Finance and Economic

WASHINGTON – U.S. sales of existing homes fell more than expected last month as economic fears made buyers leery even though prices plunged to the lowest levels in more than four years.

And the decline is expected to steepen because October's results reflect sales finalized before Wall Street's nosedive.

The National Association of Realtors said Monday that sales of existing homes fell 3.1 per cent to a seasonally adjusted annual rate of 4.98 million units in October.

That compared with a downwardly revised pace of 5.14 million in September. Sales had been expected to fall to a rate of 5.05 million, according to economists surveyed by Thomson Reuters.

The median price – half of homes sold for more, half for less – plunged 11.3 per cent from a year ago to $183,000.

That was the largest year-over-year drop on records going back to 1968, and the lowest median sales price since March 2004.

The realtors group is calling on Congress and president-elect Barack Obama to spend $50 billion to subsidize mortgage rates, projecting this would stimulate 500,000 more home sales.

"If home prices overshoot downward, than it can lead to collateral damage to the economy," said association economist Lawrence Yun. The cost, he added, would be "very reasonable" compared with the billions the government is spending to rescue major banks.

Since the October sales numbers reflect contracts signed in August and September, sales could fall further amid the fallout from the sinking economy.

Evelyn Krazer, sales manager with Johnson Realty in St. Louis, said activity has slowed to "practically nothing" in recent weeks.

"Everybody's afraid of losing their job," she said. "People who are thinking about moving are holding off."

Global Insight economist Patrick Newport said many Americans are moving in with relatives after losing their homes to foreclosure, while lenders "are trying to protect themselves by holding cash."

Still, other economists were encouraged that sales did not fall below June's sales rate of 4 business card.85 million, the lowest point to date in the current housing bust.

"The market is showing signs of bottoming out," said David Resler, chief economist with Nomura Securities.

Compared with last month, sales were down in much of the country. But in the West sales were up 40.5 per cent compared with October last year, as buyers in places like Las Vegas and Orange County, Calif., snapped up distressed properties at bargain prices.

Nationwide, the realtors group estimated distressed properties made up 45 per cent of all property sales in October.

There were 4.23 million unsold homes on the market in October, down slightly from a month earlier, but analysts say that until inventory falls substantially from ongoing historically high levels the housing slump is likely to persist.

"There are still way too many houses being offered and that is likely to stay that way for quite some time as we work through the foreclosure problem," said Joel Naroff, an economist and president of Naroff Economic Advisors in Holland, Pa.

Soaring foreclosures are a driving force behind the credit crisis that has upended Wall Street and caused the government to spend billions rescuing major banking institutions.

President George W. Bush argued Monday that the government's $20-billion-plus rescue of Citigroup, announced late Sunday, was necessary to "safeguard the financial system" and help the economy recover. Bush said there could be more such moves if other institutions need help.

Meanwhile, Obama pledged to honour the commitments the outgoing Bush administration has made, and urged the incoming Congress to immediately pass a major economic stimulus package.

He declined to specify how big a spending package he contemplates, but said: "It's going to be costly."

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General Motors Corp and Ford Motor Co posted more than $27 billion of net losses in the first half of 2008 — and that was before a deepening economic slowdown pushed industry sales beyond 15-year lows.

What either automaker will report for an encore in the third quarter could be overwhelmed by the potential merger of Chrysler LLC into GM or various other scenarios of some or all of the Auburn Hills, Michigan automaker being sold.

Both are expected to post dismal third-quarter results on Friday, capping off a disastrous week that started with reports that U.S. auto sales plunged to the lowest annualized rate in a quarter century in the first month of the fourth quarter.

Analysts on average expect GM and Ford to post losses of roughly $2 billion each for the third quarter excluding one time items, according to Reuters Estimates.

Cash flow remains key to investors, who saw GM stock fall to a 58-year low and Ford stock to a more than quarter century low in October, as does U.S. consumer confidence, which fell to a record low in October.

A deal to unite GM and Chrysler hit a wall after the Bush administration last week ruled out funding it, leaving any merger between the companies contingent on federal aid under the next administration, people familiar with the talks said.

October sales fell from bad to worse amid the financial sector failures that forced a $700 billion bailout plan in the United States and numerous props for banks in other countries.

“Auto companies just don’t make money in a recession,” Morgan Stanley analyst Adam Jonas said in an October note to clients referencing the slowdown in European automaker results that is just as relevant for U direct payday loan cash advance.S. companies.

