According to the usual N.Y. commentator…”Overall estimated volume however, was light…only 66,458 lots net of switches.”

click to enlarge

Friday’s big spike down in gold at the Comex open, was probably fresh short selling by the three [or less] American bullion banks, as gold open interest rose 3,172 contracts…while silver, which finished on its high of the day, showed an o.i. increase of another 1,140 contracts. None of this is terrific news. There could have been some switches added as well, but we won’t know until the next COT this Friday.

A couple of things in gold news yesterday. Gold fund manager Marc Gugerli said that the New York Commodities Exchange’s paper gold market is dominated by a few traders connected to the U.S. government and that he expects that market to default soon. Haven’t we heard that default story before? Last time I checked, the Comex was still there. And here’s a gold story by Peter Brimelow over at marketwatch.com. It’s entitled “Something new stirring in precious-metals pond” and the link is here.

In the GLD ETF (NYSE:GLD)…another new record was set yesterday as 14.5 tonnes [470,000 ounces] were added. That’s 1.2 million ounces in the last six business days. I guess Ted Butler’s estimate of 1.0 million ounces owed, proved to be a little on the conservative side. And in the SLV, another 2.5 million ounces were deposited…and if Mr. Butler is right about the SLV (NYSE:SLV)…then there’s around 15 million more ounces yet to come. Across the Atlantic at the Swiss ETFs…they just added another 199,946 ounces of silver and 126,665 ounces of gold.

In other news, it appears that the Manas air base in Kyrgystan that the U.S. was using to supply troops fighting in Afghanistan is now officially closed to them. “The decision has been made” a government spokesman said. Closer to home, Nissan (NASDAQ:NSANY) just cut 20,000 jobs and forecast a $2.9 billion loss. In a Bloomberg story on Sunday was this additional info out of Japan…”Panasonic (NYSE:PC), Hitachi (NYSE:HIT) and NEC — all of which are forecasting losses for the current fiscal year — have announced a combined 39,000 job cuts in the past two weeks.” And lastly, in another Bloomberg story with the headline “U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs”, is this eye-popping paragraph…”The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive [on the planet]. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.” But if you think that’s scary…this is far worse…click here!

click to enlarge

It was a newsy weekend and I have four stories this morning. The first two are from The Telegraph out of London…and both are written by their international business editor…Ambrose Evans-Pritchard. The headline of the first [and very short] story reads “Europe ambushes Germany on debt bail-out”. Europe has huge problems that are growing by leaps and bounds every week. “The European Union has called an emergency summit of national leaders this month to halt the drift towards protectionism and stem the risks of a debt crisis as the slump deepens.” The link is here.
The second article by Ambrose is slightly longer…more substantial…and even more ominous. It’s entitled “Bond market calls Fed’s bluff as global economy falls apart”. The piece looks at the bond market from a world perspective…not just an American one. This will keep you up at night. The link is here.

The third story is from worldnetdaily.com. It appears that as the Obama administration tries to push through their $1 trillion dollar rescue package….”a rebellion against the growing dominance of federal control is beginning to spread at the state level.” The article is entitled “Lawmakers in 20 states move to reclaim sovereignty”. I thank the “Charleston Voice” for bringing it to my attention…and the link is here.

And lastly, here is silver analyst Ted Butler’s latest commentary. As I mentioned in my rant on Saturday [after a long chat with Ted], the combination of the release of the Commitment of Traders report and the Bank Participation Report on Friday, proves absolutely that the three [or less] traders in gold…and the two [or less] traders in silver…have an iron grip on gold and silver prices. We at GATA thank him for his work in this area. The article itself is a GATA release with a comprehensive introduction by our secretary treasurer, Chris Powell…and the link is here.

Keynesian economics, and socialist central planning, have trapped the Western economies into a slow death. – Wayne N. Krautkramer

So Obama’s bailout package is upon us…but it matters not one iota. The catastrophe that is about to be visited upon the U.S.A…and the rest of the world…is now unstoppable. As I’ve said a couple of times before…last week being the latest…the world’s central banks only have one option left. Print, or die! No wonder the Fed, The Treasury and the President’s Working Group are trying to keep gold and silver prices under wraps. But in the end, that too will fail. But it won’t be for lack of trying.

See you on Wednesday.

Source: And Then There’s This…Tuesday, February 10th, 2009

And in a separate story yesterday – which underscores that the auto sector’s woes are going global – Nissan Motor Corp. (ADR:NSANY) said it would cut 20,000 jobs by the end of 2010 and expects to book a net loss for the year ended March 31, which would be its first loss in 14 years.

