Bartz Makes Headway Getting Yahoo on Track

The Sunnyvale, Calif., company's third-quarter profit surged, helped by Ms. Bartz's cost-cutting and an investment gain. Revenue fell 12% to $1.58 billion from a year ago, but executives indicated that spending on Internet ads was stabilizing, particularly from large marketers.

"There were a couple of encouraging things," Tim Morse, Yahoo's finance chief, said on a conference call. "The ad dollars are starting to flow a little bit better." Mr. Morse disclosed in an interview that Yahoo hired former General Electric Co. executive Andrew Siegel as its new head of mergers and acquisitions, tasked with continuing to evaluate which businesses the company should sell, as well as scout potential targets.

Rival Google Inc. announced last week that revenue grew 7% in its third quarter as executives announced confidently that the worst of the recession had passed.

Ms. Bartz didn't participate in Tuesday's conference call because of an unspecified illness that was described as "nothing serious" by Mr. Morse. In the quarter, Yahoo's profit more than tripled to $186.1 million, or 13 cents a share, up from $54.3 million, or four cents a share, a year ago. Those results included a $98 million gain on the sale of Yahoo's investment in Chinese Internet company Alibaba.com.

The improved profit comes as Ms. Bartz cut costs throughout the company. Virtually all categories of expenses—including sales and marketing and product development—fell in the quarter from the year-earlier period. Mr. Morse said the company reduced its bandwidth and equipment costs and hired more slowly than it had planned.

Yahoo shares rose more than 5% in after-hours trading to their highest level in more than a year. The stock finished the 4 p.m. trading session down five cents to $17.17 on the Nasdaq Stock Market.

"This is a big relief for investors," said Doug Anmuth, an analyst at Barclays Capital. He praised Ms. Bartz's internal "blocking and tackling," echoing other analysts and investors who say the CEO has proven adept at bringing some discipline to the company through moves such as building a new Yahoo home page on one technology platform and removing layers of management. link....

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Japan’s Nikkei Jumps Most Since May on U.S. Homes, Commodities

Japanese stocks rose, lifting the Nikkei 225 Stock Average to its biggest jump in more than three months, after sales of existing homes in the U.S. surged the most on record, the yen weakened and commodities gained.

Canon Inc., the world’s biggest digital-camera maker, added 6.3 percent. Honda Motor Co., which gets more than half its sales in North America, climbed 3.2 percent. Mitsubishi Corp., a trading company that gets more than a third of its sales from commodities, advanced 3.9 percent.

“The housing report confirmed the U.S. is clearly on a path to recovery,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $91 billion. “The fundamentals of the global economy and corporate earnings are improving, supporting the resilience of the market.”

The Nikkei 225 Stock Average climbed 342.85, or 3.4 percent, to 10,581.05 in Tokyo, the steepest climb since May 7. The broader Topix index added 22.93, or 2.4 percent, to 970.27, with all of its 33 industry groups advancing.

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Unemployment Dips in D.C., Va.

Unemployment fell in the District and Virginia in July as students found jobs or left the workforce, while it increased slightly in Maryland due to a surge in job seekers, new government data show.

In the District, unemployment edged down from a seasonally adjusted rate of 10.9 percent to 10.6 percent, the Labor Department reported.

More than 13,000 jobs were added to District payrolls last month, a larger number than for most states. City officials said the increase was largely due to the summer youth employment program. The District still leads the region in unemployment with a rate that remains significantly higher than it was a year ago, when it stood at 7 percent.

A growing number of economic forecasters are saying the worst recession of the post-World War II era is close to ending or has already ended. And the manufacturing sector has lately begun to show signs of stabilizing. But the labor market is likely to be weak well after the recession ends. The national unemployment rate edged down in July to 9.4 percent, from 9.5 percent, due in part to people leaving the workforce and not being counted as unemployed. The Labor Department data released Friday showed unemployment rose in 26 states. Jobs remain scarce, with six unemployed people for every opening and a record one out of every three unemployed people being out of work for 27 weeks or longer.

Across the nation, Michigan still has the highest unemployment rate at 15 percent. The Labor Department will release unemployment data for the Washington metropolitan region as a whole on Sept. 1. link.....

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BBVA Said to Win FDIC Bidding for Guaranty Financial

Banco Bilbao Vizcaya Argentaria SA won the bidding to take over ailing Texas lender Guaranty Financial Group Inc., people familiar with the matter said, and becoming the second Spanish bank to buy a U.S. lender this year.