While the talks between GM and Chrysler owner Cerberus Capital Management LP have taken most of the spotlight, Ford also has had discussions with policymakers about the challenges facing the industry and the automaker.

“We just want to make sure we continue that ongoing dialogue and make sure that whatever happens there is a degree of parity,” Mark Fields, Ford’s president of the Americas, told reporters last week.

Ford earlier in 2008 said it would accelerate plans to bring European-designed cars to North America and convert some pickup truck plants to car production. It is expected to provide a business plan update on Friday.

WHERE THE RUBBER HITS THE ROAD

GM’s U.S. sales were down more than 20 percent in 2008 through October, while Ford sales were down 18 percent in its core brands. Both lagged the 15 percent industry decline.

In recent years, special charges have been hard to predict for Ford and GM due to massive North American restructurings that have failed to keep pace with eroding markets. They combined for $17.1 billion of charges in the second quarter.

Charges could include costs for white collar job cuts and buyouts of unionized hourly workers. Ford cut white collar expenses in the summer and told the UAW in September that it had about 4,000 more hourly workers than it needed. 

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U.S. lawmakers prepared to vote on Monday on a $700 billion fund to buy toxic debt as the global financial crisis produced Europe’s biggest bank rescue to date.

Investors around the world hung on every twist and turn in Washington as Benelux governments moved to part-nationalise

Belgian-Dutch group Fortis.

In Britain, mortgage lender Bradford & Bingley became the second British bank to be taken under the government’s wing since the crisis began last year. Shares in French bank Dexia tumbled more than 20 percent on a

newspaper report that it might launch an emergency capital increase.

Fortis is the first major euro zone bank to buckle under the financial turmoil triggered in August last year by U.S credit reports. mortgage defaults, and an early relief rally in markets at news of progress in Washington soon fizzled out.

Stock markets in Japan, South Korea and Hong Kong all retreated 1-2 percent, giving up initial gains led by financial shares. U.S. stock futures pointed to a drop at the opening bell and Europe’s FTSEurofirst fell 2.5 percent.

The dollar climbed, mainly due to the euro and pound sliding about 1 percent, as the toll on financial firms spread across the Atlantic and stirred expectations that central banks may have to respond by cutting interest rates. 

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August Busch IV, chief executive of Anheuser-Busch Cos. Inc. will be paid nearly $10.4 million after the brewer is sold to InBev SA and $120,000 a month to consult for the new company through the end of 2013.

Terms of the consulting deal are currently being negotiated, according to a filing with the Securities and Exchange Commission made Friday.

Busch, a member of the St. Louis-based brewer’s founding family, will also be eligible for an additional payment of $13.3 million on various change-in-control payments and benefits, the filing said.

Last month, the brewer of Bud Light and Budweiser announced it had agreed to be sold to InBev, the Belgium-based maker of Stella Artois, Beck’s and Bass. The deal is worth $52 billion.

The two companies will combine to create Anheuser-Busch-InBev NV SA. The combined company’s North American headquarters will remain in St. Louis.

Busch will advise the company on new products and business opportunities, review marketing programs, and meet with retailers, wholesalers and advertisers as part of his new duties.

He will be given an office in St. Louis, administrative support, and insurance such as medical, dental and vision, the filings said.

Busch will also be given personal security services through the end of 2011 in St. Louis, in accordance with Anheuser-Busch’s past practices, the filing said. He will also get free tickets to Anheuser-Busch sponsored events.

Busch will not be able to disparage the company, or solicit employees or customers for business, according to the agreement.

Also in the filing, InBev maintained its promises to keep Anheuser-Busch’s 12 U.S cheap payday loans. breweries open, on the condition that, "there are no new or increased federal or state excise taxes."

St. Louis will remain the home of the Budweiser brand, the filing said. InBev said it would continue to support Anheuser-Busch’s charitable causes and other operations, such as its trademark Clydesdale horses.

Anheuser-Busch will have to pay $1.25 billion if the deal falls through for one of several reasons, such as Anheuser-Busch accepting another offer. InBev will pay Anheuser-Busch the same amount if Anheuser-Busch’s shareholders reject the deal.

Anheuser-Busch said in the filing it planned to hold a special shareholder meeting to vote on the deal and would announce that date as soon as the deal receives regulatory clearance.

On Monday, InBev said the U.S. Department of Justice was seeking additional information about the deal. InBev said in a statement it would "respond expeditiously" to the so-called "Second Request" that pertains to antitrust regulations. It said the request was normal and it expected the deal to close by the end of the year.