But the outlook for Detroit’s “Big Three” is clearly worse, right now. From the time U.S. carmakers first approached Congress about obtaining bailout money for the American auto industry, GM and Chrysler have adamantly opposed bankruptcy. Indeed, as far back as their first visit to Washington – when the CEOs caused a firestorm of controversy by flying to the meeting in their corporate jets – the automakers’ top executives said the bankruptcy labels would weaken their companies’ reputations by pushing potential customers to other brands.

However, the government could force bankruptcy by applying the debtor-in-possession status to the loans, which would make debts owed to the government the top priority, Don Workman, a partner at Baker & Hostetler LLP and bankruptcy expert, told Bloomberg News.

GM and Chrysler have until next Tuesday (Feb 17) to demonstrate progress on their plans – reducing labor costs and showing how they’ll begin repaying loans – enacted in order to receive loans from the Troubled Asset Relief Program (TARP).

GM said it plans to close dealerships and continue cutting union retirement benefits. Chrysler’s CEO Robert Nardelli previously said the company would try reducing debt, Bloomberg reported.

GM is talking with parts maker and supplier Delphi Corp. (DPHIQ) – which was spun off from GM 10 years ago – about buying back assets, which will shore up GM’s supply chain, Reuters reported.

The bottom: The government wants more cost-cutting and income-generating measures from the carmakers. And if GM and Chrysler can’t do it themselves, their loans will be yanked.

Nissan Announces 20,000 Job Cuts

Across the Pacific, Nissan said it must cut jobs because of lackluster sales – including its first loss in nearly a decade and a half.

“In every planning scenario we built, our worst assumptions on the state of the global economy have been met or exceeded, with the continuing grip on credit and declining consumer confidence being the most damaging factors,” Nissan President and CEO Carlos Ghosn said in a statement. “Looking forward, our priority remains on protecting our free cash flow and taking swift, adequate and impactful actions to improve our business performance.”

The 20,000 job cuts equate to 8.5% of Japan’s No. 3 automaker, Reuters reported, and is just one of several recovery actions the company outlined in a news release. Others include:

• Launching an average of 10 new vehicles every year from 2009 to 2012.
• Reducing labor costs in line with decreased revenues. Labor costs will be cut 20% in fiscal 2009.
• Eliminate bonus payments to its board of directors for 2008 and reduce board and corporate salaries by 10% starting in March and lasting “until the situation clearly improves.”
• Negotiate and hopefully implement a work-sharing scheme for staff workers.

Source: Bankruptcy Looks Increasingly Likely for GM and Chrysler; Nissan to Slash 20,000 Jobs

Sales of cars, minicars, trucks and buses hit a 28-year low, falling 5%, or 5.08 million, from the 5.35 million sold in 2007, according to figures released by the Japan Automobile Dealers Association (JADA) and Japan Mini Vehicles Association, Bloomberg reported.

Worse, domestic auto sales in December totaled 183,549 vehicles – a 22% decline and the biggest drop on record – showing the sales crunch is a growing problem.

“We never imagined sales would fall this badly,” JADA Director Takeshi Fushimi said, Reuters reported. “This is a bleak situation.” Widespread job losses plagued the industry, sapping consumer demand and chopping hundreds of thousands of vehicles from sales tallies.

“The industry is going through a blizzard,” said Ichiro Takamatsu, chief investment officer at Alphex Investments Co., a Tokyo-based hedge fund, told Bloomberg. “In Japan, people don’t see cars as their status symbol anymore with this economic slowdown.”

According to JADA figures, Toyota sold 1.47 million vehicles in Japan last year, a 7.4% fall. Nissan’s sales came in at 537,553 units, down 5.8%.

Honda Motor Co. (ADR: HMC), however, sold 423,628 units – a 6.4% gain – partially because of higher demand for new and moderately priced models of the Fit compact and Freed compact minivan. The latter only sold domestically in its first year.

Last month, the Japan Automobile Manufacturers Association projected annual sales would fall again in 2009. It estimates that new automobile sales will fall to 4.86 million vehicles, which would be the first drop below 5 million in 31 years.

Source: Dour Demand Sends Japan 2008 Auto Sales Down Dramatically

Oy. “The $700 billion financial bailout program,” the New York Times sums up Treasury Secretary Paulson’s speech this morning, “will not be used to buy troubled mortgage-backed assets, as originally intended. Instead, capital would be provided directly to nonbank companies, as well as banks and financial institutions, and that more would be done to prevent home foreclosures.”

