Economy-Finance

UPDATE 4-LA ringed by wildfires-homes, acreage destroyed

(Updates acreage in Orange County fire, adds details fromSylmar fire, second byline, Schwarzenegger comments)

By Steve Gorman and Anupreeta Das

LOS ANGELES/SAN FRANCISCO, Nov 15 (Reuters) - Fires whippedup by hot hurricane-force winds darkened Los Angeles skies onSaturday, charring thousands of acres and hundreds of homes inthe second-largest U.S. city and threatening its power supply.

More than 10,000 people were ordered to evacuate as a firethat exploded overnight in the foothills of the AngelesNational Forest, north of Los Angeles, barreled into the SanFernando Valley and burned more than 6,500 acres (2630hectares).

A separate fire flared southeast of Los Angeles in Orangeand Riverside counties on Saturday morning, charring more than1,200 acres (485 hectares) and destroying at least 10structures in the communities of Yorba Linda, Brea and Corona.

And the dry Santa Ana winds sweeping in from the desertfanned the fire in the foothills near Sylmar northwest of LosAngeles that Los Angeles Mayor Antonio Villaraigosa said haddestroyed more homes than any other fire in the past decade.

“We’re at the mercy of the wind. Mother Nature’s not beentoo good to us for the last 15 hours,” he said.

The Sylmar fire raged on both sides of Interstate 5, themain freeway connecting Los Angeles with the north.

Two of the five main transmission lines that supply powerto the city had to be taken down because of damage to aconverting station, and a third power line was damaged byheat.

Firefighters also continued to battle the two-day-old blazein the celebrity enclave of Montecito, further up the coastnear Santa Barbara, where 111 homes have been destroyed. Thefire was about 40 percent contained, a spokesman said.

“When you walk around the areas that were devastated, itlooked like hell today,” California Governor ArnoldSchwarzenegger told a news conference.

Police closed down Interstate 5 and other roads as 1,100firefighters mobilized to fight the Sylmar fire. Only about 10percent of the fire had been contained, Los Angeles County FireDepartment spokesman Ron Haralson said Saturday afternoon.

Mountains were engulfed in flames and dense clouds ofgreyish-brown smoke. Soot hung in the air, which was heavy withthe smell of burning wood. Steady gale-force winds, blowing at35 mph (56 kph), periodically gusted up to 75 mph (120 kph) andhelped spread the fire.

A map of the fire is at tinyurl.com/sayrefire.

MOBILE HOMES DESTROYED

The greatest damage was reported in the Oakridge MobileHome Park, where the fire burned about 500 houses to theground. About 300 people, many of them Oakridge residents whofled their homes during the night, gathered in the Sylmar HighSchool, where the American Red Cross set up relief services. 

Posted in Market Stats | No Comments »

GM lobbying hard for U.S. bailout -Wall St Journal

NEW YORK, Nov 15 (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz)has been telling U.S. government officials that a bankruptcyfiling by the automaker would set off a chain reaction hittinghundreds of its suppliers and dealers as well as its Detroitrivals, The Wall Street Journal reported on Saturday.

Citing people familiar with the situation, the Journal saidon its website that GM’s auto-industry bailout lobbying effortin Washington was reaching out to congressional leaders, theoutgoing Bush White House and members of the transition team ofPresident-elect Barack Obama, with meetings going on over theweekend.

Central to the campaign is the idea that a bankruptcyfiling by GM would trigger a domino effect, potentiallycrippling the nation’s industrial base, the newspaper said.

Detroit automakers have sought emergency assistance to helpthem survive a steep and worsening drop in sales that theyblame on the global credit crisis and slumping economy. GM hassaid it could run out of cash by early next year.

Democrats are proposing a bailout of distressed automakersthrough $25 billion in loans from the Treasury Department’s$700 billion corporate rescue program.

The White House opposes that move and says that $25 billionalready appropriated for loans to make automobiles morefuel-efficient should be accelerated.

According to the newspaper, GM is arguing that bankruptcywould threaten jobs and the government’s pension-benefitinsurance arm, which covers millions of workers outside theauto industry, by swamping the fund and further burdening astrained federal budget.

