Eeyore's News and view

Europe markets follow Asia lower; Japan index closes at 5-year low
LONDON (AP) — European stock markets were modestly lower Thursday after Japan's Nikkei index closed at a five-year low and Wall Street's Dow Jones index ended down nearly 6% Wednesday over mounting recession fears.
Europe's indexes could have been harder hit but for a late recovery in Asia, which helped the major indexes pare back a large chunk of their earlier losses.
Britain's FTSE 100 index of leading shares was down 35.24 points, or 0.9%, at 4,005.65, while Germany's DAX was 77.34 points, or 1.7%, at 4,493.73. The CAC-40 in France was 34.01 points, or 1.0%, lower at 3,264.17.
Earlier Japan's Nikkei 225 stock average tumbled 7% at the open but recovered to close down 2.5% at 8,460.98, while Hong Kong's Hang Seng Index was down 4.7% at 13,603 after falling more than 6% earlier. South Korea's market was down more, as the benchmark Kospi fell nearly 10% at one point but closed down 7.5% at 1,049.71.
The latest stock market jitters around the world have been stoked by a stream of disappointing earnings updates, particularly in the U.S. over the last few days. The worries contributed to a 6.1% drop in the Standard & Poor's 500 index on Wall Street on Wednesday that left it at its lowest level since April 2003.
Fears about the economy have become the primary concern as worries over credit markets and the banking system have been assuaged, for now at least, by government efforts to shore up banks, as well as massive liquidity boosts from the world's leading central banks.
"So long as there's this rather blunt, and perhaps rather realistic, fear of a global recession looming, then there's certainly scope that stocks will continue to struggle to find support in the short to medium term," said Matt Buckland, a dealer at CMC Markets.
Though the solvency of banks across Europe is less of an issue in the markets, their upcoming earnings are likely to be hit hard by the global economic downturn and that weighs on their share prices. Notable losers Thursday were BNP Paribas SA, down 2.5% and Barclays PLC, which was 5.6% lower.
One bright spot was the performance of Nestle SA, the world's biggest food and drink company, which saw its shares 5.2% in Zurich after it reported buoyant sales growth for the first nine months of the year.
Though the markets remain preoccupied with the general economic environment they continue to keep a close watch on interbank lending rates, which continue to fall, albeit relatively slowly.
Figures released Wednesday showed that the rate on three-month loans in dollars, known as the London Interbank Offered Rate, or Libor, fell by 0.29 percentage point, to 3.54%, while the so-called European Interbank Offered Rate for three-month euro-denominated loans dropped 0.03 percentage point to 4.936%, the lowest rate since June 5.
"Softer earnings and growth risks are dragging down equities, with government-central bank efforts to stabilize the money markets still bearing fruit with Libor rates easing further," said Stuart Bennett, a senior strategist at Calyon.
Abnormally high interbank lending rates have been the catalyst for the crisis in the financial markets over recent weeks, raising fears they would choke off credit to businesses and individuals.
Earlier in Asia, Japanese electronics powerhouse NEC Corp. plunged 8.5% after slashing its full-year earnings estimates Wednesday, blaming weaker demand for mobile phones and computer chips.
Japanese exporters were also battered by the surging yen against the dollar and euro. A stronger yen decreases the value of overseas profits when repatriated to Japan.
Mazda Motor Corp. plummeted 10.9%, Isuzu Motors Ltd. 9.6%, and Honda Motor Co. fell 6.6%. Game console maker Nintendo Co., which releases earnings Oct. 30, closed 8.65% lower.
Elsewhere Australia's key index pulled back more than 4% as slumping world commodity prices sent resource companies lower. Rio Tinto fell more than 14% while rival BHP Billiton sank more than 9%.
Oil rebounded modestly after plummeting more than $5 overnight to near 16-month lows. Sweet crude for December delivery rose $0.77 to $67.52 a barrel.
On the currency front, the dollar was little changed at 97.53 yen. In two months, the yen has gained more than 10% against the dollar.
The euro and the pound were both 0.1% lower at US1.2839 and US1.6257 respectively.
http://www.usatoday.com/money/markets/2008-10-22-global-markets-thursday_N.htm?loc=interstitialskip

