Financial News

Iraqi Kurdistan has been primed for a wave of foreign investment for years, but officials say the grand goals of a relatively peaceful northern enclave are frustrated by violence plaguing the rest of Iraq.

Kurdish officials dream big, speaking of bringing Europeans to ski the region’s snow-capped peaks, building modern schools and hospitals and rejuvenating thirsty wheat fields.

In Arbil, the Kurdish capital some 310 km (190 miles) north of Baghdad, the streets buzz with activity. Several upmarket hotels and housing projects are going up on the outskirts of town. Direct flights arrive from Europe and westerners are a common sight in the city centre’s booked hotels.

“We have many things: oil, iron, phosphate,” said Baqi Salaye, a Kurdish businessman sipping sweet tea in an elegant, gold-trimmed reception room in Arbil’s chamber of commerce.

Yet Salaye, who dabbles in aviation, tourism and other business, echoes widely felt frustration when he bemoans the muddled perceptions of outsiders, who often fail to notice that Kurdistan has been largely been spared the bloodshed in Iraq payday loan online.

“If something happens in Mosul, they say ‘northern Iraq.’ If it happened in Diyala, they say ‘northern Iraq,’” lamented Karim Sinjari, Kurdish state interior minister, referring to northern areas that fall outside the Kurds’ autonomous region.

“So — someone sitting in the United States — you see the news and you cannot differentiate.”

Kurdistan, closely allied with Washington for years, seemed poised to flourish after the U.S.-led invasion in 2003 toppled Saddam Hussein, the unflinching leader who had waged war against minority Kurds and slaughtered civilians en masse. 

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Carrefour (CARR.PA: Quote, Profile, Research, Stock Buzz) bucked the sliding trend in the fortunes of European retailers on Friday when it stuck to its 2008 business forecasts and met key profit expectations for the first half despite consumer spending fears.

The world’s second largest retailer behind U.S. giant Wal-Mart (WMT.N: Quote, Profile, Research, Stock Buzz) posted first-half operating profit up 5.5 percent, lifted by strong performance in its Latin American growth markets, helping to send its shares up as much as 8 percent.

Investors had turned the spotlight on France’s biggest store chain, which issued a profit warning in June, after earnings from Dutch retailer Ahold (AHLN.AS: Quote, Profile, Research, Stock Buzz) and French rival Casino (CASP.PA: Quote, Profile, Research, Stock Buzz) disappointed on Thursday, hitting the whole sector.

But relief that Carrefour was not, at least for the time being, further trimming its forecasts for the rest of the year prompted a rebound in share prices in a flat market on Friday.

Oddo Securities analyst Nicolas Champs said that the share price had “reacted positively because some investors were reassured by the fact that Carrefour confirmed its profit objectives.”

The group’s operating profit rose 5.5 percent to 1.404 billion euros ($2.07 billion), in line with an average forecast of 1.401 billion euros in a Reuters poll of 11 analysts.

Carrefour shares were up 6.62 percent at 35.93 euros at 9:27 a.m fastcash. EDT while Casino gained 2.8 percent and Ahold 2.2 percent.

“NO FURTHER DETERIORATION” 

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A weakening global economy will blunt cellphone market sales growth this year, research firm Gartner said on Wednesday.

Gartner said it expects market growth to slow to 11 percent from 16 percent last year, while in U.S. dollar terms growth would slow to 9 percent from 11 percent.

The world’s top cellphone maker Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz) has forecast the market will fall this year in euro terms.

The euro reached record highs above 1.60 against the U.S. dollar earlier this year, but was trading at 1.475 dollars on Wednesday, roughly the level where it started 2008.

“We are starting to see impact of the economy,” said Gartner analyst Carolina Milanesi, adding increased competition and the weaker economy would also hurt average selling prices $500 payday loan.

“In addition, mobile phone manufacturers will be put under pressure to maintain healthy margins while they intend to further break through in the emerging markets to increase sales,” she said.

Milanesi said she expects cellphone sales in Western Europe in 2008 to be roughly on last year’s level, underpinned by strong growth in the second half on the back of attractive new models reaching the market.

Cellphone sales in this key region for phone makers like Nokia and Sony Ericsson fell 16 percent year-on-year in the first quarter and 8 percent in the second quarter. 

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The willingness and ability of Americans to come back into the housing market over the next few months will determine whether the U.S. economy experiences a mild downturn or the deepest recession in 30 years.

Many economists say that home prices have another 10 percent to fall to bring them into balance with rents and incomes. A fall of that magnitude would elicit a huge sigh of relief from Wall Street and Washington.

