Devorah notes

US STOCKS-Germany’s caution on debt plan sinks Wall St

* VIX surges as traders hedge against stock declines* Citigroup, Wells Fargo down after banks report results* Indexes off: Dow 2.1 pct, S&P 1.9 pct, Nasdaq 2 pctBy Angela MoonNEW YORK, Oct 17 (Reuters) - U.S. stocks suffered their worst loss in two weeks on Monday after comments from Germany’s finance minister caused investors to fear Europe’s solution to its debt crisis may not come fast enough.The S&P index had risen for two straight weeks for the first time since July, riding a wave of euphoria built on optimism that European leaders had a newfound commitment to tackle a crisis that threatened financial stability and global growth.The rapid rally left the market susceptible to swift declines. German Finance Minister Wolfgang Schaeuble, speaking of an Oct. 23 European Union summit on the debt crisis, tempered enthusiasm, saying, “we won’t have a definitive solution this weekend.”U.S. bank earnings also contributed to the selling pressure. Wells Fargo & Co shares fell 8.4 percent to $24.42 after the U.S. lender financial results fell short of expectations.The KBW Bank index lost 3.9 percent.”The German Finance Minister basically came out and sort of ruined the expectation that a grand plan was coming along, that some sizable fund was being put together to recapitalize European banks,” said Stephen Massocca, fund manager with Wedbush Morgan in San Francisco.”Depending on the development there, we could technically get back down to the low end of the trading range, which is about 1,100 on the S&P.”With that in mind, investors rushed to seek protection in the options market against losses. The CBOE Volatility index VIX , Wall Street’s so-called fear gauge, rose 18.2 percent to 33.39, its highest one-day jump since August.The VIX is a 30-day risk forecast of stock market volatility conveyed by S&P 500 index options; it generally moves inversely to the S&P benchmark.The Dow Jones industrial average was down 246.58 points, or 2.12 percent, at 11,397.91. The Standard & Poor’s 500 Index was down 23.72 points, or 1.94 percent, at 1,200.86. The Nasdaq Composite Index was down 52.93 points, or 1.98 percent, at 2,614.92.Trading volume was light, with just 6.87 billion shares exchanging hands on the New York Stock Exchange, NYSE Amex and Nasdaq for the day, well below the year’s daily average so far of about 8 billion.Events in Europe overshadowed a $21 billion deal by Kinder Morgan Inc to buy rival El Paso Corp , combining the two largest natural gas pipeline operators in North America in a huge bet on the fast-growing market for that fuel.El Paso’s shares surged 24.8 percent to $24.45 and Kinder Morgan shares jumped 4.8 percent to $28.19.Shares of Citigroup Inc fell 1.7 percent to $27.93. The bank reported higher third-quarter earnings as it set aside less money to cover bad loans and recorded an accounting gain available to banks in turbulent markets.After the closing bell, IBM reported third-quarter revenue that met expectations. The tech company ended 2 percent lower at $186.59 during regular trading, but in after-hours action IBM shares fell 3.6 percent more to $179.81 after reporting results.Of the 45 companies in the S&P 500 that have reported earnings, 62 percent have beaten analyst expectations, according to Thomson Reuters data.Declining stocks outnumbered advancing ones on the NYSE and the Nasdaq by a ratio of about 5 to 1.

Posted 7 months ago
#US #STOCKSGermanys #caution #on #debt #plan #sinks #Wall #St