Is it any wonder 83% of Americans think the U.S. is “headed in the wrong direction”?

According to a CNN poll released this week — after Obama rode to victory on the audacity of hope, mind you — a record number of respondents think I.O.U.S.A. is in trouble. CNN’s been asking this simple, ambiguous question for 34 years… last week’s was the gloomiest response yet.

A record low 16% think the U.S. is in good shape. Stewards of the study note that optimism was higher during the worst of the Carter years… and the week of the Watergate scandal.

The U.S. economy will likely contract at an annual rate of 3% this quarter and another 1.5% in the first quarter of 2009 , says a slightly more articulate Bloomberg survey. Citing a recent poll of economists, the financial publisher says this current downturn will be the worst since at least 1974.

But never fear, Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) are back, and they’re ready to save the world.

Only two days after Fannie revealed a $29 billion quarterly loss, these two government-controlled mortgage enablers — which as late as December 2007 were involved in 90% of all new home loans in the U.S. — announced, umn, an audacious mortgage rescue plan. We’ll give you a few seconds to digest the irony.

Here’s the new plan: Fannie and Freddie will modify hundreds of thousands of distressed loans. In order to qualify you must be at least 90 days late on a mortgage payment, owe at least 90% of your home’s value, live in the house with the distressed mortgage and have not filed for bankruptcy.

If you fall within this “not a total deadbeat, but still incapable of managing money” sweet spot, congrats! You’ll qualify for a free Fannie/Freddie refi. The companies aim to bring payments down to at least 38% of the monthly household income for at least five years, with interest rates as low as 3%. After five years, the rate will climb 1% annually until it meets the market rate.

Preliminary estimates suggest about half a million homeowners will be eligible. If you are one of the millions of homeowners who took out a traditional mortgage on a house you were able to afford… umm… you get… ahhh… nothing. Enjoy watching your home’s price continue to fall while you pay 6%.

The naysayers are already complaining that the plan will not reach enough of the folks who are facing foreclosure to matter. About 200,000 homeowners will fall into foreclosure by the end of the year, bringing the yearly total over a million. Plus, Fannie and Freddie only control about 20% of America’s seriously delinquent mortgages.

Investors made more sensible decisions in equity trading yesterday. Major indexes in the U.S. fell about 2% yesterday after a choppy day of trading. Energy and commodity stocks suffered the most again, as the hard assets trade is still out of favor.

Cash is still king in today’s market, specifically the U.S. dollar variety. The dollar index is a breath away from its 52-week high this morning. Clocking in at 87.3 as we write, it’s about a half a point from the high-water mark set late last month. Should the index crack 88, the dollar will be at its highest valuation since 2006.

On the other side of the trade, gold and gold stocks are still in the dumps. The spot price is down another $15 today, to $725.

And at $57 a barrel, light sweet crude resides at its lowest level in 20 months. Traders shaved another $3 off the forward futures contract yesterday, mostly in anticipation of the Energy Dept. announcing higher oil and gas inventories today.

That’s bad news, of course, if you’re an oil investor… but good news if you’ve got a daily commute. Retail gasoline prices are now down for the 17th week in a row, with a national average of $2.20 a gallon.

Enjoy it while it lasts. According to the International Energy Agency today, the world will need to cough up a $26 trillion investment in global energy infrastructure over the next 20 years just to keep the status quo.

“The IEA’s findings state,” notes Chris Mayer, picking up where Dan Amoss left off yesterday, “that without additional investment to raise production, output will decline 9.1% annually. Everyone knows that oil production is on a treadmill, on which aging fields produce less oil over time. But that decline rate was faster than previously thought. Even with investment, the annual decline rate is 6.4% per year. These are big annual declines in a market that already wobbles along a knife edge of supply and demand.

“That’s a good backdrop if you own oil shares. Demand probably will continue to taper off as we get into this recession. But supply is falling also, and it’s not as if there is a lot of unsold oil lying around. The Economist reports ‘Official oil stocks [or inventories] are well below their average of the past five years.’

“And we can’t forget that most of the world’s oil reserves are in the hands of governments who use the cash for political purposes and social spending programs. They are not making the needed investments to keep these oil fields producing at current levels.”

There’s still time to get a free DVD and companion book with your subscription to Chris’ Capital & Crisis… details here.

We’re also polishing off the final details on a special report that addresses this matter directly… stay tuned.

