Australians Vote Down Their Stimulus Bill Despite Calls from the U.S. That Global Action is Needed

Australian senate votes down a $48 billion stimulus package

SYDNEY (AFP) – Australian lawmakers battled over a massive government stimulus package Thursday amid US calls for industrialised nations to take bold and immediate steps to revive the global economy.

The Australian Senate on Thursday voted down the government’s proposed 42 billion dollar (28 billion US dollar) stimulus package designed to boost the economy.

Elsewhere, other nations took measures to fight off deepening economic woes amid a slew of grim earnings data from the likes of Rio Tinto, Electricite de France and ABB, with Japan’s Pioneer announcing 10,000 job cuts worldwide.

US lawmakers agreed a compromise 789 billion dollar stimulus package while South Korea cut interest rates to a record low and Ireland announced a nine billion dollar liquidity injection into its top two banks, Allied Irish Bank and Bank of Ireland.

Lawmakers were set to battle over the Australian legislation after Prime Minister Kevin Rudd told parliament the government would reintroduce a revised plan later Thursday.

He said his government would not be deterred from taking “whatever action is necessary” and reintroducing the legislation would help Australia’s “national economic interest.”

Rudd’s Australian spending plan was branded as financially irresponsible by the opposition who claim it will send the budget deep into deficit.

The wrangling came as Australia’s unemployment rate reached a two and a half year high of 4.8 percent in January, data released Thursday by the Australian Bureau of Statistics showed.

US Treasury Secretary Timothy Geithner will urge G7 industrialized nations at a weekend meeting in Rome to do more to steady a global economy roiled by a housing meltdown and credit crunch that has spread to almost all sectors.

Geithner will go armed with the knowledge that US lawmakers in Washington struck agreement on a compromise 789 billion dollar stimulus plan and prepared to vote as early as Thursday to send the package to President Barack Obama.

Foreclosures fall in January

NEW YORK (Reuters) – U.S. home foreclosure filings in January decreased from December, an indication that an array of efforts to curb the process may be making an impact, real estate data firm RealtyTrac said on Thursday.

Foreclosure activity was still 18 percent higher than a year earlier, the 37th consecutive month with a year-over-year increase. Nevertheless, the fall in foreclosure filings last month provides a glimmer of hope for the hard-hit U.S. housing market.

Home foreclosure filings in January totaled 274,399, down 10 percent from December, RealtyTrac, an online market of foreclosure properties, said in its U.S. Foreclosure Market Report. The figure is a total of default notices, auction sale notices and bank repossessions.

RealtyTrac, based in Irvine, California, said the national foreclosure rate in January was one foreclosure filing for every 466 U.S. households.

“The extensive foreclosure efforts on the part of lenders and government agencies appear to have impacted the January numbers – particularly the Fannie Mae and Freddie Mac moratorium on all foreclosure sales that was extended through the end of January along with Florida’s voluntary 45-day freeze on all new foreclosure actions and scheduling of foreclosure sales that was announced at the beginning of December,” James J. Saccacio, chief executive officer of RealtyTrac, said in a statement.

January foreclosure activity showed a sharp improvement versus the previous month. In December, foreclosure filings were up 17 percent from the previous month and up nearly 41 percent from December 2007.

Foreclosures have largely been result of an increasing number of homeowners struggling to make mortgage payments amid the worst U.S. housing market downturn since the Great Depression.

“January REOs, which represent completed foreclosure sales to the foreclosing lender, were down 15 percent nationwide from the previous month,” Saccacio said.

“And in Florida overall foreclosure activity was down 20 percent from the previous month,” he said.

Real Estate Owned, or REO, are properties that have been foreclosed on and repurchased by a bank. But fewer foreclosures help assuage one of the housing market’s biggest banes, which is a huge supply of unsold homes.

“Any inventory off the market at this point is a good thing, but the problem is that many homes that have been taken back by banks have not yet been included in the data,” Rick Sharga, senior vice president at RealtyTrac, said on Wednesday.

There is more inventory in the pipeline and that will probably show up in the months ahead, he said.

“As for the January data, I would not read too much into it and it is doubtful that we are about to hit a bottom,” he said.

