Japan The Shrinking Economy

They did beat forecasts of 16.1%

By Jason Clenfield

May 20 (Bloomberg) — Japan’s economy shrank by a record last quarter amid an unprecedented collapse in exports and a drawdown of inventories that could pave the way for a recovery later this year.

Gross domestic product contracted an annualized 15.2 percent in the three months ended March 31, following a revised fourth-quarter drop of 14.4 percent, the Cabinet Office said today in Tokyo. Economists predicted the economy would shrink 16.1 percent.

Japan’s worst recession since World War II probably reached its bottom last quarter, as a pullback in business and consumer spending compounded the export crash that began in October. A rebound in world equity markets has spurred investor sentiment in the past month and Prime Minister Taro Aso’s three stimulus packages totaling 25 trillion yen ($260 billion) have buoyed confidence at home.

“There’s light at the end of the tunnel,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “The economy will probably return to growth this quarter” as companies replenish inventories and stimulus plans at home and abroad take effect, he said.

The yen traded at 96.05 per dollar at 9:21 a.m. in Tokyo from 96.16 before the report was published. The Nikkei 225 Stock Average rose 0.9 percent, bringing its gains to 33 percent from a 26-year low on March 10.

Worst Since 1955

The first-quarter contraction was the most severe since records started in 1955. On a non-annualized basis, Japan’s 4 percent decline is more than twice as bad as the U.S.’s 1.6 percent slide. It’s also worse than Europe’s record 2.5 percent contraction during the period.

Without adjusting for price changes, the economy shrank 2.9 percent last quarter.

Exports plunged 26 percent from the previous three months, the Cabinet Office said.

The report showed the dearth of exports is reducing spending by the nation’s companies and consumers. Domestic demand shaved 2.6 percentage points off GDP, the largest slide since 1974.

Consumer spending fell 1.1 percent, as companies including Toyota Motor Corp., Toshiba Corp. and NEC Corp. slashed pay and fired thousands of workers to cut costs. Business investment plunged 10.4 percent, the worst on record.

Excess Capacity

“There is a huge problem of over-capacity,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo. “That means capital spending is not likely to pickup. It’ll keep sliding for another two to three quarters and then stabilize, but not pick up.”

Still, reports in the past month suggest the world’s second-largest economy may resume growth this quarter, albeit from a low point. Consumer confidence rose to a 10-month high in April. Exports increased in March from a month earlier, and factory output rose for the first time since September, a fact Bank of Japan Governor Masaaki Shirakawa pointed to last week as evidence the economy is “leveling out.”

Earnings projections for the current year add to signs the worst may be over. Japanese companies that reported fiscal 2008 results say profits will rise 26 percent in the current business year, according to Tokyo-based Shinko Research Institute Co.

Replacing Stockpiles

Stabilizing demand from Japan’s biggest overseas markets, combined with aggressive inventory cuts, has given companies including Honda Motor Corp. room to raise production. Executive Vice President Koichi Kondo said last month the U.S. has probably bottomed. The automaker plans to boost output at domestic factories this quarter as dealerships clear inventories, the Wall Street Journal reported last week.

“The economy is no longer in free fall,” said David Cohen, head of Asian economic forecasting at Action Economics in Singapore. “By the end of the first quarter, things had started to firm.”

Still, the failure of export demand to do better than simply stabilize will probably limit the scope of Japan’s recovery. Toyota, Sony Corp., and Panasonic Corp. all forecast continued losses in the current business year. Panasonic said last week it plans to close about 20 factories this year and proceed with the 15,000 job cuts announced in February.

“We’re less pessimistic about the near-term recovery but we remain very cautious about the long term,” said Credit Suisse’s Shirakawa. “Global demand is not likely to revert to its peaks in 2007, 2008. So Japan is going to face a serious problem of over-capacity and over-employment.”