“There is no Plan B being discussed beyond a governmentbailout,” the Journal quoted one top GM adviser as saying onFriday. Another person close to the company said executivesrecently told the board they were “increasingly optimistic” GMwould receive a liquidity infusion before December, it said.

GM is also flooding dealers, supplier executives, employeesand union members with letters encouraging their participationin the effort, the newspaper said.

United Auto Workers President Ron Gettelfinger said in arare news conference on Saturday that U.S. automakers urgentlyneeded a federal loan to survive, but added their work forceshould not be blamed for the industry crisis. (Writing by Christopher Michaud; Editing by Peter Cooney)

Posted in Market Stats | No Comments »

UPDATE 1-Conservative Canada taking fiscal stimulus slowly

(Adds prime minister, finance minister, on stimulus, autos)

By Randall Palmer

WASHINGTON, Nov 15 (Reuters) - Canada says it will play itspart in a global effort to stimulate the world economy, butFinance Minister Jim Flaherty said on Saturday he still not didforesee running a budget deficit in the current fiscal year.

Flaherty said he would include fiscal measures when hepresents his fall fiscal and economic update in the last weekof November, but it would not likely contain new tax cuts andit would also try to restrain public sector spending.

He told Reuters in an interview that the country might moveinto a deficit as the result of future, undefined stimulusmeasures but that would likely only start in the fiscal yearthat begins April 1.

“I don’t expect so far at least that we will have a deficitthis fiscal year,” he said after a summit of the Group of 20(G20) leading developed and developing nations.

Canada is the only one of the Group of Seven big industrialcountries still to have a fiscal surplus, and Prime MinisterStephen Harper said this budget position gave it more latitudethan many others, especially those with structural deficits.

“We will do what we have to do to contribute to boostingglobal demand,” he told a news conference at the CanadianEmbassy at the conclusion of the meeting. “We’ll obviously belooking at additional (fiscal) actions ourselves.”

“What we’ve got to be sure is if we do short-term deficitspending as a deliberate policy — if we do that; we haven’tsettled on doing that — we will have to be able to demonstrateto Canadians that those deficits will genuinely be short-termand cyclical and we will come out of them quickly,” he said.

Still, he said Flaherty had been working carefully to tryto preserve this year’s balanced budget, for example limitingmoney paid to provinces in so-called equalization payments.

The message for now appears to be that the fiscal update inlate November will not be the place to look for big stimulus.

‘LOOKING AHEAD’

“The prime minister was looking ahead,” Flaherty said.

Flaherty said the G20 agreement to add stimulus might meana deficit in future years. The minister also said the fallupdate and the annual spring budget were not the only timesfiscal measures could be taken.

One possible area could be in helping out the auto sector,although neither he nor Harper mentioned this directly in thecontext of stimulus.

Harper said Canadian officials were talking to the UnitedStates and did not yet know what the American approach would beon rescuing the carmakers. 

Posted in Real Estate | No Comments »

GM lobbying hard for bailout: report

NEW YORK (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) has been telling U.S. government officials that a bankruptcy filing by the automaker would set off a chain reaction hitting hundreds of its suppliers and dealers as well as its Detroit rivals, The Wall Street Journal reported on Saturday.

Citing people familiar with the situation, the Journal said on its website that GM’s auto-industry bailout lobbying effort in Washington was reaching out to congressional leaders, the outgoing Bush White House and members of the transition team of President-elect Barack Obama, with meetings going on over the weekend.

Central to the campaign is the idea that a bankruptcy filing by GM would trigger a domino effect, potentially crippling the nation’s industrial base, the newspaper said.

Detroit automakers have sought emergency assistance to help them survive a steep and worsening drop in sales that they blame on the global credit crisis and slumping economy. GM has said it could run out of cash by early next year.

Democrats are proposing a bailout of distressed automakers through $25 billion in loans from the Treasury Department’s $700 billion corporate rescue program.

The White House opposes that move and says that $25 billion already appropriated for loans to make automobiles more fuel-efficient should be accelerated.

