Ireland Backs EU’s Lisbon Treaty
October 3rd, 2009Mmm hmm.
Via: BBC:
Irish voters have strongly endorsed the European Union’s Lisbon Treaty – 16 months after their first vote rejecting it plunged EU reforms into deadlock.
About 67% voted “Yes”, official results from the latest referendum showed. Irish Prime Minister Brian Cowen hailed a “clear and resounding” endorsement.
Political leaders across the EU have also welcomed the result.
The president of the European Commission, Jose Manuel Barroso, said it was a great day for Europe.
He urged the leaders of Poland and the Czech Republic – the only other countries yet to ratify Lisbon – to sign the treaty as soon as possible.
Excreted Tamiflu Found in Rivers
October 3rd, 2009Via: Science News:
The premier flu-fighting drug is contaminating rivers downstream of sewage-treatment facilities, researchers in Japan confirm. The source: urinary excretion by people taking oseltamivir phosphate, best known as Tamiflu.
Concerns are now building that birds, which are natural influenza carriers, are being exposed to waterborne residues of Tamiflu’s active form and might develop and spread drug-resistant strains of seasonal and avian flu.
…
Computer modeling has shown that OC should survive sewage treatment, notes Wolf von Tümpling Jr. of the Helmholtz Center for Environmental Research, a federal institute in Magdeburg, Germany. Ghosh’s team is now the first to confirm this, he says. Von Tümpling’s own data show that once exposed to sunlight, OC will break down, albeit slowly. Concentrations would fall at best by half every three weeks, he says.
If correlations predicted by earlier studies are correct, concentrations measured at some river sites in the new Kyoto study seem “high enough to lead to antiviral resistance in waterfowl,” Ghosh says.
And the Kyoto team didn’t test during a pandemic, when Tamiflu prescription rates might be 10 times higher, von Tümpling notes.
InkStop Abruptly Closed All 152 Retail Stores and Laid Off All Workers; No Final Paychecks
October 3rd, 2009Wow.
Via: The Plain Dealer:
InkStop Inc., a specialty retailer of ink, toner, consumer electronics and other supplies for small businesses and home offices, abruptly told its employees that it was shuttering all 152 stores nationwide as of Friday and laying off all workers until further notice.
“The company has elected to temporarily close all stores at the close of business today, Oct. 1, to focus on a restructuring plan in an effort to improve the overall operations of the organization,” the Warrensville Heights company told employees in a letter sent late Thursday.
“Paychecks will not be issued on Friday due to our cash constraints. We are working on a plan to improve our cash flow situation and reopen under better circumstances.”
The letter, signed by the Inkstop board of directors, went on to say that medical coverage and other insurance had been paid only through Aug. 31. “Your patience during this difficult time is appreciated,” it said.
That means not only will employees not be paid for the past two weeks, but they will also be financially responsible for their medical benefits since Sept. 1.
“We all knew the hammer was going to come down. We just didn’t think it would happen in one day,” Linda Mastellone, an assistant store manager at InkStop in Newtown, Pa., said via e-mail. “We all saw that the lack of ink [the main reason for the store’s existence] was a big sign that the company clearly didn’t have the capital to purchase product.
“The company has been doing poorly since I came aboard in August,” she said. “I frankly couldn’t see how they were still in business. We didn’t have much ink/toner, and we couldn’t order stock that we usually kept on the shelves.”
According to its profile page on LinkedIn.com, InkStop operates 152 stores in 14 states, including 14 stores in Northeast Ohio. “We are on track to have over 200 stores opened by the end of 2010,” it said. The site also says InkStop, founded in 2005, has 550 employees.
Phone calls to several retail stores went into voicemail, as did calls to several executives and to the company’s headquarters at 4400 Renaissance Parkway in Warrensville Heights.
Next-door tenant Michael Feuer, chief executive and co-founder of Max-Wellness LLC and MaxVentures LLC, said InkStop’s lights were off and the offices appeared unoccupied.
The Australian Town That Kicked The Bottle
October 2nd, 2009If there’s no fluoride, pesticides, chlorine or _____ (fill in the blank) in the tap water, great.
Via: Independent:
Plastic bottles were ceremoniously removed from shelves in the sleepy Australian town of Bundanoon at the weekend as a ban on commercially-bottled water – believed to be a world first – came into force.
The ban, which is supported by local shopkeepers, means bottled water can no longer be bought in the town in the Southern Highlands, two hours from Sydney. Instead, reusable bottles have gone on sale, which can be refilled for free at new drinking fountains.