Russia is taking the oil correction hard. For starters, check out the slide in the country’s currency:

The ruble got a nice bump as oil soared through the stratosphere this summer, but its retreat, the global credit crisis and a crashing Russian stock market has put the ruble in the doghouse.

The MICEX, the ruble-denominated major Russian index, fell 12.6% Tuesday. The decline was so swift, regulators shut down the exchange until tomorrow. The index is down a remarkable 67% since May.

“There’s some huge news coming on the medical front,” forecasts our tech adviser Pat Cox.

“I predict that real stem cell therapies will be offered offshore within the year. Currently, there is a billion-dollar industry offering stem cell snake oil, but real lifesaving and life-extending therapies are already available in the laboratory. These therapies are relatively inexpensive to produce and will revolutionize medicine. Even the FDA will come around when wealthy early adopters begin reporting true rejuvenation results. By the end of Obama’s first term, we will see S.C. and other therapies that will radically cut the cost of treating horrendously expensive illnesses.

“Obama already announced yesterday that he plans on reversing current bans on embryonic stem cell research funding. The market has already begun to lift stem cell companies, but mostly the wrong ones. We’ll be adding to our stem cell portfolio soon, and I’ll have much more on that in my next monthly issue.”

If you’re looking to capitalize on this breakthrough technology, be sure to read Pat’s latest report, here.

“I’m wondering,” ponders a reader, “why a financial institution that accepts tax dollars in order to be able to loan money to other business does not step up to loan to the automakers. Was that not Paulson’s argument for TARP?

“I mean the banks have received $3.4 trillion-plus in tax bucks… they can’t spare a dime to help out the economy… like preserving jobs so there will be someone left to borrow from them or pay on their mortgages?

“Two-10 million more laid-off workers and untold business failures like plastic plants, steel mills, etc., can’t be good for the bankers. Banks would fail also, causing all them bucks we spent bailing them out to be a waste.”

The 5: What a mess…

“It is true,” writes another, “that the American consumer should be able to buy any automobile that he can afford, domestic or foreign. It is also true, at least the last time that I checked, that Toyota (NYSE:TM), Mercedes-Benz, Nissan (NASDAQ:NSANY), BMW and the like have no obligation to pay for the American consumer’s unemployment benefits, Social Security, Medicare and Medicaid. So I will not feel sorry for those buyers of foreign cars when there are no more funds at the national or state level to satisfy these financial promises.”

The 5: So… you recommend before buying a car one should check to see whether the maker contributes to entitlement programs? You’ve lost us already. But let’s continue…

“Ah, but you say that it makes perfect sense that Americans should buy Japanese and German autos when they are clearly more reliable and of higher quality. Wrong! If you had cared to do some minimal research on this subject, rather than mouthing long-outdated facts and uneducated opinions, you might have stumbled upon some interesting, accurate and pertinent information. J.D. Power has at least for the past five or six years pointed out in its annual Vehicle Dependability Study that though Lexus has ranked No. 1, it has consistently been followed by Buick (this last report finds Buick TIED with Lexus), Cadillac and Lincoln. So three American makes have routinely scored higher than Infinity, Toyota, Acura and Honda. As for BMW and Nissan, they have rated well below Ford (NYSE:F), Chevrolet, Mercury (NYSE:MCY) and Dodge. And as for such makes as Mercedes, Mitsubishi and Volkswagen, they were ranked well toward the very bottom of the list for most of the time.”

The 5: We’re not saying you should buy Japanese or German cars per se, but that the choice is up to the person spending the money. As a consumer, I’ve always been under the impression the J.D. Power and Associates is just a shill for American automakers. But that must also be our mouths stating another uneducated opinion.

“Do you and other automobile buyers know or even care that to know other salient facts about the industry, such as the recent imprisonment of the head of Mitsubishi for failing to initiate safety recalls of his company’s cars, as mandated by Japanese law? It amuses me to see the smug looks on the faces of drivers of such luxury makes as Infinity and Mercedes when I contemplate that my Cadillac CTS-V has higher build quality and reliability than their much-overpriced status symbols.”

The 5: If the dude broke the law, he should go to jail. We’re not quite ready to indict all foreign carmakers because of one guy. You clearly have a lot of emotion invested in your own choice of status symbol.

“I am disappointed in you for not performing the same kind of research in this area that you so highly recommend that the consumer perform before making investments in the stock and bond markets.”