Entergy hits a snag on senior notes

NEW ORLEANS, Feb. 11 /PRNewswire-FirstCall/ — Entergy Corporation (NYSE: ETR – News) announced today that it was not able to successfully remarket its Senior Notes, Series A due February 17, 2011 (the “Notes”), which form part of its outstanding 7.625% Equity Units (NYSE: ETRPrA – News). Holders of Equity Units are not required to take any actions to settle the Purchase Contracts that are a component of the Equity Units as a result of the inability to successfully remarket the Senior Notes.

Securities law considerations prevented Entergy from proceeding with a remarketing during the remarketing period prescribed for the Notes.

As previously described in our press release of February 3, 2009, announcing fourth quarter earnings, fully diluted earnings per share calculations reflected in the release assumed a successful remarketing. Pursuant to generally accepted accounting principles, since the remarketing did not succeed, the number of shares to be issued under the Purchase Contracts which are included in the Equity Units should be included in the fully diluted earnings per share calculation for 2008, causing the number of shares to increase compared to the amount reflected in the release.

The Purchase Contracts for Entergy Common Stock that are a component of the Equity Units provide for settlement on February 17, 2009 (the “Purchase Contract Settlement Date”). The current holders of Equity Units have the right (the “Put Right”) to require Entergy to purchase the Notes that are components of the Equity Units on the purchase contract settlement date at a price per Note to be purchased equal to the principal amount of such Note, plus accrued and unpaid interest to, but excluding the Purchase Contract Settlement Date (the “Put Price”). The Put Right will be deemed to be automatically exercised unless the holder delivers a notice to The Bank of New York Mellon, as purchase contract agent, of its intention to settle the related Purchase Contracts with cash prior to 5:00 p.m., New York City time, on February 12, 2009 and pay the Purchase Price for such Notes as described above prior to 5:00 p.m., New York City time, on February 13, 2009, all in accordance with the procedures outlined in the Purchase Contract and Pledge Agreement relating to the Equity Units and in Supplemental Indenture No. 1 relating to the Notes. If the holder does not elect to settle the related Purchase Contracts with cash in lieu of its Put Right, the holder will be deemed to have elected to apply a portion of the proceeds of the exercise of the Put Right with respect to the Notes that are components of Equity Units equal to the Purchase Price against the holder’s obligations to pay the aggregate Purchase Price for the shares of Common Stock of Entergy to be issued under the related Purchase Contracts in full satisfaction of the holder’s obligations under the Purchase Contracts. Any portion of the Put Price remaining following satisfaction of the related Purchase Contracts will be paid to the holder.

In addition, Entergy Corporation announced today the settlement rate for the Purchase Contracts. Holders of Equity Units will receive 0.6598 shares of Entergy common stock for each Purchase Contract and cash in lieu of fractional shares. The settlement rate is based upon the average of the closing price per share of Entergy common stock on the New York Stock Exchange for the 20 consecutive trading days ending on February 11, 2009. Since the average closing price per share was lower than the “threshold appreciation price,” as defined under the terms of the equity units, the settlement rate is 0.6598.

As a result, on February 17, 2009, each holder of the Equity Units will purchase from Entergy 0.6598 shares of Entergy common stock per equity unit for $50.00. No holder will be required to make any additional cash payment.

Settlement of the Purchase Contracts will result in Entergy issuing approximately 6.6 million shares of common stock.

As a result of the settlement of the Purchase Contract component of the Equity Units, the Equity Units will cease trading on the New York Stock Exchange before the opening of the market on February 17, 2009.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Initial Claims:Prior # 626k / Market Expects 610k/ Actual # 623

Retail Sales:Prior # -2.7% / Market Expects -0.3% / Actual # +1%

Retail Sales Ex-Auto: Prior# -3.1% / Market Expects -0.4%/ Actual # +0.9%

Continuing Claims- 4.799 million

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Earnings Today

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Asia opens to the downside

Feb. 12 (Bloomberg) — Asian stocks fell for a fourth day, led by financial and consumer-related companies, on concern U.S. measures to alleviate the financial crisis won’t be enough to revive the world’s largest economy.

