Finance & Business World

Chrysler and Italian automaker Fiat on Wednesday officially signed a strategic alliance brokered by the U.S. government, one day after the Supreme Court cleared the path for the deal.

Fiat will initially take a 20% stake in the company; its share can go up to 35% if it reaches certain fuel-efficiency goals.

"This is a very significant day … for the global automotive industry as a whole," said Sergio Marchionne, Fiat’s chief executive who was named the CEO of Chrysler on Wednesday. "From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry."

Fiat spokesman Gualberto Ranieri said Marchionne will retain the title of CEO of both Chrysler and Fiat. Former Vice Chairman Jim Press was promoted to deputy CEO and special advisor; he will be the point man for Chrysler’s restructuring.

The new Chrysler: The deal established a new company, called Chrysler Group LLC, after the former Chrysler LLC sold nearly all of its assets to the new firm.

Chrysler Group is 55% owned by the United Auto Workers union. The U.S. government holds an 8% stake and Canada a 2% share. Fiat will not be allowed to take a majority stake until the new Chrysler pays back the $22.1 billion lent to it from the Treasury Department, including Wednesday’s $6.6 billion wire transfer.

Chrysler’s new board will consist of three Fiat directors, four representing the U.S. government, one from the UAW and one from the Canadian government. The company said it expects to name former Borden Chemical and Duracell chief executive as its chairman.

Marchionne said the Chrysler plants that had been shuttered as a result of the company’s bankruptcy process will be back up and running "soon," and the company will focus on developing fuel-efficient vehicles that will "become Chrysler’s hallmark going forward free credit report.com."

Jeremy Anwyl, CEO of Edmunds.com, said it will take 18 months to two years for Chrysler to begin unveiling smaller cars that have helped Fiat grow in Europe. Even after the Fiat integration is complete, Chrysler’s future path is uncertain.

"Much of Chrysler’s future success will depend on fuel prices and Americans’ appetite for small cars," said Anwyl. "But Chrysler has an opportunity to look for niches that have been under-explored, as they did in the past with the PT Cruiser and minivan market."

Not out of bankruptcy yet: Chrysler filed for bankruptcy on April 30, and the Obama administration hoped the process would take less than 60 days to complete. Though Chrysler sold its assets to Chrysler Group LLC, the old Chrysler will likely remain in bankruptcy for quite some time as it resolves its debts and liabilities.

"This is by no means the end of Chrysler’s bankruptcy case," said Ed Neiger, founder of Neiger LLP, a creditors’ rights and bankruptcy law firm. "So many issues still need to be resolved, which may take months or even years."

The U.S. Supreme Court on Tuesday cleared the way for the deal after delaying the sale pending review of a case brought by Indiana state pension funds challenging Chrysler’s bankruptcy. Those funds argued that they and other lenders deserved better treatment by the bankruptcy court.

Has the recession actually helped you? From lower debt payments to cheaper home prices, many people have benefited from the current downturn. If you’ve made out financially and want to share your story, please email steve.hargreaves@turner.com. 

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Time Warner Cable San Antonio has added the Major League Baseball Network on HD just in time for the upcoming season.

Customers with a digital set-top box are now able to watch the 24-hour sports network on channel 119 on the digital basic tier.

The MLB Network was first carried as a standard channel on Channel 255 in early January. It is now carried in high-definition, making it Time Warner Cable’s 77th HD channel.

“Our commitment to bringing our customers the best in high definition sports and entertainment continues with the addition of this great HD channel,” says Gavino Ramos, vice president of communications for Time Warner Cable San Antonio classic car insurance.

The San Antonio division of Time Warner Cable is one of the company’s leading markets in HD content and subscribers. Time Warner Cable Inc. (NYSE: TWC) is based in New York.

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General Motors Corp on Thursday reported a fourth-quarter adjusted loss per share of $9.65.

Highlights:

* Q4 loss per share $15.71

* Q4 revenue $30.8 billion versus $46.8 billion

* Ends Q4 with $14 billion in cash

* Reuters Estimates Q4 earnings per share view $-7.40, revenue view $30,626.73

million

* Says pension plans underfunded by $12 payday loan with savings account.4 billion

* Sees receiving “going concern” opinion from auditors for 2008

* Says 2008 net loss $30.9 billion

* Says 2008 automotive cash burn $19.2 billion

* Says December-end cash liquidity included $4 billion in loans from U.S.