The 5: Uh… we would say we’re disappointed in you for expressing such a bizarre xenophobic affinity for American cars, but we happen to agree with your point. People should make big-ticket purchases with care. But if they choose badly… isn’t that their problem? When did it become a federal issue? Let’s see, (NYSE:GM) GM’s share price has fallen to a 65-year low and banks refused to lend them any more money. If that isn’t enough evidence of a broken business model, what more do you need?

Wow,

Addison Wiggin
The 5 Min. Forecast

Source:American Optimism, Russia’s In Trouble, But Good News For Oil, Breakthrough Med Tech, And More!

• South Korea’s government announced plans for a 14 trillion won ($10.8 billion) economic stimulus aimed to create an extra 200,000 jobs, extend tax breaks for factory investments and increase infrastructure spending and development. Relief measures announced this year now total 33 trillion won, according to the finance ministry, Bloomberg reported.

• Initial public offering plans for buyout firm Kohlberg Kravis Roberts & Co. have again been delayed, this time because its Amsterdam-listed affiliate suffered big investment losses. With KKR’s delay, there hasn’t been a U.S. IPO in nearly three months, Reuters reported.

• DryShips Inc. (DRYS), Greece-based dry bulk ships carrier, posted a 71% gain in quarterly profits. The company dodged the cash drought by employing its vessels for long-term contracts, securing revenue as most companies are losing it, Reuters reported.

• Oil prices fell nearly 6% yesterday (Monday) as weak demand continued to drive investors from the market.  Light, sweet crude fell $3.90, or 5.75%, yesterday to settle at $63.91 a barrel. Black gold has plummeted nearly 57% from its record high of $147.27 a barrel reached in July.

• The Institute for Supply Management said yesterday (Monday) that its manufacturing index fell to 38.9 in October – the lowest reading since September 1982. Manufacturers have been crushed by mounting job losses and weak consumer demand.

• Viacom Inc. (VIA) announced yesterday (Monday) that third-quarter profit fell 37% from a year ago even though revenue rose 4% to $3.4 billion. Net earnings fell to $401 million, or 65 cents per share, down from $641 million, or 96 cents per share last year. The loss was largely the result of a $19 million operating loss in “filmed entertainment.” Viacom is parent to Paramount Pictures.

• October sales for General Motors Corp. (GM), Ford Motor Co. (F), Toyota Motor Corp. (TM), Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY) all fell in the midst of tighter credit and a weaker global economy. GM sales of cars and light trucks fell 45% from last year. Ford down 30%. Toyota slipped 23%. Honda skidded 25%. And Nissan sales dropped 33%.

Source: Global Investing Roundups Tuesday, November 4th, 2008

Instead of direct financing assistance, it looks like the Bush Administration will speed up a $25 billion loan program that was approved by Congress in September and that’s aimed at helping automakers develop more-fuel-efficient vehicles. The program is administered by the U.S. Department of Energy. The administration is also believed to have asked the U.S. Commerce Department to explore other ways that aid could be brought to the automakers – without expanding the scope of the bailout package.

The so-called “Big Three” automakers – GM, Chrysler, and Ford Motor Co. (F) – are in need of government assistance after being pushed to the brink of bankruptcy: Foreign competition and a slumping economy have combined to push vehicle sales down to their lowest level in 15 years.

GM has been in talks with Cerberus Capital Management LP about buying Chrysler since September. But potential investors in the deal have been hesitant to back the merger without the safety net of federal assistance, or a government guarantee of some sort. GM’s inability to secure financing at a time when credit is hard to come by and auto sales are in decline has left the No. 1 U.S. automaker with few options other than appealing to the government.

GM spokesman Greg Martin said in late October that the company had asked the Treasury Department to broaden recently passed legislation, intended to bolster banks and financial institutions, to include auto companies.

In fact, General Motors Chairman G. Richard “Rick” Wagoner Jr. reportedly went right to Treasury Secretary Henry M. “Hank” Paulson Jr. and lobbied for the government to provide emergency financial aid to the Big Three via the $700 billion bailout plan.

Badly in Need of a Bailout

GM desperately needs some sort of outside funding, as the company lost $18.8 billion in the first six months of the year, and is hemorrhaging about $1 billion in cash each month. That has raised the prospect of bankruptcy for the company. GM had $21 billion as of June, but a merger with Chrysler would give the company access to another $12 billion in cash.

