Banks losing up to $52 bln over subprimeCredit Suisse analysts estimated banks could lose up to $52 billion over time due to their exposure to collateralized debt obligations that invested in U.S. subprime mortgages.
Most of the losses would stem from loans to hedge funds, compared with an expected $5 billion to $10 billion from banks' direct investment in subprime CDOs, the Credit Suisse analysts said in a report dated July 6.
1,300 arrested in Zimbabwe prices crackdownMore than 1,300 shop owners and business managers have been arrested in Zimbabwe as part of a crackdown on firms accused of flouting government-imposed price controls, police said Monday.
Most of the 1,328 bosses had been fined but the number also includes around two dozen company executives arrested since Friday who are due to appear before magistrates, said police spokesman Chief Superintendent Oliver Mandipaka.
Sarkozy's blitz puts paid to pact on policyFrench President Nicolas Sarkozy threw down the gauntlet in Brussels last night, vowing to press ahead with his plans for a "fiscal shock" regardless of EU rules on budget policy.
Softening his tone slightly after a blizzard of criticism, he told eurozone finance ministers that his government would "aim" for a balanced budget by 2010, but refused to give real ground.
Bernanke: Anchored expectations mute price swingsSwings in volatile energy and food prices will have minimal impact on inflation as long as expectations of future price gains are held steady, Federal Reserve Chairman Ben Bernanke said on Tuesday.
"If inflation expectations are well anchored, changes in energy (and food) prices should have relatively little influence on 'core' inflation, that is, inflation excluding the prices of food and energy," Bernanke told the National Bureau of Economic Research.
Japan Should Diversify Reserves, Abe Adviser Ito Says Japan, the largest overseas holder of U.S. Treasuries, should invest $700 billion of its currency reserves in higher-yielding assets such as stocks and corporate bonds, said Takatoshi Ito, an adviser to the prime minister.
The reserves should be managed by a special fund that will gradually diversify into euros, Australian dollars and emerging- market currencies, Ito said in an interview in Tokyo.
Russians Selling Off US CurrencyThe Central Bank of Russia says the amount of U.S. dollars held by individual citizens of this country is rapidly declining. The bank says Russians are also moving increasing sums abroad. Moscow correspondent Peter Fedynsky follows the money trail and reports that Russians are gaining confidence in their own economy.
New figures released by the Russian Central Bank indicate the amount of U.S. dollars held by private Russian citizens has dropped since 2002 from $35 billion to less than $12 billion as of July 1.
Australian hedge fund warns about withdrawalsAn Australian hedge fund manager with $1bn in structured credits and junk-rated loans warned investors yesterday it could restrict withdrawals to ensure its survival as it reported losses of 14 per cent in one fund in June.
Basis Capital, based in Sydney, said in a letter to investors it had been hit by “indiscriminate” repricing of “otherwise fundamentally sound collateral” amid the crisis in US home loans to less creditworthy investors. It said it had deliberately avoided the worst-hit 2006 subprime loans.
Kuwait revalues as dollar weighs on Gulf currenciesKuwait allowed its dinar to appreciate against the dollar for a second time this year after the US currency’s slide raised pressure on pegged exchange rates throughout the world’s biggest oil exporting region.
The dinar would trade at 0.28690 per dollar from Thursday, an appreciation of 0.4 percent, the central bank said, confirming expectations it would respond to the dollar’s tumble to record lows against the euro this week.
LBO Credit Quality Falls to Lowest in Nine Months Loans used to finance leveraged buyouts are the riskiest in at least nine months on speculation that losses on subprime mortgage securities will spread to other markets, according to traders of credit-default swaps.
The iTraxx LevX Index of credit-default swaps on loans to 35 European companies fell as much as 1 percent to the lowest since the index started last October, according to Deutsche Bank AG prices. The LCDX index of loans to 100 U.S. companies dropped as much as 0.57 percent to 96, Phoenix Partners Group in New York said.
Dollar Slumps to Record Low Versus Euro as Retail Sales Drop The dollar dropped to a record low against the euro and slumped versus the yen after a government report showed retail sales fell last month by more than analysts expected.
The data may add to concern that the U.S. economy will slow, lifting speculation the Federal Reserve will cut borrowing costs this year.
Retail sales drop worst in 2 yearsRetail sales posted the biggest drop in nearly two years in June, the government reported Friday, fanning worries that consumers were starting to feel the pinch of higher gas prices and the slumping housing market.
