Eeyore's News and View

New Thai FM warns of shattered economy
Latest government faces immediate challenge from demonstrators accusing it of seizing power via military and courts
The political chaos that has gripped Thailand could push the country into recession and double its unemployment rate, the Thai prime minister warned today, as he was forced to deliver his maiden speech at the foreign ministry after parliament was blockaded by demonstrators.
Abhisit Vejjajiva, who was elected in a parliamentary vote two weeks ago, had to deliver the speech before his government could formally start work on trying to revive an economy battered by political crises.
Hundreds of red-shirted supporters of the ousted former prime minister Thaksin Shinawatra moved to the ministry after news spread that Abhisit was there. But there were no clashes, the demonstrators abandoned the siege and the prime minister was able to leave shortly afterwards.
In a speech broadcast live on television, Abhisit referred to repeated protests culminating in an airport blockade by anti-Thaksin demonstrators that crippled tourism and damaged Thailand's image.
"Political conflicts that have spread to civic groups could push the economy, along with the tourism industry, into recession if action is not taken quickly to resolve them and revive confidence among investors and foreign tourists," Abhisit said. "These conflicts are the country's weakness, especially at a time the world economy is entering its worst crisis in a century."
The demonstrators, angry at the dismissal of a pro-Thaksin government by the courts this month, had already forced the cancellation of the speech yesterday. They spent the night outside the gates of parliament, vowing to stay until Abhisit called fresh elections.
The unrest in Thailand stretches back to 2006 when yellow-shirted protesters led by Bangkok's royalist and business elite triggered Thaksin's removal.
Supporters of the exiled Thaksin accuse Abhisit of stealing power with the aid of the military, which they say pushed smaller parties to join his coalition two weeks ago. Abhisit denies this.
The third prime minister in four months, Abhisit was formally named to the post on December 17 in what many hoped would be the end of months of turbulent, sometimes violent protests. But his party, which had been in opposition since 2001, heads a coalition that some analysts doubt is strong enough to last until the next general election in 2011.
In his 50-minute speech, Abhisit outlined his plans to jump-start the economy, heal the country's political divisions, address a four-year-old Muslim insurgency in the south and repair Thailand's tattered image among tourists and business.
"There's no confidence among tourists who want to visit Thailand," said Prakit Chinamourphong, the president of the Thai Hotel Association. "I just want to see a peaceful country without demonstrations so that the tourists will come back to Thailand again."
The anti-Abhisit protesters call themselves the Democratic Alliance Against Dictatorship and are known as the "red shirts". They are a mix of Thaksin loyalists, farmers and labourers from the cities, including the capital, Bangkok.
Abhisit delivered his maiden speech less than a month after the last government was forced from office following six months of demonstrations by an anti-Thaksin group, the People's Alliance for Democracy. The protesters seized Bangkok's two main airports for eight days, paralysing the tourism industry.
http://w8/dec/30/thailand-abhisit-speech-protestsww.guardian.co.uk/world/200

People Pulling Up to Pawnshops Today Are Driving Cadillacs and BMWs
Well-to-Do Turn to Last-Resort Lenders; Putting Up Diamonds, Dumpsters as Collateral
PHILADELPHIA -- At Society Hill Loan, a pawnshop in a middle-class neighborhood here, a steady rain fell outside as a fashionably dressed young man parked his Cadillac Escalade outside. Looking around warily, he came in to speak with Nat Leonard, co-owner of the store.
The visitor was a 29-year-old engineer who was laid off earlier this year from one of the local chemical companies. Since then, he's been cleaning planes at the airport for less than half the salary he was earning a year ago.
Now he needs a $2,500 loan on his watch -- a Movado Fiero with a diamond bezel -- to pay his mortgage note.
"I want to help," said Mr. Leonard. But unlike Rolex and a few other brands, "there's no market" for Movado in his pawn universe.
The young man, who didn't wish to give his name, left the store disappointed. "I'm not sure what I'm going to do," he said.
Typically, pawnshop customers have a household income of about $29,000, according to Dave Adelman, president of the 2,400-member National Pawnbrokers Association. But operators around the country say they are seeing a surge in new activity fueled in part by a different clientele: middle- and upper-middle-class customers facing ravaged stock portfolios, tightened bank credit and unexpected layoffs. In areas dogged by high unemployment and foreclosure rates, the pawn business is especially robust.
Rick LaChappelle, owner of four pawnshops in Maine, calculates he has lent about 33% more money this year than last. "The banking industry is not giving out any money right now," he said. "So people are relying on second-tier lending institutions."
