Finance and Economic

ALGIERS–OPEC's next meeting must confirm that members have made all the oil output reductions they promised before taking any more action on output levels to prop up sagging prices, OPEC President Chakib Khelil said on Saturday.

"We will discuss another cut, whatever happens, but will there be a consensus? I cannot tell you today," Khelil said at a seminar on oil, referring to cuts agreed at an Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna last month.

Oil fell below $60 a barrel for the first time since March 2007 on Thursday, depressed by dismal projections for the world economy next year, and OPEC ministers are due to meet formally next on Dec. 17 in Oran, Algeria.

"There will be a consensus in Oran, and this consensus will depend on the application of the reduction," Khelil said.

"If everyone has applied (the cuts) and everything in terms of prices stays at the levels we have today, it's of course clear that we will probably go towards a decision to reduce," he said, adding that if the cuts had not all been implemented it would be difficult to decide further action.

Taking further action at a time when previous cuts had not all been implemented would send a bad signal to the markets, which reacted to "the reality on the ground" rather than mere words, he said cash advance usa.

Khelil said he expected prices to rise shortly, adding: "If we apply the reductions totally the probability of another cut is weaker."

Arab members of the group could discuss market developments informally on Nov. 29 in Cairo on the sidelines of a meeting of the Organization of the Arab Petroleum Exporting Countries, he said.

Oil's steep slide from a peak of more than $147 a barrel in July has already spurred OPEC to rein in supply by 1.5 million barrels per day (bpd) from Nov. 1. Some members of OPEC want to cut more.

Khelil said that in addition to the 1.5 million bpd OPEC cut, Saudi Arabia, the world's biggest exporter, was expected by itself to cut another 300,000 bpd that he said it had added to its own supply in recent months.

Evidence of a worldwide economic downturn has mounted. The International Monetary Fund has predicted 2009 global economic growth of 2.2 per cent, down 0.8 percentage points from its October forecast.

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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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The global downturn is forcing South Korea, Thailand and Indonesia to put on ice long-planned privatizations of banks which are either now needed as policy tools or look unattractively short of capital.

As crumbling financial markets hammer asset values of banks across Asia and with no sign of any quick recovery, governments are unlikely to dare loosen control over banks already in their charge and may well tighten their grip.

“In the current situation, governments have to take a leading role in stabilizing financial markets and that could be done through state-run banks,” said Park Jeong-hyun, a Hanwha Securities analyst in Seoul.

“Bank privatization should come once financial markets stabilize and we gain confidence in them.”

The delay also means retreating from attempts to reform and consolidate the region’s battered banking sector, which Asian governments spent hundreds of billions of dollars bailing out in the wake of the 1997-98 Asian financial crisis.

It also removes potential extra revenue just as governments want to boost fiscal spending to cushion the impact of a looming global recession.

Governments around the world have so far agreed to inject more than $4 trillion into banks, nationalizing some and guaranteeing deposits for many.

“In the short term, we should expect to see more government intervention in banks in order to support them through the credit crisis, not less,” said David Marshall, Managing Director of Fitch Ratings.

“In some other countries, banks are being wholly or partly nationalized as part of government support mechanisms cash advances pay day loan. I would not expect to see this happen on a significant scale in Asia but banks may well need liquidity support from central banks.”

DELAYS

The Bank of Thailand’s rescue arm, Financial Institutions Development Fund (FIDF), said last month market conditions meant it was not ready to sell stakes in Krung Thai Bank KTB.BK, Thailand’s No. 2 bank, or Siam City Bank SCIB.BK.

When South Korea’s chief financial regulator, Jun Kwang-woo, said the government would be flexible about the timing of privatizing Korea Development Bank (KDB), it was taken as a signal of a delay in what has been central to ambitious financial reforms President Lee Myung-bak wanted to wrap up by 2012.

South Korea has also put off cutting its 73 percent stake in Woori Finance Holdings (053000.KS: Quote, Profile, Research, Stock Buzz), the country’s No. 2 financial services group, and the Industrial Bank of Korea (IBK) (024110.KS: Quote, Profile, Research, Stock Buzz), citing market conditions.

Full privatization of the three banks is valued at more than 37 trillion won ($29 billion), according to a KDB estimate and market prices.

Instead, the government is now set to inject 1 trillion won in KDB and 500 billion won into IBK to give them room to expand lending to cash-strapped small companies. 

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Has your latest brokerage statement got you down? Maybe it’s time to try something completely different: a $96 billion market built entirely on the certifiable absence of a colorless, odorless gas.

That would be the curious and high-growth business of carbon finance. Its primary purpose is to curb global warming by stimulating the trade of a new commodity known as a carbon-emissions reduction credit. Scoff if you like, but know this: During 2008 (through Oct. 15), the value of an index of carbon credits - which you can now purchase on the New York Stock Exchange - grew 5.4%. Can you say that about anything in your portfolio?

