Venezuela - Communism Full Steam Ahead

Venezuelan President Hugo Chávez and congressional allies passed a bill to nationalize gasoline. The law means an end to wholesale sales by private companies in the country. Distributors have 60 days to negotiate the sale of their businesses to the government.

Deja Moo

The feeling you've heard this bullshit before.

Commodities price bubble hasn't burst yet, analysts say. Commodities prices increased 29% during the six months prior to the end of June and then dropped 10% in July, their worst month in nearly three decades. Although prices have continued to slide, most analysts are not ready to call the bursting of the commodities bubble. Instead, they offer reasons for the recent price declines and why a collapse is not expected.

Source: The Economist

Corel Corporation on the block

Corel today stated that it is in discussions with a third party regarding a potential sale of the company.

FRE and FNM in free fall

(AGAIN)

FRE and FNM are down 17.8% and 16.8%, respectively. FNM is worth $5.3B at $4.95 a share and has lost 93% of its value in the last year. FRE is now worth $2.2B at $3.42 a share and has lost 95% of its value in the last 10 months.

Anybody still think Chavez isn't an out-and-out communist?

Venezuelan President Hugo Chavez is set to tighten his government's grip on the economy by taking over his first bank, the local unit of Spain's Banco Santander SA. Plans to nationalize the country's third-largest bank, announced yesterday, will give the state access to Banco de Venezuela SA Grupo Universal's 285 offices and $9.46 billion in deposits. It follows nationalizations in the oil, steel, cement, electricity and telecommunications industries. Chavez said he will pay "fair compensation" and said he has been in touch with the bank's local president, and that he is interested in seeking a "friendly agreement.''

Extreme Makeover: HomeLESS Edition

An Extreme Home Makeover may be going bust. The first Atlanta metro area family who got a new home is facing foreclosure. An army of volunteers swarmed a Clayton County neighborhood to build a new home for a deserving family on “Extreme Makeover: Home Edition” in 2005. When the show came to town, no one could have predicted what would happen just 3½ years later - foreclosure. A foreclosure notice appeared last Friday, a $450,000 mortgage they took out less than 15 months ago was in default. Lake City mayor Willie Oswalt was among the 1,800 volunteers helping "Extreme Makeover: Home Edition" build the Harper’s new home ago. Beazer Homes of Atlanta was the main sponsor. The mayor said he is baffled. "Beazer gave them $100,000 cash and paid their mortgage off and they still can't make it," said Oswalt. Harper told Channel 2 they invested the loan proceeds in a construction business and the business hasn’t been good. She didn’t say how much of the money is left. “What’s going to happen is instead of keep paying my mortgage, I’m going to take my money and not pay my mortgage because I’m being harassed,” said Harper.

I will limit my comment to the fact that I've always hated that show.

Ford

The headlines about Ford's second quarter will all be about its $8.7 billion loss -- its biggest quarterly loss ever. Most of that red ink is for asset impairments and does not directly address how the core operating businesses are doing Once investors look outside the US, Ford is doing fine, but not fine enough to float Ford's entire boat Even with all of its cost cutting initiatives, Ford lost $1.3 billion in North America.

In South America, Ford posted a pre-tax profit of $388 million, up from $255 million a year ago. In Europe, the numbers were remarkably strong. Pre-tax profits there were $582 million, up from $262 million a year ago In Asia, Ford's profits were much more modest. Ford Asia Pacific Africa reported a pre-tax profit of $50 million, compared with $26 million a year ago.

The earnings highlight the extent to which Ford is becoming a tale of two companies. One exists in the US market and it trapped by old products, high fuel prices, and plant which will take years to re-tool. There is nothing wrong with Ford that being out of North America would not fix. Too bad that cannot happen.

http://www.247wallst.com/2008/07/ford-f-all-the.html

New Post from a fellow Blogger

Hi Alberto,

We just posted an article on hedge fund and investment. I thought I'd bring it to your attention just in case you think your readers would find it interesting.

Title: 4 Reasons Why Investors Should Avoid Hedge Funds at All Costs

URL: http://www.bankaholic.com/finance/hedge-fund-risks/

Thanks for your precious time!

Thanks,

Helen Anderson

Lehman down 40% for week

Lehman fell the most since the firm went public in 1994 on speculation that Freddie Mac and Fannie Mae might fail. Lehman, which has lost about 40% of its market value this week, dropped $3.27 (19%) to $14.03 this morning.

FNM and FRE in free fall

At the opening bell, FNM is at $12.95 (down $2.36 or 15.41%) and FRE is at $8.03 (down 2.23 or 21.73%). I think people are finally starting to realize that yeah they really COULD fail. Woe are we if that happens.

