Saturday, July 4, 2009

Noteworthy - Week of June 28th

The biggest news this week involved a seldom discussed nation, Honduras, which overthrew its democratically elected president, Manuel Zelaya, who is now in exile in nearby Costa Rica. In what has to be one of the most peaceful coup d'etats in world history, Honduras' military escorted Mr. Zelaya to an awaiting aircraft during the middle of the night and had him flown to Costa Rica, then promptly swore in Roberto Micheletti, the Speaker of Parliament, the next in line to the presidency under the Constitution. The reason behind the overthrow was the insistence by President Zelaya to change the Constitution, which would have allowed him to run for a second term as President. Fear was mounting that he, as a close friend of Venezuelan president/dictator Hugo Chavez and former Cuban President Fidel Castro, was attempting to become a dictator himself.

In the U.S. Bernie Madoff was sentenced to 150 years in prison for orchestrating the largest Ponzi scheme in U.S. history. His Manhattan penthouse was also seized this week, as allegations swirled of paybacks in Austria to help fund the scheme.

In unrelated news, it was revealed this week that the Congress' overseas travel budget has swelled tenfold since 1995 and has tripled since 2001 and reports suggest that this figure is understated. This, at a time when the national unemployment rate is quickly approaching double digit figures, the Senate is debating a Cap and Trade bill, which the House passed late last week, that will dramatically raise the cost of energy, and the House is just starting to put together a health care reform bill, which will cost at least $1 trillion over the next decade. Walmart backed a health care plan this week that would mandate companies to pay for employee heath insurance, as analysts suggested that such a bill would enhance the global retailer's competitive position.

In other news, California, with a budget deficit of $24 billion, is in discussion to offer IOUs. Governor Schwarzenegger was quoted in the Financial Times as stating, "California has never defaulted [on its debt] before and we're not going to start now."

Sarah Palin, Governor of Alaska, plans to step down from her role, citing personal reasons, at the end of the month after a little more than two years on the job.

Al Franken, aka Stuart Smalley on Saturday Night Live, is officially heading to the Senate after a long contested election by incumbent Norm Coleman in Minnesota.

Commercial real estate continues to fall, bringing fears again to the banking sector, as real estate investment trusts logged their best quarter in history.

Towers Perrin and Watson Wyatt agreed to merge this week, creating the world's largest employee benefits consultancy.

Schoolteachers, a traditional recession-proof profession, are feeling the pinch in the tough U.S. economy.

Valero is harnessing the wind to help in its oil refining process.

States are planning a new path to tax online retailers, such as, in a bid to find additional revenue for their cash strapped budgets. Cash strapped states are starting to eye unused gift cards for tax revenue as well. Ten states raced to finish their budgets ahead of Tuesday's deadline.

Johnson and Johnson bought a $1.5 billion stake in Irish biotech company Elan, with its eye on the company's Alzheimer's treatment program. Abbott Laboratories was ordered to pay Johnson and Johnson $1.67 billion in a patent infringement case.

U.S. cities are growing at the expense of the suburbs during the recession.

Notorious file sharing site Pirate Bay was sold this week to a Swedish firm for $7.8 million in an attempt to make the site into a legal entity, much like Napster, as the entertainment industry continues its crackdown on illegal sharing of files.

The emerging markets continue to outperform with India recording a 49% gain year-to-date and China a 25% gain.

Ricci v. DeStefano, Sonia Sotomayor's controversial race discrimination case involving firefighters from New Haven, Connecticut, was overturned by the Supreme Court this week. The ruling is not expected to hinder Judge Sotomayor's appointment to the high court.

Apple is keeping quiet on CEO Steve Jobs' health even after he returned to work. The SEC continues to look into the issue.

The Supreme Court declined to hear a case involving Cablevision's new DVR technology that allows cable firms to host DVR services on company servers rather than on hardware. The technology could curb users' ability to skip advertisements.

Comcast will start offering wireless service for laptop users, a direct attack on traditional phone providers' territory.

Layoffs are allowing small companies to snag employees from their competition.

Denny's is attempting to lure the post-party crowd.

Patients are looking more and more to online physicians in an attempt to lower costs.

Some employers are preferring to hire only the currently employed as they believe those are the best employees.

Kodak will stop manufacturing its Kodachrome line of film.

Citigroup raised its credit card interest rates sharply ahead of new curbs taking place, drawing broad criticism.

Bank profits may reach record levels during the second quarter.

The first tradeable indices tracking the default risks of sovereign default risk are set to start trading.

The U.S. is changing its terminology with regards to terrorism and war, citing, for instance, that "global war on terrorism" no longer properly describes the nature of the terrorist threat to the U.S., according to secretary of homeland security Janet Napolitano.

Futures analysts are expecting the Federal Reserve to start raising interest rates early next year just weeks after believing that the bank would start to raise rates later this year.

JPMorgan is closing a $600 million private equity fund in a sign that banks are being forced to be more conservative with their funds.

The World Trade Organization see an increase in the barriers of trade as nations seek to increase domestic production.

U.S. regulators are proposing tougher rules for private equity firms that buyout ailing banks. The Treasury is set to name nine companies, who will purchase toxic assets from financial institutions.

Ship seizures are expected to rise this year as the credit markets continue to effect shipowners.

GM is hoping to IPO next year.

Boeing is buying a carbon fiber fuselage factory in order to streamline its much delayed 787 Dreamliner program.

Beazer Homes was ordered to pay as much as $53 million in a loan fraud case.

South America:

Argentine President Christina Kirchner lost control of the congress this week, leaving her government a lame duck and, thus, opening the door for more moderate leaders to make their mark on the country.


Europe's top regulator is set to urge more standardization in the derivatives markets there.

The Deutsche Boerse is expanding its derivative and clearing activities, in a move to transition away from the exchange's traditional activities.

Europe is expected to suffer a long-term loss of potential economic output as a result of the global meltdown.

Siemens settled its bribe scandal with the World Bank.

Middle East/Africa:

Zimbabwe is turning to China for a $950 million loan.

Iraq's first big effort to bring in big foreign investment from oil companies was met with resistance as firms declined to meet Baghdad's tough terms.


Chinese steelmakers failed to reach an agreement with the largest ore producers in the world this week, highlighting the global tug-of-war over natural resources.

China's hunger for oil is now reaching into Argentina.

China's first half recovery in its markets are leaving some wondering if an asset bubble has formed there.

China continues to cut its reliance on the U.S. dollar.

In a dramatic change of direction, Taiwan has decided to allow investment from China.

India is confident of a quick domestic recovery.

India is attacking the U.S.'s Cap and Trade bill, arguing that it is a protectionist.

An Indian court struck down a long-term ban on homosexuality.


Gold is down on news that Indian jewelry demand continues to remain weak.

An El Nino effect in Southeast Asia might effect commodity markets in the coming time period.

Corn growers planted the second largest amount of land this spring in more than 60 years, causing prices to fall this week.

It was revealed this week that the recent spike in oil was caused by a "rogue oil broker."


PIMCO issued its outlook on unemployment in the U.S. this week.

This week's Alan Abelson column.

Michael Jackson's posthumous sales have surpassed that of the late Elvis Presley and John Lennon after their deaths.

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