What’s more, almost everyone expects carbon trading to really take off once the U.S. government regulates greenhouse gases, as both presidential candidates promise to do. Of course, if Washington doesn’t act, the market could vaporize. "These are political markets, and you can’t take the politics out," says V

Shares of Hartford Financial Services Group Inc. plummeted more than 50% on Thursday after a handful of analysts downgraded and cut profit estimates for the insurance company on concerns of rating agency downgrades and a possible capital raise.

Late Wednesday, the Hartford, Conn.-based insurer reported a $2.6 billion loss for the third quarter and cut its full-year profit outlook. The company now expects 2008 earnings to range from $4.30 and $4.50 per share, less than half its estimate in July of $9.20 to $9.50 per share. The quarterly loss was in line with the company’s results which were preannounced earlier this month.

"The risk of a rating agency downgrade and the inability of management to provide comfort on the level of their capital cushion make it very difficult to assess the downside or to argue that there is significant upside in the near term," wrote Fox-Pitt Kelton analyst Gary Ransom in a research note to clients.

Ransom, who downgraded Hartford (HIG, Fortune 500) shares to "In-Line" from "Outperform" and reduced his 2008 profit estimate to $4.30 per share from $5 per share, added that it is difficult to rule out the possibility of an additional capital raise by the company due to "considerable uncertainty" in the financial markets.

Earlier this month, Hartford bolstered capital with a $2 freecreditreport.5 billion infusion from German insurer Allianz SE (AZ).

Insurers have been under pressure to maintain solid capital positions in order to avoid damaging downgrades by ratings agencies. Keeping high ratings is key for insurers because lower ratings can mean higher costs, and in some cases, even a loss of business.

Deutsche Bank analyst Darin Arita also lowered his yearly outlook to $4.45 per share from $5.40 per share, and said in a note to clients, "The life insurance business is suffering from capital strain."

Arita slashed his price target by $18 to $36, but maintained a "Buy" rating on the company’s shares.

Analyst Bijan Moazami of Friedman, Billings, Ramsey lowered his yearly outlook to $4.30 per share from $5.20 per share, and cut his price target on Hartford shared by $3 to $37.

On average, analysts surveyed by Thomson Reuters forecast an annual profit of $5.25 per share.

Shares fell $10.28, or 51.4%, to $9.38 in heavy afternoon trading and earlier bottomed at a multiyear low of $8.23. 

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Pakistan must secure a loan from the International Monetary Fund within a week, the German foreign minister said Tuesday, as the country scrambles for aid to avert a run on its currency and a default on its international debt.

Without help, the fight against terrorism in the nuclear-armed nation could be complicated by out-of-control price increases, fewer jobs and rising public anger in the country of 160 million people.

German Foreign Minister Frank-Walter Steinmeier said Tuesday that Pakistan’s problems were so urgent it had no choice but to seek an IMF loan.

"I can only hope that the decision is taken quickly, because a loan in six months or six weeks will not help, but only if it is approved within the next six days," Steinmeier told reporters after talks here with Pakistani officials. "Then one can perhaps avoid the most difficult situation in Pakistan."

While Pakistan has already approached the IMF to help solve its balance of payments crisis, it has held out hope that it can raise about $5 billion from other lenders — avoiding an IMF austerity program.

Steinmeier said Germany, Europe’s biggest economy, and other countries were discussing a separate package of assistance for Pakistan to boost faltering economic growth.

"That is the only way to stabilize the situation," Steinmeier said. Pakistani Foreign Minister Shah Mehmood Qureshi said Steinmeier had been "very supportive" of Pakistan in talks with its foreign backers one hour cash loan. He did not mention the IMF.

High oil prices and dwindling overseas investment have left Pakistan with a yawning balance of payments deficit. The gap is draining its foreign currency reserves and pushing it toward a default on its international debt.

Pakistani officials had hoped to persuade allies such as the United States and Saudi Arabia, as well as institutions including the World Bank, to provide soft loans or accelerate pledged development aid.

But with many governments preoccupied with the global banking crisis, Pakistan has received no firm public commitments of assistance. An IMF program would be politically unpopular in Pakistan because it likely will come with tough conditions.

The government insists it already has taken action to slash unsustainable subsidies on food and fuel — measures that hurt in a country where about three-quarters of the population live on no more than $2 a day.

There is speculation that an IMF loan might come with demands to slash the government’s own budget, including defense spending. In a sign of the times, the army on Tuesday halted work on a new general headquarters in the capital, saying it "shares the nation’s quest for economic stability through a spirit of sacrifice."  

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KUWAIT CITY – Kuwait's Central Bank stepped in Sunday to prop up one of the country's biggest banks and said it was considering guaranteeing deposits in domestic banks – in one of the first concrete signs that the global financial crisis may next hit the oil-rich Gulf.