While some pawnshops -- like Beverly Loan Co. in Beverly Hills -- have discreetly served the wealthy for decades, more stores, such as Society Hill, are newly awash with furs, diamonds and other baubles from the bubble. At places like Society Hill, transactions are up by as much as 40% in recent months.
Even Beverly Loan has seen a shift in customer patterns. "We have had so many $50,000-plus loans and more businesses [as clients] than ever before," said Chief Executive Officer Jordan Tabach-Bank. Many business clients, he said, are "getting loans to meet payroll or other obligations because their lines of credit are frozen."
Pawnshops are lending companies that take collateralized or pawned merchandise in exchange for money. If a customer defaults, or fails to pick up their belongings, then the shop can sell the goods. Though fees vary from state to state and are set by law, the cost of a typical $75 loan is about $15 a month. While total fees can pile up over a period of several months, the industry argues that its rates can be lower than some high-interest credit cards and bank fees.
Lee Amberg, owner of AA Classic Windy City Jewelry & Loan in affluent Evanston, Ill., said he's been seeing Cartier watches, two-carat diamonds, David Yurman jewelry and pieces from Tiffany's. One client, he said, brought in a fur coat from Saks Fifth Avenue that retailed at $9,000. She told him she needed a loan to help buy private-school uniforms for her child.
Diamond Exchange USA is more of a hybrid store. In addition to selling its own pieces, it makes loans against customers' goods and purchases used jewelry too. Located on a major thoroughfare in Bethesda, Md., it has a constant stream of Mercedes-Benzes, BMWs and other luxury cars pulling into the lot. Virtually all of the clientele are women. Many come to sell their gold or diamond jewelry.
A potential new customer recently strolled in to speak with co-owner Justin Carmody. A resident of Potomac, Md., she owns a small wholesale company and was looking to obtain a $6,000 loan on a 1.91-carat diamond ring given to her by her husband. With a 10% fee, she learned, it would cost her $6,600 to get the ring back. If she failed to resolve her cash issues in a month, she'd be responsible for an additional payment -- $600, or 10% of the principal -- each month until satisfying the debt.
"I've never done anything like this. I'm looking at my options," she said. "I'm trying to separate my emotions. I just want to get through the next week." Ultimately, however, she decided against the loan.
This year, the number of first-time pawnshop users is up 10%, according to Mr. Adelman of the pawnbroker trade group. Owners say the rate at which people are coming back to retrieve property and pay off loans has fallen about 10%. That leaves the store on the hook to sell the goods.
Though some pawnbrokers now have more items to sell -- the result of higher loan defaults -- their general prospects remain healthy. Richard Shane, managing director at Jefferies & Co., who covers the pawnshop industry, said publicly traded companies, such as Cash America International Inc., are doing well in this difficult economy. (Pawn balances at the company rose by 16% in the quarter ended Sept. 30.) Banks, moreover, continue to make funds available to them "because the businesses are strong and cash flow is strong," said Mr. Shane.
On a recent weekday morning, a line stretched from the front counter at Lewiston Pawn Shop. Mr. LaChappelle and his Lewiston, Maine, staff turned away many customers with less-than-desirable goods. Computers, because they become obsolete so quickly, are among the items that are hard to use as collateral. Other things such as porcelain figurines and collectibles have negligible loan value since there's a limited market to resell them if necessary.
"I try to take all I can but I also have to be aware of the market," explained Mr. LaChappelle. "We have to evolve with the economy or I get stuck with merchandise that doesn't sell."
At the 10-floor gallery, an out-of-work contractor named Albert Langlois walked the aisles pointing to construction equipment he has pawned as collateral for loans.
Included in the stash: industrial-size nail guns, drills, air compressors for running power tools and several saws. The scaffolding he uses to work on multi-story buildings is stacked in a storage room. "Pretty much everything I own is in here," Mr. Langlois said.
So far this year, Mr. Langlois, 40, has laid off the eight members of his contracting crew and lost a house through foreclosure. In addition to his equipment he has pawned two motorcycles, valued at $20,000 between them. Mr. LaChappelle has become one of the primary lenders around, Mr. Langlois said. "You can't go to a bank and get small loans to make ends meet, so you come to Rick."
Derek Arthur, 27, owner of Ground Up Construction, was returning to the store to recover his equipment after satisfying a loan. A year ago, he said, he had 20 people working for him, including subcontractors. Now he has four employees and just one job. He had needed a $3,000 loan to get the business through a rough period while awaiting payment from a customer.
Mr. Arthur figured no bank would lend him such a small amount for a month or two. So he pawned a dump trailer as well as other equipment and a smattering of jewelry. The money, he said, paid his work crew, insurance and other expenses.
