Eeyore's Important News ands View

US May Lose Its 'AAA' Rating
The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche."The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said."In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.http://www.cnbc.com/id/27641538
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Poll shows lukewarm support for federal auto bailout
By Sharon Silke Carty, USA TODAY
DETROIT — While the auto industry's push for government aid is gaining steam in Washington, a lot of Americans don't think bailing out the industry should be one of President-elect Barack Obama's economic priorities.
According to a USA TODAY/Gallup Poll, 47% of adults believe "providing loans and other help" to auto companies is "not very important."
By contrast, 60% of the 1,010 adults surveyed Nov. 7 to 9 said stricter regulation of financial companies is a "critical" or "very important" economic priority for the newly elected president.
"Most people do not understand the ramifications of a collapse within the U.S. auto industry," says Dennis Virag, president of Automotive Consulting Group. "They see GM, Ford and Chrysler, but they don't understand the relationship and the total size of the problem with regard to not only the three automakers, but their full supply base, their support structure and all of the dealers."
Despite a lack of public support, Obama's transition team seems to be working on getting aid to automakers as soon as possible. The newly appointed chief of staff, Rahm Emanuel, has said that Obama is looking for ways to use existing laws rather than waiting for congressional action.
The push to airlift a rescue package to the automakers comes on the heels of General Motors' admission Friday that it has barely enough cash on hand to make it through the end of the year — and not enough to make it through the first two quarters of next year.
On Monday, shares of GM fell $1, or 23%, to close at $3.36 a share after Deutsche Bank analyst Rod Lache cut his rating on GM to "sell," and cut his 12-month price target to zero.
"Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy-like" in its effect on shareholders, Lache said in a research note.
Lache says he thinks the government will be compelled to intervene, preventing an all-out GM failure that would then "precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers and sectors of the U.S. economy." But even if it is able to secure government loans, Lache thinks the company is burning through cash too quickly.
So far this year, GM has depleted it cash reserve by $9.66 billion to $16.2 billion. The automaker has said it needs about $11 billion to $14 billion on hand to run day-to-day operations.
CEO Rick Wagoner told industry trade magazine Automotive News Monday that help to alleviate GM's financial distress can't wait until Obama takes office in January. "This is an issue that needs to be addressed urgently," Wagoner said.
http://www.usatoday.com/money/autos/2008-11-10-gm-shares_N.htm

Market Insider: Economy's Illness Keeps Spreading
Posted By:Patti Domm
Like anxious relatives in a hospital room, investors have been watching the economy get sicker and sicker with new symptoms surfacing daily.
Flickr User: timetrax23
That trend is likely to stick in the week ahead, and the stock market should stay volatile as it reacts to economic news, including Friday's retail sales report. The economic calendar though is fairly light, but there are earnings reports from major retailers. Those numbers should only confirm that the holiday shopping season is shaping up to be one of the weakest in years.Many economists have been expecting the current quarter to show this recession's biggest decline in GDP. A batch of weak data and growing unemployment has made it seem especially bleak."I think you can kiss Christmas goodbye this year," said BlackRock Vice Chairman Robert Doll in a phone interview on the market and economy the past week.Doll said the economy had been "iffy" for the first eight months of the year, and companies were on the fence about hiring. But after the Lehman bankruptcy, the economy "went off the cliff" and companies starting chopping their workforces, which hurts investor and consumer confidence.In the coming week, the global credit crunch is back in focus as world leaders head to Washington for next weekend's meeting on global financial markets and regulation. Traders are also watching as President-elect Barack Obama meets with President George Bush Monday. There is some expectation the president elect could identify a new Treasury Secretary in the days ahead of the G-20 weekend meeting.Markets MayhemStocks in the past week fell about 4 percent, after several days of ripping volatility. They are now 40 percent from their highs of October, 2007. The Dow ended the week at 8,943, down 381 points, and the S&P 500 finished at 930, off 38 points. Doll said the stock market appears to be forming a bottom.
"Whether it's now or in the future who knows. Most bottoms have to be tested," he said.
"We do have a severe recession. I do believe we discounted most of it, but until we get further into it we've got to do backing and filling."
Doll said there are some good signs of progress being made in credit markets.
"I think healing is taking place. When you have Libor improving, Ted spread improving ... mortgage rates are coming down. Commercial paper is working again," he said."One of the first reasons we all sold stocks was this fear of the system failing. You're getting more of a credit thaw," he said. Doll said, for now, he expects the S&P 500 to stay in the 840 to 1040 range.
"Then next year, we'll start getting some more definition on what this new (Obama) Administration is about. Hopefully that clarity is going to help, and we'll size up how long and deep this recession is going to be."He said the type of stocks to buy are companies that have economic independence, decent balance sheets and excess cash flow. He likes big blue chip growth, health care and some tech.
"You have to make sure the companies you have can take the hard times" he said.Going into the end of the year, he said the market may regain some ground.
"I think we'll get some sort of year end rally," he said.Car Wreck In the coming week, investors will also be watching the vital signs of the auto industry. Both Ford and General Motors
Reported huge losses and GM warned that its cash level is closing in on the minimal level it needs. GM also called off merger talks with Chrysler so it could focus on its financial health. The Big Three are asking Washington for funding.
The woes of the industry go hand in hand with concerns that job losses are mounting and the auto industry's ills could speed that trend, crimping the economy even further. John Kilduff, senior vice president at M.F. Global, said that GM's health is a concern too in the energy markets, where the economic slowdown has weighed heavily on the price of oil."A GM bankruptcy is certainly something that would break the back of $60 (per barrel) oil and take it lower," he said.Oil DrillOil fell $6.77 or 10 percent for the week to $61.04 per barrel.
"We believe we're at the lower end of a range between $60 and $68," said Kilduff. "What is already occurring is we're seeing various capital expenditures and investment programs go by the boards."Kilduff said there's a false sense of comfort in the falling oil prices. He said the fact that the industry is scrapping projects is not a good sign and it could put upward pressure on prices in the future.