From Jim Willie & The Market Oracle

The so-called ‘Green Shoots’ have been trampled by people walking to their Unemployment Insurance Offices to collect jobless claims in order to pay their bills. The so-called ‘Green Shoots’ have been trampled been people walking (or running) away from their homes as they are being foreclosed. The so-called ‘Green Shoots’ will continue to suffer from most water and nutrients heading to the Elite Gardens, diverted from those on Main Street. The so-called ‘Green Shoots’ have been killed off by a stubborn frost from the US Economy. A prevailing sentiment and motivation has sadly and perversely entered into the public and financial sectors, with clear deceptive intention.

The stretch of the data, the desperate misinterpretation the data, the false facade painted atop a US Economy, such deceptions cannot stand even the most gentle taste tests and sanity checks. Then again, Wall Street and the USGovt (victim of the financial Coup d’Etat) must promote a positive sentiment in order to reinvigorate confidence. After all, the US Dollar-based system depends upon trust and confidence, since no gold backs the financial foundation and debt permeates every crevice. Heck, not even much industry backs the US economy, the famed financially engineered miracle gone awry. The principal characteristic of a body that is bankrupt, deeply mired in debt, and must sustain itself by selling debt securities to foreigners is deception. One must struggle mightily to find much of any honesty in USGovt finance or US bank system accounting, economic statistics, or establishment of future prospects.

What is the motive for intentionally permitting phony accounting with FASB rule reversals? What is the motive for chronic direct accounting fraud with ‘Credit Value Adjustments’ in balance sheet updates that reinforce profits in earnings statements? That wondrous device is invaluable. Banks like Citigroup should have written down certain major credit losses. But instead, since they claimed they could purchase them back for much lower value, they booked them as gains!! Asset losses are being booked as gains, incredibly, right under the corrupted noses of the Securities & Exchange Commission, which has authority to slam such practices, reject submitted 10Q filings, to impose fines, and to prosecute for fraud.

However, the SEC is part of the Wall Street syndicate, recognized increasingly as a sprawling criminal enterprise. It even owns the US Congress, a surprising admission by a standing US Senator. Surely, the system needs a little juiced confidence after a dismal few months. Surely, the US Treasury wishes that foreign buyers of debt securities maintain a positive view toward ongoing support of the US locomotive, even if it is riding over the cliff. Surely, the US public needs to see some beneficial news in its pension and mutual funds, after months of drubbing’s. Another very real motive is to provide insiders, the executives, who authorize the often phony accounting and highly fallacious earnings reports, a good price for their INSIDER SELLING.

Here is a brief passage from a Bloomberg article dated April 24th (CLICK HERE) on the subject of rapidly rising Insider Selling. “While the Standard & Poor’s 500 Index climbed 28% from a 12-year low on March 9, CEO’s, directors and senior officers at US companies sold $353 million of equities this month, or 8.3 times more than they bought, data compiled by Washington Service, a Bethesda Maryland based research firm, show. That is a warning sign, because insiders usually have more information about their companies’ prospects than anyone else, according to William Stone at PNC Financial Services Group Inc. ‘They should know more than outsiders would, so you could take it as a signal that there is something wrong if they are selling,’ said Stone, chief investment strategist at PNC’s wealth management unit, which oversees $110 billion in Philadelphia. ‘Whether it is a sustainable rebound is still in question. I would prefer they were buying.’ Insiders from New York Stock Exchange listed companies sold $8.32 worth of stock for every dollar bought in the first three weeks of April, according to Washington Service, which analyzes stock transactions of corporate insiders for more than 500 institutional clients.

That is the fastest rate of selling since October 2007, when US stocks peaked and the 17-month bear market that wiped out more than half the market value of US companies began. The $42.5 million in insider purchases through April 20 would represent the smallest amount for a full month since July 1992, data going back more than 20 years show. That drop preceded a 2.4% slide in the S&P 500 in August 1992.” One might expect history to repeat itself, namely a severe stock decline soon to come! A peak in stocks might be forming, just like October 2007.
LATEST JOBS DATA

Back-to-back minus 6% Gross Domestic Product quarters should awaken the leaders and pundits and observers, but no! Record setting continuing claims for the unemployed should awaken the leaders and pundits and observers, but no! Heavy reliance upon the fictitious Birth-Death Model to produce a tiny decrease in April job losses should have been more noticed, but no! Record setting housing price declines should awaken the leaders and pundits and observers, but no! Tragic and relentless home foreclosures should awaken the leaders and pundits and observers, but no! A 80% to 90% decline in the market capitalization of most leading US banks should awaken the leaders and pundits and observers, but no!