…
The ban was triggered by a Sydney drinks company’s plan to build a water extraction plant in the town. Huw Kingston, a cafe owner, said townsfolk were horrified by “the idea of them taking water here, trucking it to Sydney and bringing it back in bottles to be sold in shops at 300 times the tap price”.
Bottled water is widely viewed as an environmental menace, because of the energy consumed in producing and transporting it, and because most bottles end up in landfill sites. A New South Wales government study found the industry was responsible for releasing 60,000 tonnes of greenhouse gases in 2006.
In recent years, dozens of local authorities in Britain and the US have stopped spending public money on bottled water. But Bundanoon, population 2,000, is believed to be the first community to ban it completely.
Shelf space previously reserved for bottled water in the town’s supermarket, off-licence, cafes and newsagent is now occupied by the reusable bottles. Filtered water fountains have been set up in the main street and at the local school; bottles can also be refilled in shops, for a small fee.
Mr Dee said: “We’re saying to people, you can save money and save the environment at the same time. The alternative doesn’t have a sexy brand, doesn’t have pictures of mountain streams on the front of it. It comes out of your tap.”
Only two people voted against the ban. One was concerned it would lead to more sugary drinks being consumed. The other was Geoff Parker, director of the Australasian Bottled Water Institute.
Banks Changed Hands, Records Lost, People Unable to Cash CDs
October 2nd, 2009A couple of cautionary tales for those of you who have CDs with banks that are changing names due to merger/collapse.
Bank May Have Lost Grandma’s Money
Phoenix resident Rosemarie Braunstein said Wells Fargo has refused to cash her certificate of deposit because it has lost her records.
—
Paul and Christine Dickey have a certificate of deposit worth $400,000, but they have not been able to collect the cash.
The Casa Grande couple has spent a year trying figure out which bank owes them the money.
Paul’s father bought the $10,000 CD in 1980 from First National Bank of Arizona branch in Benson, Ariz. Since then, the bank has changed hands three times.
Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt
October 2nd, 2009Via: Bloomberg:
The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.
Units of Frontier Financial Corp.,Towne Bancorp Inc. and Steel Partners Holdings LP are among 26 firms with more than one-fifth of their loans 90 days overdue or not accruing interest as of June 30 — a level of distress almost five times the national average — according to Federal Deposit Insurance Corp. data compiled for Bloomberg News by SNL Financial, a bank research firm. Three reported almost half of their loans weren’t being paid.
While regulators may not force firms on the list to close, requiring them to raise capital and curb loans may impede recovery in Florida, Illinois and seven other states. The banks are among the most vulnerable of a larger group of lenders whose failures the FDIC said could cost $100 billion by 2013.
“There are some zombie banks out there,” said Bert Ely, chief executive officer at Ely & Co., a bank consulting firm in Alexandria, Virginia. “Neither the banking industry nor the economy benefits from keeping weak banks in business.”
Ninety-five banks have failed this year at the fastest pace in almost two decades, depleting the FDIC’s insurance fund. The agency proposed on Sept. 29 that financial firms prepay three years of premiums, which would add $45 billion of reserves. The fund sank to $10.4 billion as of June 30, the lowest since 1993. It will run at a deficit starting this quarter, the agency said.
Non-Current Loans
The cost of this year’s failures to the FDIC equals 25 percent of the banks’ assets, according to agency data. Applying the same ratio to the $14.1 billion of assets held by the 26 lenders on SNL’s list means the FDIC could face additional losses of $3.5 billion.
Non-current loans averaged 4.35 percent of the total at U.S. banks as of June 30, the most in 26 years of FDIC data. Regulators typically take notice at 5 percent, according to Walter Mix, a former commissioner of the California Department of Financial Institutions. Corus Bankshares Inc.’s bank unit in Chicago was shut Sept. 11 after 71 percent of its loans soured.
The last time so many banks had 20 percent of their loans more than 90 days overdue was in 1991, near the end of the savings-and-loan crisis, when there were 60, according to an SNL analysis of FDIC data. That year the number of bank failures was less than half those at the peak of the crisis in 1988; this year closings are almost four times what they were in 2008.
For banks with 20 percent of loans overdue, “either they’ve got a massive amount of capital, or the FDIC just hasn’t gotten around to them,” said Jeff Davis, an analyst with FTN Equity Capital Markets in Nashville. Lack of staff and money are slowing shutdowns, he said.
