Wednesday, July 23, 2008

Zimbabweans battle money shortages as collectors buy hundred billion dollar notes on eBay

Zimbabweans battle money shortages as collectors buy hundred billion dollar notes on eBay

Amid Zimbabwe's mind-boggling hyper inflation, a new 100 billion dollar bank note has more value as a novelty item on eBay than on the streets of the capital.

The note, launched this week, is worth enough to buy a loaf of bread _ if you can find one on Zimbabwe's depleted store shelves. Meanwhile on eBay, the bill was on offer for nearly US$80.

Notes in the millions of dollars are useful only as toilet paper and it's cheaper to light a fire with low denomination bills than with newspaper.

In the political and economic turmoil since disputed March 29 elections, prices have risen almost daily. Factories and businesses have shut down amid empty order books and chronic shortages of gasoline, power, water and spare parts for equipment repairs.

President Robert Mugabe and opposition leader Morgan Tsvangirai signed an agreement Monday to hold talks about power-sharing to end the crisis and restore economic stability. But the news failed to move the exchange rate, since little cash is available.

House prices and lottery prizes are quoted in quadrillions _ that's with 15 zeros. Zimbabweans says it's only a matter of time before big ticket items will be priced in the quintillions, which have 18 zeros.

Official inflation is quoted at 2.2 million percent but independent finance houses say it's closer to 12.5 million percent.

One major commercial bank said its automated teller machines are not configured to dispense multi-zero withdrawals and freeze in what it called a "data overflow error." Software writers are busy writing programs to try to overcome the problem.

Urgent electronic transfers in trillions also take several days as electronic accounting systems grapple with transactions in 12 zeros.

Bank transfers command a special rate. A hundred billion dollars is worth US$5 at the official rate, US$1 at the black market rate _ but just 30 U.S. cents in a transfer because by the time the funds are processed the Zimbabwe currency can be expected to be worth a lot less.

Shops have dropped six zeros from price tags, adding them again after totals are tallied at tills.

Zimbabwe has 27 denominations of bills and no coins. Lower value bills _ 10 million Zimbabwe dollars _ are all but obsolete, even in brick-sized bundles. Beggars and street urchins rarely bother to pick up such bills dropped on the street.

But one recent day in Marondera town outside Harare, traffic stopped and business came to a halt when someone _ apparently upset by the dizzying rate of inflation _ started throwing 50-billion-dollar notes from a moving car. Residents scrambled to collect the money.

The biggest bakery in Harare shut down this month and sent 1,200 workers home on forced leave because flour stocks recently ran out. For years, the bakery donated free loaves every week to a home for the handicapped and charity-run hostels.

One Internet provider has invited customers to pay their fees in gasoline coupons that hold their value.

A 58-year-old Harare financial director who asked not to be identified said his monthly salary is paid in local money which converts to US$50 at the bank rate. When available at his local sports club, a hamburger costs the equivalent of US$12. He hasn't eaten out in a year.

A cup of coffee at a government-owned five-star hotel was 130 billion Zimbabwe dollars, or US$5.30 this week. A waitress at the hotel said she earns 100 billion Zimbabwe dollars, US$4 a month.

A German company stopped shipments of bank note paper to the central bank's printers this month as the European Union looked to strengthen sanctions. The release of new money slowed as the central bank said it was looking to Indonesia and Malaysia to supply the specialized paper.

The daily grind for Zimbabweans to survive in the economic meltdown has won them a rating as the world's unhappiest people in the World Values Survey of the Michigan Institute for Social Research.

Zimbabweans were slightly unhappier than Armenians and Moldovans, also victims poverty and "the legacies of authoritarian rule," the researchers said.

Dereck Nhamo, who manages a warehouse, says he wants to join the teeming ranks of unemployed because he can't afford to work any longer.

Nhamo earns less than his bus fare to the warehouse in Harare but adds to his monthly income by selling firewood collected on weekends in outlying woodlands.

