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Hexion Loses Bid to Extend Huntsman Commitment From Banks to Fund Takeover A New York judge rejected Hexion Specialty Chemicals Inc.'s request to force two banks to extend their financing commitment for its $6.5 billion takeover of Huntsman Corp.Tesla, Maker of Electric Sports Cars, to Raise $40 Million in Private Deal Tesla Motors Inc., the maker of luxury electric sports cars, said it's raising $40 million in a private convertible debt offering after slumping equity markets scuttled plans for an initial share sale. Diabetes Cases Almost Double in U.S. Over 10 Years, Led by Southern States New cases of diabetes almost doubled over 10 years in the U.S., a trend worsened by high rates of obesity and inactivity in the South, a study of 33 states found. HIV Doctors May Give Drugs to All Infected, Adding Thousands of Americans More HIV patients in the U.S. should be given access to powerful, costly drugs at an earlier stage of infection to save lives, infectious-disease doctors FDA Gave Drugmakers Legal Shield Over Staff Objections, House Report Finds Political appointees at the Food and Drug Administration adopted rules that help shield drugmakers from patients' lawsuits over opposition from the agency's staff, a House report says Enzyme Linked to Inflammation Doesn't Cause Heart Risk, Researchers Say C-reactive protein, a molecule being investigated as a potential target for drugs to prevent heart attacks and strokes, doesn't cause those conditions, researchers unexpectedly found. Search Is on for Iceland-Like Hedge Fund in Asia: William Pesek Commentary by William PesekOct. 31 (Bloomberg) -- It used to be that we searched for economic icebergs in Asia. Now we are on the lookout for Icelands.Last week, Iceland became the first developed economy to seek aid from the International Monetary Fund since 1976. It needed a $2.1 billion bailout after investors realized it wasn't running an economy, but a hedge fund.While Ukraine, Belarus, Hungary and Pakistan are also lined up at the IMF's door, Iceland's woes are getting special attention. The thought that even a western European economy that once had an AA rating could implode are bringing back uncomfortable memories about Asia's crisis a decade ago. The question zooming around markets is this: If the worst- case scenario plays out and the crisis continues, could Asia experience another 1997? Equally important, will investors know it when they see it?See the rest of Boomberg report. Then Watch the banks, say analysts such as Mark Matthews of Merrill Lynch & Co. in Hong Kong. ``Bank shares are the canary in the coalmine,'' he says.
In 1997, Matthews points out, bank shares underperformed in Indonesia, South Korea and Thailand before all three nations sought IMF bailouts. More recently, drops in bank stocks also preceded a broader realization of troubles in economies such as Iceland and Hungary.
So, if an Asian economy is on the cusp of an Iceland-like emergency, bank shares are the place to look. And here's the good news: The industry is holding its own. In the last 12 months, they have outperformed the broader markets by 23 percent, Matthews says.Eyes on Banks Banks in Asia had only small amounts of the toxic debt now hurting U.S. and European peers. Generally, Asia's banks are reasonably liquid and well-capitalized. Non-performing loans may rise as global growth slows, yet the most likely scenario isn't for a 1997-style crisis. In relative terms, many Asian banks are seen as less risky than peers in other nations.
Korea may be an exception. Matthews says Korean ``banks' outperformance on a 12-month basis has been thin, and more recently they have begun underperforming.'' Investors are more negative on Korea than conditions in Asia's fourth-biggest economy warrant.
Asia is anything but immune to this crisis. The cost of insuring emerging-market debt has risen 2 1/2 times in less than a month, Matthews says. A deep U.S. recession will weigh on export-dependent economies. Slowing growth in Europe, Japan and China mean Asia may soon run out of engines to expand. Feeling Pain There also are problems today that didn't exist 10 years ago. The Asian crisis was an emerging-market phenomenon, leaving larger, developed nations less affected. The current one is moving in the opposite direction and knows no borders. As turmoil spreads, all economies and markets will feel the pain. The Federal Reserve's move to provide $30 billion each to the central banks of Brazil, Korea, Mexico and Singapore showed just how universal this crisis is. Paul Donovan, London-based deputy head of global economics at UBS AG, said in a report to clients yesterday that the Fed's decision to expand efforts to unfreeze markets to emerging nations for the first time was even more significant than its official interest-rate cut.