Cerberus bought Chrysler from former parent Daimler AG (DAI) last year for an estimated $7.4 billion. But the new owner hasn’t proven anymore adept at arresting Chrysler’s financial and market-share declines. Chrysler, perennially the smallest of the Big Three, has seen its sales fall by 25% — almost double the 12.8% overall decline in U.S. auto sales. Chrysler has been hurt because its fleet of pickup trucks, minivans, sport utility vehicles and high-performance cars include a number of gas guzzlers – popular for their performance when fuel prices are low, but an albatross to market when oil prices were at record highs.

Cerberus had buyout discussions with the Japanese automaker Nissan Motor Co. Ltd. (ADR: NSANY) – and Nissan’s French partner, Renault SA – about recruiting Chrysler into its international auto alliance. But Chrysler has apparently decided to focus exclusively on the potential for a deal with General Motors.

Just how deep the Big Three’s problems actually are will become very clear this week: Sales figures for October will be released this week as part of the third-quarter earnings reports that Ford and GM are scheduled to release.

Industry sales fell 26.6%, but many analysts believe that October could be even worse. Edmunds.com, a well-known auto-industry researcher, is predicting a sales decline of roughly 30%, The Times reported.

Should any of Detroit’s Big Three go bankrupt the consequences for the U.S. economy would be both deep and long lasting. Together, the companies employ more than 200,000 Americans, and support millions more U.S. workers indirectly through suppliers and dealerships. And that doesn’t count the estimated 1 million Americans – including many retired autoworkers – who rely upon the U.S. auto companies for pension and healthcare benefits. Many of those retirees already saw their benefits suffer severe cutbacks as the carmakers struggled to find cost-savings. Any new cutbacks would undoubtedly affect them, too.

The unemployment rate hit 6.1% in September and continues to rise. Some analysts anticipate the jobless rate could climb as high as 8.5% to 10% next year. With a jobless rate that reached 8.7% in September, the state of Michigan has the highest unemployment rate in the country.

Alternative Energy is No Longer an Alternative

If bailout money isn’t an option, the first step for automakers is to get the Energy Department to expedite the release of the $25 billion in low-interest loans for GM, Chrysler and the Ford Motor Co.

The loan program is viewed as key to the U.S. auto industry’s future – allowing the three U.S. carmakers to use government money to develop fleets of new, more-fuel-efficient cars and trucks, new hybrid technologies, and new powerplants to run these new vehicles. By doing that, the automakers could then take the money from the corporate coffers that would otherwise have been used for this hybrid research and development and redirect it for use modernizing plants and developing new, more-competitive production techniques.

“The auto companies are clearly running out of cash, and badly in need of more liquidity,” David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., told The Times. “Releasing the $25 billion in loans is a necessary first step.”

Getting Political

Like the U.S. defense industry, the U.S. auto industry has always enjoyed strong political support. And the current period is no exception. Elected officials in states with a heavy automotive employment base are rallying around the Big Three. Just last week, the governors of Michigan, Ohio, New York, Kentucky, Delaware and South Dakota wrote a letter to Treasury Secretary Paulson and U.S. Federal Reserve Chairman Ben S. Bernanke, urging “immediate action” to assist the foundering industry.

“While all sectors of the economy are experiencing difficult times, the automotive industry is particularly challenged,” the letter said. “As a result, the financial well-being of other major industries and millions of American citizens are at risk.”

But with the presidential election set for today (Tuesday), it’s unclear if some of the Bush Administration’s reluctance to add the auto industry to the bailout plan is part of a concern about setting a precedent that could open the door to other industries – further boosting the rescue plan’s ultimate cost – or if the administration is seeking to avoid making any decisions that could subsequently conflict with the goals of the incoming president. For instance, the Democratic nominee, U.S. Sen. Barack Obama, D-Ill., has said in recent days that he supports increasing aid to the troubled auto companies, while Republican hopeful John McCain, R-Ariz., has not said whether he would support auto-sector aid beyond the $25 billion, The Times reported.
And, as Money Morning has reported, President George Bush realizes that some decisions about how the bailout will be administered will have to be left to the next president.

Source: Government Won’t Extend $700 Billion Bailout Plan to U.S. “Big Three”

This from Taipan Publishing:

In my last post, I noted that Krakow was “under construction.” Well, I’d like to extend that to more than just the city. There was barely a road I travelled on that wasn’t coned off and rerouted for some kind of improvement. And one of the reasons Poland is spending so much time updating its infrastructure and roads is to become more attractive to foreign investors.

On one stretch of highway, I saw two major manufacturing plants: BASF (BAS:Frankfurt) and Daewoo (004550:Korea).