"It was going to be a 400,000 barrel per day plant," he said. It is now put off for several years. "When things turn around, America's oil crises will be right back in our faces," said Kilduff, a CNBC contributor.EconoramaThe dollar fell 0.14 percent against he euro in the past week, to a level of $1.2763. The dollar was off 0.2 percent against the yen. Brian Dolan, chief currency strategist at Forex.com, said the dollar could get a lift at the beginning of the week when there is data from Europe and the U.K. and little from the U.S. Tuesday is Veterans Day and the bond market is closed.But by the end of the week, the greenback could be under pressure as jobless claims and retail sales data are reported. Dolan said markets will focus on the meeting in Washington next weekend. But as far the new Administration, he said markets now do not expect much action ahead of January. President-elect Barack Obama spoke Friday, saying he would not get in the way of the current Administration. He did call for a fiscal stimulus package and help for the auto industry."We just got the impression that there's not going to be some shining knight riding to the rescue in the next couple of weeks and markets are going to be left to twist in the wind into early 2009," said Dolan. He now expects renewed downside volatility in stocks, renewed weakness in the euro and in yen crosses.

There's just a few data points in the week ahead and one of the most interesting items will be retail sales for October, released on Friday. On Tuesday, the NFIB's small business survey is released. On Thursday, weekly jobless claims are released, as is international trade data. On Friday, import prices for October, business inventories for September and consumer sentiment are also released.Fed Chairman Ben Bernanke is scheduled to speak Friday at the Fifth European Central Bank Banking Conference on policy coordination among central banks. That meeting is in Frankfurt, Germany. European Central Bank President Jean Claude Trichet is scheduled to speak at the same event.On Wednesday, Fed Vice Chairman Donald Kohn speaks on productivity and innovation in financial services in Luxembourg. Minneapolis Fed President Gary Stern speaks that day at the Minnesota Women's Economic Roundtable in Minneapolis.Philly Fed President Charles Plosser discussed the economic outlook and regulatory issues raised at the Economic Club of Pittsburgh at noon, and Stern speaks with local business leaders in Winona, Minnesota.Earnings CentralRetailers reporting in the week ahead include TJX (some article deleted)
.Agilent and Telefonica report on Friday.Important drug company news will come from the American Heart Association meeting in New Orleans this weekend. On Sunday, AstraZeneca
releases results of a widely anticipated trial on its cholesterol drug, crestor.
http://www.cnbc.com/id/27606102

Latvia mulling IMF loan as crisis sweeps Nordic region
Latvia has been forced to bail out its second largest bank over the weekend and may soon need a rescue by the International Monetary Fund as the financial crisis engulfs the Baltic region, and much of Scandinanvia.

