Karachi shares fall after killing

The Karachi Stock Exchange's benchmark 100 share index opened 4.7% lower on Monday in the first trading since the assassination of Benazir Bhutto.

The exchange had been closed for a three day period of national mourning that began on Thursday.
By mid-morning the KSE100 index had fallen 677.7 points to 14,094.38.
Traders say that the declines might be reversed if a deal can be reached with opposition leaders to allow the 8 January elections to go ahead.
Pakistan's currency has also fallen with the rupee at 61.85 to the US dollar, which is its weakest level since October 2001.
"This is a historic fall and is reflective of the unrest in entire country," said Nabeel Jafar from Zafar Moti Capital Securities.
"When there is killing of political leaders and riots after that, who is going to invest in the market?"
Before Monday's falls the KSE100 had risen about 47% in 2007.The Karachi Stock Exchange had already closed on Thursday before Ms Bhutto was assassinated but stock markets elsewhere in the world were hit with New York's Dow Jones average falling 192 points, or 1.4%.
At the same time, the prices of so-called "safe haven" investments such as gold and government bonds rose. The Karachi stock market has a history of recovering after political unrest. When a state of emergency was declared on 3 November, the market fell about 10%, but then regained most of its losses.

Insight: Europe’s banks will herald eurozone crisis

The announcement before Christmas by the world’s central banks of further measures to help restore liquidity to money markets was at first greeted with euphoria.
But, as with the US Federal Reserve’s August 17 discount rate cut, it was not long before the measures were viewed as likely to be inadequate to deal with the size of the problem. The shift by the Fed to providing term liquidity via auctions has taken a leaf out of the European Central Bank’s liquidity management manual. It may help. But with euro-area money markets having remained stressed – even after the extraordinarily big liquidity injections over the year end – it seems that money market liquidity provision alone is unlikely to solve the problem.
Should the financial crisis persist in spite of central banks’ best efforts, the general perception is that the European economy would be less vulnerable than the US economy to its effects. That Europe has not generated on a large scale its own subprime asset class, the proximate cause of the recent difficulties, underpins this analysis. While some European banks might have been contaminated with subprime assets, it is argued, the waste is unlikely to be toxic enough to trigger a full-scale credit crunch. At the ECB’s December press conference Jean-Claude Trichet, its president, suggested that still-strong bank lending might be an indication that “the supply of credit has not been impaired”. The reality is more complicated.
At this stage, the challenge is to gauge the magnitude of the strains in the banking system and the extent to which future lending will be curtailed. The recent strength of bank lending in the euro-area reflects both re-intermediation and the difficulty of raising new finance in capital markets. It is therefore a sign of weakness, not strength, as it places even greater stress on bank balance sheets. A better measure of the credit squeeze is one that combines all capital-raising activities. The rate of increase in capital raised by companies in the previous 12 months in the form of bank loans, net debt and net equity issuance, for example, posted a drop of €57bn ($83bn) between July and September, the biggest two-month decline since mid-2001, and was followed by only a modest recovery in October.
There are numerous other signs of an emerging credit squeeze. The rates that banks charge on loans have been creeping up despite the ECB having kept its policy rate on hold. Since July, the interest rate charged on loans to companies has increased by 25 basis points. The rate charged on mortgages has gone up by 17bp. Combining these metrics into an overall index, we find that bank credit conditions have tightened sharply and now stand at levels last seen in mid-2004. One hopes the new balance sheet and liquidity constraints facing European banks will not be too great to bear. In making our euro-area forecasts, we have calibrated the short-term effect to be equivalent to about a 75bp rise in interest rates that will be gradually eliminated by the end of 2009. That is more than most central banks and international institutions are assuming, and consistent with much slower bank lending next year. But in assessing the vulnerability of an economy to tighter credit it is necessary to gauge not only the extent to which banks will restrict their lending but also the importance of bank lending for financing economic growth.

According to the International Monetary Fund, about 60 per cent of private-sector liabilities in the euro-area and the UK consists of bank loans, while only 40 per cent is debt and equity. The 60 per cent figure for bank loans is higher than that of Japan’s economy, where a broken banking system has contributed to more than a decade of poor economic performance. By contrast, bank loans account for only 20 per cent of private-sector liabilities in the US, with the rest accounted for by debt and equity.
This matters a lot. It means that, were banking systems to retrench significantly, the consequences for the economy are likely to be far greater in Europe than in the US. By symmetrical reasoning, however, the European economy is less vulnerable to a capital markets freeze than is the US. The lesson: in the US, watch the markets; in Europe, watch the banks.

HONG KONG: Hong Kong stocks fell on Friday, tracking Wall Street and regional weakness, with China Mobile <0941.hk> leading the losses on speculation that an industry revamp may start next year and see it lose market share.

But recently listed shares bucked the broad market trend, with Vietnam Manufacturing & Export Processing Ltd soaring as much as 19 percent and China National Materials Company Ltd (Sinoma) jumping 10 percent. The benchmark Hang Seng Index fell 1.06 percent to 27,546.82 on mainboard turnover of HK$42.2 billion (US$5.4 billion). The China Enterprises Index of Hong Kong-listed mainland companies , or H shares, fell 1.59 percent to 16,087.34. "It's just an instant feedback of negative global sentiment due to the Pakistan unrest," said Peter Lai, director of DBS Vickers, refering to the assassination of Pakistan's opposition leader Benazir Bhutto, which some fear will spur instability.

"But as we can see, Dow Jones futures are now up. I believe the market may go back again," he said, adding that turnover would be low as most investors were still in holiday mood. Japanese stocks , which closed for the year on Friday, ended down 11 percent for 2007 in their first annual decline in five years, which also weighed on regional markets. Some telecom stocks gained in Hong Kong after Chinese state media quoted the country's top telecoms regulator as saying Beijing would push a long-awaited reshuffle of the telecoms industry in 2008, creating players that operate both wireless and fixed-line services to address unbalanced competition. China Telecom <0728.hk>, defying the market's slide, climbed 0.6 percent, on speculation that the fixed-line operator will get a mobile licence in the industry revamp, while telecoms equipment maker ZTE climbed 0.5 percent. But China Mobile slid 1.3 percent as investors feared it would lose market share.

Air China soared 5 percent as Hong Kong and mainland China agreed to relax restrictions on aviation services, letting carriers such as Air China expand flights and cargo services. Bank of East Asia jumped as much as 4.5 percent after Spain's largest savings bank La Caixa said it had bought about 4 percent of Hong Kong-based bank in a deal worth around 265 million euros, becoming the biggest public shareholder.

ICBC (Asia) gained 2.9 percent after Industrial and Commercial Bank of China (ICBC) said it had agreed to buy HK$1.92 billion worth of shares and warrants of ICBC (Asia) from the Spanish Fortis Bank. China's second-largest listed electricity producer Datang Power rose 1.9 percent after the company said it was planning a reorganisation and would discuss the issue with regulators within eight trading days.