Alan Abelson of Barrons and David Rosenberg of Merrill Lynch surely noticed the statistical shell game. It is difficult to see the Green Shoots or anything positive in the Non-Farm job losses or the fast rising continuing claims graphs or home foreclosure data. See the small business adjustment shell game from the USGovt website, a true black eye of embarrassment to statistical modeling laced with fantasy (CLICK HERE). The Birth-Death Model was pressed into duty to add a mythical 226 thousand jobs in April, double the mythical 114 thousand jobs added in March, a handle tool indeed, based in statistical fraud.

The Birth-Death Model might be a sophisticated statistical model, called an autoregressive integrated moving average (ARIMA-11) eleventh order time series, but that don’t impress me when the small business climate is horrible and they are not hiring! They are fighting for survival, retrenching, and some failing. Such ARIMA models have their place, like in forecasting the 7-year sunspot cycle, but surely NOT in forecasting small business job creation. Such is a sham, with political motivation, laden with intentional distortions to foment false optimism. They admit it misses economic turns, but they distort using it anyway. Someday it will be illegal to write truthful commentary like this, since it causes distress to the citizenry. See a House Bill being drafted right now. Fairy tales are more blessed by authorities.

If one removes the cockeyed fabrication of the Birth-Death Model, then February, March, April job loss totals would sequentially be 815 thousand, 813 thousand, 765 thousand. Hardly a green shoot, and more like a tiny reduction in the pH level in the economic hydrochloric acid bathing the tiny shoots. Plenty more USGovt fiscal stimulus and US Fed monetary stimulus will be needed. GOLD & SILVER WILL BE THE ONLY SHOOTS GROWING ON THIS FIELD.

The jobless claims data was released today. Slowly the ridiculous positive mist will clear enough to see the data for what it is. The US economy is continuing its path during a painful process of disintegration. This has been my steady constant unflinching interpretation for several months. If you don’t like it, then enter a fantasy world with Pied Pipers galore willing to lead you over a cliff. The continuing claims rose by 202 thousand people in the week of May 2nd, to register its 15th straight weekly record, now at 6.56 million. The jobless claims are a marginal indicator, but the better indicator at the margin is continuing claims, which calculates the net difference between new people entering the jobless room minus those who find jobs exiting the jobless room. Few are finding work. Hardly a green shoot, and more like a rising tombstone epitaph to the labor market. Plenty more USGovt fiscal stimulus and US fed monetary stimulus will be needed. GOLD & SILVER WILL BE THE ONLY SHOOTS GROWING ON THIS FIELD.

The April housing price data and home foreclosure data was released yesterday. All news was horrendous. The median price fell 14% to $169k for homes in April, the biggest decline ever recorded. Prices actually dropped in 134 of 152 metropolitan areas. Home prices combined with job losses will force a persistent national tragedy of additional foreclosures to come. The April data on foreclosure filings in the US set a record for the second consecutive month as banks accelerated home seizures from delinquent borrowers. One in 374 households was subject to a filing, the worst monthly rate since RealtyTrac began their work in 2005.

Foreclosure filings rose by an ugly 32% in 1Q2009 from Q1 a year ago. Filings were little changed from March as some states delayed seizures with moratorium initiatives that are ending, thus a temporary stall. Option ARMs, Jumbos, and Commercial mortgages are all heavy losers now, and they aint Subprimes! After the Cramdown Law was defeated, a fresh avalanche of foreclosures is certain. That is a certain unintended consequence, and harsh reality of the marketplace that bankers choose instead. Hardly a green shoot, and more like an obituary to the American dream of home ownership turned nightmare. Plenty more USGovt fiscal stimulus and US fed monetary stimulus will be needed. GOLD & SILVER WILL BE THE ONLY SHOOTS GROWING ON THIS FIELD.
WHAT TO DO?

