.”

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4.2 Million Credit Card Numbers Stolen

From the AP

A security breach at an East Coast supermarket chain exposed 4.2 million credit and debit card numbers and led to 1,800 cases of fraud, the Hannaford Bros. grocery chain announced Monday.

The breach affected all of its 165 stores in the Northeast, 106 Sweetbay stores in Florida and a smaller number of independent groceries that sell Hannaford products.

Hannaford said credit and debit card numbers were stolen during the card authorization process and about 4.2 million unique account numbers were exposed.

The company is aware of about 1,800 cases of fraud reported so far relating to the breach.

No personal data such as names, addresses or telephone numbers were divulged — just account numbers.

Hannaford became aware of the breach Feb. 27. Investigators later discovered that the data breach began on Dec. 7; it wasn’t contained until March 10, said Carol Eleazer, Hannaford’s vice president of marketing in Scarborough.

 

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Bear Stearns Bailout: Employees’ Fortunes Up In Smoke

From Ken Sweet, FoxBusiness

One of the more stunning developments of the Bear Stearns (BSC: 4.81, -25.19, -83.96%) fire sale is that many of the firm’s 14,000 employees, as well as the firms many thousands of shareholders, have just watched their stakes in the company go up in smoke.

What’s more, Sunday’s news that JPMorgan Chase (JPM: 40.30, +3.76, +10.29%) would purchase Bear for $236 million, or $2 a share — a fraction of its value even from the close of trading Friday — sent fears that there might not be much of Bear Stearns left when the merger is set to be completed later this year.

“This is gonna go down as the biggest theft in all of financial history, said William Smith, portfolio manager of Smith Asset Management and a former Bear employee. “The $2 a share stock price is more symbolic than anything because the alternative is nothing.”

 

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Why Are Oil Prices Jumping So Quickly?

From John W. Schoen, MSNBC.com

This week, readers are looking for honest answers on the reasons behind the recent spike in oil prices. Some may not like what they hear, but we’ll give it a shot.

Let’s be honest. We all know that the oil market is being manipulated to drive up the price and profit for oil companies. … Do you think anybody in DC will do anything or are they just too busy cashing those lobbyists’ checks to keep the unimaginable profits rolling in?
— Richard A., Covington, Ga.

The honest answer is the reason oil prices keep setting records is that demand for fossil fuels is growing faster than the world’s oil producers can find new sources to satisfy that demand and replace the oilfields that are used up. A lot of readers don’t like that answer, but it’s the truth.

 

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George Bush Taking Strong Action Against The Slumping Economy

From the AP

President Bush, trying to calm turmoil in financial markets after a dramatic weekend, declared Monday that his administration is “on top of the situation” and dealing decisively with the slumping economy.

“One thing is for certain, we’re in challenging times,” Bush said after meeting with Treasury Secretary Henry Paulson and other senior economic advisers. “But another thing is for certain: We’ve taken strong, decisive action.”

Bush spoke as the financial markets absorbed the stunning news that 85-year-old Wall Street powerhouse Bear Stearns had agreed to be acquired by rival JPMorgan Chase for the fire-sale price of $2 a share. Bear Stearns, which traded at nearly $160 a share less than a year ago, collapsed after losing billions of dollars on mortgage-backed securities.

 

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Gasoline Prices to Hit a Record High

From Steve Hargreaves, CNN.com

Gasoline will hit a new record high price – perhaps as early as Tuesday – and experts say it will likely continue to soar in tandem with the skyrocketing price of crude.

The national average retail price for gas has already risen 26 cents in the last month, according to the motorist organization AAA. At $3.222 a gallon, it is less than a cent away from the all-time record.

And experts say motorists should prepare to pay nearly $4 a gallon – and in some places even more than that – before the price of gas finally comes down in the late spring as high prices crimp demand.

The price of gasoline usually increases this time of year. Several factors contribute to the runup: Low refinery output due to maintenance, a switch from winter to pricier summer blends, and the looming high-demand summer driving season.

Experts say this time around the spike will be more pronounced, mostly due to the surging price of oil and, to a lesser extent, refiner’s attempts to grow their profit margins.

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FBI Investigating Countrywide Mortgage for Securities Fraud

From Foxnews.com

Federal authorities are investigating Countrywide Financial Corp. for securities fraud, according to media reports.

The Wall Street Journal first reported Saturday that the mortgage company is the subject of an inquiry, citing law enforcement officials and finance executives with knowledge of the development.

FBI spokesman Special Agent Richard Kolko on Sunday would not confirm if Countrywide is under investigation but said there is an open investigation.

“The FBI has been investigating potential fraud in the mortgage/sub-prime lending industry, however, we cannot confirm or deny which companies are under investigation,”Kolko said.

The New York Times, which also cited anonymous sources, said the Justice Department is also involved in the Countrywide investigation.

“We are not aware of any such investigation,” Countrywide spokeswoman Susan Martin told the Times.

Investigators are looking at evidence that may suggest that company executives knew their mortgage securities would see many more defaults than predicted in its public documents, one source told the Journal.

 

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Bankrupt Mortgage Companies Throwing Customer’s Personal Data in Trash

From Alex Johnson, MSNBC.com

As recently as August, First Magnus Financial Corp. was the subject of a magazine feature hailing it as a “technological powerhouse” ready for the future thanks to its “tech-savvy management team.”

Just two weeks later, First Magnus, one of the nation’s largest mortgage lenders, whose headquarters was one of the biggest employers in Tucson, Ariz., was out of business, another victim of the disintegration of the U.S. mortgage industry.

Among the revelations about Magnus was that it wasn’t quite as technologically advanced as had been billed. Most of its borrowers’ records were still on paper, as Floridians learned when thousands of loan documents were discovered in boxes in an unlocked trash Dumpster in Fort Lauderdale.

 

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