Sep
30
WASHINGTON - Republican John McCain has maneuvered himself into a political dead end and has five weeks to find his way out.
Last Wednesday, McCain suspended his presidential campaign to insert himself into a $700 billion effort to rescue America’s crumbling financial structure. In so doing, he tied himself far more tightly to the bill than did his Democratic opponent, Barack Obama.
Then, as the bailout plan appeared ready for passage Monday in the House, McCain bragged that he was an action-oriented Teddy Roosevelt Republican who did not sit on the sidelines at a moment of crisis.
The implication: that he played a critical role in building bipartisan support for the unprecedented bailout.
“I went to Washington last week to make sure that the taxpayers of Ohio and across this great country were not left footing the bill for mistakes made on Wall Street and in Washington,” McCain said at a campaign rally in the swing state of Ohio.
Both he and Obama had insisted the plan originally proposed by the Bush administration be strengthened with greater oversight and regulation.
Within hours, however, the measure died in the House mainly at the hands of McCain’s own Republicans.
Initially, McCain went silent, choosing instead to send his chief economic adviser out with a statement that blamed Obama, claiming that the first-term Illinois senator had put his political ambitions ahead of the good of the country.
“This bill failed because Barack Obama and the Democrats put politics ahead of country,” McCain senior policy adviser Doug Holtz-Eakin said.
It wasn’t long, however, before McCain told reporters in Iowa: “Now is not the time to fix the blame, it’s time to fix the problem.”
All in all, McCain might have been better served by staying out of the mess and above the fray.
If the congressional impasse leads to a credit crisis, “it’s not going to be good for McCain,” veteran Republican consultant John Feehery said.
Obama had predicted trouble last week when he said the four-term Arizona senator was wrongly inserting red-hot presidential politics into a critical bailout plan even as the package was finding little support among voters.
As the plan failed Monday, the Dow Jones Industrial Average fell 778 points, the largest one-day point drop ever. Credit markets, whose turmoil helped feed the stock market’s deep anxiety, froze up further with the growing belief that the country is headed into a spreading credit and economic crisis.
Stunned traders on the floor of the New York Stock Exchange watched on TV screens as the House voted down the plan, and they saw stock prices tumbling on their monitors.
After the House vote, Obama - campaigning in swing-state Colorado - declared that McCain had “fought against commonsense regulations for decades, he’s called for less regulation 20 times just this year, and he said in a recent interview that he thought deregulation has actually helped grow our economy.”
“Senator, what economy are you talking about?” Obama said.
Sensing Obama’s advantage, spokesman Bill Burton piled on:
“This is a moment of national crisis, and today’s inaction in Congress as well as the angry and hyper-partisan statement released by the McCain campaign are exactly why the American people are disgusted with Washington.”
McCain has been routinely wrong-footed on the slumping U.S. economy throughout the campaign, starting last year when he said he was not as up on that subject as he would like to be.
Polls consistently have shown voters place greater trust in Obama to pull the country out of a financial crisis that has not been matched since the Great Depression of the 1930s.
McCain - apparently obsessed with those facts - gambled last Wednesday by declaring he had suspended campaigning to bring his considerable bipartisan credentials to bear in congressional negotiations with the Bush administration. Treasury Secretary Henry Paulson sent the enormous bailout package to Congress 11 days ago and said passage was urgent.
The measure went down 228-205, with more than two-thirds of McCain’s own Republicans and 40 percent of Democrats opposed. Source
Sep
30
By voting down the proposed $700 billion financial bailout package - and causing a spectacular stock market rout - a majority of members in the House of Representatives made a clear statement that they didn’t want to put taxpayers on the hook for the failures of financial institutions.
But there’s a catch: taxpayers are already on the hook for the failures of financial institutions, and it’s possible that the bill will actually be larger without bailout legislation than with it. That’s because the regulators who mind the financial industry - the Federal Reserve, Treasury and FDIC - will keep doing what they’ve been doing: stepping in to prevent the chaotic failure of banks and other large financial institutions. This means continuing to put hundreds of billions of taxpayer dollars at risk, but in a way that adheres to no clear plan of action and doesn’t require members of Congress to explicitly approve their actions.
On Monday afternoon, Wall Street basically stopped trading to watch TV - mainly CNBC - to see how the House of Representatives would vote on the $700 billion bailout package. When it first started looking like the bill would fail, the Dow plummeted 389 points, or 3.6%, in just seven minutes. If it had continued at that pace for much longer, this would have been perhaps the most harrowing day in stock market history. It didn’t, but things were still really, really bad. The Dow ended the day down 778 points, or 7%, and the S&P 500 - a better measure of the overall market - was down 107 points, or 8.8%, its worst performance since the 1987 market crash. And markets for bonds and short-term loans were, for the most part, nonexistent.