Shares of Anheuser-Busch (BUD, Fortune 500) fell 37 cents to close at $67.82 Monday. 

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Time will tell if Bank of America’s purchase of Countrywide Financial Corp. winds up being a bargain or a boondoggle.

Shareholders of the troubled mortgage lender approved Bank of America’s (BAC, Fortune 500) all-stock offer by a majority vote Wednesday, removing the final hurdle to the deal and ending Countrywide’s days as an independent. Countrywide said it expected the deal to close on July 1.

But lately, some analysts have suggested that Bank of America may suffer a classic case of buyer’s remorse once it absorbs Countrywide’s (CFC, Fortune 500) $95 billion loan portfolio.

Last week, equity analysts at Standard & Poor’s slashed their rating of Bank of America stock to "sell" from "hold." They fear the Charlotte, N.C.-based bank may be underestimating the impact of rising consumer defaults and delinquencies at Countrywide, especially with option adjustable rate mortgages (ARM).

Last month, Paul Miller, an analyst with Friedman, Billings, Ramsey & Co., warned that Bank of America’s purchase could prompt it to take anywhere between $20 billion to $30 billion in writedowns.

"BAC [Bank of America] should completely walk away from the CFC [Countrywide] deal, as CFC’s loan portfolio will prove a drag on earnings and could force BAC to raise additional capital," Miller wrote in a note.

Countrywide, the nation’s largest mortgage lender, was struggling in the months leading up to the deal’s completion. The company reported losses in its last three quarters due to soaring mortgage delinquencies and defaults by borrowers. The stock plunged from about $30 per share last August to less than $6 a share just before BofA announced the deal.

Bank of America’s concerns, however, don’t just end at Countrywide’s balance sheet.

The Senate Ethics Committee is looking into charges that top lawmakers including Senate Banking Committee Chairman Christopher J. Dodd, D-Conn. and Sen. Kent Conrad, D-N.D. got deals on their mortgages through a program for friends of Countrywide CEO and co-founder Angelo Mozilo.

Mozilo, who grew Countrywide from its modest beginnings, will leave the company but will still receive $10 million in stock from Bank of America. That’s on top of the $115 million he stood to gain after the deal was announced. He later forfeited $37.5 million in payments tied to the deal.

So far this year, Countrywide has also become the target of numerous government investigations into the company’s lending practices, including the U.S. Trustee’s office, a division of the Justice Department. Earlier Wednesday, both the state of Illinois and California filed lawsuits against the mortgage lender for misleading and deceptive practices. And that’s not to mention the glut of lawsuits brought by borrowers.

Some analysts think Bank of America most likely took litigation expenses into account when it drafted its offer for Countrywide though.

Still, Bank of America is also going to need to drastically cut back its combined mortgage operations once the two firms are finally integrated.

To that end, the company has hinted that job cuts lay ahead, saying in January that it planned to trim 11% of the combined mortgage companies’ expenses.

"It will be a long time before they need people on the servicing side and they probably will cut a substantial amount on the mortgage origination side," said Malcolm Polley, president and chief investment officer at Stewart Capital Advisors in Pittsburgh, which owns approximately 23,000 shares of Bank of America instant payday loan.

When Bank of America first proposed the deal back in January, Wall Street was evenly split about its merits.

Some analysts speculated that the company offered too high an asking price — the deal originally valued Countrywide at just over $4 billion and is now worth about $2.8 billion as BofA shares have fallen along with the broader financial sector in the past few months.

In addition, the deal would mean that Bank of America, which had largely avoided the subprime mess unlike many of its peers, would now be exposed to Countrywide’s risky mortgage portfolio.

Others cheered the tie-up, noting it put Bank of America in a position to expand its already vast footprint in the financial services sector, by making it the nation’s biggest mortgage lender and loan servicer.

And some large institutional shareholders in Countrywide, such as the Monaco-based hedge fund SRM Global went so far as to attack top Countrywide management, claiming that the buyout price of $4 billion was not high enough.

So is Bank of America getting Countrywide on the cheap?

Despite all the doubts regarding the deal, Bank of America’s management has stood firmly by the transaction since it was first announced.

"I think it could be a combination that really turns out to be very good strategically," said Bank of America chairman and CEO Kenneth Lewis earlier this month at an investor conference.

Lewis added that if his company correctly estimated the number of markdowns they would have to take, the acquisition "could be a very compelling financial transaction."

