Obama expands goals of stimulus US president-elect Barack Obama has expanded the goals of his proposed economic stimulus, with a plan to create or save an additional 500,000 jobs. Obama raised his jobs target over the next two years to 3m, up from 2.5m set last month, after US unemployment hit reached a 15-year high in November. Obama agreed the outlines of a $675bn to $775bn two-year recovery plan last week but officials say the price tag is likely to rise above $800bn as Congress makes its own demands during the legislative process. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50665/obama-expands-goals-
| Ireland invests €5.5bn in main banks The Irish government has announced it will invest €5.5bn ($7.6bn) in the country's three main banks, which will see it take an effective 75% stake in Anglo Irish Bank. The investment is in the form of perpetual preference shares, with the government putting €2bn into each of Bank of Ireland and Allied Irish Banks, both of which have UK retail operations, in return for an 8% coupon. A further €1.5bn will go into Anglo Irish, which last week suffered the resignations of both its chairman and chief executive over a loans scandal, but will charge a higher coupon of 10%. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50664/ireland-invests-e55b
| Money market funds reel on near-zero yields US money market funds, which have seen big cash inflows in the last six months, will need to raise fees or close to new money to remain profitable as yields hover at near-zero, say industry managers. The funds, which manage $3,800bn, are reeling from frozen credit markets, subprime exposure and a crisis of confidence triggered by one fund "breaking the buck", or returning investors less than they paid in. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50663/money-market-funds-r
| AIG, Munich Re near deal on Hartford unit AIG was closing in on a deal Sunday to sell its Hartford Steam Boiler unit to Germany's Munich Re for a price expected to be greater than $700m, or 1.2 to 1.5 times the unit's book value, reports the WSJ. The transaction would mark AIG's first major divestiture as it seeks to pay back up to $60bn in loans it received as part of its September US government rescue. The price, expected to be well below the $1.2bn AIG paid to acquire HSB in 2000, underscores the leverage buyers have for even AIG's most prized businesses. See this article online and view or leave comments.
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| Tata agrees to cash boost for Jaguar Tata, the Indian owner of Jaguar Land Rover, has agreed to inject "tens of millions" of pounds into the British car company to prevent an immediate cash flow crisis, while the government continues to consider the case for a taxpayer-funded bail-out. The cash injection from Tata has bought the government more time to respond to demands for multi-billion-pound loan guarantees from the car sector. Alistair Darling, chancellor, is understood to be concerned that any state support does not set too generous a precedent for other sectors. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50662/tata-agrees-to-cash-
| Canada unveils auto bail-out plan Canada has unveiled a plan to help hard-pressed automotive parts suppliers and dealers in tandem with C$4bn in emergency loans to the local subsidiaries of GM and Chrysler. The weekend move followed Washington's announcement Friday of a $17.4bn lifeline to their ailing parent companies. Under Canada's plan, suppliers would have easier access to government-backed credit insurance and a new facility will be set up to support car-related consumer credit. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50661/canada-unveils-auto-
| Madoff scandal embroils UBS, Tremont A Luxembourg-based fund run by UBS invested $1.4bn into Bernard Madoff's alleged $50bn Ponzi scheme, Swiss weekly NZZ am Sonntag reported Sunday, reports Reuters. The FT reported at the weekend that UBS earlier sought to absolve itself from any duty to safeguard investor assets in the Luxalpha Sicav fund, citing an agreement that it was not responsible for the assets – even though its marketing documents claimed it would be. UBS acted as manager, custodian and administrator of Luxalpha until this year, when Access Management took over. Four of the fund's six directors still work for UBS, according to the latest prospectus. Separately, the WSJ reports that Tremont, part of MassMutual, disclosed that its clients lost $3.3bn as a result of Madoff's alleged fraud. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50660/madoff-scandal-embro
| Madoff had 'perceived edge': UBP A Swiss bank that helped channel funds to Bernard Madoff says the New York money manager had a "perceived edge" in the financial markets because he handled so many trades through his broker-dealer arm. Union Bancaire Privée, which advised 11 hedge funds that placed money with Madoff, made the observation in a Dec 17 letter to clients and linked its confidence in Madoff to the number of regulators who supervised different parts of his operations. The FT earlier reported that Madoff will provide regulators with "a verified written accounting" of his firm's records by New Year's Eve, according to a court document. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50659/madoff-had-perceived
| Russia's oligarchs queue for loans Russian oligarchs are lining up for $78bn of Kremlin loans to survive the credit squeeze, handing Prime Minister Vladimir Putin the opportunity to increase government control of the nation's biggest companies, reports Bloomberg. More than 100 business leaders are vying for loans from the administration of President Dmitry Medvedev because Russian companies have about $110bn of foreign obligations due next year, according to Russia's central bank. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50658/russias-oligarchs-qu