The acquisition, arranged by the Federal Deposit Insurance Corp., follows the $1.9 billion purchase by Spain’s Banco Santander SA of Philadelphia-based Sovereign Bancorp Inc. in January. BB&T Inc. last week acquired Alabama’s Colonial BancGroup Inc. in a deal also brokered by the FDIC.

The purchase shows “those companies didn’t make serious acquisition errors years ago,” Gary Townsend, president of Hill-Townsend Capital LLC in Chevy Chase, Maryland, and a former bank analyst, said yesterday. “As in the case of BB&T buying Colonial BancGroup, it gives BBVA the opportunity to expand on the cheap.”

Guaranty said last month that it was unable to raise capital as demanded by regulators and will probably fail. The Office of Thrift Supervision has taken over board functions, directed the Austin, Texas-based bank to turn itself over to the Federal Deposit Insurance Corp. and is pursuing transactions likely to wipe out shareholders, Guaranty said in a July 23 filing with the Securities and Exchange Commission.

Bids for the bank, which had about $16 billion in assets and $9 billion in deposits, were due Aug. 18, the people said.

If regulators were to seize Guaranty, it would be the ninth biggest lender to fail in U.S. history, based on its assets and data compiled by the FDIC.

‘Open For Business’

Guaranty remains “open for business. We continue to work with our regulators,” John Wessman, a spokesman, said in an e- mailed statement. The bank provides the same FDIC deposit insurance coverage as other member banks, he said.

BBVA spokesman Ed Bilek and FDIC spokesman Andrew Gray declined to comment.

Blackstone Group LP, Gerald Ford’s Flexpoint, U.S. Bancorp and Carlyle Group were among groups considering bids for Guaranty’s assets, people familiar with the situation said earlier. Guaranty’s biggest shareholders are billionaire Carl Icahn and Omni Hotels owner Robert Rowling, who together control a third of the bank’s shares, according to data compiled by Bloomberg. link.....

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paidContent - Reader's Digest Files For Ch 11 Bankruptcy For U.S. Arm; Ripplewood Washed Out

This had been brewing for a while: Reader’s Digest company has filed for a pre-arranged Chapter 11 bankruptcy. The company was acquired for $1.6 billion by a consortium of investors, led by PE firm Ripplewood, in 2006. It hired law firm Kirkland & Ellis earlier this year to look at restructuring options. Founded in 1922, RDA was a public company from 1990 through 2007,before it went provate with the deal; the new owners also assumed $776 million in debt. In January, RDA cut 8 percent of its 3,500-member workforce and ordered furloughs across the board.

Under the terms of the deal:
—has reached an agreement in principle with a majority of its senior secured lenders on the terms of a restructuring plan.
—NYT: 60 percent of the company’s lenders had agreed to the terms of the restructuring, and it expects to speed through bankruptcy, completing proceedings 45 to 90 days after it files
—will reduce its debt from $2.2 billion to $500 million.

—the restructurng of debt will result in a transfer of ownership of the company to the lender group.
—The company will not make a $27 million interest payment due today on its 9 percent Senior Subordinated Notes due 2017. Instead, the company is using the 30-day grace period to continue discussions with its lender group for this bankruptcy.
—Among RDA’s senior lenders are Bank of America, JP Morgan and GE Capital.
—Commitment from some of its lender group to provide $150 million in new money Debtor-in-Possession (DIP) financing, convertible into exit financing upon emergence. These lenders are JPMorgan Chase, GE Capital, Eaton Vance, Ares, Regiment and Bank of America Merrill Lynch.
—Will apply only to the company’s U.S. businesses — its operations in Canada, Latin America, Europe, Africa, Asia and Australia-New Zealand will not be affected. RDA’s International operations are expected to have adequate funding based on continuing operations and access to proceeds from the DIP financing.
—All board members who have served since the March 2007 acquisition, with the exception of CEO Mary Berner, have resigned. The two recently appointed directors also continue to serve on the board. link.....

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Applied Materials Forecast Tops Analysts’ Estimates

Applied Materials Inc., the largest maker of semiconductor-production machinery, predicted fourth- quarter sales and profit that topped analysts’ estimates, signaling that the chip market may have bottomed out.

Profit will be as much as 4 cents a share in the period, which ends in October, the company said today on a conference call. Analysts had projected a loss of 5 cents, according to a Bloomberg survey.

Applied Materials may be recovering from three years of slumping sales, when customers scaled back production plans to cope with lower demand for chips. New orders, an indicator of future sales, will climb this quarter from the previous three months, the company said today.

“There are more indications that demand is growing,” Chief Executive Officer Mike Splinter said on the call. “It’s too soon to conclude that a broad-based recovery is at hand.”