Without proper warning, the US public is aligned to lose life savings. Home equity, pension funds, and savings accounts are all being decimated, as shock has resulted. The masses of people are vulnerable to deception, ruses, and false messages. They need to heed accurate siren warnings, to depart from paper based investments, to shed US$-based securities assets of all kinds, and to fully embrace gold & silver physical investments. Shun also the often fraud-ridden Exchange Traded Funds like GLD (for gold) and SLV (for silver) which are managed by the same gold cartel financial firms, laced with collusion, in violation of prospectuses, denied of disclosure, replete with naked shorting of precious metals, and probably funding gold & silver suppression projects. My full expectation is that at a future date, both GLD and SLV will shut down under tremendous controversy and probably be subjected to fraud charges. Both will be forced to liquidate funds, pay out artificially low flimsy paper prices, and admit they have far less gold & silver in their vaults than advertised, but far more paper certificates in their place. Perhaps such an explosive event will occur in late 2010, my best guess, or perhaps in 2011.

Dates on the calendar are far more difficult than event schedules. The discredit of GLD and SLV will come after the COMEX is smashed, defaulted, prosecuted, and shut down. If you believe that is impossible, then bear in mind that both the Germans and Persian Gulf states have demanded the return of all gold bullion held in the United States and London. Pressure is on the Commodity Exchanges in New York and Chicago (COMEX) and the London Metal Exchange (LME). They are fast losing their physical metal, and are loaded to the gills with illegal short contracts that grossly lack collateral. We have defaults in the making, surely overdue, but clearly slow in coming.

GOLD WILL REACH $3000 BEFORE THIS CHAPTER OF US HISTORY IS FULLY WRITTEN. SILVER WILL REACH $100 BEFORE THE LAST CHAPTER IS WRITTEN. These are easy targets. A tipping point comes just over the horizon, and the Hat Trick Letter is prepared to identify it. A massive spillover is due soon, from the money printing coffers into the streets where they people live and work and shop. When they finally receive the so-called money, it will be worth less than before, and might be worthless altogether. We are witnessing the heart attacks and seizures to the banks, the ambulances for the people, the weeds for the businesses, and the alzheimer’s for the press, as Pied Pipers run rampant and the USGovt vacillates between touches of fascism and communism. Sit back and watch, because we are in for a wild ride on the Weimar roller coaster. Not one in a thousand Americans even knows what that means. Try to avoid being a lamb at the slaughterhouse.

Permit a barrage of economic statistics without slant and bias, just statistics that fail to nourish any Field of Dreams depicted by the errant leaders of today, or their imaginary green shoots. They are sickening in their breadth and depth. A depression is taking root, tragically. Leaders are unable to come to grips with the reality that they have produced through serial bubbles, pursuit of low-cost labor solutions in Asia, unspeakable fraud from pockets of missing trillion$ in primary pantlegs (Wall Street, Fannie Mae, Pentagon, failed USTreasurys). The nation grew dependent upon the construction of elaborate weak financial latticework structures for risk pricing and offloading laced with fraud and collusion. Now they are charred ruins.
STATISTICAL BARRAGE TO REFUTE GREEN SHOOTS