BROKER CALL Merrill retains cautious view on China banks for next 3-6 months

HONG KONG (XFN-ASIA) - Merrill Lynch (NYSE:MER) (OOTC:MERIZ) reiterated its 'cautious view' on the China banking sector for the next 3-6 months after the country reportedly set loan growth quotas for the big four state-owned banks for 2008.

However, it said it continues to believe in the fundamental story of the sector.Merrill expects Industrial and Commercial Bank of China (OOTC:IDCBF) (ICBC) to outperform in the near term, while reckoning that Bank of China (BOC) has the most re-rating potential over a 12-month period.China's central bank has set a rough ceiling for new yuan loans next year of around 3.6 trln yuan, about the same level as for 2007, mainland media reported earlier.ICBC, China Construction Bank (OOTC:CICHF) (CCB) and Agricultural Bank of China were required to keep net new loans within their 2007 targets at 365 bln, 350 bln and 310 bln yuan, respectively, while quota for BOC was trimmed from 280 bln to 260 bln, reports said.If the figures are accurate, they would translate into loan growth of 11.1 pct, 13.2 pct and 17.3 pct for ICBC, CCB and BOC, respectively, in 2007 and 10.0 pct, 11.7 pct and 13.7 pct in 2008, Merrill said.

The quotas were for yuan loans only. As the sector's foreign currency loans were growing at over 30 pct in 2007, the banks' reported aggregate loan growth should be slightly higher, it noted.

The seemingly lower new loan quota for BOC was mainly due to the bank's accelerated loan growth in 2007 -- nearly 17.3 pct against 11.1 pct in the case of ICBC and 13.2 pct at CCB.Merrill has a target price of 9.45 hkd for CCB's Hong Kong-listed H-shares. It targets 6.10 hkd for BOC's H-shares and 8.00 hkd for ICBC shares.At 2.44 pm, CCB shares were down 0.19 hkd or 2.82 pct at 6.54, while BOC was down 0.06 hkd or 1.56 pct at 3.79 and ICBC was down 0.12 hkd or 1.94 pct at 5.57.

Buffett buys 60% stake in Pritzker firm

Warren Buffett's Berkshire Hathaway is paying $4.5 billion for a 60 percent stake in Marmon Holdings Inc., a privately-held conglomerate controlled by the Pritzker family in Chicago.

The acquisition was announced Tuesday by Buffett, the legendary investor who serves as chairman and chief executive of Berkshire Hathaway, and Tom Pritzker, chairman of Marmon. The deal is expected to close within the next three months.
Berkshire Hathaway (BRKA, Fortune 500) will take control of 60% of Marmon and acquire the rest of the company within six years, according to a joint statement.
Buffett noted "Marmon's impressive record of growth and profitability over the years."
Marmon comprises more than 125 manufacturing and service businesses in the energy, construction, transportation, engineering and other sectors in North America, the United Kingdom, Europe, China and elsewhere, according to the statement.
The companies said that Marmon's annual revenues total approximately $7 billion and that operating income more than tripled between 2002 and 2007.
The Pritzker family, whose businesses include the Hyatt hotel chain, has controlled Marmon since 1953.
Buffett has built Berkshire Hathaway into a massive holding company with interests ranging from underwear to private jets. Its 2006 revenues were $98 billion. Berkshire Hathaway's shares have outperformed the S&P 500 by more than two-fold since 1965.

BA accused over air cargo cartel

British Airways has been accused of colluding in setting prices of fuel surcharges and other levies in the provision of air freight services.

BA confirmed it received a letter of complaint from European Union regulators, alleging that it was part of a suspected air freight cartel.
The complaints were also sent to Germany's Lufthansa, Air France-KLM and Scandinavia's SAS.
The airlines have the right to respond, but if found guilty, they face fines.
Uncompetitive behaviour?
The European Commission that it had sent official letters, known as statements of objection, to a number of air freight firms, concerning "violation of EU rules on restrictive business practices".
Officials did not name the specific airlines involved, but BA, Air France-KLM and SAS confirmed they had each received the European Commission letter.
It follows a lengthy investigation on both sides of the Atlantic dating back to early 2006 to discover whether airlines broke competition law by operating a cartel in the air cargo sector.
But EU officials stressed that the statement of objection did not reflect the final outcome of the investigation.
The airlines have all committed to co-operate fully with the authorities.

Japan stocks rise on thin trading

Japanese stocks jumped to close at a two-week high with the benchmark Nikkei index ending trading up 1.9% to finish Tuesday's business at 15,552.59.

Trading was light after Monday's holiday in Japan and with most overseas investors closed for Christmas.Japanese shipping companies, financial groups and industrial companies such as Hitachi led the gains.
The Nikkei-225 stock index has so far dropped nearly 10% this year after gaining 6.9% in 2006.
A slightly weakening US dollar and a rally on Wall Street contributed to Tuesday's gains, said analysts.

US asset rescue scheme abandoned

A plan by US banks to help calm down rattled credit markets has been dropped weeks before it was due to launch.

Citigroup, Bank of America and JPMorgan Chase said they had shelved the $75bn (£37bn) fund designed to buy debt of weakening value to avoid panic selling.The move comes after some banks, including Citigroup, launched their own rescues of investments soured by the US sub-prime mortgage fiasco.
The U-turn did not surprise many analysts sceptical of the scheme. The banks said that they had determined how the plan, called a Master Liquidity Enhancement Conduit (M-LEC), would work and would make it available to financiers if necessary.
But they said it was no longer necessary with feedback suggesting that the threat of a mass dumping of these packages of debt, called structured investment vehicles (SIVs), had become less pronounced over recent weeks.
"Based upon the feedback that the bank consortium and the advisor have received from domestic and global liquidity sources and from prospective SIV participants, they have determined the vehicle is not needed at this time," they said.
Some relief
SIVs sell short-term debt and use the money to buy higher yielding assets, including US mortgage-backed debt. The value of these securities has tumbled after higher interest rates in the US pushed up the number of mortgage defaults and repossessions.

As the credit crisis deepened in the summer, SIVs have been struggling to refinance their debt without being forced to sell assets at knock-down prices, a situation that prompted talk of the rescue fund in mid-October.
But the need for a bail-out of these complex investments has diminished with Citigroup, HSBC and Societe General recently taking SIV assets onto their balance sheet, effectively propping them up.
These independent moves were largely seen as a more effective balm to soothe investors than the scheme that Citigroup, Bank of America and JPMorgan Chase had proposed, but the fact that it was not seen as necessary gave credit markets a lift.

UK 'faces more financial shocks'

The governor of the Bank of England, Mervyn King, has warned that the US sub-prime mortgages crisis poses more risks for the UK's financial system.

He also revealed that it was Chancellor Alistair Darling who decided not to support a Northern Rock takeover bid.

Mr King told the BBC he had advised the chancellor that governments should not provide financial help to one company so that it could take over another. Lloyds TSB had asked for a £30bn Bank of England loan to finance the deal.
Speaking to BBC Radio's File on 4, Mr King said the bank had wanted a two-year loan at competitive rates."I said to the chancellor: 'This is not something which a central bank can do.' "'They don't normally finance takeovers by one company for another, let alone to the tune of £30bn, which is rather a large amount of money'."
When the Lloyds TSB bid collapsed in September, Northern Rock had to go to the Bank of England and ask for emergency funding. Northern Rock's need for emergency cash sparked the first run on a UK bank for almost 150 years.