Edited...

As of 10:19, FNM is at $12.61 and FRE is at $7.30. UBS AG analysts led by Eric Wasserstrom in New York increased their estimates for losses at Freddie Mac and cut their price target for the stock to $10 from $28. WTF? Why do these guys have jobs?

The Bears Have It

• Off 21.3% from its October high, the Dow Jones Industrial Average closed at 11,147.44
• The S&P 500 index was down 20.3% from its October 10, 2007, high of 1,562 closing at 1,244.68
• The Nasdaq Composite Index closed at 2,234.89, off 21.8% from its October high

In particular, Fannie Mae and Freddie Mac gave up yesterday's gains to end today at $15.31 and $10.26 respectively.

Fannie Mae and Freddie Mac plummet

As of 1:15pm today...

Fannie Mae (FNM) fell 19.5% to $15.08, down 51.2% YTD and 78.6% from its 52-week high.

Freddie Mac (FRE) fell 21.9% to $11.32, down 57.4% YTD and 83.2% from its 52-week high.

Reason: It was reported they may have to raise $46 billion and $29 billion respectively if forced to bring off balance sheet assets back onto their balance sheets.

Heads Roll at Lehman

Lehman CFO Erin Callan and COO Joseph Gregory are leaving their posts, replaced by Ian Lowitt and Bart McDade respectively.

MBIA and Ambac lost S&P AAA rating

Ambac and MBIA lost their crucial AAA ratings from Standard & Poor's, leaving the largest bond insurers with little ability to generate new business in future.

Downgraded to AA, not nearly far enough in my opinion.

MBIA may lose Moody's Aaa Rating

MBIA slumped 13% to $5.84 after a Moody's warning. Rival Ambac dropped 17% to $2.48. MBIA has weak new business prospects, little financial flexibility and may suffer higher losses on guarantees its main insurance subsidiary sold on mortgage-backed securities and more complex but related vehicles known as collateralized debt obligations, or CDOs, Moody's said in a statement. The agency put the Aaa ratings of MBIA's main bond insurance unit on review for a possible downgrade. The most likely outcome of the review will be a downgrade to the Aa range. But Moody's also warned that it could cut MBIA to single A.

Does anybody trust the rating agencies anymore? Is there anything in Moody's statement that wasn't true four months ago? How can MBIA and Ambac still have Aaa ratings?

Sharks (Vultures?) Circling at Lehman

Lehman Brothers (the smallest of the bulge bracket banks after Bear's demise) may not be independent for long. The WSJ reports the investment bank may be forced by its balance sheet woes and the recent plunge of its stock to sell part of even all of itself to another financial firm. Lehman shares sold off after the WSJ reported Lehman was considering a $4 billion sale of stock. Lehman shares were down as much as 15% before the firm publicly denied it had been forced to borrow from the Federal Reserve. The WSJ reports Lehman engineered part of its relief rally by buying back its own shares - an unusual move given the worries about the firm’s financial health and the company’s recent efforts to bring down its leverage ratios. Though the buyback could be taken as a sign of management’s confidence that Lehman can weather the storm, others see it as smacking of desperation.

http://dailybriefing.blogs.fortune.cnn.com/2008/06/04/lehman-on-the-block/?section=money_topstories

Wachovia CEO Ousted

Ken Thompson is retiring as CEO of Wachovia after being asked to leave by the company's board following a string of disappointing acquisitions and poor financial results.

USA Today Letter to the Editor

American Airlines' planned $15 checked baggage fee for coach passengers is wrong-headed, short-sighted and mean-spirited ... What if American Airlines had announced that fares were going up $15 but that those who do not check baggage would receive a discount off that fare? I think that would have been the better route to take with customers.

Anybody too stupid to understand that those two things are EXACTLY THE SAME* should not be given a forum to inflict his opinion on the rest of us.

* Except of course for the nightmare of processing all those refunds.

Excellent Series on Bear Stearns in the WSJ

The Wall Street Journal is publishing a three-day series on the collapse of Bear Stearns today through Thursday. A fascinating read!

ETA links (WSJ subscription NOT required for these particular articles):
Part 1 - Missed Opportunities
Part 2 - Run on the Bank
Part 3 - Deal or No Deal

55% of Bear Stearns to be laid off

JPMorgan Chase's CEO James Dimon has announced a plan to reduce more than 50% of Bear Stearns's staff, following its acquisition. JPMorgan will retain 45% of Bear Stearns employees and jobs have already been offered to around 6,000 of around 14,000 Bear Stearns staff members.