Further banks may fail, says IMF
More European banks could fail before the financial crisis ends
More European banks "may fail" as doubts persist about the viability of their business models, the International Monetary Fund has warned.
Private funding is "virtually unavailable" and banks will have to rely on public intervention, asset sales and consolidation, it said.
The six-monthly study also warns that eurozone economic growth will almost grind to a halt next year.
Growth in the 15 euro countries will fall to just 0.2% in 2009, it forecast.
The report argued that disruptions in the US financial system have "heightened the risk of a systemic financial crisis in Europe further".
However, it maintained that a full-blown crisis "remains improbable".
Economic slowdown
The slowdown has resulted from high oil prices, rising inflation, a strong euro, falling export demand and the financial crisis, the Fund reported.
However, amid the gloom, inflation will slow next year - allowing room for cuts in interest rates, it forecast.
Meanwhile, the Icelandic government has said it hoped to reach an agreement on an economic rescue loan from the IMF this week.
"We hope an agreement with the IMF can be reached today or tomorrow," said commerce minister Bjoergvin Sigurdsson after a cabinet meeting on Tuesday.
If Iceland does receive a loan from the IMF, it would be the first Western country to do so since 1976.
Inflation eases
The IMF said growth in the eurozone would be 1.3% this year and just 0.2% next year - down from 2.6% in 2007.
"While these projections were finalised before the crisis reached systemic proportions in early October, they remain broadly valid," the IMF said in a statement.
Europe's biggest economy, Germany would see no growth at all in 2009 after expanding by 1.8% this year, while France would grow by just 0.2% after gaining 0.8% in 2008.
However as Europe's economies slow, price rises will ease, allowing the European Central Bank scope to cut interest rates, says the IMF.
"While containing inflation remains a policy concern, nurturing the recovery is likely to gain policy prominence," it said.
http://news.bbc.co.uk/2/hi/business/7682371.stm

Recession fears prompt more stock falls
LONDON (AFP) – Deepening fears of a global recession ensured another battering for the world's stock markets on Thursday as governments stepped up efforts to restore banking sector confidence.
As new figures showed cross-border lending by banks had suffered its biggest decline for a decade, Britain's government leant on bank bosses to start loosening the purse strings.
The impact of the downturn on industrial confidence was also highlighted with an official survey in France showing the sector was more pessimistic about future prospects than at any point in the last decade-and-a-half.
After the Dow Jones Industrial Average in New York lost 5.7 percent, all Asian markets saw serious losses on Thursday. Tokyo 's Nikkei index fell 2.46 percent, Australia closed down off 4.4 percent and Hong Kong 3.6 percent.
"The market is just disgraceful," said Ric Klusman, a dealer at Aequs Securities in Sydney. "There is no light at the end of the tunnel yet."
Europe 's main markets also fared badly with the main Paris and Frankfurt indexes falling although there was a slight rally in London.
The fresh falls came despite an announcement of further measures designed to restore confidence in the finance sector and among consumers.
Japan's central bank said it had injected 600 billion yen (6.2 billion dollars) into the short-term money market while the International Monetary Fund moved to bail out Pakistan, which could need as much as 15 billion dollars to help pay mounting foreign debt.
Governments around the world have unveiled packages over the last month totalling more than three trillion dollars, including loan guarantees and cash injections, to restore confidence to the financial system and reverse a sharp slowdown in lending.
The scale of the slowdown was illustrated by figures from the Bank for International Settlements, the world's biggest central banking body, which showed cross-border lending by banks fell 1.1 trillion dollars in the second quarter of 2008.
Banks were also hit by one trillion dollars' worth of withdrawals, particularly by clients in the United States, Britain and Switzerland.
In Britain, the finance minister was meeting the heads of major banks to urge them to relax their lending conditions for small firms.
Chancellor of the Exchequer Alistair Darling and Business Secretary Peter Mandelson were expected to tell bank chiefs that they must help small firms through the looming recession.
Major banks RBS, HBOS and Lloyds TSB were all helped by the government's 37-billion-pound (47-million-euro, 60-million-dollar) bailout this month.
As a condition of the deal, the banks must continue lending at 2007 levels, but many firms complain that loans are harder to obtain and that recent terms offered by banks have worsened.
Sweden's central bank meanwhile tried to encourage consumer confidence by slashing its key interest rate by half a percentage point to 3.75 percent and said it planned to make further cuts within six months.
In France, the state statistics agency said that industrial confidence had fallen to the lowest level since 1993.
Official forecasts already show France in its second quarter running of negative growth -- a technical recesssion -- and Thursday's grim news added to a mood of gloom hanging over prospects for a recovery.
"The financial crisis is endangering, sometimes threatening with death, many French firms, in particular medium, small and very small businesses," said the head of the employers' association, Laurence Parisot.
The trend was echoed by data from the European Union showing factories in the 15 nations sharing the euro saw new orders fall in August down a whopping 6.6 percent compared to the same month last year.
The ongoing financial crisis began with the emergence of problems on the US housing loan market last year when defaults on so-called subprime mortgage loans set off a chain reaction of problems for banks and other institutions across the globe at a time when the global economy was already slowing.
The crisis has already brought down the venerable US investment bank Lehman Brothers but bank chief and government leaders have expressed tentative hopes that recent bailout measures will ensure the worst is over