"You have to have a Plan B," he said. "If you don't have one, you'd better find one fast."
http://online.wsj.com/article/SB123059909346041273.html

Depression Then and Now
In the "great" depression after the 1929 stock market crash there was tremendous hardship, unemployment and, millions of Americans starved.
As more and more families became destitute, parents, who could no longer feed their children, would desperately search for relatives, acquaintances and ultimately even total strangers who could feed them and were willing to take them into their homes. The parents would then try to fend for themselves and were often totally lost to memory.
The parents, of course hoped and told themselves that the children would be okay. Unfortunately, in many cases the children were treated like unpaid servants required to do whatever was demanded of them and be thankful that they were allowed to have food and a place to stay.
During those years over 80% of the population was closely tied to the small family farms so most of the people could actually get food. There was food even though many had no money to buy it.
Going into this present depression less than one half of 1% of our population is connected to farming. Further, we are in the third year of a global famine. America will soon see food shortages even for those who still have money. The financial crash is so severe that grocery stores can't get credit to restock their shelves and farmers can't get loans to plant and harvest. America is well on track for runaway inflation where $100 loaves of bread will not be unrealistic.
Before inflation hits and while there is still food, every one of us must get the supplies that we need immediately.
http://www.efoodsdirect.com/depression_era.html?aid=6

LyondellBasell says bankruptcy is an option
December 31, 2008 - 1:34pm
By ERNEST SCHEYDER
AP Energy Writer
NEW YORK (AP) - LyondellBasell Industries, the world's third-largest independent chemical company, said Wednesday that bankruptcy protection is an option as a broadening recession eats away demand for its products.
"We are looking to restructure our debt, and we are looking at all of our options," company spokeswoman Susan Moore said in an interview. "Filing for Chapter 11 protection is one of those options."
The privately held company has brought in outside advisers, Moore said.
The LyondellBasell announcement arrived just two days after the collapse of a $17.4 billion joint venture between Dow Chemical and Kuwait's Petrochemical Industries Co.
The industry has been hit by slumping demand and volatile energy prices in 2008, which have scuttled one major buyout and has put another, involving Dow, at risk.
Earlier this month, LyondellBasell said in a filing with the Securities and Exchange Commission that several lenders have allowed it to postpone $160 million in loan payments.
Standard & Poor's Ratings Services downgraded the company's long-term corporate credit rating to junk status and Moody's lowered LyondellBasell's corporate family rating to "Caa2," its fourth-worst junk rating.
S&P said a restructuring of the company's debt could lead to "substantial principal losses for some creditors, especially nonsenior lenders, which will be tantamount to a default under our criteria and definition."
LyondellBasell denied that it had defaulted on any debt.
LyondellBasell Industries AF was formed in 2007 when Dutch chemical company Basell International Holdings paid $12.7 billion for Houston-based Lyondell Chemical.
The deal was struck just as crude oil began its rapid ascent to nearly $150 per barrel over the summer, prices that squeezed margins for all chemical makers.
But a broadening recession slashed demand both for the products the industry makes and the energy prices that led to a consolidation in the industry in the first place.
Chemical companies have scrambled to undue major deals and cut costs.
Hexion Specialty Chemicals Inc. walked away from a $6.5 billion buyout of Salt Lake City-based Huntsman Corp. in June. The dispute was settled privately earlier this month, putting aside a string of lawsuits.
Midland, Mich.-based Dow Chemical laid off 5,000 workers and closed 20 plants in December.
When Kuwait's Petrochemical Industries called if its joint venture with Dow Chemical late Sunday, it threw Dow's pending $15.3 billion acquisition of Philadelphia-based rival Rohm & Haas Co. into doubt.
Dow may be forced to draw down a $13 billion bride loan to pay for the entire acquisition with the money expected from the joint venture now apparently gone.
Dow's credit rating has also taken a hit.
Wilmington, Del.-based DuPont Co. let 2,500 workers go in December and released 4,000 contractors. DuPont spokeswoman Lori Captain said Wednesday that the company remains financially strong and that LyondellBasell is not a significant customer, supplier or competitor.
Even in the context of a global economic downturn, volatility in the chemical sector and the end of the year stands out.
"The year marched in like a lamb, and we're obviously exiting being buffeted by very depressing economic activity," said Frank Mitsch, an analyst with BB&T Capital Markets.
Deals that were completed came with some baggage as well this year.
Ashland Inc., which makes Valvoline took on $700 million in debt when it bought Hercules Inc. in November. After the buyout, the Covington, Ky.-based company had to cut its dividend by 73 percent to conserve cash.
LyondellBasell has annual sales of $54.6 billion and more then 16,000 employees worldwide, according to its Web site.
http://wtop.com/?nid=111&sid=1562114