But it wouldn’t take much — a further clampdown by private lenders or a meltdown at mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) — to push home prices down much more severely, perhaps more than 20 percent.

“That’s how you could quickly get into this darker scenario,” said Mark Zandi, chief economist with Moody’s Economy.com.

If banks tighten lending standards further, denying loans to borrowers with good credit histories, affordability won’t be enough to keep people buying homes. And a sharper housing bust would leave deep scars in consumer sentiment, which would likely lead to a deep recession.

Analysts at Credit Suisse estimate that the S&P Case-Shiller Index of house prices in 20 major cities must fall by another 14 percent for houses to become affordable again, assuming the typical mortgage rate stays around 6.32 percent payday advance. The index was down 15.8 percent from a year earlier in May.

If borrowing costs eased to 5.5 percent, the Case-Shiller index may have only another 7 percent to fall, Credit Suisse said, but if rates rise to 7.5 percent, house prices may tumble another 24 percent.

A 24 percent decline would wipe out the entire home equity for millions of homeowners, many of whom were counting on their homes to finance their retirement or pay for their childrens’ college education. Without that nest egg, spending would suffer, triggering a consumer-led recession that some economists predict would be the worst since the early 1980s. 

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Warren Buffett, the billionaire co-founder of a top private equity firm and a prominent voice for U.S. fiscal responsibility, called on the United States and its elected officials to combat the nation’s fast-growing, multi-trillion dollar debt load.

Buffett, Blackstone Group LP co-founder Peter Peterson, and former Comptroller General David Walker were part of a panel that spoke Thursday night in Omaha, Nebraska following the national premiere of the documentary “I.O.U.S.A.” The talk was simulcast in more than 350 movie theatres.

The film argues the country might face economic disaster if it can’t find a way to pay some $53 trillion it has committed to spend — and doesn’t have now — as the population ages, and Medicare and Social Security costs soar.

It also argues, and panelists agreed, that the United States has become too dependent on foreign investors to buy its goods and its publicly-issued debt. There was also agreement that many politicians fear making tough policy choices that have ramifications far beyond the current election cycle http://abc-cashadvance.com.

“Our politics have become so embedded and so partisan, with so many special interests, that they require a massive effort from the public telling them, ‘we want something done’,” Peterson said.

Buffett, who runs Omaha-based Berkshire Hathaway Inc and turns 78 on Aug 30, was more sanguine than other panelists, though he said he doesn’t want debt to grow as a percentage of gross domestic product.

“The prospects of being born in the United States are still better than being born anyplace else in the world,” Buffett said.

Buffett, the world’s richest person according to Forbes magazine, added: “It has not paid to sell America short since 1776, and the time to start is not in 2008.” 

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U.S. investment bank Lehman Brothers Holdings Inc is considering options, such as selling all or part of its asset management unit, with an aim of reaching a deal by the time it releases third quarter earnings, sources said.

Analysts and bankers have recently said that Lehman may opt to part with its asset management business to further boost its capital. Experts estimate the business, whose core is Neuberger Berman, could be worth about $8 billion.

It was not immediately clear if all or part of the investment management business would be sold. Some have said an outright sale of the entire investment management business could be tough, as it would be too big for most buyers to swallow.

One source familiar with the situation said Lehman is marketing its asset management unit to a number of buyers including private equity firms easy payday loan.

A second source said Lehman is looking at several alternatives including selling a stake in the business, and is aiming to have the strategy resolved by the time it announces third quarter earnings.

The end of Lehman’s fiscal third quarter is less than two weeks away, and the bank typically announces its third-quarter earnings in mid-September.

In June, the bank posted its first quarterly loss as a public company, of $2.8 billion.

Lehman declined to comment. 

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Smaller financial firms have found a way to capitalize on their larger rivals’ woes, moving to snap up some of the top talent cast adrift by sweeping layoffs at leading investment banks.

Such firms, many of which have ducked the troubles gripping Wall Street, are plucking what they see as gems in the fallout from the credit crunch, which has led to more than 100,000 financial-sector job losses so far in 2008.

As accountants at the biggest banks prepare for next year’s budgets, their smaller cohorts are betting the cuts will continue well into next year, making the pool of unemployed talent both deeper and cheaper.

“You buy your straw hats in the winter,” Ed Wedbush, president of Wedbush Morgan Securities, said of the windfall of affordable talent.

The Los Angeles-based investment bank, with annual revenue of $250 million, has grown from 600 employees to 820 in the last two years, Wedbush said freecreditscore. “We’ve been able to take advantage of the situation, clearly.”

One year after problems in the U.S. mortgage market bloomed into a full-blown financial crisis, big banks are under immense pressure to contain losses caused by write-downs.