Crisis not over
Mr King said it was likely to be several months before banks returned to normal after the crisis, because it would take that long for banks to disclose all the losses from financial instruments linked to US sub-prime mortgages. "I think most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, and have taken measures to finance their obligations that result from that, but we're going in the right direction," he said.
"There is always, in a period like this, the possibility that a shock from outside the UK, one from the world economy, might create further fragilities, but to some extent there are always risks, there are always fragilities.

Unpaid Credit Cards Bedevil Americans

SAN FRANCISCO (AP) - Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.
Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.
"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."
The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.
At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.
Serious delinquencies also are up sharply: Some of the nation's biggest lenders -- including Advanta, GE Money Bank and HSBC -- reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.
The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors -- similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.
Until recently, credit card default rates had been running close to record lows, providing one of the few profit growth areas for the nation's banks, which continue to flood Americans' mailboxes with billions of letters monthly offering easy sign-ups for new plastic.
Even after the recent spike in bad loans, the credit card business is still quite lucrative, thanks to interest rates that can run as high as 36 percent, plus late fees and other penalties.
But what is coming into sharper focus from the detailed monthly SEC filings from the trusts is a snapshot of the worrisome state of Americans' ability to juggle growing and expensive credit card debt.
The trend carried into November. As of Friday, all of the trusts that filed reports for the month show increases in both delinquencies and defaults over November 2006, and many show sequential increases from October.
Discover accounts 30 days or more delinquent jumped 25,716 from November 2006 and had increased 6,000 between October and November this year.

Stocks resurface in a choppy session

Stocks inched higher Wednesday afternoon, as looming downgrades for bond insurers highlighted credit concerns and results from the Fed's $20 billion auction made for a volatile session.
The Dow Jones industrial average gained 0.2 percent with 90 minuets left in the session. The broader S&P 500 index gained 0.2 percent. The tech-fueled Nasdaq composite gained 0.4 percent.
In a troubling sign of more credit market turmoil, bond insurer ACA Financial Guaranty Corp. saw its "A" credit rating cut down Wednesday to non-investment grade "CCC" by Standard & Poor's. Bond insurers, which guarantee bonds and other structured investments that have recently plunged in value, have been buffeted by the credit crunch.
Other bond insurers, including Ambac Financial Guaranty Insurance Co., MBIA Insurance Corp. and XL Capital Assurance Inc., were also dragged down by the news. Adding to the volatility, stock index futures and options and individual stock futures and options will all expire simultaneously this Friday.
Peter Cardillo, chief market economist at Avalon Partners, points out that "the markets are very much caught in an options expiration week." "When you have a weak market heading into an options expiration week, you will see selling during that week," he added.
Investors also reacted to the results of the Fed's $20 billion auction launched on Monday. The first of four auctions showed strong demand, as the central bank loaned $20 billion at 4.65 percent. That was slightly below the discount rate of 4.75 percent. But the Fed's action may not be enough to keep spirits bright on Wall Street, according to Harry Clark of Clark Capital Management Group.
"The Santa Claus rally is non-existent," he said. And the absence of the traditional year-end rally means "we could be headed for a recession next year." "We may look back and realize that the market topped out in October," Clark said.
In the latest woes for the banking sector, Morgan Stanley posted a bigger-than-expected quarterly loss Wednesday morning and said it would take an additional $5.7 billion in writedowns on top of the $3.7 billion it had already announced, due to the subprime mortgage mess.
However, investors sent Morgan shares higher, along with other major banks including Lehman Brothers and JP Morgan. Shares of Sallie Mae were down nearly 20 percent as the lender's CEO hinted in a shareholder conference call that a dividend cut may be necessary to soften the blow of rising loan defaults.
Among other movers, homebuilder Hovnanian plunged 14 percent after reporting a quarterly loss late Tuesday that more than quadrupled from a year ago. And in the latest bad news for the housing sector, the level of foreclosures was up 68 percent in November from a year ago, according to tracking service RealtyTrac. On the upside, foreclosures fell 10 percent from the previous month.
In other news, shares of smart phone maker Palm fell more than 7 percent after the company reported a loss and warned that revenue for the quarter would be lower than expected. On the Nasdaq, shares of software maker Oracle Corp fell more than 2 percent ahead of the company's earnings report due out later Wednesday.
Market breadth was mixed. On the New York Stock Exchange, losers topped winners seven to eight on volume of 969 million shares. On the Nasdaq, advancers beat decliners by a narrow margin on volume of 1.41 billion shares.
Treasury prices rose, lowering the yield on the 10-year note to 4.07 percent from 4.14 percent late Tuesday. Treasury prices and yields move in opposite directions. U.S. light crude oil for January delivery rose $1.32 cents to $91.40 on the New York Mercantile Exchange after the government's weekly report showed lower than expected crude supplies.

Bradway Research LLC developed a universal profit score analysis to rank all banks and thrifts in the U.S.

This profit scoring methodology establishes a level playing field for evaluating and ranking all banks and thrifts, regardless of their size. This profit scoring methodology was used to evaluate 149 pure de novo banks and thrifts that were started in 2002 and 2003. Twenty of these 149 institutions ranked in the 1st quartile out of 7,430 banks and thrifts of all sizes. The report includes an analysis of the business strategies and key operating metrics for these high-performing de novo banks and thrifts, based in part on the results of executive interviews with 19 of the 20 institutions.
Key operating characteristics of the 20 high-performing de novo institutions included, but were not limited to, superior net interest margins and low operating ratios. Net interest margins for these 20 de novos are higher due to loan portfolio yields, which were frequently tied to a niche lending strategy. A lack of branches was not a constraint as all 20 of the de novo institutions have fewer than 5 branches. Fiserv led a group of six core banking technology vendors that serve these 20 de novo institutions.
Geographic diversity is well-represented by the de novos founded during these two years. The top 20 de novos were distributed across 14 states. Only Texas (4), Arizona (2), California (2), and Georgia (2) had more than one top-performing de novo. The other 10 states represented with a top 20 de novo institution include: Colorado, Florida, Illinois, Kentucky, Michigan, Missouri, Oregon, Utah, Virginia, and Wyoming. Table A lists these 20 high-performing de novo institutions.

ECB offers banks unlimited funds

The European Central Bank is to offer banks unlimited funds at a below-market rate, in a cash injection to counter the impact of the global credit crunch.