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China’s exports probably fell the most in a decade in December amid a deepening global recession, making it more likely extra measures will be implemented to stimulate growth.

Shipments from the world’s fourth-largest economy dropped 5.3 percent from a year earlier after tumbling 2.2 percent in November, according to the median forecast of 16 economists surveyed by Bloomberg News. The customs bureau may release the figures as early as today.

Consumer confidence has tumbled to a 15-year low in Europe, China’s largest market, as the global economy grapples with the most severe downturn since the Great Depression. Profits have slumped at manufacturers with operations in China, such as Hon Hai Precision Industry Co., the world’s biggest contract maker of electronics.

“Exports won’t recover any time soon because of deeper recessions in major economies,” said Xu Pingsheng, an economist at the State Information Center in Beijing. “It’s almost certain the contribution exports make to growth this year will be zero or even negative,” said Xu, who expects shipments to fall as much as 17 percent in 2009.

China has increased rebates as incentives for sales abroad every month since October, pledged more export loans, and stalled its currency’s gains to aid exporters. The Chinese currency advanced just 0.5 percent against the dollar in the second half of last year from a pace of 6.6 percent in the first six months, according to Bloomberg data.

Still, growth in exports to the U.S. eased to 9.6 percent in the first 11 months of 2008 from 15.2 percent a year earlier, as demand for made-in-China shoes, clothes and plastic products fell, the customs bureau said in a report on Jan. 4.

‘Withering’ Demand

The expansion of total imports and exports may slow to less than 5 percent this year as “withering external demand imposes a strong constraint” on China’s overseas sales, the bureau said, estimating trade may have grown about 18 percent in 2008.

Shanghai Haixin Group Co., a Chinese textile exporter, said last month it may post its first annual loss since listing in 1994 because orders from overseas declined.

“Export growth of 20 percent to 30 percent is unlikely to return in the next few years because the biggest source of demand, U fast cash no credit check.S. consumers, are changing from spending to saving,” said Yuwa Hedrick-Wong, a Singapore-based economic advisor at MasterCard Inc. “China will face unprecedented challenges in terms of looking for new sources of economic growth.” Export growth averaged at 30 percent annually between 2003 and 2007, government data show.

Stimulus Package

China on Nov. 9 announced a 4 trillion yuan ($585 billion) investment package until 2010 and lowered the benchmark lending rates five times since September to spur domestic demand and make up for weaker exports, which account for one fifth of the nation’s expansion.

Still, economic growth may slip to as little 5 percent this quarter, almost half the 9 percent pace reported in the third quarter, according to Citigroup Inc. The World Bank expects 7.5 percent growth in 2009, the smallest gain in almost two decades.

“It will be very difficult for the government to achieve its ‘protecting-8-percent’ target if recessions in major economies extend,” said Xu from the State Information Center, an affiliate of the top economic planning agency, the National Development and Reform Commission.

China needs growth of at least 8 percent to create enough jobs for the 20 million workers entering the urban workforce annually and ensure social stability. The nation will face a “grim” job situation this year as the economy cools, labor minister Yin Weimin said on Nov. 26.

Almost half of China’s toymakers shut their businesses in the first 11 months as overseas shipments plunged, according to customs data. In 2008 more than 10 million migrant workers had lost their jobs as of the end of November, Caijing Magazine reported Dec. 17, citing an unidentified labor ministry official.

Imports may fall by 20 percent in December from a year earlier, according to the economists surveyed by Bloomberg. That will result in a trade surplus of $34 billion for last month.

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Treasury’s $700 billion bailout has gotten most of the nation’s attention, but some of the government’s lesser-known programs are doing their part to help ease credit as well.

Two new government programs aimed at easing short-term liquidity concerns for financial institutions have started to take hold. The first, the Federal Reserve’s Commercial Paper Funding Facility, allows companies to sell highly rated 3-month debt to the government in exchange for ultra-low interest rates.

A Fed report released Thursday showed that the key market for business lending has expanded for the sixth straight week.

The amount of so-called commercial paper that was sold in the seven days ended Dec. 3 rose by $11.6 billion, or 1%, to a seasonally adjusted $1.7 trillion, the report said.

Commercial paper is short-term debt that big businesses and financial institutions issue to fund day-to-day business operations. Long considered a safe and liquid investment, the debt is bought chiefly by conservative investors such as money-market funds.