Applied Materials, based in Santa Clara, California, rose 41 cents, or 3.1 percent, to $13.63 in extended trading. The shares, up 31 percent this year, closed at $13.22 today on the Nasdaq Stock Market.

Sales will climb at least 10 percent from the previous three months, Applied Materials said, indicating about $1.25 billion. Analysts had estimated $1.07 billion.

‘Bounce Back’

“There are definitely signs of a bounce back,” said Edwin Mok, an analyst at Needham & Co. in San Francisco. He has a hold rating on the stock, which he doesn’t own.

The company reported a third-quarter loss of $54.9 million, or 4 cents a share, compared with a profit of $164.8 million, or 12 cents, a year earlier. Sales fell to $1.13 billion in the period, which ended July 26. Analysts had predicted a loss of 9 cents a share on sales of $959.9 million.

New orders rose to $1.07 billion, up 65 percent from the second quarter. That compares with a prediction of a 40 percent gain by Patrick Ho, an analyst at Stifel Nicolaus & Co. in Dallas.

Applied Materials didn’t give a specific forecast for orders this quarter. Demand is concentrated among a few customers and they could quickly change their plans if the economy doesn’t recover, Chief Financial Officer George Davis said in an interview.

“Our visibility extends out a few months, rather than a few quarters,” he said.

Industry Slump

Worldwide chip-equipment capital spending will fall 45 percent this year to $24.3 billion, estimates Gartner Inc., a research firm in Stamford, Connecticut.

To offset the swings in demand for chip-making equipment, the company has branched out into solar-panel production machinery in the past three years. The tightening of credit markets prevented alternative-energy companies from getting loans needed to build plants, hampering efforts to expand that business. link....

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China Charges Four Rio Executives With Bribery, Xinhua Says

China arrested four Rio Tinto Group workers on charges of infringing trade secrets and bribery, the official Xinhua News Agency said, citing a statement from the nation’s Supreme People’s Procuratorate.

They are Stern Hu, head of the company’s iron ore business in China, Liu Caikui, Ge Minqiang and Wang Yong, Xinhua said yesterday, citing the statement. Initial investigations showed the four had obtained commercial secrets about China’s iron and steel industry through improper means, violating the nation’s criminal law, Xinhua said, citing the statement.

The six-week detention of the Rio sales executives, Australian citizen Hu and three Chinese nationals, has strained relations between the two nations. Australia, which said today it hadn’t received formal advice of the arrests, has said the detentions may be part of a criminal probe into iron ore talks.

Hu “will most certainly face trial and the laws of judicial probability in China suggest that he will be found guilty,” Michael McKinley, a professor of global politics at Australian National University in Canberra, said today by phone. The Chinese government seems “quite happy for this to be made a reasonably high profile case both within China and outside,” he said.

Rio Tinto fell 1.7 percent to A$56.94 at 10:07 a.m. Sydney time on the Australian stock exchange.

China, the world’s biggest buyer of iron ore, is Australia’s second-biggest trading partner, with two-way trade valued at A$68 billion ($56 billion) in 2008. China is also Australia’s largest source of foreign investment. Hu has been held since July 5 after police searched Rio’s Shanghai office.

Claims Denied

Rio has denied the bribery allegations and said that it wasn’t aware of any evidence that would support an investigation by Chinese authorities. Hu’s arrest was an individual judicial case and wasn’t political, Qin Gang, China’s foreign ministry spokesman, said July 9.

Rio spokeswoman Amanda Buckley declined to immediately comment on the Xinhua report. The company said yesterday it hadn’t had any contact with the four executives since their detention.

Australia made its second consular visit to Hu on Aug. 7, Foreign Minister Stephen Smith said today on the Australian Broadcasting Corp. The government continues to take a close interest in Hu’s welfare, the Department of Foreign Affairs and Trade said today in an e-mailed statement.

“We are continuing to make representations in Beijing, Shanghai and Canberra in support of this Australian citizen,” the department said in today’s statement. “Hu is now subject to Chinese law and Chinese legal and judicial processes. link....

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HK Dlr Slightly Higher Late; Gains In HK Shares Drive Demand

Gains in Hong Kong shares pushed up demand for the local dollar, leading it slightly higher against the U.S. dollar Monday and keeping it near the upper limit of its trading band.

Traders said optimism over local equities is likely to encourage investors to keep funds in Hong Kong, curbing any gains in the U.S. dollar. They said they expect the U.S. dollar to be capped at HK$7.7510 in the near term.