It is one of five central banks that have pledged to inject billions in emergency cash into money markets. The aim is to cut the cost of lending between retail and ommercial banks, which has jumped in the past few weeks.
All banks with enough collateral, and which submit bids of at least 4.21%, will receive funds from the ECB. The interest rate being charged on the loan is lower than the 4.9% market rate for interbank borrowing which has been in place over the past few days.
The idea is to try and bring down interbank rates closer to the ECB's target interest rate of 4%.
The two-week ECB refinancing operation is the first time it has said it would offer banks unlimited funds, above a certain interest rate, since 9 August when the credit crisis started.
Central bank coordination
The main reason banks have been unwilling to lend to each other is a downturn in the US property market. A surge in mortgage defaults and bad debts has forced many banks to cut the value of their mortgage investments, costing them billions of dollars.
As a result, the banks fear that they might need any spare cash they have to cover their losses.
Central banks have also been boosting liquidity into the banking sector to ensure banks keep offering credit to businesses.
On Monday, the US Federal Reserve made $20bn available through auction, though it did not say how many banks took advantage of the extra money. And on Tuesday the Bank of England is set to lend more than another £10bn in funds.
As well as the Bank of England, the Fed, and the European Central Bank, the national banks of Canada and Switzerland are also involved in the funding plan. But some analysts say that until the banks reveal the true scale of their potential losses, the central banks will be unable to do much to ease the credit crunch.

Israel nabs over 24 Hamas members in West Bank

RAMALLAH, Dec. 16 (Xinhua) -- Israeli troops had detained more than 24 Hamas members, including senior officials, in the West Bank town of Nablus, the Islamic movement said Sunday.

"The detentions have basically and clearly focused on Hamas andthe key leaders of the movement," a Hamas statement said. A Hamas lawmaker, Ahmed al-Hajj, and Hamas representative in Nablus, Ahmed Doula, were among the detainees, it said. The statement added that Israeli soldiers had also stormed the house of Aziz al-Dewik, the jailed Speaker of the Palestinian Legislative Council (PLC).

In early November, Israel allowed the deployment of 500 Palestinian security troops loyal to President Mahmoud Abbas of Fatah to boost the security in the volatile town. Yet Israel has reserved the right to take control in the city in the night.

The pro-Abbas security services have also been cracking down on Hamas in the West Bank since June as a response to Hamas' takeover of the Gaza Strip. Meanwhile in Gaza, Hamas said it had thwarted an Israeli attempt to arrest a "filed commander" after Israeli undercover forces infiltrated eastern Gaza City and headed for his house near the border.
Ezz el-Deen al-Qassam Brigades, Hamas' military wing, added that its fighters have exchanged fire with the Israeli forces as soon as they were discovered. The brigades said in a statement that four of its members were slightly wounded when the Israeli air force intervened and fired a missile into the car that the commander tried to use to escape.

Fed Can't Stop the Bleeding in Financials Funds

Anyone who thinks the Federal Reserve has been cutting interest rates to bail out financial services companies hasn't been paying attention to stock prices in that sector recently.

On Tuesday the Fed threw the badly wounded financial industry a Band-Aid by cutting the fed funds target rate by 0.25 percentage points to 4.25%, only to see the financials stocks sell off even further. The carnage was so bad that the following day the Fed announced a coordinated program with other central banks to add liquidity to the banking sector.
These efforts didn't prevent the shares of Citigroup(C:NYSE) from falling 4.4% on Tuesday and another 5.3% on Wednesday. The nation's largest bank, which traded as high as $57 a share less than a year ago, closed on Dec. 13 at $31.01, down 9.72% for the week and off 44.3% for the year to date.
Citi had plenty of company in the loss column. Washington Mutual(WM:NYSE) tumbled 18.51% for the week while National City(NCC:NYSE) swooned 12.07%. The already-battered mortgage industry continued to retreat, with Countrywide Financial(CFC:NYSE) falling 16.69% and MGIC Investment(MTG:NYSE) down 12.23%.
Mortgage industry giants Fannie Mae(FNM:NYSE) and Freddie Mac(FRE:NYSE) both suffered double-digit percentage setbacks.
Fears that the credit crunch could spread to other areas of the money-lending business drove prices lower in the consumer finance sector. SLM(SLM:NYSE), also known as Sallie Mae, took a 25.05% hammering, while First Marblehead (FMD:NYSE) sank 20.32% and IndyMac(IMB:NYSE) surrendered 18.01%.
The Dow Jones financials index retreated 5.05% for the period, led southward by an 11.20% setback in the mortgage finance subindex, an 8.77% decline in the consumer finance group, a 6.40% backtracking in the banking gauge and a 7.09% retrogression in full-line insurance.
Of 60 financial services funds -- including open-end mutual funds, closed-end funds and exchange-traded funds but excluding leveraged and inverse funds as well as redundant classes of multiclass funds -- the average performance for the week ended Dec. 13 was negative 3.82%.
The bottom trio of performers -- one of which suffered a double-digit setback for the week -- all are leveraged funds. Investors who took positions in those funds in hopes of achieving outsized gains are now learning that multiplicative nature of geared investments can also produce extra painful losses.
ProShares Ultra Financials(UYG:NYSE), an exchange-traded fund that seeks to reproduce twice the daily performance of the Dow Jones Financials Index, slid 11.19%. ProFunds Bank Ultra Sector (BKPIX), which tracks 150% of the Dow Jones U.S. Bank Index, lost 9.61%, and ProFunds Financial Ultra Sector (FNPIX), which tracks 150% of the Dow Jones U.S. Financials Index, lost 7.69%.

Industrial output up 0.3% in November

WASHINGTON (MarketWatch) -- Output at the nation's factories, mines and utilities rebounded slightly in November, after a soft patch in October, the Federal Reserve reported Friday.

U.S. industrial production rose 0.3% last month, after production dropped 0.7% in October.
Capacity utilization rose to 81.5% in October from a revised 81.4% in the previous month.
The gain in production was slightly above estimates. Economists had been looking for November's production to rise 0.1%. Economists said the report didn't change the big picture that manufacturing is struggling to continue to expand outside of the export sector.
The data doesn't "change the big picture of slower Q4 GDP," said Ian Shepherdson, chief economist at High Frequency Economics. Manufacturing output rose 0.4% in November. Output of automotive products increased 1.9%. Auto production had fallen for three straight months.
Excluding motor vehicles, manufacturing output rose 0.7% in the month
In the past year, U.S. manufacturing output is up 2.2%. Capacity utilization in manufacturing rose to 79.9% from 79.7%. Output of utilities sank 1.3% in November, because of a decline in electric utilities.
October's mining output rose 1.1%. Output of high-technology goods jumped 2.3% in November after rising 1.1% in the previous month. Semiconductor production rose 2.1%, while computer equipment output rose 1.7%. High-tech output is up 16.9% in the past year.
Production of consumer goods fell 0.2%, as consumer durable goods increased 0.9%, primarily reflecting the gain in auto production. Production of business equipment increased 0.9% in November. Business equipment output is up 4% in the past year.
Production of non-industrial supplies decreased 0.2% in November. Production of materials increased 0.5%. In a separate report, the Labor Department said consumer inflation rose at the highest level in more than two years in November.

Chávez, allies launch Bank of the South Regiona to multilaterals

Hugo Chávez and leaders of six other South American nations launched a regional development bank that they tout as the continent's answer to United States-influenced international lenders.