TD Bank Says U.S. Account Processing Is Delayed
October 2nd, 2009Via: Bloomberg:
Toronto-Dominion Bank, Canada’s second-biggest bank by assets, said technical glitches delayed the processing of bank transactions at some U.S. branches today.
Toronto-Dominion converted some of its branches in the U.S. from Commerce Bancorp Inc. to its TD Bank brand over the weekend, spokesman Nick Petter said. The Toronto-based bank acquired Commerce in March for about $7.1 billion, giving it about as many branches in the U.S. as in Canada.
Keisha Shore of Brooklyn, who works in customer service at a dry cleaner, said her paycheck didn’t go through direct deposit. Her bills were paid through preauthorized payments, leaving her with a negative balance.
“I kept checking the ATM – each time it gives a different, negative number,” said Shore, 29, who went to TD Bank’s Third Avenue and 64th Street branch in New York to close her account. “It’s not acceptable.”
Maurice Tebele, who lives on Manhattan’s Upper East Side, said he noticed about $3,000 in debit charges he hadn’t authorized while checking his online account last night.
“I don’t understand what’s going on there,” said Tebele, 23. “It’s very upsetting.”
“We are working hard to resolve this issue,” Toronto- Dominion’s Petter said in an e-mail. The bank plans to have all transactions processed and account balances updated “later today,” he said.
Toronto-Dominion will reverse any fees, charges or interest incurred because of the disruption, Petter said.
Toronto-Dominion fell C$2.55, or 3.7 percent, to C$67.70 at 4:10 p.m. in trading on the Toronto Stock Exchange.
Is the U.S. Economy Headed for a “Sudden Stop” Event?
October 2nd, 2009Must read.
(Full text below.)
Via: Reuters:
October 2nd, 2009
Why gold if deflation is the threat?
Posted by: Rolfe Winkler
Alice Schroeder wrote a great column for Bloomberg yesterday that I’m just getting to. The best stuff comes at the end, where she describes why some people are buying gold even though inflation doesn’t seem to be a big risk. (Apologies in advance for block-quoting lots of stuff in this post, but I think it’s worth it…)
[Gold bugs] aren’t just betting on inflation, as is the conventional wisdom. Gold has a wicked history of being an unreliable inflation hedge. It has, though, at times been a haven against sudden currency depreciation.
In all the talk of inflation because the Treasury is printing so much money versus deflation because it may not print enough, there is one type of inflation that is rarely discussed. This is the mega-inflation caused by a sudden currency devaluation. Currency is like any financial innovation, an obligation secured by assets. When the obligation is perceived to have increased far beyond the level justifiable by the assets, which in this case make up a country’s economy, a bubble has formed.
Schroeder is describing, in much simpler terms, what economist William Buiter has called a “sudden stop” event. (I’m having trouble logging on to FT to find the right link, but the guys at Baseline Scenario have a good one here.) Let’s take a quick detour to Buiter then, writing early this year:
But as the recession deepens, and as discretionary fiscal measures in the US produce 12% to 14% of GDP general government financial deficits – figures associated historically not even with most emerging markets, but just with the basket cases among them, and with banana republics – I expect that US sovereign bond yields will begin to reflect expected inflation premia (if the markets believe that the Fed will be forced to inflate the sovereign’s way out of an unsustainable debt burden) or default risk premia….
The US is helped by the absence of ‘original sin’ – its ability to borrow abroad in securities denominated in its own currency – and the closely related status of the US dollar as the world’s leading reserve currency. But this elastic cannot be stretched indefinitely….
The only element of a classical emerging market crisis that is missing from the US and UK experiences since August 2007 is the ’sudden stop’ – the cessation of capital inflows to both the private and public sectors. . . . But that should not be taken for granted, even for the US with its extra protection layer from the status of the US dollar as the world’s leading reserve currency. A large fiscal stimulus from a government without fiscal credibility could be the trigger for a ’sudden stop’.
Most economists, using their conventional models, are looking at things like “output gaps” to rationalize additional borrowing to stimulate the economy. So long as people and capital are unemployed, cost-push inflation isn’t seen as a threat so stimulus is believed to be cost-free. The risk, of course, is that we can’t borrow to infinity. At a certain point — tough to say when — we’ll tap out the national credit line. Where economists get in trouble, IMHO, is they envision this nebulous period in the “medium term” when the economy will be growing again and debt can be paid back. As I argued in my column yesterday, this ignores the fact that growth, which is to say growth in spending, is no longer possible without incremental borrowing. We’ve gotten ourselves into a cycle of perpetual borrowing to, in Schroeder’s words, “pump the economy back to a high-water mark that was phony to begin with.”