No need to go into depth to provide much background and interpretation. The above major millstones around the US Economic neck serve as preface. Basic facts and figures without massage will serve the purpose to dismiss and refute and reject the nonsensical propaganda that continues to spew. Note that final line item. Never in modern US economic history has consumer credit gone negative. Its growth fell sharply in 3Q2008, but it contracted (reduced, shrunk) by $31.7 billion on an aggregate basis in 4Q2008 and 1Q2009. For a debt-based economy, such is a death knell. On the national level, the vivid retreat by foreigners to finance US treasury debt is the other shrill warning signal, not yet a death knell, because the US has a printing press. Bernanke actually described its usage as having zero cost. He must not be aware of the FOREX and credit markets, which can sell down the US Dollar and US T-Bond respectively. In time, the United States and its bankers will be almost completely isolated, the principal defender of its monstrously growing debt burden, stuck with only a printing press with a Weimar brand. Consequences come, at which time gold & silver will be the major games in town. As the US economy continues its lethal decline, the USGovt stimulus will require quarterly stimulus of staggering proportions. By then, the entire US financial structure will be thoroughly discredited.

What follows is a laundry list that puts the US economy halfway between the Intensive Care Ward and the National Morgue:

– Endless War spending could subsidize every household in America with $1000 per year
– Income is trending down in the United States, England, and Japan
– US banks loan loss reserves are at a 20-year low while profound losses continue
– Of the nearly 9000 US banks, 1575 of them posted a Q1 loss
– Bernanke claims $2 trillion is needed by the big US banks, but they pass the Stress Test
– Municipal bonds and state finances are disasters, as they each appeal for USGovt aid
– A shocking 20% of US homeowners have loan balances greater than their home values
– Half of modified loans result in foreclosure within several months
– Jobs report for April revealed jobless level at 8.9% (massaged) and 15.8% (actual)
– Jobs Report for April included 66k worse revised job losses for March and February
– Continuing jobless claims at 6.56 million, grew 220k just last week
– CALPERS pension fund is insolvent, USGovt pension PBGC guarantee fund in deep deficit
– FDIC requested $500 billion in additional funds to cover bank failures (giant failure coming)
– Car sales still down 40% annually, with steep Japanese car sales declines also
– Detroit car makers are closing down plants, with huge ripples through entire supply chain
– GM & Chrysler restructures are extremely likely to result in Chapter 7 liquidation in time
– GM burned $1.3B in Q1, burns $113 million per day, unable to transition to green cars
– Business investment down 38% in Q1, a RELIABLE LEADING INDICATOR
– Durable goods up 9% in Q1, but only after Q4 was pushed down from bank shock
– Inventory reduction not key, but rather inventory/sales ratio, since sales way down
– Economic contraction despite lower energy costs from crude oil, natural gas, gasoline
– Housing was false foundation since 2002, now in stubborn decline, the Giant Albatross
– Distress sales make up 40% of all housing sales, led by underwater sales and foreclosures
– Cramdown Law rejection means open season on foreclosures, more huge bank losses
– Banks admit that home loan are not modified after all, a revolving door to foreclosure
– Option ARMs, Jumbos, and Commercial mortgage defaults are ramping up fast
– Commercial mortgage bonds have $70-100 billion that cannot be refinanced, sure to default
– Staggering decline in consumer credit, -80% in Q3, minus $31.7B in Q4/Q1
REJOINDER ON TARP FUND BICKERING & MOTIVES

Let’s get something straight!! Much has been in the news about the TARP funds, and how former US treasury Secy Paulson pressured numerous big banks into accepting funds. Some of their CEO’s did not wish to receive the funds, and felt forced by Paulson and US fed Chairman Bernanke into accepting the funds. Phony reasons have been put forth in the financial media networks, that given all the changes to the program and involvement with corporate banking affairs, the CEO’s are playing fast & loose with the truth, claiming only now that they were unduly pressured. The USGovt changes and interference CAME LATER. The CEO’s did not wish to receive TARP funds BEFORE any USGovt changed decisions had been made. Many question why Paulson (Mutt) and Bernanke (Jeff) coerced acceptance of official funds. The other phony argument is that the bank leader duo, two titans of the financial syndicate rampant with criminal fraud, were attempting to save the US banking system, which was a nick-nick from falling into the abyss. Does anyone wish to know the real reasons why Mutt & Jeff from the syndicate were motivated to force TARP fund flows???