With as much as US$7 billion in expected start-up capital, backers say the Banco del Sur, or Bank of the South, will offer Latin American countries loans with fewer strings attached than those given by the World Bank, the International Monetary Fund or the Inter-American Development Bank.
The leaders signed the "founding act" Sunday at a ceremony at Argentina's presidential palace hosted by President Nestor Kirchner and his wife, President-elect Cristina Fernandez, who takes office Monday. "Not long ago there was a general chorus singing the praises of neoliberalism" in the region, Chávez said in a speech.
"But we are now hearing the great voice of our nations." Bolivian President Evo Morales, whose country is the continent's poorest, praised the bank as a new tool to fight poverty and ease inequalities, and criticised what he characterised as the heavy-handed practices of international lenders who demand austerity prescriptions as conditions for extending credit.
"Only strong and united can South America occupy its rightful place among nations," Brazilian President Luiz Inacio Lula da Silva said. "This will be the first international bank truly controlled by the nations of our continent."
One of several proposals
The institution is one of several proposals under Chávez's ambitious call to unite Latin American countries in a "confederation of republics". His vision also includes a transcontinental natural gas pipeline and trade alliances. Venezuela, with South America's largest known oil reserves, is expected to be a leading financier along with Brazil.
But critics note much remains to be determined about how the bank will operate and say it might turn out to be a largely symbolic project used by Chávez to spread his oil-financed influence.
"Chávez has very large resources at his disposal and will continue to promote his vision for the hemisphere," said Peter DeShazo of the Washington-based Center for Strategic and International Studies.
But he said it remains to be seen "whether it's going to be a politically oriented gesture or if it's going to be a real regional development bank." Others call it a bold stroke for Latin America's financial independence.
"What you had in the past decade was the collapse of a very powerful creditors' cartel headed by the IMF," said Mark Weisbrot of the Washington-based Center for Economic and Policy Research. "This is the first step in creating a Finance ministers of Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela will sit on the bank's board. Officials say it will dispense loans for projects from road-building to anti-poverty programmes and regional integration plans.

US central bank set to cut rates

The US central bank is expected to cut interest rates to 4.25% from 4.5% when Federal Reserve officials meet later.

Analysts predict the Fed will cut rates for the third time in 2007 to boost economic growth and ease the impact of the housing crisis and credit crunch.
But a half a percentage point cut is less likely, analysts say, given that more jobs were created in November than had been expected.
The meeting of the Fed will be its final one of the year.
The bank is expected to make its announcement on interest rates at 1915 GMT.
Third time?
The Federal Reserve has cut rates twice already this year. On 18 September, the central bank cut interest rates from 5.25% to 4.75%.
The first cut in four years, it was aimed at preventing a downturn in the housing market and limiting the impact of the credit crunch.
It lowered rates again on 1 November, reducing them to 4.5%. This loosening of monetary policy has been replicated around the world. In the past week, the Bank of England cut rates from 5.75% to 5.5%, though the European Central Bank decided to keep rates on hold at 4%.

Bank of America to Liquidate $12 Billion Cash Fund

Dec. 11 (Bloomberg) -- Bank of America Corp. will liquidate a $12 billion cash fund for wealthy clients and institutions, the largest investment of its type to close because of losses tied to the collapse of the subprime-mortgage market.

The fund, Columbia Strategic Cash Portfolio, was sold as an alternative to money-market funds, offering a higher yield by taking more risk. It was the biggest so-called enhanced cash fund, with $33 billion in assets two weeks ago before an investor pulled more than $20 billion, said Peter Crane, founder of Crane Data LLC, the Westborough, Massachusetts-based publisher of the Money Fund Intelligence.
``This could be the death of enhanced cash funds,'' Crane said. Such funds hold about $850 billion in assets.
Some investors in Charlotte, North Carolina-based Bank of America will get their money back at net asset value, which fluctuates and currently is 99.4 cents on the dollar. Others may get control of specific assets, Robert Stickler, a spokesman for the second-largest U.S. bank, said today in an interview.
Some cash funds hold commercial paper or medium-term notes issued by structured investment vehicles, or SIVs, that have fallen in value as delinquencies on home loans rose to the highest in 20 years in the third quarter, according to data compiled by the Mortgage Bankers Association in Washington. SIVs use proceeds from the short-term debt to buy longer-term securities backed by assets including subprime mortgages and credit-card receivables.
Not Money Funds
A General Electric Co. enhanced cash fund last month returned money to investors at 96 cents on the dollar after losing money on mortgage-backed securities. Federated Investors Inc., the third-largest manager of money-market accounts in the U.S., bailed out investors in its Enhanced Reserve cash fund as credit markets seized up.
Towns and school districts in Florida last month pulled almost half of $27 billion in assets from a state government investment pool that bought SIV debt and other subprime-linked assets. State managers froze the fund until hiring BlackRock Inc. to salvage the portfolio. It reopened last week.
Unlike money-market funds, which are considered the safest investments besides bank accounts and government debt, cash funds aren't required to maintain a $1 net asset value. To generate higher yields, enhanced funds buy riskier assets that money funds aren't permitted to hold.
Assets of U.S. money-market mutual funds rose to a record $3.083 trillion during the seven days ended Dec. 4 as investors sought a haven from credit-market losses, according to data compiled by the Money Fund Report in Westborough. Enhanced cash funds hold about $850 billion in assets.
Columbia Management, Bank of America's Boston-based investment unit, manages $566 billion in assets. Last month, the bank said it may provide as much as $600 million to prop up Columbia funds that bought debt from SIVs and other assets tainted by mortgages.
``The liquidity in the fund was eroding,'' Stickler said. He declined to say who would be eligible to be repaid in fund assets rather than cash.
``They can give them to us, and we will manage them in a separate account at no fee,'' Stickler said. The fund is closed to new investments. Stickler also declined to be more specific about the investments the fund held. ``It has some investments in it that have either lost value or are illiquid,'' he said.

I don't have low self-worth: Sonam

Sonam Kapoor is basking in glory of her Saawariya performance. The offers like Rakeysh Mehra's film Delhi 6 are pouring in everyday for the doe-eyed beauty.

Talking about her new found fame and life after that she says,"I'm second-time lucky. If I had to choose one filmmaker after Sanjay Sir (Bhansali) I'd have chosen Rakesh Mehra. I haven't seen his Aks. But I fell in love with Rang De Basanti. Loved every performance in it.I love his courage, integrity and idealism. I went beyond conventional definitions of the heroine in Saawariya. I hope to do the same in Delhi 6. It's a great follow-up.I couldn't have chosen a better second film. The minute I met Rakeysh Mehra I was completely floored. We connected very well. I sat with him for five hours."While her performance in Saawariya has been lauded some Mumbai critics have slammed the film. Some people even say she got a raw deal in the plot."Three of them. I'll remember their names forever, she says with a laughter and adds, "I don't think I got a raw deal. In the second-half all the meaty dialogues are mine.When Sanjay Sir offered me the role he said it was complex and not author-backed. But he had faith that I could carry off."What about a report that some of her crucial scenes have been cut in Saawariya?"What utter nonsense," she reorts, "No crucial scene of mine has been cut. Just the usual editing that happens in every film. I don't know where this comes from.People are just creating friction through fiction. If this kind of loose talk gives some people a high, so be it. It doesn't effect my relationship with Sanjay Sir."