But when the credit crisis hit in mid-September, funds began to invest in even safer assets, leaving many businesses in dire need of short-term financing.

"Investment committees for money market funds were worried that they might be investing in the next Lehman," said Bill Larkin, portfolio manager at Cabot Money Management. "They got out of the commercial paper market, and now they’re buying mostly government bonds."

As a result, on Oct. 20, the Fed began buying up commercial paper to help businesses meet their funding needs.

A separate Fed report showed that the government bought nearly $10 billion of commercial paper over the past week. It was the second week in a row in which the overall market expanded faster than the Fed’s weekly purchase rate, suggesting the program has begun to attract private borrowers.

"The program has helped, but the commercial paper market may never come back to the way it was," Larkin said. "That’s where the FDIC’s new program can fill the void."

That second program, the Temporary Liquidity Guarantee Program, allows the FDIC to guarantee the payment of newly issued unsecured bank debt with greater than a one-month maturity, in exchange for a nominal fee payday loans online.

The FDIC will guarantee a bank’s issuance of debt, usually in the form of corporate bonds, for up to 125% of a bank’s total debt outstanding as of Sept. 30 that was scheduled to mature on or before June 30, 2009.

In just its second week, the FDIC’s guarantee program has attracted numerous participants, including Citigroup (C, Fortune 500), General Electric (GE, Fortune 500)’s finance division GE Capital, JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), Bank of America (BAC, Fortune 500) and Goldman Sachs (GS, Fortune 500), which only two months ago applied for "bank holding company" status so it could receive government aid for banks.

Bank of America has issued $9 billion in bonds under the program. Citi issued $5.5 billion, and Goldman and JPMorgan issued $5 billion. Wells Fargo sold $6 billion. GE has not yet issued bonds, though it said it was approved for $139 billion of FDIC guarantees.

The program has thus far guaranteed more than $40 billion in bonds, and Larkin believes the program will eventually guarantee more than $200 billion.

Early indications show the plan is working. Corporate bond yields are down, making lending cheaper for businesses. And credit default swaps, insurance contracts on debt, are also much less expensive.

For instance, credit default swaps on Citigroup bonds were running at about 5% of the bond’s price just before the program started, and the insurance cost just 2.6% Thursday.

The guarantee program will remain critically important if companies remain unable to finance short-term debt through the commercial paper market after the Fed program expires. Larkin believes the FDIC program could help in the long run when the commercial paper market might not be able to.

"Risk-averse people are happy, because they’re really looking for places to put their money," said Larkin "The FDIC program is giving institutions access to these crucial markets again." 

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Sales of new cars and trucks in Silicon Valley are down 19.3 percent in the first nine months of 2008 compared to the same period in 2007, a report released Wednesday shows.

The Silicon Valley Auto Dealers Association report predicts that sales for the full year will total 58,665 vehicles, down more than 18 percent from the 71,616 cars and trucks sold in 2007.

The report's author, economist Jeff Foltz of Auto Outlook of Malvern, Pa., predicts valley sales will drop again next year to 56,000 vehicles before rising in both 2010 to 58,500 and in 2011 to 63,500) cash advance in one hour.

The drop in the valley is steeper that the 13.7 percent decline so far this year across the nation.

The only brands which haven't declined in the valley are Mini, Subaru and Jaguar, the report said.

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HAVANA – The global financial crisis has dealt another blow to Cuba, already reeling from two powerful hurricanes and soaring import prices, and it could force the government to speed up reforms, Western diplomats and businessmen say.

The crisis has made credit tighter and softened demand for nickel, the island’s key export. It could also slow tourism revenues and financial support from family members living abroad.

It comes at a particularly bad time for Cuba, where there were already signs of a mounting foreign-exchange shortage before the crisis surged on Wall Street and hurricanes Ike and Gustav caused at least $5 billion (U.S.) in damage – roughly 10 per cent of Cuba’s gross domestic product.

Cuban President Raul Castro warned the country starting in mid-summer that belts would have to be tightened because of rising costs for fuel and food imports.

At the same time, the government began taking steps to ease its financial crunch, said one businessman, who like others interviewed, requested anonymity.

"First they insisted suppliers allow 360 days for payment instead of 180. Then they told some suppliers and creditors they needed to restructure debt," he said.

Even before the two hurricanes struck within 10 days of each other starting on Aug. 30, at least one Spanish bank had stopped handling letters of credit for Cuba deals.