15 notes

RPT-UPDATE 1-Harrisburg, Pa. attorney defends bankruptcy filing

* Legal fight could involve county, bondholders* Other cities, counties have had filings dismissedBy David GaffenNEW YORK, Oct 13 (Reuters) - The lawyer for Harrisburg, Pennsylvania rejected allegations on Thursday that its bankruptcy filing was illegal in the face of threatened legal and legislative challenges.One day after Pennsylvania’s state capital filed for bankruptcy, Mark Schwartz, attorney for the city council, told Reuters Insider the Chapter 9 filing was “absolutely” legal.That followed comments by the mayor and county that the council did not have the authority to take such a step.Harrisburg is one of a handful of municipalities that has flirted with bankruptcy in the wake of the Great Recession that devastated budgets in state and local communities. Some say it could become a touchstone for whether other cities will follow this path to extract concessions from creditors and others.”We’re trying to advocate to use the leverage of bankruptcy,” said Dan Miller, Harrisburg City Controller.But legal experts say this is a complicated process as states in recent years have erected higher walls for local governments to overcome if they seek bankruptcy. One in four Chapter 9 municipal bankruptcies are dismissed, according to a legal expert.Several entities, including the county, state, and bondholders, are expected to contest the filing.Thursday, Charles Zwally, special council for Dauphin County, where Harrisburg is located, said the county is weighing its options.”We’re reviewing it now and we’re advising the county…We don’t believe that they are authorized to file,” he said.The Pennsylvania capital’s crisis has been a year in the making. The city of about 50,000 is hampered by $300 million in debt incurred from an expensive revamp of its incinerator and is struggling to fund key city services.Less than half of U.S. states authorize a city or county to undertake such a move, and states have been making it harder to file.A law passed in Pennsylvania earlier in the year prohibits the city from filing for bankruptcy until 2012.Glen Grell, a Republican member of the state’s house of representatives for the 87th district said the “bankruptcy petition that was filed is not authorized by state law as it’s required to be.”“It’s horrible for any municipality, especially the state capital of Pennsylvania, to attempt to walk away from its creditors,” he said. The state Senate is expected to vote next week on a bill that calls for an eventual takeover of Harrisburg.Schwartz called the legislation’s language “deplorable, incomprehensible and illegal.”Juliet Moringiello, a professor at Widner School of Law in Harrisburg, said the state’s authority is in question. The state’s law says municipalities can file for bankruptcy, but it changed its law to stipulate that third-class cities — of which Harrisburg is one — cannot file for a year.”The problem is that the law was aimed at Harrisburg. The question the city lawyer is raising is, ‘Was that constitutional?”ONE IN FOUR DISMISSEDIn 1991, Bridgeport, Connecticut filed but the case was dismissed as the city could not prove it was unable to pay its debts.”One of the issues is, is the municipality insolvent? Do the assets exceed the liabilities? That’s why Bridgeport failed,” said Richard Zeisler of Zeisler & Zeisler PC of Bridgeport, who represented that city in its unsuccessful case.Jim Spiotto, a municipal bankruptcy expert at the law firm of Chapman and Cutler, told Reuters Insider on Wednesday one in four bankruptcies wind up “having it being dismissed or closed without a plan.” He said Harrisburg’s bankruptcy “could” be dismissed.Bond insurer Assured Guaranty and the mayor questioned the legality of the filing, which the Harrisburg City Council approved in a 4-3 vote late on Tuesday, but Schwartz rejected that assessment.”The council basically utilized that remedy, which was bankruptcy, and filed for it,” he said.Thompson said Wednesday that the mayor and the city solicitor must sign off on all hiring of outside counsel and the city solicitor must approve all ordinances and resolutions considered by the council, which was not done in this case, she said.The county is one of the most high-profile cities to use Chapter 9 of the U.S. bankruptcy code, most notably invoked nearly 20 years ago by Orange County, California.There have been only 629 municipal bankruptcies under Chapter 9 of the U.S. Bankruptcy Code since 1937, according to Spiotto.Pennsylvania Governor Tom Corbett has said the city would be better off if it agreed to a rescue plan under the state’s Act 47 program for distressed cities — which has seen Philadelphia and other cities through crises. His office opposes the bankruptcy.”If you go through the Act 47 plan or the receiver legislation we’re going through right now, the assets are sold and Wall Street gets paid 100 cents on the dollar. And we’ll be left with no sources of income,” said city councilman Brad Koplinski.”So we’re going to have to tax our citizens. Those who can leave — will leave. Those who can’t leave because of economic situations are those who can least afford to pay it.”At the root of Harrisburg’s troubles is a financing scheme used to fund a state-of-the-art revamp of its trash-burning plant that left the city deeply in debt.The incinerator is owned by the Harrisburg Authority, a separate municipal entity, but the city and the surrounding Dauphin County guarantee much of that debt. The state wants Harrisburg to sell major assets, cut jobs and renegotiate labor deals.”This mess has been around for a long time,” said Joe Church, a resident of Susquehanna Township, a suburb of Harrisburg. “The previous administration and the new administration are not fiscally capable.”