Mitsubishi UFJ Financial Group Ltd., Japan’s biggest lender, fell 3.1 percent as U.S. Treasury Secretary Timothy Geithner said he needs time to work out details of a bank-rescue plan unveiled on Feb. 10. Daikin Industries Ltd., the biggest Japanese maker of air conditioners, dropped 2.9 percent after cutting its profit forecast. Newcrest Mining Ltd., Australia’s largest gold producer, rose 4.6 percent after gold futures climbed in New York.

“The market had been awaiting the financial bailout plan with high hopes, but what was announced didn’t have much meat on the bone,” Juichi Wako, a strategist at Tokyo-based Nomura Securities Co., said in an interview with Bloomberg Television. “It’s unfortunate, but stocks are in for a rough day.”

The MSCI Asia Pacific Index fell 0.8 percent to 82.29 at 10:42 a.m. in Tokyo. More than two stocks advanced for each one that declined. The gauge has lost 8.2 percent this year, furthering a record 43 percent tumble in 2008, as the credit crisis triggered by the collapse of the U.S. housing market spun into a global recession.

The Nikkei 225 Stock Average slumped 1.7 percent, to 7,814.01. The Japanese market resumed trading today following yesterday’s holiday. Australia’s S&P/ASX 200 Index climbed 1.6 percent, while South Korea’s Kospi index slipped 0.8 percent.

European Markets Fall as well

Feb. 12 (Bloomberg) — Stocks in Europe and Asia slipped and U.S. index futures fell as companies from Electricite de France SA to Diageo Plc posted disappointing results and investors speculated U.S. measures won’t revive the global economy.

EDF, the biggest operator of nuclear reactors, and Diageo, the largest liquor maker, fell more than 5 percent. Wal-Mart Stores Inc. retreated 2.1 percent before a report that may show U.S. retail sales declined amid rising unemployment. Mitsubishi UFJ Financial Group Ltd., Japan’s biggest lender, lost 3.5 percent as U.S. Treasury Secretary Timothy Geithner said he needs time to work out details of a bank-rescue plan unveiled Feb. 10.

The MSCI World Index dropped for a third day, losing 0.9 percent at 12:09 p.m. in London. The gauge of 23 developed countries had rallied 5.8 percent in the previous five days on optimism that global stimulus packages, a financial-rescue plan from Barack Obama’s administration and interest-rate cuts would help lift the U.S., Europe and Japan out of recessions.

“There isn’t a miracle solution,” Sebastien Korchia, a fund manager at Meeschaert Asset Management in Paris, which oversees about $2.6 billion, said in a Bloomberg Television interview. “It will take time. The market is worried.”

U.S. stocks gained yesterday as lawmakers debated a $789 billion plan to revive the economy. U.S. House and Senate lawmakers agreed on a compromise late yesterday, a smaller bill than originally approved by both groups.

Australian Rejection

Governments worldwide are attempting to stabilize a global economy battered by more than $1 trillion in writedowns and losses at financial companies with stimulus programs and bank support packages. Australia’s Senate today rejected a A$42 billion ($28 billion) stimulus package aimed at preventing the country’s first recession in 18 years after an independent lawmaker demanded increased spending for his constituency.

Europe’s Dow Jones Stoxx 600 Index slid 1.5 percent as all 19 industry groups declined. The MSCI Asia Pacific Index lost 1.8 percent as Daikin Industries Ltd. cut its profit forecast.

Futures on the Standard & Poor’s 500 Index lost 0.8 percent before reports today that will probably show U.S. retail sales fell in January and unemployment benefit claims stayed near 26- year highs last week, giving further indication the American economy is heading for its worst slump since 1946.

Obama’s stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey. The world’s largest economy will contract 2 percent this year, half a percentage point more than last month’s forecast, according to the survey.

‘Slowing Sales’

Profits have declined 65 percent for 469 companies in western Europe that have released earnings since Jan. 12, according to Bloomberg data.

Sir Print: Ready the Printing Press
Lackey: Jolly Good

The Bank of England is ready to launch a policy of “quantitative easing” – printing money – in an effort to lift the economy out of what the Bank calls “a deep recession”. The Bank’s central forecast, in its latest Inflation Report, suggests that annual growth in the UK economy will hit a nadir of -4 per cent in the summer of this year.