But if Bank of America expects any payoff from the Countrywide deal, it should be patient, noted David George, senior research analyst at Robert W. Baird & Co. Inc.

When the housing market finally turns around — and most analysts expect it will at some point — Bank of America will have a nice head start with Countrywide’s well-trained sales staff and mortgage lending technology platform.

"Over the near term, I think the Countrywide deal adds increased credit risk to BofA’s balance sheet," said George. "Longer term, it could be a positive transaction." 

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An analyst cut his rating and price target on Motorola Inc. Monday, saying the company continues to lose handset market share in North America, where nearly half of its unit sales originate.

Piper Jaffray analyst T. Michael Walkley downgraded Motorola (MOT, Fortune 500) to "Sell" from "Neutral" and cut his price target to $7 from $9.75.

The new target implies he expects shares to slip 12% over Friday’s $7.94 close.

While North American market share remains well above its global share, sales at four major wireless carriers on the continent are declining, he said.

Schaumburg, Ill.-based Motorola said in March that it plans to separate the handset business, which has been hurt by a two-year-long decline in cell phone sales, from its home and networks business http://us-fast-cash-now.com.

The company said in April that it expects second-quarter handset sales to be equal to, or slightly better than, its results from the first quarter.

Walkley lowered his 2008 handset forecast to 106 million from 116 million.

He warned that the macroeconomic problems facing North America appear to have had an effect on government budgets, which could hurt the company’s enterprise mobility solutions business later this year.

So far this year, the stock has dipped 51%.

A company representative was not immediately available for comment. 

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President Hugo Chavez of Venezuela signed a decree Wednesday that orders the nationalization of the country’s leading steel producer.

Chavez nationalized Sidor, a steel making company, a Venezuelan government official told CNN. The Argentine company Ternium owns the majority of shares in Sidor, according to a report about Chavez’s decision in the Venezuelan-based Bolivariana News Agency.

The leftist administration of Chavez has nationalized companies from several industries.

About three weeks ago, government ministers told three foreign-owned cement companies that Venezuela planned to nationalize the cement industry. Those plans affect Cemex (CX), a Mexican firm; Holcim Ltd fast payday loans. of Switzerland and Lafarge, which is based in France. Those companies control 92% of the cement market in Venezuela.

Chavez also has nationalized telephone and power companies.

The decree that Chavez signed Wednesday will create a commission "to take control of the company and make it work in the best interests of the nation, its workers" and the Guyana region of Venezuela, the Bolivariana News Agency reported. 

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Home foreclosure filings jumped 23 percent in the first quarter from the prior quarter, and more than doubled from a year earlier, as more overextended borrowers failed to make timely payments, real estate data firm RealtyTrac said on Tuesday.

One of every 194 households received a notice of default, auction sale or bank repossession between January and March, for the seventh straight quarter of rising foreclosure activity, RealtyTrac said.

Foreclosure filings were far-reaching, rising on an annual basis in 46 states and in 90 of the 100 largest metropolitan areas, to a total of 649,917 properties. The first quarter filings surged 112 percent from the same period last year.

“In most of the states with the highest levels of foreclosure activity, we’re still seeing the fallout from overheated home prices and people overextending themselves with risky loans to try to buy those properties,” Rick Sharga, vice president of marketing at RealtyTrac, in Irvine, California, said in an interview.

“I’m more convinced that we haven’t seen the peak of foreclosure activity yet, and the wave probably won’t crest until late third or fourth quarter of 2008,” he added.

Nevada, California, Arizona and Florida had the highest foreclosure rates among states during the quarter.

A buying frenzy by speculative investors had sharply inflated home prices in all of those states before a slide into one of the worst housing markets in a century began in 2006.

These states are now inundated with unsold homes, many valued less than the size of the mortgage easy quick payday loans. The oversupply is pressing prices down, forcing some owners to walk away and escalating pressure to foreclose. 

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Dr. Arlyn Scherbenske, a veterinarian on the sparsely populated plains of North Dakota, is directly responsible for the health of every dog, cat, sheep, horse, cow and canary within a 45-mile radius

"The only thing we don’t work on is reptiles, like snakes," said Dr. Scherbenske, speaking by phone from his practice in Steele, a town of less than 700 people.

But that doesn’t narrow down his clientele much. Dr. Scherbenske estimates that he has some 100,000 animals under his care, most of them cows at surrounding farms. That’s a lot of work, and Dr. Scherbenske - who recently sprained his shoulder on the job - could use all the help he can get.