Interestingly, the Slovak roads are in much better condition. Investment is still going strong, though, and one major private investor is expanding a huge resort here in the High Tatras, in the Pieniny National Park.

Now, that brings up an interesting point to growing so quickly…

And sometimes, fast growth comes at the cost of quality. Take the Czorsztyn-Niedzica-Sromowce Complex for example. This is the dam provides only half the electricity it could have had it been built right. It was finished in 1994 and has a capacity of 160 million kWh of generation a year. That’s less than what Rhode Island uses in a month…

But Slovakia is certainly breaking away from the past, and it’s financial markets are trying to do the same. The SAX Index on the Bratislava Stock Exchange (BSSE) has climbed 3.54% in August, year over year.

That said, investors considering the Slovak exchange need to be extra dilligent. The BSSE has three different markets: the main listed market, the parallel listed market, and the regulated free market. It gets a bit confusing, and to top it off, most investors aren’t looking at companies… They’re looking at debt.

Also, as the first half of the year has been extremely scary for the rest of the world, the same goes for Slovakia, too.

If you’re interested in looking further at how the market has performed, check out the Semi-Annual Fackbook 2008. Lots of great information there. I’ll be digging through it for the next few days to see if there are any gems worth taking a closer look.

As of now, a better bet might be to look at the international companies investing in the area. Of course, technology and electronics companies are flocking to this region, like Canon (NYSE:CAJ), Ericsson (Nasdaq:ERIC), and Motorola (NYSE:MOT), and automanufacturing is also a big sector. You’ll recognize names like Nissan (Nasdaq:NSANY), Renault (Paris:RNO), Volvo (OTC:VOLVY).

With the euro coming in January, 2009, this place is on the tip of a lot of people’s tongues, and investors already have their ears to the door.

Source: International Investing: Crossing Borders

This from Investor’s Daily Edge:

I’ve heard it a dozen times. The economic slowdown will end when the housing sector recovers.

The idea is that it was the housing crisis which kick-started the economy’s decline, and it’ll be housing which brings it back to life. A recovery in housing will give people confidence in the economy. And, just as importantly, it’ll enable people to take out equity loans again. That will give a big boost to spending.

But I see it the other way around. I believe that the housing sector crisis will end when the economy recovers. In other words, I see the revival of housing as a lagging indicator.

Before people start buying houses in increasing numbers, the job and household income numbers need to improve.

The retail numbers will also have to pick up. People who are reluctant to buy new clothes will also be reluctant to buy new houses.

People who can’t afford new cars won’t be buying houses. That’s why I’m keeping a close eye on auto sales. When auto sales pick up, it’ll be a bullish sign for the housing sector and the economy as a whole.

The auto sales numbers for August are in. And they’re not pretty. They’re down for the tenth straight month – dropping 15 percent. Truck sales (this is no surprise) fell 22 percent.

Among the six biggest automakers, only Nissan (NASDAQ:NSANY) increased sales – by an impressive 14 percent. But that was more than offset by Volvo’s downshifting sales (49 percent drop), Chrysler (34 percent), Ford (NYSE:F)(26 percent), General Motors (NYSE:GM) (20 percent), Toyota (NYSE:TM) (nine percent), and Honda (NYSE:HMC) (seven percent).

Daimler came closest to Nissan’s sales performance and it was still in negative territory, but by less than one percent.

Auto sales are headed for their worst year since the early 1990’s. And as long as they continue to head down, so will the economy.

Source: Auto Sales Still Falling

• The U.S. Federal Reserve released its Beige Book report yesterday (Wednesday), which looks at the economic conditions in the 12 Fed regions. “The pace of economic activity has been slow in most districts,” the report said, Bloomberg News reported. “Wage pressures were characterized as moderate by most districts amid a general pullback in hiring.”

• August was another weak month for auto sales as most major carmakers reported declines. Ford Motor Co. (F) reported 26.6% decline, while General Motors Corp. (GM) sales fell 20.4%. Toyota Motor Corp. (ADR: TM) fared better with a 9.4% decline, but Japanese rival Nissan Motor Co. Ltd. (ADR: NSANY) had a surprising 13.6% increase, Reuters reported.

• GMAC Financial Services (GMA) announced yesterday that it would close all 200 GMAC Mortgage retail offices and reduce and its Residential Capital LLC unit in an effort to cut costs and streamline operations, The Wall Street Journal reported. Approximately 5,000 employees, 60% of Residential Capital staff, will be let go.