Some of Cuba’s payment problems have been settled or are being worked out now, sources said, but the availability of future credit for Cuba is in question.

"Credit has always been hard to come by and expensive because of their payment history and U.S. pressure," a European economic attach? said.

"It’s hard to see how it could become that much worse, but who knows (cash loans)."

Cuba, under U.S. economic sanctions for decades, is not a member of the International Monetary Fund or any other multilateral lending organization. The country has a Moody’s rating of Caa1, or speculative and poor.

How much worse an already difficult financial situation might become will depend on support received from oil-rich ally Venezuela as well as China, and the Cuban government’s willingness to push ahead with economic reforms, the sources said.

When Raul Castro officially replaced ailing brother Fidel Castro as president in February, he instituted some small changes such as the opening of cellphone and computer sales to the public and began broader reforms in agriculture.

The changes raised hopes, so far unfulfilled, of more reforms to modernize the country’s state-run economy.

"If Cuba quickens reform, for example opening up the retail sector to private individuals and co-operatives, that would help domestically and be a positive signal even to China," said a leader of the organization of Spanish companies operating in Cuba.

The financial crisis also could provide an opening to renegotiate some of the debt hanging over Cuba’s economy, diplomats said.

Cuba’s central bank has told creditors the country’s foreign debt increased by $1.1 billion in 2007 to $16.5 billion.

"In every crisis there is opportunity, and a possible solution would be for Cuba to negotiate its debt with the Paris Club," another European diplomat said.

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The Bank of Japan said it's ready to provide more cash after pumping 5.5 trillion yen ($51.8 billion) into money markets unsettled by the U.S. financial crisis.

“The bank will continue to strive to ensure smooth settlement of funds and maintain market stability,'' it said in a statement after Governor Masaaki Shirakawa and his colleagues left the target for the overnight lending rate at 0.5 percent.

Central banks from Frankfurt to Sydney added more than $200 billion this week to make sure banks keep lending to each other following the collapse of Lehman Brothers Holdings Inc. and rescue of American International Group Inc. World market turmoil may crimp global growth, reducing demand for Japan's exports and weakening an economy that's on the brink of a recession.

“The BOJ is sending a message that its best approach to the market turbulence is to provide as much liquidity as needed, not to change interest rates,'' said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “The bank is trying to figure out how badly the external shocks will affect the economy at home.''

Global stock markets have rebounded since reeling from Lehman's bankruptcy this week. The Nikkei 225 Stock Average advanced from a three-year low today after the U.S. government said it would take over New York-based AIG, the country's largest insurer, to save the firm from collapse.

“Economic growth has been sluggish against the backdrop of higher energy and material prices and weaker growth in exports,'' the Bank of Japan said, repeating language introduced last month. “Tensions in global financial markets have increased and there are downside risks to the world economy.''

`Functioning Well'

The yen traded at 105.97 per dollar at 2:30 p.m. in Tokyo from 105.99 before the announcement. The Nikkei rose 1.1 percent.

The Bank of Japan injected 3 trillion yen into the banking system today after the overnight rate surged to 0.65 percent, and yesterday added 2.5 trillion yen. “Japan's money market has been functioning well,'' the central bank said.

The policy board may want more evidence that weakening global growth will derail the world's second-largest economy before deciding whether to cut borrowing costs, already the lowest in the industrialized world. The bank today reiterated that prolonging a low-rate policy could hamper the nation's prospects for sustainable growth in the long term cash advance usa.

Protracting the policy may “lead to swings in economic activity and prices,'' the bank said. Shirakawa made similar remarks in speeches in August and this month.

Japan's economy will recover after slowing for the time being, the central bank repeated today, adding that it will implement policy flexibly.

No Move By June

Today's rate decision was unanimous, and predicted by all 33 economists surveyed by Bloomberg News. Of 29 who gave predictions through June, 24 said there will be no move by then. Four estimated higher rates and one forecast a cut.

Gross domestic product shrank an annualized 3 percent last quarter, the sharpest contraction since 2001. Exports, the main driver of Japan's six-year expansion, fell for the first time in three years.

“We think the Japanese economy is already in a recession and now the focus is on how much damage the latest external shock will cause,'' said Yoshimasa Maruyama, a senior economist at BNP Paribas Securities Japan Ltd. in Tokyo. Still, “a rate cut isn't among the bank's options because BOJ policy makers have said monetary conditions are already very accommodative.''