In the coming months, two veterinary school graduates will be joining his practice to help inspect herds for pregnant cows and treat calves with broken legs. But it isn’t easy wooing city-bred vets to move to the country, where the need is approaching critical.

"All of a sudden, the shortage is huge and we have less and less of these kids coming to rural practice," said Dr. Scherbenske. "I think those jobs could be filled if we get over the perception that it is a lower-paid job."

The U.S. lost 80,000 jobs in March - its third straight month of losses. But the job market for veterinary medicine is expected to grow dramatically in the next few years.

The Bureau of Labor Statistics projects an increase of 22,000 veterinary jobs nationwide through 2016, a 35% jump from 62,000 vets in 2006. The Bureau also expects a surge of 29,000 veterinary technician jobs, a 41% jump from 71,000 technicians in 2006. The technicians serve as assistants to vets, just as nurses assist physicians in the healthcare profession.

But it’s unclear where all these new vets will come from. The Association of American Veterinary Medical Colleges, a Washington, D.C.-based organization representing 32 schools in the U.S. and Canada, produces about 2,600 vets a year, a rate that hasn’t changed since the 1970s. That isn’t enough to replace retiring vets in the "graying" field, said Dr. Marguerite Pappaioanou, executive director of the association, which does not have an estimate for the projected exodus.

"We’ve been stuck at 2,600 [grads] a year for 30 years while our population has gone up and our number of animals has gone up," she said. "There is a critical shortage of veterinarians in the U.S. right now."

While vets are often associated with pets, they’re needed more as caretakers for food animals like cattle and sheep. Some rural counties in cattle country have more than 25,000 head of cattle but no vets. The shortages are most acute in parts of the Dakotas, Iowa, Nebraska, Kansas and Missouri.

"The role model for most kids is a vet in companion animal practice working with dogs and cats," said Dr. Gregory Hammer, president of the American Veterinary Medical Association cash advance loan. "What we don’t expose them to is a vet working in food safety, research, the military, public health and food animal medicine."

The health of America’s livestock, and the meat on your table, is at issue. But convincing city-bred vets to move to the Great Plains to conduct house visits on sprawling herds of cattle, or to conduct food safety inspections in meat processing plants, can be difficult.

"We have more and more people raised further and further from the farm," said Dr. Hammer. "We have people who are less comfortable working on food animals and are less comfortable going to rural areas."

Many grads prefer to care for family pets in cities and suburbs, partly because their average student debts exceed $100,000 according to the Association of American Veterinary Medical Colleges, and the city jobs are seen as more lucrative.

"When they have that kind of debt, they go to the highest bidder," said Dr. Pat Halbur, chair of the veterinary department at Iowa State University. But Dr. Halbur said many of these grads don’t realize they can make a good living in the country, noting that the average vet pay in a small Midwestern town is $75,000, compared to $65,000 in a bigger city.

"[Rural vets] do make a very good living, in many cases, a better living than being a companion animal veterinarian," said Dr. Halbur. "The quality of life is there, the income is there, and they’re usually able to own their own practices quicker."

One of the biggest turn-offs for incoming vets is the concept of being on-call 24 hours a day, and the near-impossibility of making house visits across vast areas. But this is changing, and many rural vets are finding that hospital-like settings, where the patients come to them, are more practical and profitable.

"I think that change in vet medicine is going to be in the hospital setting with multiple veterinarians," said Dr. Clark Cooper of the Cooper Veterinary Hospital in West Monroe, Louisiana. "I would hire two vets today, if I could get them in here."

Despite decent salaries, Cooper sees the high tuition of vet school as the biggest deterrent to the industry, and he said he can’t afford to pay grads the salaries that they need to pay off their student loans.

In 2007, identical bills were introduced in the House and Senate requesting grant money for vet schools to train more vets, but they’re still in the earliest stages of legislation.

"We’ve got to cut down on the amount of loans these students have," said Dr. Cooper, who, like many vets, believes the federal government should provide more funding for training. 

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Creve Coeur-based scrap metal recycling company Alter Trading Corp. acquired Anoka, Minn.-based SCI Recycling Service for an undisclosed amount.

With the acquisition, Alter new owns 35 recycling centers and seven trading offices in nine states, including the three SCI facilities in Anoka and Hayfield, Minn., and Mason City, Iowa.

SCI has 61 employees fast cash loans. Privately-owned Alter has 973. An Alter spokeswoman said "all key SCI employees" would remain with Alter. She did not elaborate.

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