In Saudi Arabia, meanwhile, the government said it would deposit $2.7 billion into the Saudi Credit Bank to help lower-income citizens deal with financial difficulties, the country's Al-Ektisadiya newspaper reported.

The two moves came just a day after finance ministers from the six-nation Gulf Cooperation Council held an emergency meeting to echo assurances, which they have repeatedly voiced over the past few weeks, that the region's banks face no liquidity crisis.

Kuwait's decision to stop trading in shares of Gulf Bank sent a shock wave through the country's bourse, which closed down almost 3.5 per cent and brought its year-to-date losses to over 19 per cent.

"The halting of Gulf Bank shares spread panic in the bourse today, because the government has been saying banks are safe from (global financial crisis) losses," said investor Ahmed al-Fadhli in a telephone interview.

The central bank order said trading in Gulf Bank shares would be suspended pending an investigation into the derivatives deals that caused the losses. The bourse's statement said some investors had balked at covering their losses, but neither the central bank nor Gulf Bank indicated the scope or timeframe of the bank's losses.

But one banking official with access to the information estimated the bank's losses at up to $749 million. The official spoke on condition of anonymity because of the sensitivity of the issue.

Over the past few weeks, Kuwaiti investors have voiced clear concerns about the market. One stockbroker unsuccessfully sued to temporarily close the bourse while other traders last week stormed out of the exchange, demanding the government intervene to halt their near-daily losses.

Investor al-Fadhli said about 40 brokers walked Sunday from the exchange to the nearby seaside Seif Palace, demanding to see the prime minister, Sheik Nasser Al Mohammed Al Sabah, to ask for more government intervention.

The Gulf Bank news further fuelled market turbulence in the broader GCC, not just in Kuwait, a tiny country which is far more dependent on oil revenue than many of its other Gulf counterparts.

Oman's stock exchange was down about 8.29 per cent while Qatar's exchange was off almost 9 per cent. Saudi's benchmark Tadawul index was down a moderate 3.06 per cent, a day after plummeting over 8 per cent.

Sunday is a normal business day in the Arab Mideast, which usually observes Friday as the weekend no teletrack payday loans.

So far, the Gulf countries have been thought to be protected from the crisis, in part because of the cushion of oil money many of them have built up during years of high oil prices. However, because most of the region's banking sector is privately held, not much is known about the institutions' true risk exposure levels.

The Gulf Bank news also appeared to have pushed the Kuwaiti government to take a step it has so far resisted – guaranteeing deposits. The country currently makes no deposit guarantees.

The central bank said it would propose an urgent bill to guarantee bank deposits in an effort to "boost confidence in our banking sector and enhance its ability to compete with banks in countries where deposits were guaranteed by the state" but gave few details on specifics.

The guarantee would cover local Kuwaiti banks.

The various Gulf countries have taken a range of measures to maintain market confidence, including cutting interest rates and pumping billions into their economies.

In tandem, officials have repeatedly said the region is not exposed to the kind of toxic debt that has led to massive losses in the United States and spread to other global markets.

But the move to deposit funds in the Saudi Credit Bank, to be used interest-free by lower-income Saudis, showed the push many of the GCC countries were undertaking to ensure that their citizens are not affected by the current international crisis.

Much of that effort is funded by the countries' massive cash surpluses, accrued from oil wealth. But with crude prices falling, analysts say some spending may be curtailed.

The draft bill to guarantee deposits could prove to be the necessary catalyst for stability, analysts said.

But some, including independent financial analyst Ali al-Nimesh, have criticized demands to stop trading, arguing that such a step was counterproductive and unnecessary since the daily losses have not exceeded 4 per cent, compared to a more than 8 per cent drop in the benchmark Saudi Tadawul index on Saturday, for example.

"Unfortunately, Kuwaitis have been used to demanding help and getting it … and parliament has played a negative role in this," al-Nimesh said.

Legislators have passed pay hikes and set up a state fund to buy bad consumer debts despite strong Cabinet opposition.

The government believes oil revenues should be used for development instead of "popular" demands that do not take into consideration that oil prices might fall sharply, dragging down state revenues in tow.

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Asian and European leaders closed ranks on Saturday to try to bolster the confidence of shell-shocked investors fearful that the year-long global credit crunch is mutating into a worldwide recession.

Poor economic data around the world and another international barrage of corporate profit warnings and job cuts triggered a brutal sell-off in stocks from Tokyo to New York.

“The danger of a collapse (on financial markets) is far from over. Any all-clear would be wrong,” German Finance Minister Peer Steinbrueck said in an interview released on Saturday.

“We are still in a dangerous situation. I am not going to mislead anyone and say: we have got everything under control,” he told Bild am Sonntag newspaper.

The worries of political leaders were mirrored in the markets how to get a free credit report.

