The market can stay irrational longer than you can stay solvent

Brussels and Dublin both insisted there were no formal talks despite persistent reports that Ireland faced pressure to seek assistance from a special EU system set up after the Greek debt crisis six months ago.

But with concern also deepening over public finances in fellow eurozone members Greece and Portugal, Ireland said for the first time that it was in contact with international partners over its problems.

Following detailed Brussels audits of Athens’ books, the European Union released massively revised national figures that saw the headline deficit for 2009 rise to 15.4 percent of gross domestic product, a big jump from the 13.6 percent announced in April.

The rise was reflected in each of the previous three years also — with the numbers jumping from 3.6 to 5.7 percent for 2006, 5.1 to 6.4 percent in 2007 and 7.7 to 9.4 percent throughout 2008 — showing the rapid degradation of Greek government finances in the run-up to its calling in EU and International Monetary Fund aid.

“Markets are starting off on the back foot once again as the woes of Europe rear their head once more,” said Simon Denham, head of trading group Capital Spreads.

The euro dropped to 1.3635 dollars in London trade from 1.3693 dollars late in New York on Friday. The dollar rose to 82.85 yen from 82.52 yen on Friday.

Contacted again on Sunday, the Eurogroup of currency partners, the European Commission that supervises EU states’ budgetary planning, and separate diplomats — not to mention Dublin itself — each rejected persistent international media reports claiming that organisational talks were already under way on a rescue running to some 70 billion euros (95.8 billion dollars).

Nevertheless, rumours have reached fever pitch two days before a monthly meeting of euro finance ministers in Brussels at which mounting fear over Ireland’s financial health is the single most important item, now formally placed on their agenda.

The Bank of Tokyo-Mitsubishi UFJ said it had agreed on key terms with RBS for the proposed deal to acquire the loan portfolio worth around 3.8 billion pounds.

Through the purchase — mainly of loans for natural resource and power infrastructure projects in Europe, the Middle East and Africa — the Japanese group aims to gain a foothold in emerging markets and become a sector leader.

The Nigerian subsidiary of Exxon Mobil said one of its offshore facilities “was boarded by unknown armed persons in the evening of Sunday,” but gave no further details.

The raid is the latest on oil facilities in Akwa Ibom state, one of Nigeria’s main oil producing states.

The hottest summer on record also drove sales of items such as air conditioners during the period, helping to drive growth.

But there were warnings of a looming payback in the fourth quarter in the absence of such one-off factors, amid growing fears Japan could face a slide back towards recession and doubt over the impact of planned stimulus measures.

Leaders of the nine nations met for the first time Sunday at a summit in Japan to discuss the so-called Trans-Pacific Partnership (TPP) pact which would oblige members to scrap tariffs and other trade barriers.

The group did not include China — the world’s number-two economy and biggest exporter — which favours negotiating trade reforms in alternative forums that include only Asian economies and not the United States.

The competing visions of the two economic giants were laid out a day after the Group of 20 knocked back US proposals for binding targets to address global trade imbalances and curbs on currency manipulation — proposals effectively aimed at China.

Obama also made an appeal to tear down trade barriers as the 21 members of the Asia Pacific Economic Cooperation (APEC) forum kicked off a summit in Japan, clouded by tensions between its biggest economies.

The Group of 20 summit knocked back US proposals for binding targets to address global trade imbalances, and on Friday produced a watered-down statement that put no pressure on China to adjust the value of the yuan.

“The United States tried to push an idea too fast, at a time when the foundation for cooperation is not as strong as it was during the crisis” that shook the world economy in 2008-09, said IMF chief Dominique Strauss-Kahn.

The announcement comes two months after National Australia Bank (NAB), one of Australia’s four big banks, ditched its offer for AXA Asia Pacific after it was blocked by competition regulators.

AMP said it was teaming up with AXA Asia Pacific’s French parent, AXA SA, reviving a partnership that had been trumped by NAB’s higher offer.

Dublin reiterated that it will not need a bailout from the European Union or the International Monetary Fund although EU sources have said talks on a possible bailout are under way and it is unlikely to hold out without assistance.

The Irish Independent newspaper said Dublin was considering asking for money for its banks, an option that could be less risky politically than asking for a bailout of the state.

The FTSEurofirst 300 index of leading European shares (.FTEU3) shed 0.6 percent in early trade, following most Asian equity markets lower, as worries about eurozone debt problems intensified.

Irish officials have not ruled out the possibility it may have to turn to Europe for help in dealing with its debt crisis, but said no application had been made for assistance yet.

