News round-up: 27 Aug 2008

China and Asia
So, the Olympics are over. What now for China? Despite the recent news of China’s need for an enormous stimulus package, Asia is still doing relatively well – far better than either Europe or North America. Sovereign Wealth Funds are flush with cash and consumers are beginning to spend in China. Below are a number of stories highlighting these issues.

Europe
Germany is slipping into recession fast and job cuts are n the way. Yesterday, I wrote a post about commercial property in Frankfurt. Today we here that E.ON is cutting jobs. With Germany, Italy and France, the three largest economies of the Eurozone, all hitting the skids, the ECB is likely to become more dovish in the coming weeks and months. This should bring good relief for Spain and Ireland, which are crying out for some monetary stimulus.

Britain
You realize Britain is not part of Europe, right? Well, housing in the UK stinks and Labour are not looking good because they are taking the blame. I’d say Northern Rock has something to do with that. Is Brown going to last a full election cycle? Oh, and the windfall tax? Bad idea (see my post).

United States
Housing in America is not much better than the UK. Two separate gauges of house rices showed some pretty awful declines. Nevertheless, I see the Case-Shiller index as slowing it’s pace of decline, which may mean we are more than halfway through the price drop. And the drop in gas prics has boosted consumer confidence.

Financial Services
Lehman is sill being chased after for its asset management firm. Hopefully, they will sell before they have to announce their dreary earnings next month. The first three Canadian Banks announced earnings. I like Scotia. Meanwhile, in the States, the FDIC has increased its list of problem banks to 117.

We are all still waiting and wondering when Paulson is going to get out his bazooka and do something about the GSEs. Stop dithering.

Politics
Russia is still on a rampage and the Democrats are in Denver spending money. What else is new?

Local and State
Local and state governments are getting killed by reduction in tax receipts. Expect many a bankruptcy. Modesto, CA has already filed. Here’s another one in the offing in Alabama.

China and Asia
Profits rise 51% at China Mobile – BBC News
Temasek: Profit Doubles at Wealth Fund in Singapore – Deal Book ($12.8 billion even after losses on Merrills and Barclays. Nice)
Temasek defends investment strategy – FT
Scotiabank launches Chinese wealth manager – National Post (Follow the money)

Europe
E.ON to cut 1,800 jobs in Germany – BBC News
Spain: From boom town to ghost town – BBC News (overbuilding is leading to the same phenomenon of ghost towns that we see in the US)
ECB Overpricing Asset-Backed Debt May Hurt Market – Bloomberg

Britain
Taylor Wimpey takes £1.5bn hit as property values slashed – Guardian
Housebuilder Bovis cuts its dividend – Guardian
Buy-to-let lending falls as repossessions rise – Guardian (Another nail in the coffin for shambolic B&B)
Northern Rock defaults leave taxpayers facing bill – Times Online
The windfall trap – Times Online (bad idea)

United States
OFHEO: Record Annual Home Price Decline in Q2 – Housing Wire
Case-Shiller: U.S. home prices continue record decline – LA Times
Drop in gas prices lifts spirits – LA Times
Our Inequality of Outcomes – Wash Post (The Census Bureau released income data for 2007)

Financial Services
Three Buyout Firms Said Still in Race for Lehman Unit – Deal Book
Fannie and Freddie Can Absorb Losses, Analyst Says – Deal Book (What’s this guy smoking? I want some)
A Preferred Problem; Fannie, Freddie Downgrades Loom Large – Housing Wire (OK, Paul Jackson has a sane analysis of the GSEs)
Wells Fargo Mortgage Head to Step Down – Housing Wire (Get out!)
No. Va: Comstock’s Defaults Darken Its Future – Wash Post (More house builder bankruptcies in the states)
Housing slump hits BMO’s bottom line – National Post
Bank of Nova Scotia earnings dip – National Post (Scotia still looks good; let’s see what CIBC says)
CIBC profit squeezed by $885-million credit hit – National Post (CIBC has spoken; not looking good)
Manulife overtakes AIG as North America’s top insurer – National Post (I like Manulife more than AIG by far; they own John Hancock too – which is the tallest building in Boston)
FDIC: More Weakness Expected Among Banks – Deal Book
FDIC may borrow money from Treasury: report – Reuters (That’s not good)
Ireland: First-half profits down 88 percent at IL&P – Irish Independent

Politics
Medvedev endorses Georgia break-up – FT
UK warns Russia against starting new Cold War – FT (Whatever; Miliband, the deed is done. Are you taking lessons
from Condi on diplomacy?)
Text of Hillary Clinton speech – Market Watch
Taxpayers give fat cats $20 billion – MSN (CEOs are feeding at the trough. Does anyone care?)
North Korea still holds plutonium card: analysts – Reuters
Iraq says U.S. sought troop presence to 2015 – Reuters (Iraq wants the Americans out by 2011)

Local and State
Alabama County Prepares for a Possible Bankruptcy Filing – Deal Book
Running Out of Money, Cities Are Debating the Privatization of Public Infrastructure – NY Times

Odds & Ends
Couples are finding ways to cut wedding costs – LA Times
Yakuza target Japan’s financial markets – Times Online
Deodorant spray will tackle stench of Bombay rubbish dumps – Times Online
Barbie doll maker wins Bratz damages – Independent (I back Barbie too. You go, girl)