In late Asian trade, the U.S. dollar was at HK$7.7503, down from HK$7.7504 late Friday. The U.S. unit was fixed at HK$7.7504 earlier Monday.

"The rise in local stocks spurred buying of the local currency during the afternoon by both local and foreign banks, helping it reverse Friday's decline," said a senior trader at a local bank.

Gains on Wall Street on Friday and easing concerns over credit tightening in China led Hong Kong shares to a near 12-month closing high Monday. The blue-chip Hang Seng Index rose 2.7% to 20,929.52.

Another trader at a U.K. bank said broad U.S. dollar weakness overseas also discouraged investors from holding onto the U.S. dollar.

The U.S. dollar gave up some ground to the yen in Asia Monday, as investors took profits following a rise Friday. At 0745 GMT, the U.S. dollar stood at Y97.36, down from Y97.48 in New York late Friday.

Hong Kong interbank offered rates were broadly steady due to ample liquidity.

"I don't see any big force to drive up short-dated Hibors in the near term as the aggregate balance is still above HK$232 billion," a senior trader at a U.K. bank said.

"Unless the U.S. dollar rises above HK$7.7510 with strong outflows to tighten liquidity, Hibors are likely to stay at their current levels," the trader added.

The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 223 points to the spot rate, compared with a 219-point discount late Friday. link....

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Europe Central Banks Agree to Third Cap on Gold Sales

European central banks agreed to a third five-year cap on gold sales and said planned disposals by the International Monetary Fund could be done within the accord.

The European Central Bank and 18 other banks agreed to sell no more than a combined 400 metric tons of the metal a year through September 2014. That’s less than the annual cap of 500 tons in the current agreement, which expires Sept. 26.

“It’s positive for gold,” John Reade, an analyst at UBS AG in London, said by e-mail. Having the agreement “removes the small chance that European central banks would have dumped gold onto the market in an unconstrained manner.”

Central banks sold 73 percent less gold in the first half and full-year disposals may drop to the lowest since 1994, according to estimates from London-based researcher GFMS Ltd. The IMF wants to sell 403 tons from its reserves of 3,217 tons, the third-largest holding after the U.S. and Germany.

“The IMF has not signed and this leaves open the possibility that the Chinese, Russians, another central bank, could buy the 403 tons of IMF gold in one go,” Reade said.

China has the world’s sixth-largest holding at 1,054 tons and Russia is ranked 10th with almost 537 tons, World Gold Council data show.

Gold for immediate delivery in London was 0.4 percent lower at $959.30 an ounce by 10:45 a.m. local time today. The metal reached $971.68 an ounce yesterday, the highest since June 5.

IMF Sales

Gold sales haven’t been approved yet by the IMF’s board. The U.S. Congress passed legislation in June that permits the American representatives to the IMF to agree to the planned sale to help finance aid to poor countries.

Four hundred tons, or 12.86 million troy ounces, is equal to about a sixth of annual mine production. At this year’s average spot price of $920 an ounce, 400 tons would be worth about $11.8 billion.

The Swiss National Bank, one of the signatories to the new accord, in a statement today said it isn’t planning any gold sales in the near future, and that its gold is an important part of monetary reserves. Switzerland has 1,040 tons of gold, making it the seventh-largest holder.

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FAA Boss Says He'll Ensure Action on Pilot Fatigue

Two days after The Washington Post published an examination of the living conditions endured by some pilots for regional airlines, Federal Aviation Administrator J. Randolph Babbitt said he will "close the gap" if a government rulemaking committee fails to develop regulations aimed at curbing pilot fatigue.

"We know too much," Babbitt said Wednesday in an address to the Air Line Pilots Association (ALPA). "We have too much science in hand. We know too much about fatigue."

Babbitt announced the creation of the rulemaking committee in June after congressional hearings into the crash of Continental Connection Flight 3407 on Feb. 12 near Buffalo. All 49 people aboard and one person on the ground were killed when the plane stalled and plunged into a house. Federal investigators have uncovered evidence that suggest fatigue was a factor in the crash.

The FAA's so-called flight duty time and rest rules seek to limit the maximum number of hours a pilot can fly or be on duty and set a minimum number of rest hours between shifts. Babbitt said the current standards date back to the "propeller era" of the industry.

The Post published a report Tuesday that described how some regional pilots, some of whom earn as little as $20,000 a year, share "crash pads" near their duty stations to save money and have a place to rest between flights.

Pilot unions and airline groups have battled at least since the mid-1990s over attempts to rewrite regulations. FAA officials in the past were reluctant to move forward without consensus from both sides. link....