Ask her if her low self-worth come from her weight problem, Sonam says," Oh, but I was over-weight only for two years, not as a child.In school I was cool. I was never a limelight moth. I did like dancing, though. But I never thought of myself as a Madhubala, Madhuri or Sridevi.It was Sanjay Sir who made me feel beautiful from inside. I'm extremely grateful to God to get me such a complex role. To be a Sanjay Leela Bhansali heroine after Manisha Koirala, Madhuri, Aishwarya Rai and Rani Mukherjee…what more could I ask for?"So is she flooded with offers after Saaariya?"Yes, They're all coming to my father. He's so proud of me. He keeps saying he never knew I could be such a capable actor and handle the media with dignity and grace. He isn't too demonstrative How can I think of anything else right now? I need to focus on my second film. I'm going into a different mood and style here," exults Sonam.

Keira Knightley`s Good Sex scene in Atonement

British actress Keira Knightley has given the sex scene in her latest flick Atonement a first grade rating.

The 22-year-old star steamed up the scene with co-star James McAvoy in the film."It was the sex scene, which I have to say I think is a really good sex scene," New York Daily News quoted her, as saying."But it was such a specific thing and it had to be so erotic that we did just say to Joe, 'Come on, talk us through it,'" she said.Earlier, Knightley's partner in the film McAvoy had said that he hated the sex scenes between himself and Keira Knightley in the film- because he found them "sweaty and uncomfortable."

The 28-year-old actor, best known for his role in British television show Shameless, admitted that he dreaded shooting for the sex scenes with Knightley."Sex scenes are always a nightmare. It's never easy and it's always a little bit sweaty and uncomfortable."

"When they call action, if you feel the lady's breast, it's your decision to feel the lady's breast. It's like, this is wrong. You have no parameters," he added.Keira, according to the actor, was also just as embarrassed, but the pair apologized to each other afterwards."We carried on and about 10 seconds later we just said very sheepishly, 'Sorry about that,'" he said.Atonement was released in the United Kingdom and Ireland on September 7, 2007 and in North America on 7 December 2007.

Meet the ideal man in Esha's life

She's papa's pet. "But not as much as my younger sister Ahana," Esha Deol celebrating her legendary dad Dharmendra's 72nd birthday, said on Saturday.

"No one in our entire family resembles Dad as much as Ahana. I think he sees a lot of himself in her face, her nose, her eyes, etc." Ahana a painter by choice, made a beautiful painting for her father's birthday.Esha had something unique for her dad.

"I've been shopping for him all around the world for many months now, collecting the clothes that suit him and he likes to wear. In fact in the last six months when he has come into the limelight again, I've become his costume designer. So my gift for him is this suitcase of clothes that I've been collecting. Actually I don't like shopping for myself. I like shopping only for my dad and my little niece."The two babies in the family?

"Nooooo! Dad is not a baby. He's very very tough, though with a very soft heart," says the proud daughter sentimentally as she along with her sister and mom got ready to spend the day with the man they love the most."He's a hard act to follow up. I look for my dad in my male friends… and find them quite inadequate. Dad is my teddybear. I hug him and the world seems a nicer place."

IndexCreditCards.com Names Top New Credit Cards of 2007

IndexCreditCards.com has released our choices for the top ten new credit card introductions of 2007.

In creating the list, we looked at the perceived value of each offer, the breadth of its appeal (how many people might be interested in it), as well as how often site visitors clicked on links to the card offer.
The top ten new card introductions are:
1. Capital One Card Lab – Consumers “build their own” credit cards by mixing and matching features such as interest rates, rewards, and introductory rate offers on new purchases or balance transfers. The result is a credit card that best meets their personal preferences.
2. “Green” Cards – Not one credit card, but three, each riding the trend of environmental awareness. The Bank of America Brighter Planet Visa, the GE Money Earth Rewards Card, and the GreenPay MasterCard were all launched this year, each offering reward points good toward “carbon offsets”—money that funds environmental projects such as tree planting, with the idea of offsetting humans’ production of carbon dioxide to fight global warming.
3. Chase Freedom Card – This card was actually introduced in 2006, but a significant change in its rewards formula makes it a brand new card in 2007. Where cardholders previously had received increased rebates when they made specific purchases of gas, groceries or fast food, in 2007 the rewards formula was changed to automatically give cardholders higher rebates for the three types of purchases they make the most each month, regardless of the category and regardless of how they used their cards in previous months.
4. Discover Motiva Card – To help credit card customers who regularly carry balances, Discover launched this card, which refunds one month’s interest back to the cardholder every time the cardholder makes his or her payment on time for six straight months.
5. PayPal Debit Card – While not a credit card in the strictest sense, this new debit MasterCard allows the millions of PayPal customers to pay for purchases anywhere MasterCard is accepted, with payment for purchases coming out of their PayPal accounts. Previously, PayPal customers had a much more limited number of merchants who would accept payment via the online money transfer service.
6. Gap Visa – Gap introduced its first credit card that could be used at both Gap stores and anywhere else Visa is accepted. (Previously cards could only be used at Gap stores.) The card offers 5% rebates on purchases at Gap, Old Navy and Banana Republic stores, and 1% rebates on all other purchases.
7. BankAmericard –Bank of America recycled the name of what is often considered the very first credit card, but gave it a bit of a new twist. Cardholders can earn up to an extra half-point in rewards per dollar charged when they carry this card in addition to having other Bank of America accounts (checking, savings, etc.).
8. Zappos Rewards Visa – Popular online shoe retailer Zappos.com introduced this card which offers rewards toward future Zappos.com purchases. The card can be used at Zappos.com or anywhere else Visa is accepted.
9. World of Warcraft Visa – Online role-playing game World of Warcraft launched this card which allows cardholders to earn points toward free game time—each 1,500 points earned equals one free month of playing.
10. Citi CashReturns Card – Offers a straight 1% cash rebate on card purchases, with no tiered rebates and no caps on earnings. More attractive to heavy card users is the fact that this card offers a full 5% rebate on all card purchases for the first three months, with no cap on earnings.

Citigroup Inc. wrestling with $41 billion question

A $41 billion question mark is hanging over Citigroup Inc. That is the amount, in a worst-case scenario, of potentially shaky securities the bank would need to bring onto its balance sheet.

