Business and Finance

The U.K. is facing “arguably the worst'' economic crisis for 60 years, according to Chancellor of the Exchequer Alistair Darling.

In comments that contrast with those of Prime Minister Gordon Brown, Darling told the Guardian newspaper in an interview the downturn would be “profound and long-lasting,'' and said he had no idea how serious the credit crunch would become. Brown has said he will unveil measures next month to prevent the U.K. economy from tipping into recession and bolster support for his ruling Labour Party. The Treasury confirmed the chancellor's comments

Official data this month showed the British economy recorded zero growth in the second quarter, while Bank of England policymaker David Blanchflower this week forecast two million people could be unemployed by the end of the year. U.K. consumer confidence stayed near a record low in August as the fastest inflation in a decade and falling house prices discouraged shopping, London-based research group GfK NOP said yesterday.

Brown has said Britain is better placed to weather global economic storms now than in the late 1970s, when it was bailed out by the International Monetary Fund, and in the early 1990s, when the pound was forced out of the Exchange Rate Mechanism that tied its value to other European currencies.

The government now has its “work cut out'' to persuade voters that it deserves another term in power, Darling told the newspaper. He said ministers had “patently'' failed to explain problems to the public.

`Huge Problem'

“This coming 12 months will be the most difficult 12 months the Labour Party has had in a generation,'' Darling told the Guardian. “We've got to rediscover that zeal which won three elections, and that is a huge problem for us.''

The opposition Conservative Party's lead over Labour widened to 22 points in a YouGov Plc poll finished on Aug bad credit payday advance. 21, from 8 points at the beginning of the year.

The Bank of England kept the benchmark interest rate unchanged at 5 percent this month on concerns about inflation after the economy stagnated in the second quarter. Retail sales slumped to the lowest since 1983 this month, and house prices fell by the most in three decades, reports showed Aug. 28.

An index of confidence, based on a survey of 2,001 people, rose 3 points from July's minus 39, which was the lowest since the data began in 1974, GfK said. While sentiment was lifted by the Olympic Games in Beijing this month, the U.K. index has declined from minus 4 a year ago, the report said.

Blanchflower, who has voted to reduce interest rates at every meeting of the Monetary Policy Committee since October, has called for “a substantial fall'' in borrowing costs, “probably quite quickly.''

“I certainly think we are in negative growth now and I expect several further quarters,'' Blanchflower said in an interview with Reuters on Aug. 28.

Darling's comments on the economy “are entirely consistent with his previous statements about the challenging times the U.K. is currently facing,'' the Treasury said in an e-mailed statement today. “These are the same difficult economic circumstances that every other country in the world is having to deal with.''

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Competition and a move away from tailored dressing, only exacerbated by a weak economy, are hurting the men’s suit business hard, and retailers are adding to manufacturers’ pain by demanding more discounts.

Suit vendors at a trade show this week described how men’s taste for more casual clothing, a flood of low-cost rivals from Asia, and a recent pull-back in spending due to tough economic times are plaguing the suit industry, the most economically sensitive category in the apparel business.

“(Suit makers) can’t withstand the competition and the downturn in the economy at the same time,” Mark Lipman, vice president of national sales for Los Angeles suit maker and wholesaler Marina Imports, said at the Magic Marketplace apparel trade show. “It’s a perfect storm.”

The troubles can be seen in some major players’ numbers. Retailer Men’s Wearhouse Inc’s second-quarter profit fell 40 percent, while profit dropped 44 percent for Oxford Industries Inc, a manufacturer and retailer whose men’s tailored division cut inventory by more than 25 percent in its most recent quarter.

One big problem is how men now dress faxless payday loan. Many pair a dress shirt with more casual pants, even jeans, when they dress up, a far cry from the buttoned-down, tailored looks of years past.

“Casual Friday,” a 1990s phenomenon that allowed office workers one day a week to dress down, was a big thorn in the side of the suit industry and the gradual shift to more casual looks has only intensified in the United States.

“The overall dress-up market has changed dramatically in the past 10 years,” said retailer Cy Rosengarten, owner of Suits 20/20 outside Chicago, who noted fewer menswear vendors were in attendance at the Las Vegas trade show this year.

Apart from men’s stores stocking sportswear at the expense of suits, the industry is also competing for the attention of fewer retailers amid industry consolidation and the decline of small haberdasheries in American cities. 

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Heineken (HEIN.AS: Quote, Profile, Research, Stock Buzz) shares have fallen by almost a third this year as investors punish the Dutch brewer for its heavy exposure to mature Western markets, but analysts see the weakness as overdone given good long-term prospects for premium brand beers.

The credit crisis, waning consumer confidence and smoking bans have all taken their toll on beer sales in Western Europe and the United States, but the thirst for trendy, pricier brands — among which Heineken is one of the most universally recognized — remains strong.

While the world’s third-largest brewer works to integrate assets it acquired from Britain’s Scottish & Newcastle (S&N) and struggles to absorb higher input costs, the discount its shares now offer to peers such as Carlsberg (CARLb.CO: Quote, Profile, Research, Stock Buzz) and InBev (INTB.BR: Quote, Profile, Research, Stock Buzz) could provide a buying opportunity even if top-line growth rates may look less than impressive for now.