Many have responded by trimming payrolls: New York-based Citigroup Inc has wielded perhaps the biggest ax, chopping 14,000 jobs this year alone. Over the same period, Merrill Lynch & Co Inc trimmed some 4,200 staffers.

But unlike in past financial crises, not everyone is caught in this firestorm. While mortgage-related securities rot on the balance sheets of larger players, firms that avoided the worst of those products finally have the leverage needed to hire the talent that was previously out of reach. 

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Citigroup and Merrill Lynch said they would buy back billions of dollars of illiquid auction-rate securities from retail clients, and Citigroup agreed to pay a $100 million fine to settle charges it fraudulently misled investors about the debt’s risk.

The announcements could pave the way for settlements or buybacks by UBS AG and other financial companies whose clients own such debt, following the February meltdown of the $330 billion auction-rate market.

Citigroup agreed to buy back about $7.5 billion of the debt, as part of settlements with New York Attorney General Andrew Cuomo and the U.S. Securities and Exchange Commission.

Meanwhile, after U.S. markets closed, Merrill offered for a one-year period beginning January 15, 2009 to buy back auction-rate debt it sold to retail clients. It estimated that its clients hold $12 billion of the debt.

Both companies offered to buy back the debt at face value.

For Citigroup, which said it may face a $500 million pre-tax loss, Thursday’s settlement will hinder efforts by Chief Executive Vikram Pandit to cut costs and restore profitability following $17.4 billion of losses in the last three quarters.

“It’s really a face-saving attempt,” said Brian Yelvington, an analyst at CreditSights Inc in New York, referring to Citigroup free credit report without a credit card. “Other banks that have sponsored these programs could be under pressure to do something similar.”

Merrill’s buyback offer, meanwhile, comes after a year when the bank and brokerage suffered $19.2 billion of losses. 

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The European Central Bank left interest rates unchanged on Thursday and insisted inflation was still its key fear even though risks to growth were taking hold, prompting markets to scrap bets on rates rising again this year.

ECB President Jean-Claude Trichet said growth in mid-2008 would be substantially weaker than at the start of the year and the central bank had only partially anticipated the scope of the slowdown.

“The latest economic data point to a weakening of real GDP growth in mid-2008, which in part was expected,” Trichet said in a news conference after the ECB left rates at a near seven-year high of 4.25 percent.

“We are identifying downside risks since a number of months, and I would say that the information that we had very clearly suggests the materialization of those risks,” he added, citing higher food and oil prices and a global growth downturn.

Last month the ECB raised rates by a quarter percentage point, the first rise in more than a year, and Trichet said that data since then had vindicated this decision http://pay-day-home.com.

He confirmed the ECB’s stance of “no bias” on monetary policy and no pre-commitment on future rate moves, and said that the current level of interest rates was helping to get inflation back under control.

The biggest change in the ECB’s assessment was on the growth outlook, after many indicators dropped to levels last seen in 2003, when ECB rates were at their all-time low of 2 percent and economic growth fell to just 0.4 percent.

Many economists think output has been falling in recent months, and Trichet repeatedly sidestepped questions about whether the ECB now saw a euro zone recession. 

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The Federal Reserve held U.S. interest rates steady on Tuesday, expressing concerns about both economic growth and inflation and indicating it is in no rush to push borrowing costs higher.

The 10-1 decision by the U.S. central bank leaves the benchmark federal funds target at a low 2 percent, where it has been since April.

The Fed had reduced rates by a cumulative 3.25 percentage points since mid-September in response to a sharp housing retrenchment and turmoil in credit markets, and financial markets had widely expected no change on Tuesday.

“Although downside risks to growth remain, the upside risks to inflation are also of significant concern,” the Fed said in a statement outlining its decision, noting that the measures it has already taken should promote economic growth.

The announcement closely mirrored a statement issued after the Fed’s last meeting in late June. However, it omitted a phrase from the June statement that had said risks to growth appeared “to have diminished somewhat.”

And while the Fed made clear its anxiety about inflation, it dropped language from June saying those risks “have increased” — a quiet nod to the sharp decline in oil prices in recent weeks 24 hour payday advances.

U.S. stock investors latched onto signals that the Fed likely would not raise interest rates in the near term, and the market sharply extended earlier gains. The blue-chip Dow Jones industrial average ended up 331 points, or 2.9 percent. U.S. Treasury debt prices and the dollar slipped, while interest rate futures pared the implied prospects of rate hikes later this year.

A Reuters poll of 17 primary dealers who trade directly with the Fed found that all believe the U.S. central bank is on hold for its next two meetings as worries about the economy trump fears about rising inflation. 

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