Greece has cut public wages and pensions and raised taxes to help plug its budget shortfall as part of a 110 billion euro EU/IMF bailout that saved it from bankruptcy in May.

But officials say it will miss this year’s deficit target because of a revision of 2009 fiscal data and weak revenue growth, and the government has said it is ready to make extra spending cuts if necessary.

The debt-choked nation is set to miss a target to reduce its deficit to 7.8 percent of gross domestic product this year due to weak revenue growth and the upward revision of last year’s deficit, a Greek government official told Reuters this week.

“Greece has to achieve its objectives in order to regain credibility. We must now focus on 2011,” Executive Board member Bini Smaghi said in an interview to be published on Sunday by Greek newspaper Kathimerini.

BHP, conceding defeat for the third straight time on a major proposed merger or acquisition, signaled with its revived $4.2 billion share buyback that it had limited opportunities for other big buys.

Shareholders will be eager to hear what further growth prospects the company will chase with its cash pile when BHP Chief Executive Marius Kloppers fronts the group’s annual meeting in Australia on Tuesday.

A deal would put AMP at the top of Australia’s $1.2 trillion wealth management market, and end one of Asia’s largest takeovers that has dragged on for a year.

It would also allow AXA SA to exit Australia and help it to focus on its stated goal of growing in Asia, where businesses in eight countries contributed 60 percent of its operating earnings in the first half of 2010.

Mitsubishi UFJ Financial Group (MUFG), Japan’s biggest bank by assets, joined smaller rivals Mizuho Financial Group and Sumitomo Mitsui Financial Group in raising its forecast, after bond trading gains and lower credit costs helped its second-quarter net profit nearly triple.

But Japan’s top three banks are struggling to boost their core lending operations as a murky economic outlook prompts companies to curb business investment, underlining the need to diversify revenue sources and seek growth abroad.

The potential investment from SAIC is part of a surge in investor interest in GM that is expected to push the pricing of its shares to $29 or above in the U.S. automaker’s initial public offering, one of the sources said.

Another source said SAIC, GM’s partner in China, would take a stake of around 1 percent in the automaker, majority owned by the U.S. Treasury after a bailout last year.

Many analysts expect the economy to stall, or even contract slightly, in the next two quarters as the strong yen’s damage to exports becomes more evident and factory output slumps after stimulus measures for low-emission cars expired in September.

While few expect Japan to slip back into recession, policymakers remain alert for risks to the fragile economy.

A data-heavy week could give investors hard evidence to justify a rally that lifted the S&P 500 16.8 percent from its August 31 close to the 2010 closing high hit November 5.

But the index has been unable to move above 1,228, a key resistance level, and its chart is brewing a double-top formation, a very bearish signal.

But that will not be good enough for the market going forward. Analysts expect the world’s largest retailer to confirm that sales at U.S. stores open at least a year will improve in the current fourth quarter, which includes the holiday season.

The world’s largest retailer has seen sales fall for five consecutive quarters at stores open at least a year. Investors are not expecting much out of the third quarter from steps the company took to lift that measure.

The hearings on Tuesday and Thursday will include the first appearances by executives from major lenders like Bank of America (BAC.N) and JPMorgan Chase (JPM.N) since the furor over sloppy foreclosure paperwork erupted in September.

Banks are accused of having used “robo-signers” to sign hundreds of foreclosure documents a day, a fiasco that has reignited public anger with banks that received billions of dollars in taxpayer aid during the financial crisis.

Hu told a regional business forum in Japan on Saturday that China “will make vigorous efforts to establish lastingly effective means for expanding domestic demand, especially consumer demand.”

China’s rapid growth has helped to shore up the global economy and spur on Asia while the United States and Europe have struggled with high unemployment and financial woes.

At a time of crisis and growing calls for change to America’s broken housing finance system, Obama intends to tap North Carolina Commissioner of Banks Joseph Smith to head the Federal Housing Finance Agency, the administration said.

“Mr. Smith brings to this position both tremendous expertise and a deep commitment to strengthening our housing finance system for the American people,” Obama said.

The FTSE 100 index of leading British shares was down 18.85 points, or 0.3 percent, at 5,778.02 while the CAC-40 in France fell 12.47 points, or 0.3 percent, to 3,816.65. Germany’s DAX was up just over a point at 6,735.76.

…

Investors are jittery at the moment amid reports that the Irish government is in talks with the European officials to discuss the country’s debt position. All eyes are likely to shift towards Brussels Tuesday when the finance ministers of the 16 countries of the eurozone meet, with Ireland more than likely to top the agenda.