Analyst Marcel Hooijmaijers at Landesbanki/Kepler, who rates the stock a “buy” despite having slashed his target share price to 37 euros from 54 euros, said the stock trades at a discount of about 20 percent compared to other major brewers.

“A certain discount is justified given the more favorable emerging market profile of other brewers,” but he adds: “A 10 percent discount to the sector seems more justified than the current 20 percent.”

This makes the stock attractive at current levels of around 32 euros, giving Heineken a market value of 15.4 billion euros ($23 billion) guaranteed approval cash advance loans. The share closed on Friday at 31.88 euros.

Heineken trades at around 13.7 times projected 2009 earnings compared to 15.1 for Carlsberg, 14.2 for InBev (INTB.BR: Quote, Profile, Research, Stock Buzz), maker of Stella Artois and Beck’s, and 15.8 for Diageo (DGE.L: Quote, Profile, Research, Stock Buzz), which owns Guinness, according to Reuters data.

Last week, Heineken warned that declining consumer confidence had cast doubt on whether its acquisition of S&N assets would benefit its earnings in 2009. The brewer is set to report first-half results on August 27. 

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Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) failed to sell a large stake to Asian investors, a report said, and such failures may open the door to a hostile takeover of the investment bank, an analyst wrote.

A newspaper report said Lehman sought to sell up to a 50 percent stake to China’s biggest brokerage, CITIC Securities (600030.SS: Quote, Profile, Research, Stock Buzz), or state-owned Korea Development Bank KDB.UL, but the two Asian companies walked away after deciding the asking price was too high.

That represents a failure for a bank seeking to assuage investors concerned about its $60 billion of mortgage assets. The bank has looked at selling at least a part of its asset management unit to private equity firms, and is looking at selling commercial real estate assets.

So far, nothing has been announced. Lehman spokeswoman Monique Wise declined to comment on Thursday.

Richard Bove, an analyst at Ladenburg Thalmann, wrote: “The major question related to this company at the moment is, ‘Why isn’t anything happening?’”

Bove said it appears that management’s perception of Lehman’s value is much higher than investors’.

That disconnect leaves Lehman vulnerable to a hostile takeover, the analyst said cash advance loan. And the potential for a hostile takeover makes the company’s shares worth buying, he added.

Another analyst who sees value in Lehman is Citigroup’s Prashant Bhatia. Bhatia rates the company’s shares “buy” even though he cut his estimates for Lehman’s third-quarter results on Thursday to a loss of $3.25 per share from his prior estimate of a loss of 41 cents per share. He said he expects $2.9 billion of asset-related write-downs for the bank, but that does not mean Lehman needs more capital. 

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The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world’s biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

“The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say ‘the worst is to come’,” he told a financial conference.

“We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one, one of the big investment banks or big banks,” said Rogoff, who is an economics professor at Harvard University and was the International Monetary Fund’s chief economist from 2001 to 2004.

“We have to see more consolidation in the financial sector before this is over,” he said, when asked for early signs of an end to the crisis.

“Probably Fannie Mae and Freddie Mac — despite what U.S. Treasury Secretary Hank Paulson said — these giant mortgage guarantee agencies are not going to exist in their present form in a few years.”

Rogoff’s comments come as investors dumped shares of the largest U.S faxless cash advance. home funding companies Fannie Mae and Freddie Mac on Monday after a newspaper report said government officials may have no choice but to effectively nationalize the U.S. housing finance titans.

A government move to recapitalize the two companies by injecting funds could wipe out existing common stock holders, the weekend Barron’s story said. Preferred shareholders and even holders of the two government-sponsored entities’ $19 billion of subordinated debt would also suffer losses.

Rogoff said multi-billion dollar investments by sovereign wealth funds from Asia and the Middle East in western financial firms may not necessarily result in large profits because they had not taken into account the broader market conditions that the industry faces. 

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With global stock markets facing months of uncertainty, investors are increasingly putting their faith in the more bearish forecasts of macro strategists over company analysts.

Analysts, wrongfooted by unrealistic guidance from the companies, have found themselves chasing events, constantly downgrading their forecasts for company profits over the past year. Strategists, who weigh up broad market sentiment and macroeconomic factors, have been more pessimistic.

Fund managers have looked on bemused, but are now concluding that the strategists offer the better advice.

“In the last 12 months, the strategists have been ahead of analysts in reducing forecasts,” said Mark Bon, a fund manager at Canada Life.

“In difficult market circumstances, strategists are very useful because they can identify changes in the market. When you have a prolonged period of benign environments … you tend to focus on the bottom-up, and analysts can point you in the right direction.”

Even after several downgrades, analysts were too optimistic on nearly half of the 178 Stoxx 600 companies that have reported second-quarter results, according to Thomson Reuters data.

“Analysts tend to be more optimistic about the earnings outlook of individual companies generally .. overnight payday loans. They typically have a bias for thinking earnings will be higher than they actually are,” said Andrew Clare, professor of asset management at Cass Business School.