The trouble is, the U.S. still may be entering into a Japan- like period of stagnation. In cutting short-term rates to 1 percent this week, Fed Chairman Ben Bernanke nudged the U.S. closer to the experience of Asia's biggest economy. Like the Bank of Japan, the Fed is running out of monetary ammunition.
The U.S. also is borrowing money so fast it's making Ronald Reagan's administration seem downright debt-averse. President George W. Bush inherited a surplus, yet his budgets have resulted in deficits and added $1.7 trillion to the national debt.
Financing from nations such as China allows the U.S. to live beyond its means. Yet the stability of China, the world's largest holder of foreign currency, is becoming less certain. The People's Bank of China on Oct. 29 reduced its benchmark one-year lending rate to 6.66 percent from 6.93 percent.
China's growth slowed to 9 percent in the third quarter. It may keep lowering interest rates after three reductions in two months as the global crisis drags down exports and production. Growth in Japan continues to lose ground, too.
Developing Asia has its own vulnerabilities. Growth rates aren't the problem, with 7.9 percent in India, 6.4 percent in Indonesia, 6.3 percent in Malaysia, 5.3 percent in Thailand, 4.6 percent in the Philippines, 4.3 percent in Taiwan and 3.9 percent in Korea. Yet economies do hit icebergs, and things will cool as U.S. companies fire employees.
The odds don't favor the next hedge-fund economy turning up in Asia. With the exception of Japan, central banks generally have ample room to cut rates; debt-to-gross-domestic-product ratios leave fiscal latitude; and currency reserves offer a cushion. Asia is a very different place than it was in 1997.
If global turmoil worsens, though, Asia won't get off easily. If the region is harboring an Iceland, bank stocks will provide an advance warning.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at email@example.com Last Updated: October 30, 2008 16:01 EDT
The Shipping News Suggests World Economy Is Toast: Mark Gilbert
Commentary by Mark Gilbert
Oct. 30 (Bloomberg) -- In the third quarter of 2007, Volvo AB booked 41,970 European orders for new trucks. Guess how many prospective purchases Volvo, the world's second-biggest maker of heavy rigs, received in the third quarter of this year?
Here's a clue. Picture a highway gridlocked by 41,815 abandoned trucks -- because Volvo's order book got destroyed to the tune of 99.63 percent, with customers signing up for just 155 vehicles in the three-month period, the Gothenburg, Sweden-based company said last week.
The pathogen that has fatally infected swathes of the banking industry is now contaminating non-financial companies. ``We're heading toward the sharpest downturn I've ever seen in Europe,'' said Chief Executive Officer Leif Johansson. SEE REST OF REPORT, Oct. 30 (Bloomberg) -- Often when people have near-death experiences, they resolve to change their ways. That's not the case with the folks running Wachovia Corp., which experienced the financial equivalent.
In their starry-eyed world, Wachovia's net assets still were worth $50 billion as of Sept. 30, according to the balance sheet the Charlotte, North Carolina-based bank released last week. Never mind that, on Oct. 2, Wachovia's board approved Wells Fargo & Co.'s offer to buy the company for $14.8 billion in stock, saving it from the clutches of Citigroup Inc. and the undertakers at the Federal Deposit Insurance Corp.
Taken literally, the timeline suggests two scenarios. Either Wells Fargo is getting about $35 billion of stuff for free. Or the value of Wachovia's equity plunged $35 billion during the first two days of October. Neither of those happened, of course.
The reality is that Wachovia's management, including Chief Executive Officer Robert Steel, still won't admit the company's balance sheet is a farce and has been for a long time. More worrisome, though, is that nobody with any authority is calling them on it, even today. That includes Wachovia's auditor, KPMG LLP, as well as the Securities and Exchange Commission and banking regulators such as the Federal Reserve and FDIC SEE report for the rest of story.So with all the good news that is in as I look into my crystal ball I see Ares,Dwot and Alstay and the TMF guys will rack up quite a few points in the next few days. As for the buy and hold theory well you can see the 8,000 point drop in a 3 mos period. Thank god it is caps and not my real life. Have fun this week fools and lets rock and roll.