| Nomura-Lehman tie-up to miss target The acquisition of the bulk of Lehman Brothers in London by Nomura International will take longer to move into profit than originally budgeted, according to Sadeq Sayeed, chief executive of Nomura in Europe, who orchestrated the deal, reports The Time. Sayeed said that he now expected the business to continue to make losses until early in 2010. Originally the target break-even point was October/November 2009. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50656/nomura-lehman-tie-up
| First group emerges to offer CDS clearing Liffe, the futures exchange, and LCH.Clearnet, the London clearer, will on Monday become the first group to offer clearing of credit default swaps, which are central to regulatory worries over the risks posed by defaults in the credit derivatives markets. The development comes as efforts by regulators on both sides of the Atlantic to get such bilaterally negotiated, or OTC, contracts shifted on to centrally cleared platforms are coming to a head. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50655/first-group-emerges-
| Turquoise plans to link 'dark pools' Turquoise, the equities trading platform, is due to announce plans for a pan-European share trading service linking "dark pools" operated by banks in the latest effort to combat the increasing fragmentation of liquidity across the region. The move also pits Turquoise, launched three months ago, against the London Stock Exchange for a second time in the competition for market share in trading blue-chip stocks, as the exchange plans to launch a dark pool of its own. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50654/turquoise-plans-to-l
| Christmas shut-down for Silicon Valley Some of Silicon Valley's biggest companies are responding to the economic downturn with office and factory closures and enforced holidays over the Christmas period. Usually limited to traditional manufacturing industries such as the ailing carmakers, the year-end shut-down is this year sweeping through the office suites and R&D labs of information-age companies. Hewlett-Packard, Cisco Systems, Advanced Micro Devices, Texas Instruments, Dell, Adobe and CSC are among the tech industry heavyweights to be taking a break, with some closed from Dec 22 to Jan 5. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50653/christmas-shut-down-
| Hypo Real Estate to cut 40% of jobs Hypo Real Estate, the troubled German commercial property lender rescued for a second time by the German government two months ago, is to cut more than 40% of its workforce and retreat from some business areas. Staff numbers would fall from 1,800 to 1,000 in the next three years – some two-thirds of the cuts outside Germany, HRE said at the weekend. At the same time, HRE warned that business conditions had declined in the current quarter and "significant extra burdens" were expected in its Q4 results. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50657/hypo-real-estate-to-
| Weekend catch-up In case you missed these stories: - S&P downgrades 11 of world's top banks
Eleven of the world's biggest banks were downgraded Friday by S&P after the ratings agency said the current downturn could be longer and deeper than previously thought. - Bush unveils $17.4bn carmaker rescue
George W. Bush on Friday handed the fate of US carmakers to president-elect Barack Obama as he announced plans to lend GM and Chrysler $17.4bn to survive the next three months. - GLG snaps up SocGen UK fund manager
GLG Partners, the hedge fund group, is moving into the retail market by buying the UK asset management arm of Société Générale, paying less than $10m cash for SocGen UK's $8.2bn under management, - Up to 40% of buy-out groups could fail
The deepening economic crisis could see up to 40% of private-equity firms go out of business within the next three years as their portfolio companies default on debts, according to predictions by Boston Consulting Group and Spain's IESE Business School. - Anglo Irish Bank scandal claims third scalp
David Drumm, chief executive of Anglo Irish Bank, on Friday became the third board casualty at the lender when he resigned following revelations the bank had hidden €87m (£81m) of loans made to its chairman Sean Fitzpatrick. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50652/weekend-catch-up-21
| Overnight markets: Up Asian stocks advanced on Monday, led by automakers and technology shares, after the US government pledged a $13.4bn rescue plan for the top US carmakers and computer-memory chip prices climbed. However, renewed worries about the global economy sent the dollar and the price of oil crashing to fresh lows last week. Asian markets (Mon)
05:00am GMT
Nikkei up 96.03 (+1.12%) to 8,684.55
Topix up 10.19 (+1.22%) to 844.62
Hang Seng down 252.90 (-1.67%) at 14,874.61 US markets (Fri)
DJIA down 25.88 (-0.3%) at 8,579.11
Nasdaq up 11.95 (+0.77%) at 1,564.32
S&P500 up 2.60 (+0.29%) at 887.88 European markets (Fri)
FTSE100 down 43.73 (-1.01%) at 4,286.93
Eurofirst 300 down 3.75 (-0.45%) at 823.37 Currencies
04:55GMT
€/$ 1.3974 (1.4273)
$/¥ 89.98 (89.14)
£/$ 1.4942 (1.5144) Commodities
05:57 GMT
Brent Crude (Feb09) up $0.27 at $44.27
Light Crude (Feb09) up $0.69 at $43.05
100 Oz Gold (Feb09) up $6.60 at 844.00
3M 24HR Copper up $55.00 at $2,990 10-year government bond yields (%)
US 2.14 (2.08)
UK 3.17 (3.17)
Germany 3.00 (2.96)
Japan 1.21 (1.29) Sources: FT, Reuters See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/22/50651/overnight-markets-up
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