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Wednesday, August 25, 2010


Asian markets dip as the Tokyo index drops to a record low
Asian share markets declined Wednesday after a drop on Wall Street. Japan's Nikkei 225 fell 1.7%, Australia's S&P/ASX 200 gave up 1.4% and South Korea's Kospi Composite dropped 1.5%. Hong Kong's Hang Seng Index shed 0.1%, Taiwan's Taiex plunged 2.6% and China's Shanghai Composite fell 2%. New Zealand's NZX 50 lost 0.6%, while Singapore's Straits Times Index gained 0.1% and India's Sensex was down 0.3% in afternoon trading. The Wall Street Journal (25 Aug.)

BHP Billiton says won't buy Potash "at any cost"
(Reuters) - BHP Billiton, the world's biggest miner, tried to dampen expectations it would substantially raise its hostile $39 billion bid for Potash Corp as bumper results showed it has plenty of firepower.
"I will be as disciplined on this bid as I've been on every other endeavor," Chief Executive Marius Kloppers told a conference call with reporters on Wednesday. "The shareholders own the company and it's my job to create more value for them, not to do any one thing at any cost."
BHP posted its best half-year profit in two years and a hefty balance sheet confirmed the miner has the financial muscle to raise its $130-per-share offer for the top global fertilizer maker, with net annual cash flows of $17.9 billion.

Home sales plunge, fueling concern about the U.S. recovery
Sales of existing U.S. homes fell to their lowest level since 1999 in July, raising concern that the economy is weakening and headed into a long period of stagnation or a double-dip recession. The National Association of Realtors said home sales dropped 27.2% between June and July, a bigger decline than expected. For single-family houses, which account for most residential transactions, the sales rate was at its lowest since May 1995. Los Angeles Times (25 Aug.)

Report: Fewer recently modified mortgages are falling into foreclosure
Recent mortgage modifications in the U.S. are more successful at keeping borrowers from losing their homes in foreclosure than those completed earlier in the housing crisis, according to a report by the State Foreclosure Prevention Working Group. Homeowners who obtained a mortgage modification in 2009 were nearly 50% less likely to fall 60 days behind on their payments compared with those whose mortgages were modified in 2008, according to the report. Google/The Associated Press (24 Aug.)

S&P lowers Ireland's credit rating to AA-minus
Standard & Poor's took Ireland's credit rating down one notch as the risk premium demanded by government-bond buyers widened to an all-time high, measured against the benchmark German bund. S&P downgraded Ireland's credit rating from AA to AA-minus, an action that might further increase the country's borrowing costs. The Irish Times (Dublin) (25 Aug.)

Drilling ban's harm to the Gulf economy is not as grave as expected
The Obama administration's six-month ban on deep-water oil drilling hasn't hit the Gulf Coast economy as hard as experts and officials expected, according to The New York Times. Unemployment claims growing out of the ban have numbered in the hundreds, not thousands. Of 33 deep-water rigs operating in the Gulf of Mexico before BP's spill, only two have left the area. Pensacola News Journal (Fla.) (24 Aug.)

Report: 1 of 5 big firms considers moving to leave U.K. tax system
A report prepared for Britain's taxing authority shows that about 20% of major companies have looked into moving offshore to get out from under the nation's system of taxation. The study notes that 62% of the biggest firms think complying with tax rules has become more difficult in the past 12 months. Many businesses said the taxing agency has become less transparent in its decision-making. Telegraph (London) (25 Aug.)

Analysis: Technology is the culprit for lost manufacturing jobs
Revised industrial policy, trade sanctions against China and a cheap U.S. dollar are powerless to reverse a loss of manufacturing jobs in the U.S., a trend that has been under way for a half century despite growth in the sector, according to The Economist. Manufacturing has become more productive and less labor-intensive through technology, and that's not going to change. "Time to accept that reality and figure out how best to prepare workers for the good jobs to come," the magazine notes. The Economist/Free Exchange blog (23 Aug.)

Analysis: Fed seems ready to boost recovery next month
The good news from the Federal Open Market Committee is that the Federal Reserve's chairman and vice chairmen recognize the importance of making a further effort to keep the U.S. recovery from stalling, and that action might come in September, according to The Economist. Asset purchases and a meaningful change in the central bank's language are likely. "The belief that the Fed will step in if things get bad enough is what is providing a floor under stock indexes and perhaps on the recovery as a whole," the magazine notes. "Strip that away, and things will rapidly fall apart." Telegraph (London) (24 Aug.)

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