According to the newspaper, GM is arguing that bankruptcy would threaten jobs and the government’s pension-benefit insurance arm, which covers millions of workers outside the auto industry, by swamping the fund and further burdening a strained federal budget.

“There is no Plan B being discussed beyond a government bailout,” the Journal quoted one top GM adviser as saying on Friday. Another person close to the company said executives recently told the board they were “increasingly optimistic” GM would receive a liquidity infusion before December, it said.

GM is also flooding dealers, supplier executives, employees and union members with letters encouraging their participation in the effort, the newspaper said.

United Auto Workers President Ron Gettelfinger said in a rare news conference on Saturday that U.S. automakers urgently needed a federal loan to survive, but added their work force should not be blamed for the industry crisis.

(Writing by Christopher Michaud; Editing by Peter Cooney)

Posted in World Economy Finance News | No Comments »

Pelosi Outlines Automaker Aid Plan

Posted in World Economy Finance News | No Comments »

Obama urges help for homeowners, auto industry

WASHINGTON, Nov 15 (Reuters) - President-elect Barack Obamasaid struggling U.S. automakers need a government rescue, buthelp should be conditioned upon changes in the industry,according to excerpts from a TV interview to air on Sunday.

He also urged more assistance for troubled homeowners andadded that he is offering the Bush administration occasionaladvice on handling the worst U.S. financial crisis in decades.

“If we don’t have a clear, focused program for homeownersby the time I take office, we will after I take office,” Obamatold the CBS television network’s 60 Minutes news program,according to a written summary of the interview.

The president-elect, who takes over from President GeorgeW. Bush on Jan. 20, said he would announce his Cabinetselections soon and plans to include a Republican on his team,according to CBS.

Obama said the federal government has not focusedadequately on aiding homeowners slammed by a nationwide wave offoreclosures stemming from a steep housing market decline thathas thrown the world financial system into disarray.

Critics of the Bush administration have said it is spendingtoo much time and money trying to rescue ailing banks andcredit markets, with mixed results, and not enough to helphomeowners refinance their way out of unmanageable mortgages.

“We’ve got to … set up a negotiation between banks andborrowers so that people can stay in their homes. That is goingto have an impact on the economy as a whole,” Obama said.

Treasury Secretary Henry Paulson is managing a $700 billionbank bailout that has shifted its focus since it was approvedby Congress early last month.

“Henry Paulson has worked tirelessly under some verydifficult circumstances,” Obama said.

“I think Hank would be the first one to acknowledge thatprobably not everything that’s been done has worked the way hehad hoped it would work.”

A member of the Obama transition team is in dailycommunication with Paulson, he added.

“We are getting the information that’s required and we’remaking suggestions in some circumstances about how we thinkthey might approach some of these problems,” he said.

The automakers need assistance, he said, but he added thatit should be conditioned on “labor, management, suppliers,lenders, all of the stakeholders coming together with a plan:What does a sustainable U.S. auto industry look like?”

He said any help to the industry should be “a bridge loanto somewhere as opposed to a bridge loan to nowhere.” (Reporting by Kevin Drawbaugh and Caren Bohan; editing byTodd Eastham)

Posted in Bonds | No Comments »

World leaders agree to step up financial oversight

By John Poirier and Rachelle Younglai

WASHINGTON, Nov 15 (Reuters) - Leaders of the world’s 20largest economies vowed on Saturday to toughen oversight of thetroubled financial system, but stopped short of calling for aglobal super-regulator or new restrictions on hedge funds.

At an economic summit hosted by soon-to-depart U.S.President George W. Bush, officials faulted regulators andpolicymakers for not tackling financial problems and agreed ona foundation for reform.

Rich and developing nations alike, many having recentlybailed out their banking sectors, blamed credit ratingagencies, complex derivatives, banks, accounting standards,executive compensation and regulators.

Leaders agreed that “colleges” of international supervisorswere needed for all major global financial institutions, suchas Swiss-based UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) or Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz).

Financial industry experts said it was significant that the20 largest economies met to discuss financial markets. However,they called the G20 statement vague and broad.

“In terms of the substance, it’s remarkably bland,” saidEdwin Truman, senior fellow at the Peterson Institute forInternational Economics, a think tank in Washington, D.C.