So what happens now? On Capitol Hill, House leaders said they’ll try again soon. Treasury Secretary Henry Paulson practically begged for a revised deal in his brief appearance after the market carnage. “Our tool kit is substantial but insufficient,” he said. The market’s traumatized reaction today may change some minds and some votes.
In asking Congress 11 days ago for the authority to spend up to $700 billion to buy troubled assets, Paulson and Fed Chairman Ben Bernanke were hoping to share some of the responsibility and the blame - and get the freedom to boost companies that weren’t already on the brink of failure. Instead, they’re back to being crisis managers for the moment - and maybe for the duration of the crisis.
That’s not all bad, especially now that most of the endangered financial institutions are commercial banks. The Federal Government has clearly defined that authorities take them over, merge them out of existence or shut them down - whereas it had to make things up as it went along with investment banks Bear Stearns and Lehman Brothers and insurer AIG. That’s why the demise of giant banks Washington Mutual and Wachovia, arranged over the past week by the FDIC, occurred in a far more orderly fashion than the non-bank meltdowns.
But orderly isn’t the same as cheap. To get Citigroup to absorb Wachovia, the FDIC agreed to share the risk on a $312 billion portfolio of loans (Citi has to eat the first $42 billion in potential losses; anything above that hits the FDIC fund).
Also, the fact that every big FDIC deal so far in this crisis has been different - IndyMac was allowed to fail, with only insured deposits safe; WaMu was seized, but all depositors were protected; and Wachovia was sold in a deal that protected both depositors and owners of the company’s bonds but left shareholders with very little - has left investors guessing about the fate of the rest of the banking world. Hardest hit in today’s market sell-off were regional banks like Sovereign Bancorp and National City, perhaps because they seem too small to get special FDIC treatment.
Federal authorities are going to keep doing whatever they can to keep the financial system from collapsing. Taxpayers will bear the risks and the costs of that, whether Congress votes to put them there or not. And it’s possible - although nobody can know for sure - that this ad hoc approach will end up costing more than an up-front $700 billion bailout. Source
Sep
30
WASHINGTON - Adding to their woes, mortgage finance giants Fannie Mae and Freddie Mac are facing a federal grand jury investigation into their accounting practices.
The mortgage finance companies said Monday that a federal grand jury in New York is investigating accounting, disclosure and corporate governance issues at Washington-based Fannie and McLean, Va.-based Freddie.
Fannie and Freddie said they received subpoenas Friday from the U.S. Attorney’s office in Manhattan as well as requests from the Securities and Exchange Commission that they preserve documents. Fannie Mae and Freddie Mac were taken over by the government earlier this month as their mounting defaults and foreclosures threatened the entire mortgage market.
The government investigation focuses on activities starting in 2007, Freddie Mac said in a statement.
Critics have long questioned the companies’ bookkeeping. Last November, for example, a Fortune magazine story said new accounting procedures at Fannie Mae masked potential losses on bad loans.
And several years ago, both Fannie and Freddie were forced to restate billions in earnings after federal regulators discovered accounting irregularities at both companies.
The scandals led to the replacement of the companies’ top executives. Freddie Mac’s former CEO, Gregory Parseghian was ousted in December 2003. Fannie CEO Franklin Raines and chief financial officer Timothy Howard were swept out of office a year later.
Both companies said Monday they would cooperate fully in the investigations, but their spokesmen declined to comment. Representatives of the SEC and Justice Department also declined to comment.
Three weeks ago, the government seized control Fannie Mae and Freddie Mac, the two biggest U.S. mortgage finance companies, with a rescue plan that could require the Treasury Department to inject as much as $100 billion into each to keep them afloat.
A spokeswoman for the Federal Housing Finance Agency, which controls the companies said the housing agency, “will work with the companies to assure a smooth and efficient process and will work with the government agencies as they undertake their inquiries.”
Law enforcement officials said last week the FBI is looking at potential fraud by Fannie, Freddie, and insurer American International Group Inc. Additionally, a senior law enforcement official told said failed investment bank Lehman Brothers Holdings Inc. also is under investigation.
The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official told the Associated Press last week.
Officials said the new inquiries bring to 26 the number of companies connected to the mortgage crisis under investigation over the past year.
Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. FBI Director Robert Mueller has said the FBI’s hunt for culprits in the U.S. mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments. Source
Sep
30
SYDNEY (Reuters Life!) - Grandparents play a critical role in their grandchildren’s lives, helping boost their development even through simple activities such as reading to them or going shopping together, an Australian study said.
The four-year government-funded study, released on Tuesday, measured children’s physical, learning and cognitive development, in addition to social and emotional functioning.
It showed that children aged from 3 to 19 months had higher learning scores if they were cared for by family and friends — including grandparents — as well as their parents.
“This new study demonstrates just what a critical role grandparents play in the development of children,” Federal Families, Housing and Community Services Minister Jenny Macklin was quoted by Australian media as saying.
“We know from this study how important it is to a child’s development to … spend as much time as possible every day reading and spending time playing with children,” she said.
The “Growing up in Australia” report is the first comprehensive national study of Australian children over time, Macklin said. More than 10,000 families with children took part in the study, which started in 2004.
(Writing by Miral Fahmy, editing by Alex Richardson)
Sep
26
Anthony Kim holds a four shot lead in the opening round of the PGA tour golf championship at Atlanta in Georgia.
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70. The 23-year-old American, seeking his third PGA tour victory this year, fired a sparkling six-under-par 64 on a breezy, sun-baked day at east lake golf club. Kim, who played a significant role in the U.S. Ryder cup victory over Europe at Valhalla, piled up eight birdies and two bogeys to pull clear of a high-quality Leaderboard. American world number two Phil Mickelson opened with a 68 to share second place with South afrIcans Ernie Els and masters champion Trevor Immelman. South Korean Kj Choi carded a 69 while Canadian left-hander mike weir and Spaniard Sergio Garcia returned matching
Sep
26
Former world number one Ana Ivanovic crashed out of the China open, beaten by home favorite Zheng Jie in a marathon quarter-final clash in Beijing.
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Ivanovic, the second seed, lost 7-6, 2-6, 6-4 to her Wimbledon conqueror in a match lasting almost three hours. In men’s quarter-finals, men’s sixth seed Tommy Robredo was beaten convincingly 6-4, 6-1 by Israel’s world number 92 Dudi Sela, who put out top seed David Ferrer in the previous round.
Sep
26
Karachi Port operations
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Seven ships including three to load 50,000 tons of cement are due to arrive at the outer anchorage on Wednesday, according to KPT sources. Berthing activity at the wharves was relatively slow where three ships, Mol Ability, Buxhill to unload and load containers and Lalazar to offload crude oil were berthed after the departure of six.
The departing ships were led by Wan Hai-311, Mol Ability, As Mars, Cap Gabriel, Quetta and Scan Oceanic, while Al-Soor-2, Adriatic Arrow, Kang Hing, Force Ranger, Kota Perdana, Siam Pearl, Buxhill, Sima Pride and Lalazar are due to sail out on Wednesday.
Cargo handling activity at the wharves was fairly active totaling 131,000 tons comprising 30,774 tons of export cargo and 99,812 tons of import tonnage.
The following ships are due on Wednesday: Champion to load molasses, Flag Investor, Island Star and Super Star-3 to load cement, Northern Harmony, APL Shenzhen, Cosco Dammam with containers. Source
Sep
26
Oil prices slip after historic one-day gain
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Oil prices fell on Tuesday in choppy trade marked by profit-taking one day after New York crude soared more than $16 in its biggest-ever daily jump.
The massive price gain on Monday was driven partly by hopes that a massive US bailout plan for the banking system would also bolster the global economy and thus maintain strong demand for energy.
The rally was also driven by technical factors because the contract for New York oil deliverable in October had expired on Monday.
On Tuesday at 1600 GMT, New York’s new main contract, light sweet crude for November delivery, showed a loss of $2.37 at $107 a barrel.
The October contract had soared $16.37 a barrel to close at $120.92 on Monday after hitting an intra-day high of $130.
Oil had also been buoyed by the weak US currency, which makes dollar-priced oil cheaper for buyers using stronger currencies, stimulating demand.
Monday’s price gains in New York exceeded the previous record one-day rise of $10.75 on June 6.
Meanwhile, on Tuesday, Brent North Sea crude for November dived $2.61 to $103.43 a barrel. It had jumped $6.43 on Monday.
“Oil was lower on Tuesday, correcting after Monday’s meteoric and historic rise, with concerns about the US toxic debt bailout plan growing,” said Michael Davies at the Sucden brokerage in London.