To Schroeder’s conclusion:
As in any bubble, those who recognize this need to act well in advance. Historically, governments have taken action to prevent currency flight when the owners of a severely overvalued medium of exchange start selling so much that it adds to the pressure on its price. They make private purchases of gold illegal, or tax the exchange of currency.
Right now, the American economy is worth less than the value implied by the market value of its obligations. How much less, no one knows. But gold bugs will tell you, privately, that this is why they are buyers. Might as well stock up, they say, before gold becomes a controlled substance.
The bolded section is why I haven’t touched stocks in two years and don’t plan to for some time: The U.S. economy is underwater. The value of our obligations is greater than the value of our assets, which is to say the equity value of the economy is negative. The best proxy for that is the stock market.
Stocks aren’t going to zero. They have option value. But a 90% fall from the peak is what I see happening eventually. Over what time frame, I haven’t a clue.
But that’s what happened during the Depression. Today we’re far more leveraged…
Back to Bonds; Yields Tank
October 2nd, 2009Via: Los Angeles Times:
Money is pouring into Treasury bonds today, driving yields sharply lower as investors start the fourth quarter with another rush into what they perceive to be safe.
The yield on the 10-year T-note plummeted to 3.20% by about 12:20 p.m. PDT, down from 3.30% on Wednesday and the lowest since May.
The 30-year T-bond yield, charted below, has slumped below 4%, to 3.97% from 4.04% on Wednesday.
Falling market yields mean bond prices are rising.
…
The latest bond-buying binge is making individual investors look like they were ahead of the curve: The public has been voracious for bond mutual funds for the last few months even as many Wall Street bulls insisted that stocks were the smarter investment in a recovering economy.
Today, stocks are selling off amid fresh concerns about the economy’s ability to sustain a recovery, despite the surprising rise in consumer spending in August. The Dow Jones industrial average was down about 150 points, or 1.5%, to 9,564 at about 12:20 p.m. PDT.
For the bond market — or at least, high-quality bonds such as Treasuries — the explosion in demand today suggests an epiphany for many investors who’ve been disbelieving that long-term interest rates could go much lower.
Many bond pros say weakness in key economic data in recent days (including today’s report on U.S. manufacturing activity in September) has raised strong doubts about the recovery.
More investors are sensing that “the feel-good bounce in the economy created by the [government’s] fiscal stimulus is not a permanent factor,” said Tom Tucci, head of Treasury trading at RBC Capital Markets in New York.
Dutch Bank DSB Denies Problems After Head of a Mortgage Foundation Tells Customers to Pull Funds ASAP; Bank’s Site Down, Alledgedly Due to Hackers
October 2nd, 2009Via: Reuters:
Dutch bank DSB dismissed calls from a mortgage foundation on Thursday for customers to withdraw their money and denied there was a run on the bank.
“There are no mass numbers of people taking away their money,” DSB spokesman Klaas Wilting said following remarks by Pieter Lakeman, chairman of the Stichting Hypotheekleed, in a national television interview.
Wilting said the bank was seeing a “bit higher” level of withdrawals than usual, but added it was not uncommon for DSB to have days when withdrawals outnumbered deposits. “We are not worried,” Wilting said.
The bank’s Web site had been down since about 1000 GMT, Wilting said, due to a hacker attack that originated across Europe.
The Dutch central bank, DNB, declined to say whether it was monitoring DSB more closely. “I have seen the remarks from Lakeman, they were not the most sensible,” a DNB spokesman said.
The DNB later issued a statement saying it understood that DSB maintained that its solvency and liquidity were intact.
No-one at market regulator AFM and the finance ministry was immediately available to comment.
At the end of 2007, the last figures the bank has disclosed, DSB had a balance sheet of 7.8 billion euros ($11.4 billion). That would make it roughly one-tenth the size of listed bank SNS Reaal and just over one-hundredth the size of unlisted Rabobank.
DSB first drew scrutiny this summer when AFM fined it for lending people more than they should have been able to borrow.
The loans in question were made while former finance minister Gerrit Zalm was chief financial officer of the bank. He left DSB late last year to become CEO of nationalised bank ABN AMRO at the government’s request.
The government has defended Zalm and the decision to name him chief executive of the bank.
After a critical newspaper story on his DSB tenure, Zalm said last month on ABN’s internal website the article was “biased and full of insinuations”.