Seventy-nine years to the day after the 1929 crash that ushered in the Great Depression, currencies experienced extreme volatility, while oil and other commodities tumbled on fears of plummeting demand that would accompany a slowdown.

Many analysts declared that Europe was in recession after private-sector activity in the euro zone’s economy contracted at the fastest pace in at least a decade and Britain’s economy shrank 0.5 percent in the third quarter, much more than expected.

“The euro area has entered a deep recessionary spiral,” said Aurelio Maccario, chief euro zone economist at Italian bank UniCredit. 

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A majority of Americans aren’t happy with the way Treasury Secretary Henry Paulson is handling his job or with the financial rescue package he and Congress created, according to a poll released Wednesday.

Of 1,058 people surveyed in a CNN/Opinion Research Corp. poll, 64% said they disapproved of Paulson’s performance and 28% said they approved. The poll was conducted on Oct. 17-19 and the margin of error was plus or minus 3 percentage points.

The Treasury secretary, however, fared better than the president has recently. In an earlier poll, 72% of Americans said they disapproved of the way President Bush is handling his job.

A majority in the latest poll - 56% - said they also oppose the financial rescue package passed by Congress earlier this month. That package allows Treasury to buy troubled assets to stabilize the financial system.

In particular, 53% of Americans polled said they thought a major action taken as a result of that package - Uncle Sam providing capital to banks and other financial institutions in exchange for an equity stake in those companies - is a bad idea.

Fifty-eight percent also think the idea of the government providing financial assistance to keep a big company in business in exchange for a stake in that company is also a bad idea.

The Treasury has stepped in to help giant insurer American International Group (AIG, Fortune 500), which has received more than $100 billion in government loans check cash advance. It has also taken over and agreed to provide funding for mortgage finance companies Fannie Mae and Freddie Mac.

There is one financial rescue strategy that won support in the poll: 58% of those polled said they favored government assistance to homeowners who can’t pay their mortgages.

The financial rescue package requires the government to encourage lenders to modify mortgages in cases where the government holds at least a partial stake in a mortgage-backed security. And in cases where the government buys loans directly, it may modify the loans on its own.

On Oct. 1, the Federal Housing Administration launched a program to encourage lenders to write down loans to below a home’s appraised value in exchange for refinancing a troubled borrower into an FHA-backed loan.

Early reports on that program, however, suggest that any positive effect on foreclosures may take time.

Meanwhile, FDIC Chairwoman Sheila Bair, who was instrumental in working on the financial rescue package provisions, has said publicly she thinks the government now needs to do more to help struggling homeowners. 

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American International Group’s CEO said Monday that the troubled insurer should start selling off pieces of its sprawling global business by year end.

Some 15 to 20 buyers may each walk away with a unit of the troubled insurer, Chief Executive Edward Liddy told CNNMoney.com.

Liddy declined to comment on the prices the divisions are commanding, saying it is "too soon." But he expects to be able to repay the $85 billion government loan AIG (AIG, Fortune 500) received last month to keep it afloat as it unwinds its $1 trillion in assets.

"We were in a heck of a mess," Liddy said. "It’s solvable. We can work our way out of it."

Liddy took charge of the company after the Federal Reserve arranged the unusual financing to prevent further turmoil in the already strained financial markets. In return, the government took a 79.9% stake in the company and gave the AIG two years to repay the debt by selling its assets.

The company does not expect to need additional financing beyond the $85 billion to continue operating, Liddy said. It has already drawn down $69 billion of that loan.

The Federal Reserve of New York said Oct. 8 that it would lend AIG up to $37.8 billion in exchange for investment-grade, fixed-income collateral.

The second loan was needed because AIG couldn’t access the frozen credit markets to fund its daily operations, Liddy said. Depending on how the capital markets value its securities assets in the future, it might need more, he said payday advance lender.

Liddy has spent the last month deciding which parts of the company to sell. In early October, the beleaguered insurance giant announced it would hold onto its property and casualty insurance businesses and retain a majority stake in its foreign life insurance operations. The property and casualty lines bring in more than $40 billion in revenue annually.

Everything else is on the table, Liddy said. The businesses include its aircraft leasing unit, asset management division, retirement services and U.S. life insurance operations.

Liddy said he regrets the company threw a $440,000 one-week retreat at the St. Regis Resort in Monarch Beach near San Diego, Calif., just days after the bailout. He said he was not aware of the junket at the time, but would look into recouping the costs and disciplining those involved.

AIG agreed Thursday to curb such expenditures after heavy criticism from Congress and New York state Attorney General Andrew Cuomo. The company canceled 160 conferences and events - some that carried price tags of as much as $750,000. It also has put on hold a nearly $10 million severance payment to outgoing chief financial officer Steven Bensinger.

"I apologize to the American people for those things," Liddy said on CNN. "They were terribly insensitive."  

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