Citi has already taken billions of dollars of such securities onto its balance sheet and expects to take big write-downs on those holdings. The fate of the $41 billion rests on the outcome of a debate going on in accounting circles over what constitutes a "reconsideration event." Those who say Citi needs to put these securities, known as collateralized debt obligations, onto its balance sheet argue that because Citi acted over the summer to backstop some of them, its relationship with them changed, prompting a reconsideration event.
At the moment, it seems unlikely Citigroup will be forced to bring the assets onto its books. The bank doesn't believe such a reconsideration event is in order. A spokeswoman says Citigroup is confident its "financial statements fully comply with all applicable rules and regulations."
But the division of opinion reflects debate within accounting circles over just how to interpret rules that govern off-balance-sheet treatment for some financing vehicles. That, in turn, underscores what many consider to be a failure of these rules to ensure that investors in the companies that create these vehicles are adequately informed of the risks posed by them.
In recent months, investors have been shocked to learn that many banks were exposed to big losses because of their involvement with vehicles that issued commercial paper and purchased risky assets such as mortgage securities. The troubles facing one kind of off-balance-sheet entity, known as structured investment vehicles, have even prompted Citigroup and other major banks to organize a rescue fund.
But CDO vehicles created by Citigroup have proved to be a more immediate threat. The bank's announcement this month that it expects to take $8 billion to $11 billion in write-downs in the fourth quarter largely stems from its exposure to CDO assets. Citigroup was one of the biggest arrangers of CDOs -- products that pool debt, often mortgage securities, and then sell slices with varying degrees of risk.
If Citigroup had to include an additional $41 billion in CDO assets on its books, that could potentially spur a further $8 billion in write-downs, above and beyond those already signaled, according to a report earlier this month by Howard Mason, an analyst at Sanford C. Bernstein. Such losses could further weaken Citigroup's capital position, threatening its dividend or forcing the bank to raise money. The issue for Citigroup is when, and if, it has to reconsider consolidation of the CDO vehicles it sponsors.
Like other banks, Citigroup structured these vehicles so they wouldn't be included on its books. The vehicles are created as corporate zombies that ostensibly aren't owned or controlled by anyone. In that case, accounting rules say consolidation of such vehicles is determined by who holds the majority of risks and rewards connected to them.
To deal with that, banks sell off the riskiest pieces of the vehicles. This ensures they don't shoulder a majority of the risk and so don't have to consolidate the vehicles. The assessment of who absorbs the majority of losses is made when the vehicles are created.
Over time, though, rising losses within a vehicle can lead a sponsor to shoulder more risk, or even a majority of it. That can also happen if a sponsor takes on additional interests in the vehicle by buying up the short-term IOUs it issues.
That is what happened to Citigroup. Over the summer, the bank was forced to buy $25 billion in commercial paper issued by its CDO vehicles because investors were no longer interested in the paper. Citigroup already had an $18 billion exposure to these vehicles through other funding it had provided. This combined $43 billion exposure means that if CDO losses climb high enough, the bank could be exposed to more than half the losses, according to Bernstein's Mr. Mason. That would seem to argue for Citigroup's consolidating all $84 billion of its CDO assets originally held in off-balance-sheet vehicles.

But the accounting rules don't say that sponsors of these vehicles have to reassess on any regular basis the question of who bears the majority of risk of loss. Such "reconsideration events" occur when there is a change in the "governing documents or contractual arrangements" related to these vehicles, the rules say. Citigroup believes that because it hasn't changed the documents or contracts related to the vehicles, it shouldn't have to reconsider its relationship to them, according to people familiar with the bank's thinking.

Loonie in its proper place, top banker says

In the closest he has come to publicly specifying the true value of the Canadian dollar, Bank of Canada governor David Dodge said yesterday the loonie may be very close to where it deserves to be against the U.S. dollar.

Testifying before the Senate banking committee for the last time, the outgoing central bank head said the currency's wild roller-coaster ride of the past several weeks remains largely inexplicable, but a loonie close to parity with the greenback is justified by fundamentals.The bank governor and Finance Minister Jim Flaherty have voiced concern about the value of the dollar in the past, but have steadfastly refused to peg it against its American counterpart. Last month, they complained at an international meeting of finance officials that Canada had absorbed one-third of the greenback's depreciation since 2002.Dodge stuck by that number yesterday, saying that Canada has taken a disproportionate hit from the U.S. dollar's decline even though Canada accounts for about 16 per cent of U.S. trade, the same as Europe and China."

But we should be quite clear that at least some of that correction is entirely appropriate because we've had a big improvement in our terms of trade against the U.S.," he told the senators."If you leave aside this awful experience with the spike that took us from $1 to $1.10 and back to $1 in the course of several weeks, the answer is that more or less the move from a mid-60s cents value to the mid-90s cents value accords with what was going on from a domestic perspective."Countered criticsDodge countered critics who urged him to cut interest rates to rein in the dollar and save the manufacturing sector, saying this would not have helped factories and "we would have simply had inflation higher than what we got now."

"In the real sense, Canadian manufacturers would not be any better off because they'd be paying higher wages and higher domestic costs."Dodge, who will hand over the central bank's top job to former Finance Department official Mark Carney at the end of January, backed up his designated successor's testimony Wednesday that it would be a mistake to peg the loonie at a fixed value against the U.S. dollar, or for Canada and the United States to adopt a single currency."Monetary unions should follow economic unions, not vice versa," he said. "Without that, a single-currency union is likely to bring trouble."He predicted growth will slow through the current quarter and the first half of next year before recovering later in 2008.

Buffett buys $2B in TXU bonds

Warren Buffett's Berkshire Hathaway is buying more than $2 billion worth of junk, or high-yield, bonds issued by the former TXU Corp., the investor told CNBC on Monday.

Fortune magazine first reported the billion-dollar buyup over the weekend, citing a source close to the deal.
Private equity firms TPG Capital and Kohlberg Kravis Roberts & Co. bought Dallas-based power company TXU Corp. for $32 billion this year. The deal closed Oct. 10 and the new private owners renamed TXU Energy Future Holdings Corp.
According to Fortune, Berkshire Hathaway bought into two different TXU bond issues for 95 cents on the dollar and 93 cents per dollar, giving it effective yield of more than 11% in both instances.
Buffett has benefited from investing in TXU before. He bought TXU stock in 2002 when the company was near bankruptcy, and sold for a profit in 2004.

Fraud Investigators Brace for Arsons from Subprime Mortgage Crisis

Insurance fraud investigators are girding for an expected rash of arsons by cash-strapped homeowners trying to avoid foreclosures and ballooning monthly payments as the subprime mortgage crisis deepens.

"Home arsons for insurance money by mortgage-burdened owners are hardly new. The question is whether a new and virulent spike looms," says the Coalition Against Insurance Fraud.
Falling home values and tighter lending are making it difficult for many people to finance their way out of trouble. More than $50 billion in adjustable-rate mortgages were reset last month, thus intensifying the financial crunch on homeowners, says the coalition's Executive Director Dennis Jay.
"The subprime mortgage crisis is crushing untold thousands of homeowners under heavy mortgage payments they can't afford—especially as many monthly payments adjust upward sharply after introductory teaser periods of low-interest rates," he writes in an artcile in its publication, Fraud Focus.
Only a few suspected home torchings have surfaced so far. Samuel White allegedly burned down his Houston home for insurance money to dodge a scheduled foreclosure. An African-American, he allegedly spray-painted racial slurs around the interior to make the suspected crime appear to be a hate crime.
Suspected mortgage-related home arsons already have jumped 50 percent above the 2006 rate in California, though the numbers are still relatively small, the insurance department says.
The industry's Rocky Mountain Insurance Association also is watching its region closely. In fact, one Woodland Park owner allegedly torched his home just days before he was scheduled to evicted in a foreclosure.
"I don't believe that it's had time to ripple through the market yet to the point that many people have reached the point of desperation," EFI Global fire investigator Alex Ahart says. "But I absolutely think it's coming."