“There are many, including us, who feel that the optimism we have seen since news of the plan broke last Thursday is unfounded.
“The US plans are still far from certain and will not help the damage to the real economy already done by the recent turmoil, which we are yet to see.
“Also, the longer the plans take to be finalised, the more uncertainty will grow, with many expecting no outcome until next week as policy makers argue over the proposal,” said Davies.-AFP Source
Sep
26
Stocks perk up on fresh market fund proposal
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Stocks on Tuesday showed signs of recovery in response to reports of proposed market support fund of Rs20 billion mooted at Monday’s meeting between the KSE high-ups and the central bank governor on the perception that investor liquidity problems may be solved.
Both the daily turnover figure and the number of advancing shares were on the higher side and in a way reflected that the market reaction to the State Bank meeting may have been much bigger sans flooring on the index.
After initially rising to 9,211.67 points, the KSE 100-share index finally ended with a fresh fractional decline of 0.71 points at 9,199.51 but on the other hand the KSE 30-share index rose by 0.42 points at 10,064.86 as compared to 10,064.44.
Unlike the previous sessions, the interesting feature was that some of the leading shares, notably, MCB Bank, Engro Chemical, Habib Bank, OGDC and Hub-Power came in for active support and allowed the volume to rise from all-time low of 3.524m shares to about 6m shares.
The review date for the flooring is just a day away and indications are that it would be lifted on Sept 25 amid hopes that there will be enough money to absorb any panic or fresh selling as a section of leading investors will try to build-up long positions at the current lower levels.
The market could fall another 100 to 150 points after the end of the flooring on the index but would rebound from that low on massive short-covering by all and sundry at the current bottom rates, analyst Hasnain Asghar Ali predicts, adding “but chief relief would come from ban on short-selling”.
However, some analysts are a bit skeptical about the fresh funding arrangements or the rescue package on the ground that another NIT managed Rs20 billion fund is already operating in the market but failed to save the situation.
“Downgrading of the credit rating of Pakistani bonds and negative economic outlook by Moody’s in the backdrop of the rupee at an all-time low, suicide attacks and Fata operations all point to a bleak outlook and investors may think twice before opting for new buying even for short-term,” they said.
The big question being debated among the analysts was whether or not foreign investors would return to the market amid fears of some more attacks after the Islamabad blasts, they added.
Leading gainers were led by Unilever Pakistan and National Foods, up by Rs5 and Rs18.97 followed by Meezan Balanced Fund, UTP Large Fund, Engro Chemical, Eye TV and Crescent Steel, which rose by 19 paisa to Re1.
Losers were led by Exide Pakistan and Pakistan Tobacco, off by Rs4.30 and Rs1.11 respectively. Others fell fractionally under the lead of Al-Abbas Sugar, Reliance Insurance, Pak Elektron and Gharibwal Cement, which fell by 15 paisa to 41 paisa.
Trading volume rose to 5.935m shares from the previous 3.524m shares as gainers held a lead over the losers at 20 to 12, with 88 shares holding onto the last levels.
MCB Bank led the list of actives, unchanged at Rs235.75 after rising to Rs241 on 2.782m shares followed by Engro Chemical, up by 23 paisa at Rs180.67 on 0.541m shares, Habib Bank unchanged at Rs138.45 on 0.252m shares, PICIC Fund, also unchanged at Rs6 on 0.250m shares, Southern Electric, higher by 26 paisa at Rs3.96 on 0.232m shares, Meezan Fund, up by Re1 at Rs8.70 on 0.196m shares and OGDC, unchanged at Rs94.43 at Rs0.153m shares.
Eye TV followed them, up 20 paisa at Rs42.20 on 0.144m shares, Hub-Power, unchanged at Rs21.46 on 0.121m shares and Nishat Chunnian, unchanged at Rs12.78 on 0.100m shares.
FORWARD COUNTER: MCB Bank also led the list of actives on the cleared list, unchanged at Rs238.46 on 3.491m shares followed by Engro Chemical, up by 40 paisa at Rs181.40 on 0.360m shares, PTCL, up by 38 paisa at Rs31 on 0.29m shares and Habib Bank, lower by 12 paisa at Rs137 on 0.20m shares.
DEFAULTER COMPANIES: Trading on this counter remained slow in the absence of investors. Stray covering purchases were, however, noted in Taxila Engineering and Al-Asif Sugar, which were quoted higher by 45 and 75 paisa at Rs1.50 and Rs4.90 on 14,500 and 500 shares, respectively.