Posted 7 months ago
#RPTUPDATE #1Harrisburg #Pa #attorney #defends #bankruptcy #filing

33 notes

Online education site raises $3 mil in a round led by Groupon founders

Groupon co-founders Eric Lefkofsky and Brad Keywell have invested in online educational site (with one complicate name) Udemy through their venture capital fund Lightbank. Udemy just announced a $3 million Series A round of financing led by Lightbank that also includes funding from MHS Capital and 500 Startups. Udemy plans to use the money for hiring and marketing and biz development. Udemy “the academy of you” offers 6,000 courses covering all sorts of hobby-related subjects like social marketing, how to build a iPhone app, and Art 100 in addition to more traditional topics like intro to psychology. About 90 percent of Udemy’s courses are free. Online education is a pretty hot sector now — just go ask the Washington Post and its Kaplan division which for the most part has been the driver of growth behind the company synoumous with Watergate and newspapers . Even News Corp is getting in on the act and set up an education unit focused on technology last year. The $3 million round follows $1 million in funding from MHS Capital, 500 Startups, and several other individual investors.

Posted 7 months ago
#Online #education #site #raises #$3 #mil #in #a #round #led #by #Groupon #founders

22 notes

Time not right for yuan globalisation -gov’t researcher

“Now is not a good time to liberalise yuan,” Wang Jian, a researcher with the National Development and Reform Commission, China’s top economic planning agency, said in an article published in China Securities Journal.He said a freer yuan will make it easier for developed countries to buy Chinese assets and that sudden capital flows would complicate Chinese policymaking.”The yuan will rise strongly after liberalisation, and a sluggish external economy, which will last a long time, will press down Chinese export growth,” he said.”Therefore, liberalising the yuan now will add frost to the snow falling on the Chinese economy,” he warned.A right choice is for China to use newly accumulated foreign exchange reserves to buy resources and technologies abroad, Wang said.

Posted 7 months ago
#Time #not #right #for #yuan #globalisation #govt #researcher

25 notes

Oil spill grows from stricken ship off New Zealand

As much as 350 of 1,700 tonnes of heavy fuel oil has already escaped and authorities have warned people off the beaches and from eating seafood.The district is a popular holiday resort, with long, golden beaches renowned for surfing and nearby waters with an international reputation for big-game fishing.Booms have been put over some harbor entrances to prevent oil from destroying wetland and wildlife habitats. So far fewer than a dozen seabirds have died and about the same number treated for oil contamination.Maritime New Zealand said weather overnight had shifted the ship on the reef and continuing heavy swells and strengthening winds were making it too dangerous to stay on board.”All personnel have now been taken off the vessel as a precautionary measure due to the conditions,” the agency said in a statement.Swells of up to four meters (12 feet) and winds gusting up to 25 knots had moved the ship around on the reef, but also reduced its list to between three and six degrees from the previous 11 degrees.”There has been more damage to the front part in the vessel, and additional flooding in the forward holds. However, this will to some degree help to settle Rena.”Refloating and salvage of the ship is the responsibility of the owner, Daina Shipping, a unit of Greece’s Costamare Inc., and salvage experts, but any plan needs official approval.The ship was en route to Tauranga, 200 km (120 miles) southeast of New Zealand’s biggest city, Auckland, the country’s biggest export port and a hub for transshipping cargo, to collect cargo before heading for Singapore.

Posted 7 months ago
#Oil #spill #grows #from #stricken #ship #off #New #Zealand

102 notes