But the country, which has been struggling with a severe financial crisis for the past year and is receiving a euro110 billion ($150 billion) in rescue loans to keep it from defaulting on its debts, insisted it was still on track for an “unprecedented” 6 percentage point deficit reduction.

Eurostat said Greece’s 2009 budget deficit reached 15.4 percent of gross domestic product, significantly above its previous projection of 13.6 percent.

“Ireland needs a new credit rating agency. Moody & Poor,” says Colm O’Regan, an IT consultant turned comedian.

Another declares that since central banks print money anyway, they’re built to be defaulted on. “They’re just like my dad,” quips Joe Rooney.

Ottawa announced earlier this month that it would block the deal because it wasn’t a net benefit to Canada. BHP had 30 days to appeal, but said Sunday in a statement that it cannot satisfy the net benefit requirements outlined by the government.

“We have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the Offer,” BHP Billiton CEO Marius Kloppers said in a statement.

At least three gangs have struck deals to fly drugs to West Africa and from there to Europe, according to U.S. indictments. One trafficker claimed he already had six aircraft flying. Another said he was managing five airplanes. Because there is no radar coverage over the ocean, big planes can cross the Atlantic virtually undetected.

“The sky’s the limit,” one Sierra Leone trafficker boasted to a Drug Enforcement Administration informant, according to court documents.

All signs indicate that the uptick is temporary, and momentum will almost certainly fade as slowing exports and a persistently strong yen take their toll on the world’s No. 3 economy. Japan will be lucky if it can eke out growth in the fourth quarter.

First, the good news.

Acknowledging that Japan’s economic power is declining, Prime Minister Naoto Kan declared his country must open up its markets and embrace free trade – or risk getting left further behind other regional rivals.

“Japan is determined to reopen itself,” Kan said at a press conference Sunday that wound up the Asia-Pacific Economic Cooperation forum, alluding to the historic role that Yokohama, which hosted the summit, played more than 150 years ago as one of the first Japanese ports to open up to the West.

But another drug that’s been used for nearly a decade – Johnson & Johnson’s Natrecor – did little to help those with severe heart failure in a big study aimed at settling whether the drug raised the risk of death or kidney problems.

“They resolved the safety issue but in the meantime showed it was not very effective,” and it’s hard to tell now which patients should get the pricey medicine, said Dr. Alfred Bove, a Temple University heart specialist and past president of the American College of Cardiology.

Worrying about losing a job can raise heart risks, too, researchers found.

The results seem sure to resonate in a weak economy with plenty of stress about jobs – or lack of them. The mere fact this study was done is a sign of the times: Past studies focused on men, the traditional breadwinners, and found that higher job stress raised heart risks. This is the longest major one to look at stress in women, who now make up nearly half of the workforce.

Socialist-backed mayoral candidates Giorgos Kaminis and Yiannis Boutaris won in the capital Athens and the northern city of Thessaloniki, interrupting a streak of conservative victories dating back to 1986.

Prime Minister George Papandreou praised Sunday’s result as a vote of confidence in his austerity program ahead of an inspection by EU and IMF officials on the implementation of a rescue loan agreement worth euro110 billion ($150 billion).

President Barack Obama reiterated his opposition to a permanent extension of current tax rates for individuals making more than $200,000 a year and married couples making more than $250,000.

“It won’t significantly boost the economy, and it’s hugely expensive,” he told reporters aboard Air Force One as he returned to Washington from an Asia trip. “So we can’t afford it.”

The president returned to Washington on Sunday with mixed results to show from his longest foreign trip abroad as president, an exhausting 10-day tour through India, Indonesia, South Korea and Japan.

His first two stops yielded dramatic diplomatic successes and memorable images in two booming Asian democracies that will only become more important strategically to the U.S.

With change clearly in the air, more than 100 mainly Republican freshmen arrive on Capitol Hill to be schooled on the jobs they’ll assume when the next Congress convenes in January. For Democrats, it’s another sad note as one of their most venerable members goes on trial on ethics charges.

Lame-duck sessions are usually unpopular and unproductive. Nothing suggests otherwise this year.

At least 13 Democrats on the House Agriculture Committee lost on Nov. 2, and most of then helped steer generous farm support back home. Many of their replacements avoided the issue of farm payments during the campaign as they focused on broader themes of lowering federal spending and changing Washington.

They’ll have to face it soon enough. Congress is expected to begin work on the next five-year farm bill before the 2012 election.