http://news.yahoo.com/s/afp/20081023/bs_afp/financeeconomyworld

In hard times, some flirt with survivalism
Economic angst has Americans stockpiling 'beans, bullets and Band-Aids’
By Kari Huus
Reporter
msnbc.com
updated 11:13 a.m. PT, Tues., Oct. 21, 2008
SEATTLE - Atash Hagmahani is not waiting for the stock market to recover. The former high-tech professional turned urban survivalist has already moved his money into safer investments: Rice and beans, for starters.
“I hoard food,” says Hagmahani, 44, estimating that he has enough to last his family a year or two. “I’m not ashamed to admit it.”
“People keep asking when this (economic crisis) is going to clear up,” says Hagmahani, who agreed to be interviewed on the condition that he be identified only by this pseudonym, which he uses for his survivalist blog, or by his first name, Rob.

The answer, he predicts, is that the country is entering what he calls a “Greater Depression.” “Maybe they jolly well better get used to the change in lifestyle.”

Hagmahani is not alone in concluding that desperate times call for serious preparations.

With foreclosure rates running rampant, financial institutions teetering and falling, prices for many goods and services climbing, and jobs being slashed, many Americans are making preparations for worse times ahead. For some, that means cutting spending and saving more. For others, it means taking a step into survivalism, once regarded solely as the province of religious End-of-Timers, sci-fi fans and extremists.

That often manifests itself as a desire to secure basic emergency resources — what survival guru Jim Wesley Rawles describes as “beans, bullets and Band-Aids.”

Rawles, speaking by phone from an “undisclosed location” somewhere between the Cascades and the Rocky Mountains, said he has seen traffic on his Web site, SurvivalBlog.com, explode in the last year.

Getting ready for ‘TEOTWAWKI’
“There are a lot more people — a lot more eager people — who are trying to get themselves squared away logistically,” said Rawles, who lectures and writes books on preparing for and surviving “TEOTWAWKI” — The End Of The World As We Know It.

Rawles, a self-described Christian conservative, said most of his readers had similar backgrounds when he started his blog in 2005. But he said that as the financial crisis has unfolded — particularly when oil prices began to soar — he started hearing from a much broader segment of the population.

“Now it’s the entire political spectrum — far right, far left and everything in between,” said Rawles. “I’m getting over 200 e-mails from readers a day. Now it is quite apparent how many more liberals are writing. Same concerns, different outlook. Greens, for instance, put less emphasis on self-defense and guns.”

Buoyed by an industry that flourishes when others languish, his site also is attracting record advertising revenue. The offerings include “secure, off-grid” mountain retreats, firearms training, home schooling aids, gold, freeze-dried food and water filtration systems.

Long-lasting food in demand
Others more directly embedded in the survival industry say they, too, are seeing the biggest surge of orders since the run-up to Y2K, when angst surged over whether computers would survive the dawn of a new millennium.

“I’m getting slammed with big orders,” said Kurt Wilson, a distributor of freeze-dried foods and other provisions with decades-long shelf life, like canned meat, cheese and butter.

“I have customers who were spending 200 bucks a month now spending $5,000 to $8,000,” Wilson said from his warehouse in Coeur d’Alene, Idaho. “I get little old ladies calling up, stocking up for their grandchildren.”


Wilson, who also has an online radio show called the Armchair Survivalist, said one of his new clients is a New York interior designer who specializes in outfitting cramped Manhattan apartments with hidden food storage units that double as tasteful furnishings.