“Even the description of supervisory colleges for largecomplex institutions is pretty vague,” Truman said. “It’s notmuch more than what goes on today.”

Some financial industry reforms are already in motion.

U.S. and European securities regulators are taking steps toensure that rating agencies such as Standard & Poor’s (MHP.N: Quote, Profile, Research, Stock Buzz),Moody’s Investors Service (MCO.N: Quote, Profile, Research, Stock Buzz) and Fitch Ratings (LBCP.PA: Quote, Profile, Research, Stock Buzz),avoid conflicts of interest, provide greater disclosure anddifferentiate ratings for complex products, such asmortgage-backed securities.

U.S and EU accounting rulemakers have also begun working onstandardizing global accounting rules and addressing weaknessesin accounting and disclosures for off-balance sheet items.

Regulators are already working on central clearing ofcredit default swaps, sophisticated instruments blamed forexacerbating the credit crisis. The swaps are used to insureagainst risk that a borrower will default on debt and are oftenspeculatively traded.

CEO PAY RECOMMENDATIONS

“Credit default swaps should be processed through centralclearing houses,” Bush said in a statement after the summit.His comments were a marked departure from the Bushadministration’s pro-business policies centered on the premisethat free markets should police themselves.

On corporate executive pay, the group of 20 leaders toldtheir finance ministers to come up with recommendations oncompensation practices and said pay incentives shoulddiscourage excessive risk-taking.

Leaders said the Financial Stability Forum — an advisorybody of rich nations’ central banks, regulators and financeministries — should expand to include emerging economies. 

Posted in Market Stats | No Comments »

World leaders agree to act fast against recession

By David Lawder and Emmanuel Jarry

WASHINGTON (Reuters) - World leaders on Saturday backed a rapid action plan for the global economic crisis, agreeing on the need for measures to spur growth, better financial market rules and more say for emerging countries.

“We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world’s financial systems,” the leaders of more than 20 industrialized and developing nations said after a summit.

Government spending plans to boost growth are needed with “rapid effect”, but they did not commit to a coordinated push, and differences were apparent over how to regulate the financial industry, in areas including hedge funds.

In one historic breakthrough, they agreed emerging market countries should have a voice in running the world economy. They will study ways of giving them more power at the International Monetary Fund.

Presidents and prime ministers from the powers of the 20th century for the first time in a G20 summit joined the leaders of new economic heavyweights such as export colossus China and oil-rich Saudi Arabia. They met in a Washington museum around a large map of the world, trying to highlight the global nature of their rescue plan.

U.S. President George W. Bush hailed the meeting he hosted as a success, saying leaders agreed to pro-growth policies.

“It makes sense to come out of here with a firm action plan, which we have, and it also makes sense to say to people that there is more work to be done, and there will be more meetings,” Bush told reporters.

Signs are mounting of a painful economic slump in many regions, with the euro zone slipping into recession according to data last week, unemployment climbing in the United States and elsewhere and emerging economies slowing.

As the summit began, the International Monetary Fund agreed to a loan worth at least $7.6 billion as part of a bigger plan for Pakistan where foreign currency reserves have dwindled and the risk of a default on its debts has grown.

In another sign of the scope of the crisis, India on Saturday took the latest in a series of steps to improve money market liquidity and help exporters.

The G20 group of advanced and big developing economies also agreed on Saturday there should be no rise in protectionism in the face of the economic slump.

Bush and several other leaders said they would aim for a long-elusive breakthrough in the struggling Doha round of talks for a global trade deal before the end of the year.

BROADER RESPONSE NEEDED

With Bush only two months away from leaving the White House and his successor Barack Obama choosing to stay away from the Washington meeting, talk of the summit launching a top-to-bottom overhaul of global finance had been tempered.

In their summit communique, the leaders said the worsening economy meant “a broader policy response is needed, based on closer macroeconomic cooperation,” and they backed fiscal measures to boost growth without risking budget discipline. 

Posted in Market Stats | No Comments »

EU faces recession threat

WASHINTON—European Commission President Jose Manuel Barroso said Saturday that Europe’s biggest threat is recession and countries should be allowed leeway in running up deficits.