Americans uncomfortable with U.S. government ownership of General Motors may want to hear more: One of those banks is the Industrial and Commercial Bank of China, one of China’s four big central government banks. The other, China International Capital Corp., is a joint venture run primarily by Central Huijin Investment Ltd., an arm of the state, and Morgan Stanley.

This is the first time Chinese government banks have participated in a major U.S.-issued IPO, according to IPO tracking firm Dealogic. The banks are listed as co-managers in the offering, meaning they will sell a portion of the new shares.

President Barack Obama has said he wants to compromise with Republicans to ensure that tax cuts for middle-income families continue, suggesting he’s open to extending all the tax breaks for a year or two. Republican leaders say it’s a nice gesture by the president, but some key GOP lawmakers want more.

“It should be permanent,” said Sen. Judd Gregg, R-N.H. “We’ve got to get this economy to pick up and if you raise taxes you’re going to stifle the economy significantly. I’m sure that somebody’s explained that to the president.”

“I reiterated my commitment to getting the START treaty done during the lame-duck session,” Obama said, noting that Congress returns next week for its postelection session.

In talks with Medvedev on the sidelines of the summit of the Asian-Pacific Economic Cooperation (APEC), Obama also reiterated his support for bringing Russia into the World Trade Organization, calling Russia “an excellent partner.”

Merkel told a conference of her conservative Christian Democratic Union that she is proud of the country’s sinking unemployment and won’t let Germany be “beaten up” for being a leading exporter.

Merkel’s party and the pro-business Free Democrats won a hoped-for majority in last year’s election after the chancellor presided for four years over a middle-of-the-road “grand coalition” with her main rivals on the left.

Across the nation, food producers are seeing enough growth that many are expanding and investing in new equipment.

For cheesemakers, dairy farmers and vegetable growers, the slow economy has brought opportunities to expand while construction costs are low. Food makers have also benefited from having products that consumers still buy in hard times and from ongoing efforts to open up new markets overseas.

The Federal Reserve took the first step in a $600 billion plan to boost the economy Friday. The same day, the Standard & Poor’s 500 index tumbled to its worst weekly loss in three months. It wasn’t just a coincidence.

Stock markets are forward looking. Once the Fed began signaling in late August that it had a stimulus plan in the works, investors started to push stock prices higher. But over the past five days, ominous signs emerged about the global economy:

For Ellen Cassels it’s living with her husband and two sons in a one-bedroom apartment. Every night, she and her husband climb into a custom-made Murphy bed in the living room, while their boys bunk in the master bedroom. For their sacrifice, they pay just under $1,500 a month. And she’s not going anywhere: She even hopes to buy the apartment one day.

The tenants at the 11,000-unit complex known as Stuyvesant Town and Peter Cooper Village – which was bought for $5.4 billion before collapsing to an estimated value of less than $2 billion – all want something different as they navigate out of what’s known as the largest failed residential real estate deal of all time.

The reddish-orange schooling fish have been worth so little to fishermen that they’ve rarely had to flee from the tightening mesh of a net. But life for the redfish may soon be changing – if the fishing industry can get people to bite.

Redfish is one of the few populations of New England groundfish considered completely healthy. Regulators have allotted fishermen 15 million pounds to catch this year, the third-most of any Northeast species. The big question is, who’s going to buy it?

This weekend, the 32-year-old who now lives in South Carolina is doing it again. And so will hundreds of others who believe Virginia-based Massey Energy Co. and subsidiary Rawl Sales & Processing have poisoned their water wells with 1.4 billion gallons of toxic coal slurry.

The company has denied wrongdoing, though residents say the proof flows from their faucets as red, orange or black water. They say the chemicals in slurry have left them and their children with developmental disabilities, cancers and other maladies.

What it hasn’t generated is any of the roughly half-million dollars per day in projected state revenue.

Collections were to start Sept. 1, but legal challenges by five of New York’s Indian nations have indefinitely delayed them.

They’re ready to deliver power to New England.

The Western Massachusetts Electric Co. site in Pittsfield, New England’s largest solar project, promises to produce enough electricity for about 300 homes starting later this month. That’s a tiny fraction of what the region needs to run computers, lights, TVs and everything else utility customers take for granted.

For the year ending Sept. 30, the post office had income of $67.1 billion, down $1 billion from the previous fiscal year. Expenses totaled $70 billion, a decline of about $400 million. The post office also was required to make a $5.5 billion payment for future retiree health benefits.

“Over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions – more than any other organization, anywhere,” chief financial officer Joe Corbett said in a statement. “We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labor contracts has never been more obvious.”