“We’ve just experienced a particularly strong earnings cycle, moving from below earnings trend in 2003 to quite a bit above earnings trend in 2007. As a result, reversion to mean is coming more quickly than previous cycles,” said Timothy McCarron, who runs Fidelity’s $8.5 billion European fund. 

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American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) Chief Executive Robert Willumstad will soon take the scalpel to the world’s largest insurer — and not a minute too soon for investors blindsided by mortgage losses that led to an unexpected $5.36 billion quarterly loss.

Willumstad, who was AIG’s chairman before being named CEO on June 15, said he will unveil a plan to dramatically reshape the company at an investor meeting on September 25, three weeks later than promised.

Willumstad, a 40-year banking veteran, intends to cut staff and divest parts of the sprawling company — but has kept mum on the details.

“A less complex AIG will be a better competitor,” he said on a conference call with investors on Thursday faxless payday advance.

Analysts are convinced the company has become unwieldy.

“We believe that AIG is simply too large and complex for anyone to fully understand, and that the company could eventually need to be broken into pieces,” said Bijan Moazami, an analyst with Friedman, Billings, Ramsey in Arlington, Virginia.

What will AIG shed? Willumstad will try to unload toxic mortgage-linked assets, and divisions where mortgages have drained profits, such as United Guaranty Corp, analysts said.

United, a mortgage insurer, posted a $440 million operating loss in the second quarter. 

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Home sales contracts signed in June unexpectedly rose, boosting an index of pending sales to the highest level since October, though it was well below the year-ago level, a real estate trade group said on Thursday.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in June, was up 5.3 percent to 89.0 from a downwardly revised 84.5 in May.

It was the highest reading for the index since October, when it was at 89.8.

Some analysts said the main reason for the June improvement might be that banks were aggressively marking down prices on foreclosed properties to get them off their books. But even that is a sign that housing markets are being brought into order.

“There are some bottom feeders coming in to buy some of these homes in distressed situations,” said Andrew Richman, managing director for SunTrust’s personal asset management division in West Palm Beach, Fla instant payday loan.

The pickup in June signings sharply contrasted with forecasts by economists polled by Reuters who had expected contract signings to decline 1 percent.

The association’s senior economist, Lawrence Yun, said the swing in monthly signings “indicates a housing market in transition,” but said it nonetheless was encouraging.

“This is welcome news because a rise in contract activity is necessary for an overall housing recovery,” Yun said. 

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Google Inc said on Tuesday it is an offering an upgraded version of the hardware appliance its sells to companies and government organizations for Google-style Web search of office documents.

The Web search leader said the latest version of the Google Search Appliance, a pizza-sized box that holds a self-contained search system for managing an organization’s electronic files, can store up to 10 million documents in a single box.

The new product has the same capacity as a previous version that came in a five-box rack. Google already sells a 12-box version of the appliance in a rack the size of a stand-up refrigerator that can search up to 30 million documents.

The appliances contain Google software to power the search services, running on storage hardware from Dell Inc.

Once installed in a network, the appliances help staff find documents in various different corporate store houses, from EMC Corp’s Documentum, IBM’s FileNet, Open Text’s LiveLink and Microsoft Corp’s SharePoint.

New features in the latest model include greater encryption powers and the ability for Google Alerts to notify users when new documents are stored on the network by colleagues.

Network administrators will be able to manage Google Search Appliances in 27 languages, adding Turkish, Czech, Vietnamese and Portuguese fast payday loan no faxing. The boxes can, in turn, deliver search results to office workers in 40 different languages.

Mountain View, California-based Google does not disclose revenue for search appliances, which are part of its enterprise software and services business aimed at corporate buyers. 

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Department store chain Boscov’s Inc filed for Chapter 11 bankruptcy protection on Monday and put itself up for sale, becoming the latest retailer to succumb as consumers reduce spending.

Founded in 1911, Boscov’s describes itself as the largest family-owned, full-service U.S. department store chain, with 9,500 employees and 49 locations in Pennsylvania, Delaware, Maryland, New Jersey, New York and Virginia. The Reading, Pennsylvania, company plans to close 10 unprofitable stores.

Boscov’s joins more than a dozen retailers to go bankrupt in the last year, including Bombay Co, Goody’s Family Clothing Inc, Linens ‘n Things Inc, Mervyn’s LLC, Sharper Image Corp, Shoe Pavilion Inc and Steve & Barry’s LLC.

Boscov’s did not immediately return a call seeking comment on possible job cuts.

In a court filing, Executive Vice President Michael Hughes said Boscov’s was hurt as the housing market collapse, skyrocketing energy and gas prices, and higher food costs caused consumers to spend less on discretionary items easy fast cash. He also said credit market conditions caused many vendors to tighten terms.

“The recent addition of these pressures and constraints to a broadline retailing industry that already operated on thin profit margins has forced the debtors into inadequate liquidity levels,” Hughes said.

Hughes said the company sought court protection after failing to refinance its debt and locate new equity investors. He said it is exploring a possible sale to a third party.

Boscov’s and seven affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. The company had $538 million of assets and $479 million of liabilities as of May 3, a court filing shows. The filing does not cover Boscov’s Business Center and Boscov’s Travel Center. 

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