"It doesn't make sense to go to work any more," Nhamo said.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Wachovia Posts $8.6 Billion Loss, Slashes Dividend

Wachovia, the fourth-largest U.S. bank, on Tuesday posted an $8.86 billion second-quarter loss, slashed its dividend and announced 6,350 job cuts after losses tied to mortgages soared.



17.65 0.86 +5.12%
[WB 17.65 0.86 (+5.12%) ] shares fell as much as 11.6 percent, but recovered after Chief Executive Robert Steel said he does not plan to issue common stock to raise capital and has many ways to boost capital without selling assets at bargain prices.

Wachovia has nevertheless been among the major lenders hardest hit by the nation's housing crisis, following a disastrous $24.2 billion purchase in October 2006 of Golden West Financial, a California mortgage specialist.

The bank set plans Tuesday to raise or preserve more than $5 billion of capital by the end of 2009.

"Credit deterioration was worse than expected," said Gerard Cassidy, an analyst at RBC Capital Markets, who has a "sector perform" rating on the bank.

"Wachovia is in capital-preserving mode, which means it has to shrink its balance sheet, leading to a vice-like effect on income statement. Revenue growth will likely shrink, even as operating expenses rise. This will lead to lower earnings, or possibly losses, in the future," he added.

The second-quarter net loss for Charlotte, North Carolina- based Wachovia equaled $4.20 per share and compared with a profit of $2.34 billion, or $1.22, a year earlier.

Excluding items, the loss was $2.67 billion, or $1.27 per share. Analysts expected a loss of $1.30 per share, Reuters Estimates said. Wachovia had on July 9 projected a $2.6 billion to $2.8 billion loss excluding items.

Results included a $6.06 billion write-down of goodwill because asset values declined and reflected a $4.19 billion increase in reserves for bad loans.

They also included a $975 million charge related to the tax treatment of leveraged leases, $936 million of losses from disrupted capital markets, a $590 million charge for other legal matters and $391 million of losses on securities sales.

On a conference call, Steel said results were "clearly a disappointing performance." He pledged that Wachovia would be "realistic and balanced and cautious," as well as "prudently paranoid," in working through the credit environment.

Speaking later to journalists, Steel and Chairman Lanty Smith said they planned to keep Wachovia independent.

Dividend, Job Cuts

Wachovia slashed its quarterly dividend to 5 cents per share from 37.5 cents, saving about $700 million of capital per quarter. It has lowered the dividend 92 percent this year.

The bank said it plans to cut 6,350 jobs, affecting more than 5 percent of its roughly 120,000 employees. Wachovia said it will also eliminate 4,400 open positions and contractors.

Wachovia said it has already cut 2,000 retail mortgage jobs and plans to eliminate 4,400 more in the next year.

It also said it plans to sell at least $20 billion of loans and securities by year's end, reduce expenses by $490 million this year and $1.5 billion in 2009, and slow expansion in California and branch openings.

Moody's Investors Service, Standard & Poor's and Fitch Ratings lowered the bank's long-term credit ratings. Moody's and Fitch's rating outlooks are "negative." S&P's is "stable."

Wachovia hired Steel from the U.S. Treasury Department, where he was undersecretary for domestic finance, to replace Ken Thompson, whom it ousted a month earlier.

Steel was a key figure in the Bush administration's response to the nation's mortgage and credit crisis, and was involved in JPMorgan Chase's


41.96 1.10 +2.69%
[JPM 41.96 1.10 (+2.69%) ] bailout in the spring of investment bank Bear Stearns.

Wachovia said it ended the quarter with a Tier 1 capital ratio, which measures its ability to cover losses, of 8 percent. Regulators consider 6 percent sufficient. Wachovia raised $8.05 billion of capital in April.

In afternoon trading, Wachovia shares were up 86 cents, or 6.5 percent, at $14.04 on the New York Stock Exchange. The cost of protecting Wachovia debt against default fell, according to Phoenix Partners Group.