Richard Mankemyer, general manager of the Survival Center, in McKenna, Wash. said he too is swamped.

“There are a lot more people interested in being prepared, stocking up and being on their own for extended periods of time, as we’ve been advising,” he said. Among them are businesses, he said, including a major Northwest corporation that recently spent “tens of thousands of dollars” to stock up on shelf-stable foods for its executives. He would not identify the company, but he said he urged the officials to stock up for its other employees as well.


Not just for the ‘Planet X’ crowd
Also reporting an uptick in business is Utah Shelter Systems, which makes underground dwellings designed for surviving the aftermath of a biological or nuclear attack.

“I think the economy certainly is part of it,” Sharon Packer, part owner of the Salt Lake City company, said of the surge in orders this year. “Anytime we become vulnerable, our risk of a terrorist attacks increases.”

She emphasizes that most people who purchase the shelters, which run between $40,000 and $50,000, are wealthy professionals interested in hedging their bets.

“Every once in awhile I have people who are concerned about Planet X or little green men, but they are usually not our clients,” she says.

A less surprising indication of the public nervousness about the recent financial turmoil can be found in gold brokerages and coin shops around the country. Many say that demand for gold and silver has been off the charts in recent months — a clear measure of concerns about the U.S. dollar and the soundness of the economy as a whole.

“We’re seeing absolutely unprecedented demand,” said Peter Grant, gold broker and analyst at USA Gold in Denver. “We’re seeing the full gamut … from high net worth (clients) to people looking at just a couple of ounces at a time.”

Preparing for a ‘major paradigm shift’
Seattle survivalist Hagmahani sees such commodity hoarding as just a partial measure for weathering a financial crisis.

On his blog, mutuallyassuredsurvival.com, he advises people to prepare for a “major paradigm shift” that will, in a decade, leave the U.S. with a Third World economy.

The $700 billion government financial bailout, in his view, only ensures a crisis that cannot be avoided after unbridled lending and spending.

“One of the most frightening possibilities is the banking system freezing up,” he said. “... Our remittance system is almost entirely through the banking system. … Without ATMs, you can’t get groceries, you can’t get paid… Is that a possibility? Yes.”

So Hagmahani, whose pen name is derived from the ancient religion of Zoroastrianism, is focused on procuring and stashing away enough food to last his family — himself, his wife and three kids — up to two years.

He said he began his preparations after witnessing the burst of the high-tech bubble in 2001, paying off the family’s debt, moving his assets away from stocks into safer investments, including, he implies, some precious metals and offshore accounts.

In the last three or four years, he has led his clan away from what he calls their former “yuppyish lifestyle.” They no longer eat out, cook most meals from scratch, and rarely drive their one car. They also are all learning practical skills — such as sewing, nursing and wielding a gun for self-defense.

“One thing I’m adamant about is that each of the kids needs real skills; they can’t just be a pencil pusher,” says Hagmahani of 19-year-old Hans, Sofia, 14, and Erik, 12. “You might get lucky and get a cushy job, but you might not. You need high-tech skills and low-tech skills for dealing with a systemic breakdown.”

Looking for farmland in South America
In addition to shifting some of his high-tech windfall into safe havens, Hagmahani is looking into buying farmland in South America — a last-ditch destination should the economic crisis become a catastrophe.

At the same time, he wants to be a model for others who want to be prepared. And he has his fans, relatively mainstream Americans who are worried by what they see and hear on the evening news.

“I didn’t want to be the crazy aunt in the attic,” said Susan Oakes, a fan of Hagmahani’s Internet site. She started worrying about the state of the economy a few years ago. “I started reading more and trying to find people who were credible, and not the tinfoil hat group…. trying to figure out what I could do,” she said.

To save money, she combined households with her two daughters’ families in eastern Washington state. She cashed out of some of her savings and bought gold, and then started to garden on their half-acre plot. She has stockpiled staples and learned to can her fruits and vegetables. She now has enough, she believes, to last her family for six months and to have some left for charity, which she expects to be in high demand.

But Oakes said she finds no comfort in being well-prepared for what she fears is coming.

“We’re in deep doo-doo,” she said. “I honestly believe the government thinks we’re idiots. … I get that they can’t come out and say ‘the sky is falling’ but it is.”

URL: http://www.msnbc.msn.com/id/27244465/