The Wall Street leader (operating from his office at the US Dept Treasury) and US fed leader wanted to create a gigantic flow of funds. Lost in the shuffle would be huge payout’s to parties in Europe and Asia who were delivering pointed threats to key Wall Street leaders, as in violent threats. They were paid off in full on bond restitutions. Lost in the shuffle would be huge sums of missing money. Note the Congressional Inspector General Barofsky and his recommended 40 criminal investigations of TARP funds for fraud. Lost in the shuffle would be absurd excessive redemptions (far above market prices) paid for crippled impaired bond assets owned by Wall Street firms, who would essentially pay themselves from the Goldman Sachs order to the investment firm balance sheet. GSax received 100 cents on the dollar for AIG credit default swap contracts, but others did not. The winks & nods between Paulson and his henchmen CEO’s from other Wall Street firms are obvious. Just like the Iraq War, the objective is to create a gigantic flow of funds, where between 15% and 25% are stolen. Even former President Bush justified some level of fraud as normal, and never bothered to investigate the missing $50 billion from the Iraqi Reconstruction Fund. That figure only recently has come to light. The watchword that best identifies Wall Street ever since Rubin took control of the US dept Treasury in 1992 is FRAUD. The coercion to accept TARP funds was to create conditions that enable fraud, plain & simple. If an observer cannot notice it, then the person is at best myopic and too closely associated to official functions, and at worst hopelessly blind and corrupt at the heart.

THE HAT TRICK LETTERPROFITS IN THE CURRENT CRISIS.

From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

“I have found your commentary to be excellent in helping to insulate my clients from much of the malfeasance and market manipulations that occur in our markets by avoiding certain sectors such as banking even when all of the commentary says how well they are doing. You have been proven over the years to be very accurate.” – (RickW from Iowa)

“A few years ago, I was amazed at some of the stuff you were writing. Over time your calls have proved to be correct, on the money and frighteningly true. The information you report is provocative and prime time that we are not getting in the news. I was shocked when I read that the banks were going to fail in one of your prescient newsletters.” – (DorisR in Pennsylvania)

“You seem to have it nailed. I used to think you were paranoid. Now I think you are psychic!” – (ShawnU in Ontario)

“Your unmatched ability to find and unmask a string of significant nuggets, and to wrap them into a meaningful mosaic of the treachery-*****-stupidity which comprise our current financial system, make yours the most informative and valuable of investment letters. You have refined the ‘bits-and-pieces’ approach into an awesome intellectual tool.” – (RobertN in Texas)

Podcast

Today’s highlights: VOD, HPW, MTU

Commodities, U.S. builder sentiments, and lower borrowing costs fuel rally

By Jonathan Burgos

May 19 (Bloomberg) — Asian stocks rose as higher confidence among U.S. homebuilders, a surge in oil prices and a drop in bank borrowing costs stoked optimism the global economy is recovering.

Toyota Motor Corp., which gets a third of its sales in North America, rose 3.1 percent as the yen weakened versus the dollar. BHP Billiton Ltd., Australia’s biggest oil producer, climbed 3.4 percent after crude-oil futures rose to a six-month high. Mitsubishi UFJ Financial Group Ltd. gained 5.9 percent as the London interbank offered rate fell the most in two months. Indian stocks were poised to advance after election results triggered a surge in their American depositary receipts.

“The housing market is the most important factor in predicting the direction of an economy,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co. “When we look back on these times, we’ll see the global economy bottomed out in the April-June period.”

The MSCI Asia Pacific Index advanced 2.2 percent to 98.97 at 11 a.m. in Tokyo. Through yesterday, the gauge climbed 40 percent from a more than five-year low on March 9.

Japan’s Nikkei 225 Stock Average climbed 2.8 percent to 9,293.09. Australia’s S&P/ASX 200 Index added 2.1 percent and South Korea’s Kospi index rose 2 percent. Trading in India is due to resume trading today as a 17 percent surge in the Sensitive Index triggered a suspension yesterday.