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Hang Seng Bank’s Profit Falls 29% on Lower Fee Income

Hang Seng Bank Ltd., the largest Hong Kong-based lender by market value, said first-half profit fell 29 percent as a weakening economy hurt fee income servicing wealthy individuals.

Net income declined to HK$6.45 billion ($832 million), or HK$3.37 a share, from HK$9.06 billion or HK$4.74 per share a year earlier, the bank said in a statement today. Profit beat the median HK$6.21 billion estimate among five analysts surveyed by Bloomberg.

Chief Executive Officer Margaret Leung, who in May became the first woman to lead a major Hong Kong bank, is battling falling fee income and narrower loan margins as the economy contracts the most in 11 years. Hang Seng Bank, majority owned by HSBC Holdings Plc, has gained 23 percent this year in Hong Kong trading, trailing the 43 percent advance in the benchmark stock index.

“Revenue progression for Hong Kong banks is going to be a big challenge,” Morgan Stanley analysts Anil Agarwal and Daniel Shum wrote in a July 28 report. They have an “overweight” rating on Hang Seng Bank. “Our view for large Hong Kong banks is that there will likely be severe compression in net interest margins.”

Wealth-management income fell 32 percent to HK$2.18 billion in the period from a year earlier because of “poor investment sentiment,” Leung said in today’s statement.

Net interest income fell 12 percent to HK$7.28 billion and net fee income dropped 36 percent to HK$1.93 billion. The net interest margin, or the difference between earnings on loans and the cost of funds, fell to 2.06 percent from 2.43 percent. Bad- debt provisions rose, the bank said.

Continued Challenges

“The global financial crisis continues to pose challenges for business,” Leung said in the statement. “Although major economies across the world have introduced stimulus measures, it is too soon to tell how successful such measures will be in driving sustainable growth momentum.”

Leung, 56, joined HSBC in 1978 as a management trainee and in 2005 became the first Chinese woman to be appointed a general manager at the bank. She succeeded Raymond Or, who was retiring, as CEO.

Hang Seng Bank, which is incorporated in China, said contribution from its operation in the world’s third-largest economy to the group’s pretax profit rose to 11.7 percent in the first half from 9.4 percent a year earlier.

Former CEO Or said last year he aimed to have 50 outlets in China by the end of 2010. Hang Seng Bank now has 34. The Chinese government’s $585 billion stimulus and record bank lending has helped the economy rebound from an export-led slump, and the nation’s benchmark stock index has rallied 90 percent this year.

Hang Seng’s shares fell 0.9 percent to HK$124.8 at the 4 p.m. close in Hong Kong today, before earnings were announced.

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House Gives Regulators Incentive Pay Role; Senate Prospects Dim

The U.S. House gave regulators the power to ban Wall Street incentive pay that encourages excessive risk-taking after banks bailed out by taxpayers paid billions of dollars in bonuses.

The legislation, passed 237-185 yesterday, authorizes banking agencies and the Securities and Exchange Commission to prohibit compensation practices that threaten the sustainability of financial companies and “could have serious adverse effects on economic conditions.” The bill must pass the Senate, where lawmakers oppose aspects of the measure, and be signed by President Barack Obama to become law.

The bill targets “bonuses that pay off if the gamble or the risk pays off but don’t lose you anything if it doesn’t,” said House Financial Services Committee Chairman Barney Frank, author of the legislation. “There is a wide consensus that this incentivizes excessive risk.”

Outrage over Wall Street pay was reignited after New York Attorney General Andrew Cuomo reported July 30 that nine banks getting U.S. aid paid $32.6 billion in bonuses last year. Cuomo’s report showed the nine companies paid 4,793 employees bonuses that exceeded $1 million last year.

In addition to targeting incentive pay, the House measure requires all public companies to give shareholders a non-binding vote on top managers’ compensation.

Representative Spencer Bachus, an Alabama Republican, criticized the measure and questioned whether it makes sense to give more power to regulators that “failed to prevent the worst financial calamity since the Great Depression.”

“Under the guise of empowering shareholders it is in fact the government that is empowered,” he said.

Senate, Obama

The legislation got a cool reception from senators and the Obama administration. White House press secretary Robert Gibbs, told reporters this week the administration is concerned the measure may give regulators too much authority over incentive pay. Obama has endorsed giving shareholders a vote on compensation.

“We are not in this case taking orders from the Obama administration,” said Frank, a Massachusetts Democrat. link....

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Dow Soars 188 Points; Nasdaq's Streak at 12

Strong housing data combined with good earnings reports to spur a stock-market rally that pushed blue chips to a new 2009 high and the Nasdaq Composite Index to a winning streak unparalleled even in the dot-com bubble.