“We are living in exceptional conditions: the menace today is not inflation, the threat today is deflation, the risk today is a recession,” he said in a press conference after a summit of global leaders hosted by U.S. President George W. Bush.

The EU commission forecasts that the economy in the 15 countries that use the euro may already be in a recession and will barely grow next year, expanding just 0.1 percent as the financial crisis hits hard.

Germany plans to boost its economy through a program of public spending and tax breaks and France has called for industry to receive state help to ride out the slowdown.

The costs of such programs after the bailing out of troubled banks while tax revenues shrink and welfare payouts swell will see governments pile on debt and run bigger deficits, the EU executive warns.

It says France and Ireland will break EU budget rules in 2009 by running a yearly government deficit of more than 3 percent of GDP. The ceiling is intended to keep their shared currency stable. Britain, Latvia, Lithuania, Romania and Hungary will also likely exceed the limit.

Barroso said the EU is working on new ideas to boost growth and that governments should be allowed some flexibility under EU budget rules known as the growth and stability pact.

“The stability and growth pact in Europe allows in exceptional conditions exceptional measures,” he said.

Posted in Business | No Comments »

REFILE-UPDATE 3-LA ringed by wildfires-homes, acreage destroyed

(Fixes time without power in paragragh 7)

By Steve Gorman

LOS ANGELES, Nov 15 (Reuters) - Fires whipped up by hothurricane force gusts ringed Los Angeles on Saturday, charringthousands of acres and hundreds of homes in California’slargest city and threatening the city’s power supply.

More than 10,000 residents were under mandatory evacuationorders as a fire that exploded overnight in the foothills ofthe Angeles National Forest barreled into the San FernandoValley and burned more than 6,500 acres (2630 hectares).

The dry Santa Ana winds sweeping in from the desert fannedthe fire in the foothills near Sylmar that Los Angeles MayorAntonio Villaraigosa said had destroyed more homes than anyother in the past decade.

Villaraigosa urged residents near Sylmar to leave quicklyif they were in harm’s way. “If you wait until the fire getsthere you have waited too long … This fire can be on you in amoment’s notice.”

“We’re at the mercy of the wind. Mother Nature’s not beentoo good to us for the last 15 hours,” he said later.

The fire raged on both sides of Interstate 5, the mainfreeway connecting Los Angeles with the north, and the path oftransmission lines bringing power to the city of 10 million.

Two of the five main transmission lines had to be takendown because of damage to a converting station, and a thirdpower line was directly damaged by heat, causing 115,000customers to be without power for 45 minutes.

A separate fire flared south of Los Angeles in OrangeCounty on Saturday morning, charring more than 800 acres (324hectares) and destroying at least 10 structures in thecommunities of Yorba Linda and Corona, south of Los Angeles.

And, further up the coast near Santa Barbara, firefighterscontinued to battle the two-day-old blaze in the celebrityenclave of Montecito, where 111 homes have been destroyed.About 40 percent had been contained, a spokesman said.

Northwest of Los Angeles, police closed down Interstate 5and other roads as 600 firefighters mobilized to fight theSylmar fire. About 10 percent of the fire has been contained,Los Angeles County Fire Department spokesman Ron Haralson saidSaturday afternoon.

Mountains were engulfed in flames and billows of smoke werevisible from space by weather satellite. Steady gale-forcewinds, blowing at 35 mph (56 kph), periodically gusted up to 75mph (120 kph) and spread the fire. A map of the fire is attinyurl.com/sayrefire.

About 300 people, many of them residents of the OakridgeMobile Home Park where homes burned to the ground, gathered inthe Sylmar High School, where the American Red Cross had set uprelief services.

“You could see absolutely nothing,” said Jackie Burns, 77,who, along with her husband, Len, fled their mobile home at 3a.m. as the fire raged through the neighborhood. “It was likelooking into a black hole. It looked like the end of the worldto me.”

Some evacuees sobbed as Los Angeles Fire Department CaptainSteve Ruda told them the fire had burned down most of the 600pre-fabricated homes in the mobile park. 

Posted in Market Stats | No Comments »