Weaker Yen

Futures on the Standard & Poor’s 500 Index were little changed. The gauge climbed 3 percent yesterday, the most in two weeks, as analysts recommended Bank of America Corp. and Lowe’s Cos. beat earnings projections. Separately, the National Association of Home Builders/Wells Fargo index of builders’ confidence advanced in May to the highest level since September.

Toyota rose 3.1 percent to 3,670 yen in Tokyo. Honda Motor Co., which makes 51 percent of its revenue in North America, added 0.9 percent to 2,705 yen. Japanese exporters also rose on speculation a weaker yen will boost the value of overseas sales.

The surge in equities signaled investors are more willing to take risk, making the yen less attractive as a haven. The yen depreciated against the dollar to as much as 96.40 today from 95.03 at the 3 p.m. close of stock trading in Tokyo yesterday. The Japanese currency weakened versus the euro to as much as 130.68 from 127.91.

BHP Billiton, the world’s biggest mining company and Australia’s largest oil producer, rose 3.4 percent to A$34.01. Inpex Corp., Japan’s largest oil explorer, climbed 4.6 percent to 702,000 yen.

Bank Borrowing Costs

Crude oil futures gained 4.8 percent to $59.03 a barrel in New York yesterday, the highest settlement since Nov. 11. The contract rose as much as 0.4 percent in early Asian trading.

Mitsubishi UFJ, Japan’s biggest publicly traded bank, advanced 5.9 percent to 627 yen on Tokyo. Westpac Banking Corp., Australia’s biggest lender by market value, added 2.3 percent to A$19.96 in Sydney.

The three-month Libor had its biggest decline since March 19 yesterday, according to British Bankers’ Association data. It has fallen for the past 34 days, as credit markets thawed amid record low interest rates and rising customer deposits.

Indian shares trading in the U.S. rallied on speculation Prime Minister Manmohan Singh’s Congress party victory in nationwide elections will speed up economic reforms and lure overseas funds. The Bank of New York Mellon India ADR Index surged 16 percent.

American depositary receipts of ICICI Bank Ltd., India’s second-largest lender, climbed 25 percent to the highest in eight months after Morgan Stanley raised its recommendation on the country’s financial stocks.

okay just said cheating

By DEVLIN BARRETT

WASHINGTON (AP) – The Justice Department on Monday accused Wyeth (WYE), one of the nation’s biggest drugmakers, of cheating Medicaid programs out of hundreds of millions of dollars by overcharging for a stomach acid drug.

The Justice Department and more than a dozen states have joined in two whistleblower lawsuits against the Madison, N.J.-based drug company filed in federal court in Massachusetts.

The government is seeking financial penalties against the company of up to three times the amount lost by Medicaid. And if a settlement is reached, the two whistleblowers who filed the original suits likely would be entitled to some share of the sum.

The court papers claim that between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals for two versions of Protonix, a drug that suppresses stomach acid.

By law, manufacturers of brand-name drugs are required to offer the same rebates to state Medicaid programs that they provide to other customers.

The government claims the maneuver helped the company avoid paying hundreds of millions of dollars in rebates to Medicaid, a health care program for the poor that is funded by state and federal money.

“By offering massive discounts to hospitals, but then hiding that information from the Medicaid program, we believe Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have,” Assistant Attorney General Tony West said in a statement.

In court papers, the government accused the drug company of bundling the intravenous version of Protonix with the oral version in sales packages to hospitals, in the hopes of making more money in the lucrative outpatient market.

Wyeth defended its pricing plan.

“The company believes that its pricing calculations were correct and intends to defend itself vigorously in these actions,” said Doug Petkus, a Wyeth spokesman.

Wyeth’s shares fell 50 cents to $44.37 in after-hours trading.

The states joining the lawsuit are California, Delaware, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Michigan, Nevada, New Hampshire, Tennessee, Texas, Virginia and Wisconsin, as well as the District of Columbia.

New York-based drugmaker Pfizer Inc. (PFE) (PFE) is in the process of acquiring Wyeth for more than $60 billion in a deal expected to close later this year.