The Dow Jones Industrial Average leapt 188.03 points, or 2.1%, to 9069.29, helped by gains in components 3M, up 7.4%, and AT&T, up 2.6%. Both announced declines in profits smaller than analysts expected.

The Dow is at its highest point since Nov. 5, up 3.3% for the year, but still down 36% from its closing record in October 2007.

The Nasdaq Composite Index rose for a 12th day in a row -- the longest such streak since 1992. The tech-stock-heavy measure rose 2.5%, helped by an 11% gain in online auctioneer eBay after it said current-quarter results would top analyst estimates.

The S&P 500 rose 2.3% to 976.29, also its highest close since early November. All its sectors posted gains.

Treasury prices fell as investors put their money in stocks, pushing the yield on the benchmark 10-year note to its highest level in more than a month.

Some traders wonder how durable the stock gains will be, noting persistent weakness in employment and corporate revenue that hasn't shown much improvement even as profits have risen. link....

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TARP cop: Get tough on banks

WASHINGTON (CNNMoney.com) -- The top cop tracking the $700 billion bailout program said Monday that he's concerned federal officials are ignoring his proposals for preventing tax dollars from being wasted or pilfered.

Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, released a 260-page report detailing a long list of concerns about government efforts to prop up hundreds of banks, Wall Street firms and auto companies.

The report criticizes the Treasury Department the most for its unwillingness to adopt some of his recommendations.

Barofsky cites two examples: He wants Treasury to force bailout recipients to keep track of how exactly they are spending TARP funds. He also wants officials to erect a "firewall" to prevent private investment managers -- the kind hired to manage and invest taxpayer dollars -- from taking advantage of insider knowledge.

"Although Treasury has taken some steps towards improving transparency in TARP programs, it has repeatedly failed to adopt recommendations that SIGTARP believes are essential to providing basic transparency and fulfill Treasury's stated commitment to implement TARP 'with the highest degree of accountability and transparency possible,' " the report stated.

Barofsky is set to testify about the report Tuesday morning before a House Oversight panel.

The special IG's office, which was established as part of the TARP program enacted last fall, has also launched 35 criminal and civil investigations into a range of allegations from accounting and securities fraud to insider trading and public corruption, the report said.

Some of Barofsky's investigations have already led to criminal and civil charges against those accused of fraudulently benefiting from the government's bailout program.

Risk in the trillions?
Some lawmakers are already squealing about one figure in Barofsky's report, which assigns an eye-popping value of $23.7 trillion as the sum total of dozens of federal programs supporting companies, industries and consumers affected by the economic meltdown.

"Any assessment of the effectiveness or the cost of TARP should be made in the context of these broader efforts," Barofsky is expected to say to the House panel, according to testimony acquired by CNNMoney.com.

The $23.7 trillion number is a "staggering figure," said Rep. Darrell Issa, R-Calif., the ranking minority member of the House Oversight panel.

Yet, the aggregate figure contains programs that the government is no longer on the hook for. For example, it includes $12.9 billion bridge loan to JPMorgan Chase to buy failed investment bank Bear Stearns in March 2008 -- that loan was repaid in full with taxpayers making $4 million in interest.

The aggregate figure also includes bank debt backed by the Federal Deposit Insurance Corp. Taxpayers are on the hook if the banks can't make good on the debt, but so far taxpayers haven't lost a dime and have in fact made billions in fees paid to the program, said industry analyst Jaret Seiberg, who generally supports transparency and disclosure of risk.

"You can start raising questions about lots of different components, but that's throwing lighter fluid on an already politically-charged fight to produce nothing of substance," said Seiberg of Concept Capital's Washington Research Group.

A Treasury official on Monday called the $23.7 trillion figure "inflated," saying it ignores fees and interest that regulators collect to compensate taxpayers for taking on risk. The official added that Barofsky's estimate doesn't take into account assets the federal government now owns that "offset the risk" in these programs.

"While quantity and quality of the assets backing all of these programs vary, ignoring that side of these programs misrepresents 'potential exposure' associated with them," the official said. link....

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Mark Cuban Insider Trading Lawsuit Dismissed

A federal judge on Friday dismissed the Securities Exchange Commission's insider-trading lawsuit against Internet entrepreneur and Dallas Mavericks owner Mark Cuban, dealing a major blow to the SEC's case.
Judge Sidney A. Fitzwater of the U.S. District Court in Dallas said that the SEC failed to prove that the controversial billionaire had agreed not to sell his shares in Canadian Internet search company Mamma.com when its chief executive told him that the company planned to sell additional shares in a private offering in 2004. Such a sale would have diluted the value of Cuban's shares.While Cuban was bound by a promise of confidentiality, there was no evidence that he "agreed, expressly or implicitly, to refrain from trading on or otherwise using for his own benefit the information the CEO was about to share," the judge wrote in his 35-page decision, The New York Times reported.
By law, for the SEC to prove deception, and therefore fraud, the government agency needed to show that Cuban agreed to refrain from using the information to his own benefit.