Faster Inflation

Since the seven-member board met last month, reports showed inflation accelerated and the ratio of jobs available to applicants fell to the lowest level in four years. Consumer prices excluding fresh food rose 2.4 percent, the fastest rate in a decade, outpacing wage growth.

The central bank said it's watching “inflation expectations of households and the price-setting behavior of firms in addition to developments in energy and materials prices.''

Crude oil has tumbled 35 percent since exceeding $147 a barrel for the first time on July 11. Cheaper oil won't provide immediate respite, economists say.

“Commodity markets are going through an adjustment, but core consumer prices will hover around 2 percent because companies continue to pass on food and energy costs,'' said Jun Ishii, chief fixed-income strategist at Mitsubishi UFJ Securities Co. in Tokyo. “The BOJ won't cut rates to spur growth nor raise them to contain inflation for the time being.''

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Anheuser-Busch said Wednesday that a lawsuit filed in an attempt to block InBev’s $52 billion takeover of the Budweiser-maker lacks merit.

“We believe that the claims alleged in the lawsuit are without merit and we intend to vigorously defend against them,” said Gary Rutledge, vice president of legal and government affairs, in a statement.

Joseph Alioto, a prominent San Francisco antitrust lawyer, filed a lawsuit Wednesday in a federal court in St. Louis on behalf of 10 Missouri beer drinkers, alleging that the takeover hurts consumers with higher prices and smaller selections.

The beer market is “plainly a market ripe for probable if not certain collusion and a galloping tendency toward monopoly,” the lawsuit says. “If InBev is allowed to purchase Anheuser-Busch, there no longer would be any significant major potential competitor to influence pricing and marketing practices in the United States anywhere near the degree to which InBev, as the largest brewer in the world, is able to do.”

St cash advance loan. Louis-based Anheuser-Busch Cos. Inc. (NYSE: BUD), through its Anheuser-Busch Inc. subsidiary, is the leading domestic brewer, holding a 48.5 percent share of U.S. beer sales. The company accepted a $52 billion takeover offer from Belgian InBev, which will create the world’s largest brewer when the deal closes.

Anheuser-Busch is the top domestic competitor to MillerCoors, the merged Miller Brewing of Milwaukee and Coors Brewing of Golden, Colo.

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U.K. house prices fell by the most since at least 2001 in August as economic growth stagnated, and an end to the property slump is “still some way off,'' according to Hometrack Ltd.

The average cost of a residential property in England and Wales slipped 5.3 percent from a year earlier to 167,000 pounds ($305,000), the London-based research company said in a statement today. That's the biggest annual drop since the index started seven years ago. Prices fell 0.9 percent from July.

“A recovery in the housing slump, even back to zero monthly growth, is still some way off,'' said Richard Donnell, director of research at Hometrack. “It is confidence over the outlook for job prospects and the wider economy that is fundamental to any sustained turnaround in market conditions.''

Nationwide Building Society and HBOS Plc reports show that the U.K. has entered its steepest property market slump since the early 1990s. The Bank of England kept the benchmark rate unchanged in August as it weighed the fastest inflation in a decade against the threat of a recession.

Property values fell in each of the nine regions in Hometrack's survey. In London, they dropped 1.1 percent from July. The average time for a home to stay on the market rose to 11.3 weeks from 11 weeks, and the amount of the asking price achieved in sales fell to 90.7 percent from 90.9 percent faxless payday advance.

`Market Turns'

“When the market turns, it can take as long as 24 to 36 months for prices to reach realistic levels,'' Donnell said. “We are now well into this process.''

House prices in Britain declined 10.5 percent from a year earlier last month, the most since 1990, Nationwide said Aug. 20. HBOS said Aug. 7 that prices declined the most since 1983.

The flagging property market adds to signs that the U.K. may be entering its first economic contraction since 1992 after growth stagnated in the second quarter.

For manufacturers, orders fell to the lowest in three years, and companies expect a further deterioration, according to a separate report published today by the EEF engineering lobby group.

Inflation accelerated to 4.4 percent in July, more than twice the central bank's target, making the Bank of England reluctant to cut interest rates to shore up the economy. Societe General SA and Bank of America Corp. predict that the central bank will start lowering interest rates by the end of this year.

The next interest-rate decision is Sept. 4. All 61 economists in a Bloomberg News survey expect no change this month.

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