"This report is a much weaker report than most analysts expected, and presumably it will come as a shock to people who bought retail stocks yesterday on the basis of [some] 'better' chain store numbers," Ian Shepherdson, chief U.S. economist with High Frequency Economics, wrote in a note Friday.
Foreclosure activity rises dramaticallyForeclosures continued to rise throughout the country, the state and the Bay Area in June, according to a report to be released today. Nationally, 164,644 foreclosure notices were filed in June, up 87 percent from June of last year, said RealtyTrac.com, an online marketplace for foreclosure properties. In the Bay Area, the number of foreclosure notices was 5,018, almost triple the 1,780 in June 2006.
The greatest economic boom everJust how red-hot is the current worldwide expansion? "This is far and away the strongest global economy I've seen in my business lifetime," U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune's offices.
That may come as news to many Americans, whose boom-time memories are stuck in the 1990s, when Silicon Valley was the epicenter of our growth fantasies. But the fellow now occupying Paulson's old office at 85 Broad Street in downtown Manhattan shares that upbeat view. Just returned from a ribbon-cutting ceremony in the Middle East, Goldman Sachs (Charts, Fortune 500) CEO Lloyd Blankfein waves out toward the East River as he explains how the rise of the "BRICs" has altered his strategy and his travel schedule. (BRIC is an acronym Goldman coined in 2001 reflecting the rising economic power of Brazil, Russia, India, and China.)
U.S. trade deficit widensThe U.S. trade deficit widened to $60 billion in May as oil prices jumped and the volume of foreign oil coming into the country rose, the government said Thursday. But the overall trend still appears to be improving, economists said.
The Census Bureau said that the trade imbalance - the gap between what is imported and exported - grew 2.3 percent from April in seasonally adjusted terms. For the first five months of the year, however, the deficit grew at a slower pace than it did last year. From January through May, the deficit was $295.5 billion, compared with $317.8 billion in the first five months of 2006.
Moody's May Cut $5 Billion of Subprime-Backed CDOs Moody's Investors Service may cut $5 billion of collateralized debt obligations after lowering the ratings of subprime mortgage bonds that make up the securities.
A downgrade would affect 184 pieces of 91 CDOs, representing about 3.6 percent of rated CDOs containing asset-backed securities, Moody's said in a statement today. Moody's yesterday sliced ratings on $5.2 billion of subprime bonds that back CDOs, which are also sliced into pieces to allow investors to choose how much risk they bear for the returns they receive.
D.R. Horton home sales plunge; expects lossHome builder D.R. Horton said Tuesday declining home values would lead to its first quarterly loss since it listed on the New York Stock Exchange in 1995, sending its shares to a three-year low.
Hurt by the deteriorating U.S. housing market, the No. 1 U.S. home builder said net sales orders in its fiscal third quarter, ended June 30, fell 40 percent to 8,559 homes. The dollar value of the orders dropped 47 percent to $2.0 billion.
Zimbabwe: Inflation - the Endless Battle of the ZerosWHEN Princess Nyathi retired to her rural home after a 20-year flirtation with a furniture shop, she was confident monthly payments in pension would be enough to buy the basic commodities.
But five years down the line, Nyathi is bitter after watching her monthly pension eroded heavily by inflation. "Six hundred dollars five years ago would buy you groceries, now with the $12 900 payment, you can only buy half a loaf of bread," she said.
Jeff Saut Presents: Subprime Sublime?"Liquidity is a coward, when you need her most she runs away and hides.” That old market axiom has clearly stood the test of time. Most recently, the “liquidity cowardess” ran and hid from the subprime complex, causing the ABX-HE.BBB-Subprime Index to lose nearly 50% of its value. Concurrent with that price decline has been a sentiment slide, as reflected in The New York Times, whose reference to the subprime woes has seen a downward verbiage skein that has the glide path of a stone. To wit, “Largely contained,” “mostly contained,” “reasonably well-contained,” “severe but contained.” “Contained?” ... Well, maybe on a macro basis, but try telling that to investors in certain subprime-focused investment funds that have seen their principal erode and in some cases evaporate. Indeed, just a few weeks ago the Bear Stearns (BSC) “bombshell” brought the issue home to roost with the implosion of a couple of highly-leveraged subprime hedge funds. "
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