ADB Marks World AIDS Day, Launches Transport Sector Toolkit

MANILA, PHILIPPINES - The Asian Development Bank (ADB) marked the commemoration of the 20th World AIDS Day 2007 with the launch today of a new guide for decision makers and staff working with the transport sector.

While the guide, HIV/AIDS and the Transport Sector – a toolkit for decision makers, is focused on HIV/AIDS issues related to the development of roads, many of the same issues and interventions discussed are applicable to other types of infrastructure programs.
“While transport sector projects are powerful instruments for economic growth, they attract a migrant population during construction and facilitate people’s mobility, both linked to the spread of HIV,” said Jacques Jeugmans, ADB Principal Health Specialist, Regional and Sustainable Development Department. “ADB wants to mitigate the possible spread of HIV and AIDS that our transport projects might facilitate. This toolkit will help our staff and decision makers to choose appropriate HIV/AIDS prevention interventions.”
ADB Vice-President for Knowledge Management and Sustainable Development, Ms. Ursula Schaefer-Preuss, has officially handed over the guide to Nigel Rayner, Director of the Transport Division of ADB’s East Asia Department, during the opening ceremony of World AIDS Day in ADB Headquarters.
“We want ADB to become an AIDS-competent institution, with staff not only well informed about the HIV/AIDS epidemic but also able to identify opportunities and take initiatives,” Ms. Schaefer-Preuss said in her remarks to ADB staff.
“We have produced some ground-breaking studies on the social and economic impact of the epidemic in the region,” Ms. Schaefer-Preuss said. “One study showed that, except perhaps for women when poverty pushes them to prostitution, poverty alone is not a risk factor for HIV and AIDS…But HIV and AIDS lead to poverty.”
According to UNAIDS, an estimated 4.9 million people were living with HIV in Asia Pacific in 2007, including the 440,000 people newly infected in 2006. Approximately 300,000 people died from AIDS-related illnesses in 2007, and there were almost 20% more new HIV infections in East Asia than in 2001. The HIV prevalence is highest in South-East Asia, with large variations: while the epidemic seems to have declined in Thailand and Cambodia, it is growing fast in Indonesia and Vietnam. In India, new and more accurate figures still indicate that some 2.5 million people were living with HIV in 2006.

U.S. Individual Life Insurance Premium

Windsor, CT, Dec 2, 2007 — LIMRA International reports U.S. individual life insurance premium increased twenty percent in third quarter 2007 resulting in an eight percent increase for the first nine months of 2007 over 2006.

"Corporate-owned life insurance (COLI) (cases of 200 lives or less) and private placement sales made a significant impact this quarter," said Ashley Durham, LIMRA analyst for product research. "In addition, companies noted that increased service to and expansion into new distribution channels (such as BGAs/MGAs/wholesalers) also affected sales tremendously.”
LIMRA also reports that total face amount in the third quarter rose by six percent over 2006, while the total number of new policies sold declined by one percent.
All products were up through the first nine months of 2007, especially universal and variable universal life, which were up 9 and 10 percent (23 and 55 percent for the quarter). Year-to-date, term life grew seven percent and whole life grew three percent.
The biggest portion of the sales increases seen through the third quarter stem from the brokerage channel. In fact, with the exception of WL, all products were up especially UL and VUL which were up 16 and 19 percent for the year and 28 and 110 percent for the quarter.

Universal life continued to hold the lion's share of annualized premium through the September of 2007 at 40 percent while term and variable universal life remained steady at 23 and 15 percent respectively. View the latest data table on U.S. life sales trends . For more statistics, visit the newly updated Data Bank .

Cigna's $1.5 Billion Buy of Great-West Reflects Growing Competitive Pressures

OLDWICK, N.J.--(BUSINESS WIRE)--December 2, 2007--Cigna Corporation’ s planned $1.5 billion acquisition of Great-West Heathcare is the latest example of the fierce competitive pressures facing regional health insurers when they attempt to go head to head with the biggest health insurers in the United States, according to a story in BestWeek U.S./Canada.

But in an ever-consolidating industry, some companies may survive and perhaps thrive by steering clear of the markets the giants are focused on and by developing a niche by serving certain customers.Cigna said it would buy the Denver-based subsidiary of Great-West Life & Annuity Insurance Company, the U.S. unit of Canada’ s Great-West Lifeco Inc., for about $1.5 billion cash in a deal Cigna says would expand its presence in the western United States.

Great-West is a good example of a regional health-care company that “was trying to compete against the big managed care companies nationally and wasn’ t able to gain the critical mass,” said Scott Wood, co-chief operating officer of Independence Holding Company [NYSE: IHC], a small, regional health insurer that’ s looking to grow its fully insured health business by targeting small businesses, which Independence defines as companies with two to 50 employees.Great West was “a BUCA wannabe,” he said. BUCA refers to Blue Cross Blue Shield companies owned by WellPoint, as well as UnitedHealth Group, Cigna and Aetna, the four biggest health insurers in the United States. It also refers to independent Blues plans that generally dominate in the states where they do business.

For its part, Great-West Lifeco, one of Canada’ s biggest life insurers, said the sale would allow its focus in the United States to be on its financial services businesses.

World Bank Approves US$75 Million to Support Competitiveness and Public Financial Management in Panama

WASHINGTON, December 2, 2007 – The World Bank’s Board of Directors approved yesterday a $75 million loan for Panama to support the Government’s public finance management and reform program.

This is the first IBRD operation in a proposed programmatic series of two Development Policy Loans (DPLs), which build upon the fiscal year 2007 Public Finance and Institutional DPL.
“The operation will support selected elements of the Government of Panama's Strategic Vision, helping the Government advance on development indicators which it has set for itself,” said Jessica Poppele, Acting Country Director for Central America.
The actions supported by the First Competitiveness and Public Financial Management Development Policy Loan (DPL) series are expected to enhance private sector competitiveness and public financial management, with a view of improving public sector efficiency and effectiveness in a fiscally sustainable fashion, thus influencing the country’s enabling environment for private sector development.
The DPL series will also contribute to fiscal stabilization and efficient spending by helping diversify external sources of finance and obtain better financial terms. As described in the Government’s Strategic Vision document, this DPL series focuses on actions aimed at:

• Promoting broad-based growth through the enhancement of private sector competitiveness, by helping to reduce bureaucratic red tape, improving training policies, and increasing investments in innovation.
• Consolidating fiscal sustainability, transparency and efficiency through the modernization of public financial management systems for revenue, debt, fiscal reporting, and public procurement.

“This operation kicks-off the new Panama-World Bank Country Partnership Strategy (CPS),” explained Frederic de Dinechin Country Representative for Panama. “The CPS includes a package of activities that support various elements of the Government's Strategic Vision which aims to promote broad-based economic growth and establish modern public financial management systems and institutions within the overall goal of reducing poverty and inequality,” he added. The $75 million fixed-spread loan is repayable in 18 years and includes a two-year grace period.