The SEC now must decide whether to appeal the ruling or file an amended lawsuit in the next 30 days. "We are reviewing the court's ruling and weighing our options," Scott Friestad, associate director of the SEC's Division of Enforcement, said in a statement e-mailed to InformationWeek.

"It's been a great day so far, and it's only going to get better," Cuban said on Twitter. He added, "Thanks for all the kind words everyone! As far as media, I'm not going to be commenting at all, but thanks for asking."

The SEC claimed Cuban sold 600,000 shares of Mamma.com after learning of the pending offering. The move saved Cuban more than $750,000 in trading losses, according to the commission.

When the SEC filed its suit last November, Cuban denied the charges. "I am disappointed that the commission chose to bring this case based upon its enforcement staff's win-at-any-cost ambitions," Cuban said in his blog. "The staff's process was result-oriented, facts be damned. The government's claims are false and they will be proven to be so."

At the time, the SEC planned to recover the amount Cuban allegely salved from the stock sale and impose additional civil penalties on Cuban, whose past and present tech companies include HDNet, MicroSolutions and Broadcast.com. link....

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PSM closes two blast furnaces

KARACHI - The shortage of raw material Friday forced Pakistan Steel Mills (PSM) to close two of its blast furnaces, The Nation learnt reliably.
According to the source, the blast furnace one has been started later while the furnace number two has been put on stand by. “This is because both the furnaces can not be run at the same time as the PSM faces shortage of raw material, iron ore that is used for the production of steel,” he added.
“The raw material, iron ore, is expected to arrive from July 25 to 27. There is some delay in the arrival of raw material that has caused such a serious situation in PSM. It is to be noted that the PSM has reduced its production up to 50 % over the last few months owing to the shortage of raw material,” the source elaborated.
He said that the situation turned ugly when both the government and the PSM high ups did not heeded the letters from the experts of the particular department, pointing to the looming crisis. The top management has been warned several times against the declining of the iron ore stock but nothing has been come out of that. The situation clearly exhibits the sheer negligence on the part of the management that has resulted in the closure of the blast furnaces, he lamented.
The source pinpointed that the rampant corruption in the PSM is deep rooted and every department has been engulfed by the menace.
“The only solution to the situation is a transparent and clear investigation into all the allegations,” he added. The source maintained that the PSM management decided to shutdown the blast furnace for 10 days but had to took back the decision Friday noon when the experts opposed it and criticised the management for the decision.
The closure of blast furnaces may reduce the average lifespan of these furnaces besides affecting their efficiency.
About the working of blast furnace, the source mentioned that each furnace completes 24 tapping processes during 24 hours in normal times.
Now, as the PSM is facing financial crisis, the furnaces are completing only one tapping process and the amount of iron ore required is 5,000 tonnes per day.
The temperature of the blast furnace is 1900 Celsius in which iron ore, coal, coke and lime stone are heated up till it gets into molten form. This melted material is then converted into iron, he concluded, link.....

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UPDATE 2-China iron ore output soars, steel at record

China's monthly iron ore output leapt by a quarter to the second highest ever in June as demand for steel strengthened and prices rose, while steel production hit an all-time peak, official data showed on Friday.

The 27 percent jump in iron ore output, to 83.3 million tonnes, will reassure local steel mills that are facing uncertainty over imports of iron ore because of the furore over allegations of spying levelled at Rio Tinto (RIO.AX) employees involved in China's annual price negotiations.

China was expected to settle iron ore prices with Rio and its Anglo-Australian rival BHP Billiton (BHP.AX) at the end of last month, but the two sides failed to strike a deal before the talks became subsumed in the spying row involving Rio.

With a revival in the international market, domestic production has rebounded.

"The trend is expected, as imported iron ore prices have been higher than domestically produced, encouraging local miners to resume production," said analyst Hu Kai at industry consultancy Umetal Research Institute. "Production will keep rising in July, as more mines are reopening."

A slump in prices early this year forced China's relatively high-cost iron ore mines to cede domestic market share to importers, who have shipped unprecedented amounts to China for the last three months.

Some analysts had estimated China closed nearly 20 percent of its ore mines this year.