By Ambrose Evans-Pritchard Last Updated: 8:17AM GMT 10 Nov 2008

Riga, capital city of Latvia
Premier Ivars Godmanis stunned the country by announcing that Parex banka had been half-nationalised in an attempt to head off a serious crisis in the face of escalating capital flight from the country.
"We have to do everything to avoid trouble, not only for specific banks, but for the banking system as a whole," he said.
Mr Godmanis said Latvia was examining a raft of measures to rescue the economy, including possible aid from the IMF and European Union. Iceland, Hungary, and Ukraine have already obtained loans for the IMF.
Latvia is facing a brutal recession after years of torrid credit growth and one of the most extreme property bubbles in Eastern Europe. The economy contracted by 4.2pc in the third quarter.
House prices have fallen 21pc over the last year, according to Global Property Guide. The swing from boom to bust has been made worse by heavy use of mortgages in euros, Swiss francs, and yen.
The rating agencies have rushed through a spate of downgrades in recent days for the Baltic trio of Latvia, Estonia, and Lithuania, warning that heavily reliance on short-term foreign funding has left them dangerously exposed to the global squeeze.
"If the situation were to worsen, Latvia could be forced to seek balance-of-payments support from the EU or the International Monetary Fund," said Kenneth Orchard, senior analyst at Moody's
"The global liquidity crisis will probably cause a shock to the Latvian banking system, which will reverberate throughout the rest of the economy. Unless there are major improvements in the European syndicated loan market by early 2009, the government will be forced to take remedial action."
Oskars Firmanus, head of the Latvian consultancy Paus Konsults, said the Parex rescue had badly shaken depositors in Riga. "It has come as a big surprise. The bank has been very secretive and did not tell anybody there was a problem. People have been lining on the streets over the weekends trying to get their money out of ATM machines," he said.
Swedish banks have large exposure to the Baltic market, adding to their woes as the industrial downturn hits Scandinavia.
The IMF warned in a recent report that the Baltic operations of Stockholm's banks "could cause a credit crunch in Sweden itself" if the closure of the wholesale capital markets continues for much longer. Total lending to Eastern Europe by Swedish banks is equal to 25pc of the country's GDP.
Swedbank dominates lending in Latvia and Estonia, while SEB is the biggest lender to Lithuania. The share price of the two banks have fallen by 70pc from their peak.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3412087/Latvia-mulling-IMF-loan-as-crisis-sweeps-Nordic-region.html