DIVIDEND: Ismail Industries, cash 15 per cent, Askari Leasing, bonus shares 15 per cent, Kohinoor Energy, cash final 10 per cent, BRR Investment, cash nine per cent, Al-Zamin Leasing, Thatta Cement, Ghazi Fabrics and Descon OxyChem, all nil for their financial years ended June 30, 2008 Source
Sep
26
Stocks remain choppy ahead of ‘floor’ decision
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The stock market on Thursday turned in a relatively improved performance as some of the leading shares came in for active short-covering at the lower levels and ended modestly higher amid dull activity as the market will remain closed on Friday on account of Jumatul Wida.
The KSE board was in the meeting till late in the evening to review the floor and whether or not it should be removed or stay but there was no official word on the final word or its fate.
There was a loud whispering in the corridors of the KSE that the final decision on the ‘floor’ may be announced after the return of the president from the US in couple of days.”A good part of the foreign selling is still floating here and there and may sneak in the system after the removal of the floor, pushing the index further lower,” analyst Tabish H. Rajabali fears, adding “till then the floor may stay”.
On the monetary front, he said massive government borrowing would eventually fuel the inflation. The recent increase in return on saving schemes could cause fresh outflow of fresh funds from the market to fixed return saving schemes, he added.
Ahsan Mahanti said there was on immediate negative impact on the banking sector followed government bond downgrading by the Moody’s as investors were worried over so many pressing issues.
Trading volume hit a new single-session all-time low at 2.477m shares as compared to previous 2.792m shares as the covering purchases remained confined to selected shares and that too on a modest scale.
However gainers held a modest lead over the losers at 18 to eight, with 82 shares holding on to the last levels.
The KSE 100-share index fell by 6.60 points at 9,184.15 as compared to 9,190.75 a day earlier, despite the relative strength of some leading base shares, but on the other hand the KSE 30-share index was held unchanged at 10,064.44 points.
Some of the leading base shares, notably MCB Bank, PSO, Bank Alfalah and OGDC came in for active support and finished steady limiting the fall in the index.
Leading gainers were led by some of the leading auto shares, notably Millat Tractors and Al-Ghazi Tractors, up by Rs11.24 and Rs8.40 followed by Asset Leasing, Bolan Casting, Agriautos, Pak Datacom and National Foods, up by Re1 to Rs2.63.
Losses on the other hand were mostly fractional barring Royal Bank and Pak Elektron, off by Rs153 and Rs1.25, followed by Al-Noor Modaraba, Eye TV and Meezan Fund, which were marked down by 30 to 66 paisa.Among the actively traded shares, Engro Chemical was leading, unchanged at Rs180.44 on 0.375m shares followed by Southern Electric, also unchanged at Rs3.90 on 0.337m shares, OGDC, unchanged at Rs94.43 on 0.171m shares, Nishat Chunnian, unchanged at Rs12.78 on 0.143m shares, B.R.R. Modaraba, unchanged at Rs5.60 on 0.140m shares, Habib Modaraba, also unchanged at Rs6.49 on 0.100m shares and Orix Bank, static at Rs3.08 on 0.100m shares.
Colony Sugar Mills followed them, static at Rs48 on 0.100m shares, Netsol Technologies, also static at Rs57 on 0.100m shares and National Asset Leasing, up by 13 paisa at 53 paisa on 0.98m shares.
FORWARD COUNTER: PSO came in for active support but held unchanged at Rs271.79 on 0.190m shares followed by Bank Alfalah, also unchanged at Rs31.69 on 0.131m shares and MCB Bank, unchanged at Rs238.26 on 0.128m shares.
Attock Refinery followed them, unchanged at Rs141 on 0.92m shares and Hub-Power, static at Rs20.90 on 0.50m shares.
DEFAULTER COMPANIES: National Asset Leasing came in for stray support and was marked up by 13 paisa at 53 paisa on 97,500 shares followed by Bawany Sugar, up nine paisa at Rs3.50 on 500 shares and Al-Asif Sugar, steady by one paisa at Rs4.15 on 6,000 shares. Zeal Pak Cement, Quice Foods and Indus Polyester were traded at the last levels.
DIVIDEND: Rupali Polyester, cash 30 per cent, Ellcot Spinning, cash 15 per cent, Premium Textiles, cash 10 per cent, Muhammad Farooq Textiles, Dawood Equities, PTCL, Pakistan Synthetics and Latif Jute, all nil for the year ended June 30, 2008. Source