But spot iron ore prices delivered in China have steadily risen to above $80 a tonne and some Indian ores are offered at around $90 a tonne, making them more expensive than Chinese spot material for the first time nearly in a year.

China, the world's largest iron ore buyer, consumes more than half of the world's traded ore. Its buying spread helped iron ore prices rebound strongly this year, reducing their negotiation leverage with global miners.

The National Bureau of Statistics, which published the figures, revised last June's iron ore production up, leaving the latest month showing a 1.6 percent fall in volumes.

China's crude steel output in June rose 6 percent on year to 49.42 million tonnes, and coal output jumped 15.9 percent on year to 279.09 million tonnes, both record high levels, according to the data from the National Bureau of Statistics.

June's steel production is equivalent to an annual output of more than 600 million tonnes, 20 percent higher than the country's 2008 production and way above previous government target of 460 million tonnes for 2009. link....

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Pakistan to talk with WB, ADB for IMF loan review

Pakistani officials will meet with the World Bank and Asian Development Bank from Monday to discuss progress in addressing the problem of circular debt and improving the power sector, the finance ministry said.

The talks are part of a review of the South Asian country's performance under a $7.6 billion International Monetary Fund (IMF) programme launched late last year to help it avert a balance of payments crisis.

Pakistani officials "successfully" concluded the first round of the review talks with an IMF mission in Turkey this week, the finance ministry said in a statement late on Saturday.

"The second leg of talks with the World Bank and the Asian Development Bank relating to circular debt and improvement in the power sector would start from July 13 in Islamabad," it said.

One of the expected sticking points of the current review process is whether the government will raise electricity tariffs, which the IMF is pressing it to do but which the government has resisted because it would be a politically sensitive move.

The IMF will take into account input from the World Bank and the ADB in concluding its review of Pakistan's progress, the finance ministry said.

Pakistan is looking to secure the roughly $875 million third tranche of its IMF loan, which was originally meant to be disbursed in June. The IMF board is now set to meet by the end of this month to take a decision on the release of the instalment.

The programme has got off to a good start, with inflation easing and the central bank's reserves back above $8 billion after falling to $3.3 billion last November, the IMF said in a report late last month.

But the fight against Taliban militants in the northwest, uncertainties created by the slump in global demand and domestic power shortages all add to the challenge of pulling the economy out of what is likely to be an extended phase of sluggish activity, analysts say. link....

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China revives dollar debate

		China is proposing to replace the dollar with the International Monetary Fund's Special Drawing Rights based on a basket of currencies as a super-sovereign currency. -- PHOTO: AFP

BEIJING - CHINA raised the stakes in itslong-haul drive to unseat the dollar as the world's dominant currency, seeking a debate on an alternative reserve regime at next week's Group of Eight (G-8) summit.

The global financial crisis set off by the bursting of the US housing bubble nearly two years ago yielded new urgency to calls from emerging powers for a new currency system that would reflect the shifting balance of power in the globalised economy.

G-8 sources told Reuters that Beijing has asked to debate its proposals at the summit in Italy and the issue could be mentioned in the summit statement. China's deputy foreign minister said on Thursday he was unaware of such a request, but that it would be 'normal' for the issue to be raised during the meeting.

'This financial crisis has fully exposed some shortcomings in the international monetary system,' Mr He Yafei said. 'Of course we hope that in the future the international monetary system can diversify,' he told a news briefing in Beijing.

Trillions of dollars committed by US authorities to revive the sagging economy fanned fears of inflation that would erode the value of dollar assets held by official and private institutions around the world.

China, which holds more US Treasury debt than other countries has been particularly vocal, proposing to replace the dollar with the International Monetary Fund's Special Drawing Rights (SDRs) based on a basket of currencies as a super-sovereign currency.

Analysts believe any move away from the dollar would be slow and the report about Beijing's request only temporarily dented the US currency ahead of US jobs data.

The influential payrolls report due at 8.30pm is expected to show the world's biggest economy lost 363,000 jobs in June, up from 345,000 in May, bringing the unemployment rate to a 26-year high of 9.6 per cent from May's 9.4 per cent.

Markets are, however, wary of a negative surprise after Wednesday's news that private sector job cuts last month exceeded expectations reaching nearly half a million.

In Europe, May labour statistics are expected to show euro zone jobless rate creeping up to 9.4 per cent from 9.2 per cent, near a 10-year high. Rising unemployment is emerging as the biggest challenge to recovery, which governments' around the world are trying to stoke with record low interest rates and by pumping trillions of dollars into their economies. link.....

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