Here we go again: American held hostage in Iran November 10, 2008 - 10:32am
JJ Green, WTOP Radio
WASHINGTON - Esha Momeni was driving on Tehran's main expressway, the Modarres highway, on Oct. 15 when she was stopped by Iranian authorities. She hasn't been seen in public since.
"What we've been told is that initially she was pulled over for what they first say was a traffic violation, but she was taken to the prison where they held political prisoners, so clearly that's not what this was about," says Melissa Wall, one of Momeni's professors at California State University Northridge.
Wall says the 28-year-old Iranian-American woman, who was born in Los Angeles, went to Iran on a mission.
"She was working on her master's thesis project, collecting video interviews with women involved in the women's movement in Iran. It's a very scholarly project and it requires a whole lot of background research, and she was very deeply engaged with this issue."
Wall says Momeni was well aware of the risk.
"The faculty did discourage her from going back."
Momemi was not scared to return, primarily because she was very familiar with Iran.
"She has a dual citizenship. So for her it's a trip home to see her parents and to do this work. So it wasn't like she was going to a foreign country. She has a foot in both worlds. And in part the project was, I think, an attempt to sort of bridge those two worlds and help us see Iranian women," says Wall.
A small army of students, professors and concerned citizens from the Iranian-American community and beyond has mobilized to secure her release.
"We have put out a statement calling for the authorities in Iran to respect and safeguard her rights, her safety and security, as well as all other Iranian-Americans who travel to Iran," says Babak Hoghooghi, executive director of Public Affairs Alliance of Iranian Americans (PAAIA).
"We have also called on the authorities in Iran to make every effort to bring her case to an expeditious resolution."
Since her arrest three weeks ago, Momeni's family and friends have started a blog called "For Esha," as well as launching several petition drives to secure her release. Hassan Hussain, a close friend of Esha, says the situation is very troubling.
"Our one concern is why they detained her in the first place when she has done nothing illegal, and second is the fact that we don't have any information from her. They don't give her access to the outside world for us to be able to ensure that she is well."
The situation is compounded by the strained and complex relationship between the U.S. and Iranian governments, says Hussain.
"We want to make sure that people like Esha, who have really no political agenda and only wanted to force the dialogue between the two societies, don't get caught up in that process."
The U.S. has no official presence in Iran and will likely call upon the Swiss government, which has represented the U.S. on certain issues inside Iran.
"We're seeking additional information about this case. We stand with all those in Iran who are working for universal human rights and justice in their countries," says Deputy State Department spokesman Robert Wood.
This is not the first time that an Iranian-American has been detained under less than clear circumstances in Iran.
On Jan. 25, 2007, Parnaz Azima went to Iran to see her mother who was in the hospital. At the airport in Tehran, her passport was confiscated, and she was instructed to see passport officials 10 days later to get it back.
It never happened.
She was held for months, and left wondering about her future.
She told WTOP at the time: "I don't know what I'm going to do tomorrow, what will happen. I feel that I'm under control. My lawyer says I have to wait until the court decides what will happen to me. The judge says it could take one or two years."
She had been charged with trying to overthrow the government. Azima, a journalist for the U.S. funded Radio Farda, said the real reason she and the others were taken into custody was "to eliminate civil society activities." Azima was held for more than a year under house arrest before being released.
During the same time frame, other Iranian-Americans -- Academics Haleh Esfandiari and Kian Tajbakhsh, and businessman Ali Shakeri were all imprisoned at Evin, a prison in Tehran for political activists, for many months. They were eventually all freed after back-channel negotiations with the Iranian government.
What the future holds for Esha is still up in the air, but her family and friends are not going to leave it to chance. They are pressing the U.S. government to secure her release. In order to show Esha is not forgotten, they are planning a candlelight vigil on Nov. 12.
http://wtop.com/?nid=778&sid=1514298

Iran test-fires new surface-to-surface missile November 12, 2008 - 5:31amBy ALI AKBAR DAREINI Associated Press WriterTEHRAN, Iran (AP) - Iran successfully test-fired a new generation of long range surface-to-surface missile using solid fuel, making them more accurate than its predecessors, the defense minister announced Wednesday.Mostafa Mohammed Najjar said on state television that the Sajjil was a high-speed missile manufactured at the Iranian Aerospace department of the Defense Ministry. He said it had a range of about 1,200 miles (2,000 kilometers).Solid fuel missiles are more accurate than the liquid fuel missiles of a similar range currently possessed by Iran.The official IRNA news agency said the test was conducted Wednesday and television showed the missile being fired Wednesday from a launching pad in a desert region."This missile is a two-stage weapon with two combined solid-fuel engines and has an extraordinary high capability," the television quote Najjar as saying. He didn't elaborate.Najjar said the missile was a defensive weapon and not a response to threats against Iran. He didn't name any country but Israel has recently threatened to take military action against Iran to stop Tehran from developing a nuclear bomb."This missile test was conducted within the framework of a defensive, deterrent strategy ... and specifically with defensive objectives," Najjar added.Iran is known to possess a medium-range ballistic missile known as the Shahab-3, which means "shooting star" in Farsi, with a range of at least 800 miles (1,300 kilometers). In 2005, Iranian officials said they had improved the range of the Shahab-3 to 1,200 miles (2,000 kilometers).Iran's Shahab-3 missile has been known to use liquid fuel. Missiles using liquid fuel are less accurate.Iran launched an arms development program during its 1980-88 war with Iraq to compensate for a U.S. weapons embargo. Since 1992, Iran has produced its own tanks, armored personnel carriers, missiles and a fighter plane.
http://www.wtopnews.com/?nid=105&sid=1515866