• U.S. government officials charged two former Credit Suisse Group AG (ADR: CS) brokers with fraud and conspiracy yesterday (Wednesday) concerning sales of subprime-related debt, the International Herald Tribune reported. The two brokers gave clients the impression the debt was secured by federally guaranteed loans. “In September 2007, these former employees resigned after we detected their prohibited activity and promptly suspended them,” the bank said. “Credit Suisse immediately informed our regulators.”

• Orders to U.S. factories rose by a larger-than-expected amount in July, the Commerce Department said yesterday (Wednesday). New orders increased by 1.3%t in July, much stronger than the 0.8% increase economists expected. The July advance follows a 2.1% increase in June and represents the fifth straight rise in orders, The Associated Press reported.

• Staples Inc. (SPLS) the world’s largest office supply company, reported profit of $150.2 million, or 21 cents per share, for the quarter ended Aug. 2. Down from $178.8 million, or 25 cents per share, a year ago. Sales climbed 18% from $4.29 billion to $5.07 billion.

• A division of United Technologies Corp. (UTX) received a $78.1 million contract from the U.S. Navy for parts and materials to build propulsion systems for a variant of the Joint Strike Fighter, The Associated Press reported yesterday (Wednesday). United Technologies’ Pratt & Whitney will also build 10 propulsion systems for the U.S. Air Force, two of the same for the Royal Netherlands Air Force and three for the United Kingdom’s Royal Navy.

• Liberty Media Corp. (LMDIA) will spin off its stake in DirecTV Group Inc. (DTV) and other assets into a publicly traded company called Liberty Entertainment Group SA, according to Reuters. Liberty’s 50% stake in DirecTV will be the dominant asset in Liberty Entertainment, accounting for more than 80% of its value.

Sourcce: Global Investing Roundups Thursday, September 4th, 2008

• Crude oil for September delivery gained $4.58 yesterday (Wednesday) to close at $126.77 a barrel on the New York Mercantile Exchange, MarketWatch reported, after the Energy Information Administration announced crude supplies fell 100,000 barrels to 295.2 million barrels for the week ended July 25.

• Comcast Corp. (CMCSA), the largest U.S. cable television provider, announced yesterday (Wednesday) that net profit in the second quarter rose to $632 million, or 21 cents a share, from $588 million, or 19 cents a share, in the prior year, Reuters reported. Comcast stock gained 89 cents, a 4.64% increase, to close at $20.07 on the news.

• Navigation system maker Garmin Ltd. (GRMN) lowed its full-year outlook to $4.13 per share from an earlier estimate of $4.40 per share in light of the weakening U.S. economic conditions, Forbes reported. Yesterday (Wednesday), the firm missed earnings expectations for the quarter ended June 28, causing shares to plunge over 20%.

• UAL Corp. (UAUA), parent of United Air Lines Inc., filed suit yesterday (Wednesday) against the Air Line Pilots Association union, The Wall Street Journal reported. UAL is seeking an injunction against an unlawful sickout, which caused United to cancel an abnormal number of flights.

• Private employers added 9,000 jobs in July, a private report by ADP Employer Services said yesterday (Wednesday). In June, the private sector slashed 77,000, according to revised data. June was originally reported as 79,000 jobs lost.

• Nisssan Motor Co. Ltd. (ADR: NSANY) said yesterday (Wednesday) that it plans to offer buyouts to about 6,000 workers at its two Tennessee plants and eliminate a night shift at one of them, Reuters reported. Citing lower demand for pickup trucks and sport utility vehicles the company said it would offer technicians and salaried employees a lump sum of $100,000 or $125,000, depending on tenure, as well as medical and car purchase benefits.

• ArcelorMittal (ADR: MT) had a second-quarter surge in earnings, as high steel prices offset soaring mineral costs. Net income rose to $5.84 billion from $2.72 billion a year earlier. Revenue was $37.84 billion, from $27.2 billion a year earlier.

• Nintendo Co. Ltd.’s (OTC ADR: NTDOY) quarterly profit rose 31.5% on the runaway success of its Wii game console. The Wii outsold Sony Corp.’s (SNE) PlayStation 3 and Microsoft Corp.’s (MSFT) Xbox 360, putting Nintendo in the leading position in the three-way game console battle, Reuters reported. April-June net profit rose 33.7% to $1 billion (¥107.27 billion) on sales of $3.9 billion (¥423.38 billion), up 24.4%.

Source: Global Investing Roundups Thursday, July 31st, 2008