Every week there are a numerous headlines that are worthy of mentioning but I simply run out of time. Here are a few headline news reports of interest from the past week.
B.C. Canadian brewery toasts tough times with Bailout Bitter Beer
A microbrewery in British Columbia is toasting the current economic downturn by launching a special brand of recession-style beer.
Howe Sound Brewery has named its most bitter-tasting brew Bailout Bitter in honour of the government bailouts of the financial sector that have taken place in an attempt to mitigate the global financial crisis.
Calling it “bitter ale for bitter times,” the brewery said the new beer will cost less than its other brands.
A pint of Bailout Bitter will sell for $5.50, or about $1 less per glass than other brews, at the company’s restaurant and pub, located in Squamish, B.C., north of Vancouver.
The company is also planning to sell one-litre bottles of the new ale in the coming weeks, at a price less than the $7.10 per one-litre bottle it charges for some of its current brands. The price per bottle hasn’t been set yet as the company waits for bottling approval from provincial government.
A Damien Hirst painting of four skulls that was tipped to fetch at least $3 million at Phillips de Pury & Co.’s New York auction didn’t sell, the biggest upset of last night’s auction that missed presale low estimates by more than half. It was the third sale this week to disappoint art dealers and may herald a decline that tracks the drop in stock markets.
Phillips took $9.6 million with fees, against its presale low projection of $23 million. Two in five lots didn’t sell. Gone was the party ambience that filled its loft-like Manhattan headquarters in previous seasons. Collectors such as Mera and Don Rubell, Adam Lindemann, Stavros Merjos and Maria Baibakova looked on as 21 lots found no buyers. A comparable sale a year ago fetched $42.3 million. “It was pretty brutal,” said Los Angeles-based Merjos.
Sears Holdings Corp. is entering what may be the worst holiday season in decades with 42 percent less cash on hand than a year earlier, declining cash flow, hard-to-sell real estate and retail operations lagging behind competitors.
More than three years after Lampert’s Kmart Holding Corp. bought Sears Roebuck & Co., the 46-year-old chief still hasn’t revived revenue growth at the largest U.S. department-store chain. The combined company has seen sales drop at stores open at least a year in every quarter since the acquisition.
The world’s developed countries, hard hit by the financial crisis, have probably tipped into a recession that will last at least through the first half of 2009, according to new projections issued Thursday.
The Paris-based Organization for Economic Cooperation and Development forecast that economic output would shrink 1.4 percent this quarter for the 30 market democracies that make up its membership — and keep contracting until the middle of next year.
That would mean the developed world has now entered a slump estimated to last at least three quarters; two consecutive quarters is a common definition of recession. For all of 2009, these countries’ economies would contract by 0.3 percent.
China’s industrial output grew at a slower pace than any economist forecast in October, stoking concern that the biggest contributor to global growth is running out of steam.
Production rose 8.2 percent from a year earlier, the smallest gain in seven years, the statistics bureau said today. None of 18 economists surveyed by Bloomberg News predicted such a small increase. Output grew 11.4 percent in September.
“China’s economy is losing momentum faster than expected: the central bank needs to act,” said Tao Dong, chief Asia economist at Credit Suisse Group AG in Hong Kong. “We hope this is the worst quarter and things start looking better next year because of the infrastructure plan.”
Inflation eased to the slowest pace in 17 months in October, money supply expanded by the least in three years, and import, export and retail sales growth cooled, this week’s figures showed.
Construction contracted in September by the most since the 1990s, according to Macquarie Securities Ltd. Export orders fell last month to the lowest since 2005, a survey showed.
The economy may expand 5.8 percent this quarter, the weakest pace in at least 15 years, Credit Suisse AG estimates.
Time Inc., part of Time Warner (TWX), proposes to cut payroll the old fashioned way: With a meat ax. Of course, this invitation to a beheading is called a “voluntary buyout.” However, if enough folks don’t take the hint and accept the offer, easy-to-understand layoffs are next.
After slashing expenses by completing 8,500 of 8,900 planned job cuts, Dell (DELL) found it wasn’t enough. The computer maker then asked remaining workers to consider taking up to 5 days of unpaid vacation as part of the ongoing effort to reduce costs.
ports Illustrated is looking for about 40 volunteers; People, 23 and Time, about 20. Fortune and Money are also asking for volunteers, but the number wasn’t specified.
Babcock & Brown Ltd.’s fight to avoid becoming Australia’s next victim of the credit crisis may depend on convincing bankers that it can sell assets in a market where others have failed.
Babcock slumped to a record low in Sydney trading today, and has lost more than half its value since Nov. 6, when ABN Amro Holdings NV analyst John Heagerty said the owner of wind farms and real estate may breach loan agreements next year. It must repay A$400 million ($266 million) — twice its market value — of a A$2.8 billion loan to a group of banks.
When the government said it would spend $700 billion to rescue the nation’s financial industry, it seemed to be an ocean of money. But after one of the biggest lobbying free-for-alls in memory, it suddenly looks like a dwindling pool.
Of the initial $350 billion that Congress freed up, out of the $700 billion in bailout money contained in the law that passed last month, the Treasury Department has committed all but $60 billion. The shrinking pie — and the growing uncertainty over who qualifies — has thrown Washington’s legal and lobbying establishment into a mad scramble.
The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.
The lobbying frenzy worries many traditional bankers — the original targets of the rescue program — who fear that it could blur, or even undermine, the government’s effort to stabilize the financial system after its worst crisis since the 1930s.
General Electric Co., buffeted by the global credit crunch, rebounded from the lowest stock price in 12 years after saying there is no plan to cut its dividend and Chief Executive Officer Jeffrey Immelt bought shares in a show of faith.
GE rose 57 cents to $16.01 at 4:01 p.m. in New York Stock Exchange Composite trading. Earlier the shares fell as much as 11 percent to $14.58, the lowest price since September 1996.
The company has not changed a plan revealed on Sept. 25 to keep the 2009 dividend the same as this year, spokesman Russell Wilkerson said after today’s share decline. Fairfield, Connecticut-based GE has paid a quarterly dividend for more than a century and next year’s cash flow is expected to exceed the amount needed for the payout, the company said on its Web site.
The global economy is entering a slowdown of epic proportions, comparable to the Great Depression, John Thain, chairman and chief executive of Merrill Lynch, warned on Tuesday.
“Right now, the US economy is contracting very rapidly. We are looking at a period of global slowdown, and a global slowdown in economic activity that affects everyone who participates in global markets,” he told investors. “This is not like 1987 or 1998 or 2001. The contraction going on is bigger than that. We will in fact look back to the 1929 period to see the kind of slowdown we’re seeing now.”
Goldman Sachs, which acted for the state of California in selling bonds, has urged some of its big clients to place investment bets against some of those bonds this year, the Los Angeles Times reported.
The paper said that Goldman declined to discuss the details of its trading strategy.
Goldman spokesman Michael DuVally told the paper that the firm was no longer giving the trading advice to clients. He declined to elaborate.
Another Week, Another Week Of Grim News
Mike “Mish” Shedlock
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