"Pick-A-Pay" Mortgage Writedown

Wachovia's increase in loan loss reserves included $3.3 billion related to the $122 billion portfolio of "Pick-a-Pay" adjustable-rate mortgages in which Golden West specialized and which enticed Wachovia to buy Golden West in the first place.

The bank has since stopped making Pick-a-Pay loans, which let borrowers pay less than the interest due and are sometimes called option adjustable-rate mortgages. On Monday, it said it will stop offering home loans through brokers.

Wachovia said its total allowance for credit losses was $10.96 billion, up from $6.77 billion at the end of March and $3.55 billion a year earlier. Net charge-offs increased more than eight-fold from a year earlier to $1.31 billion.

Profit at the corporate and investment banking unit fell 73 percent to $209 million, hurt by write-downs tied to subprime, commercial and consumer mortgages, and to non-subprime debt.

In consumer and business banking, Wachovia's largest unit, profit fell 23 percent to $1.12 billion, hurt by rising credit costs, mainly for mortgages.

Capital management profit fell 5 percent to $297 million, hurt by the liquidation of an Evergreen Investments fund, while wealth management profit rose 9 percent to $98 million.

Through Monday, Wachovia shares had fallen 65 percent this year, while the KBW Bank Index was down 30 percent.

Copyright 2008 Reuters. Click for restrictions.

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Wachovia loses $8.9B, cuts 6,350 workers, dividend


Wachovia Corp. reported a surprisingly large second-quarter loss Tuesday, deflating Wall Street's hopes that the nation's big banks are weathering the credit crisis well. The nation's fourth-largest bank by assets said it lost $8.86 billion, is slashing its dividend and eliminating 10,750 positions after losses tied to mortgages soared.

Even excluding one-time items, the results substantially missed Wall Street estimates.

"These bottom-line results are disappointing and unacceptable," Chairman Lanty Smith said in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."

Wachovia said it lost the equivalent of $4.20 per share in the April-June period. In the same timeframe last year, the bank earned $2.34 billion, or $1.22 per share.

Excluding $6.1 billion in write-downs to the value of its intangible assets and merger-related and restructuring charges of $128 million, Wachovia lost $2.67 billion, or $1.27 per share. Second quarter results include the bank's October acquisition of A.G. Edwards Inc.

Analysts on average expected a loss of 78 cents per share on revenue of almost $8.4 billion.

Earlier this month, Wachovia had projected a $2.6 billion to $2.8 billion quarterly loss, equal to $1.23 to $1.33 per share, excluding goodwill items.

The Charlotte-based bank cut its quarterly dividend to 5 cents per share from 37.5 cents, which will conserve approximately $700 million of capital per quarter. In April, Wachovia slashed its dividend 41 percent.

As part of a plan to cut 2009 expenses by $1.5 billion, the bank said it would lay off 6,350 workers and eliminate 4,400 open positions and contractors.

During the quarter, the Wachovia boosted its provision for loan losses to $5.57 billion from $179 million a year ago, and added $4.2 billion to its reserves for bad loans.

Wachovia has been suffering from its 2006 acquisition of Golden West Financial Corp. The bank paid roughly $25 billion for the California mortgage lender known for exotic loans.

The so-called "Pick-a-Payment" loans, which Wachovia inherited from Golden West, have proved a headache for the bank and a lightning rod for shareholders, defaulting at higher rates than other mortgages.

Wachovia recently discontinued offering the "Pick-A-Payment" loan option, which allows customers to pay a less-than-full interest payment on all new home loans. The bank also had hired The Goldman Sachs Group Inc. to conduct an analysis of its loan portfolio and advise it on strategic alternatives.

Late Monday, Wachovia announced plans to leave the wholesale mortgage lending business. And beginning Friday, the company will no longer offer mortgages through brokers, joining other lenders making similar moves to exit the troubled sector.

Big banks, such as Bank of America Corp. and National City Corp., have stopped making loans through brokers entirely, relying instead on their loan officers. National City said it was forced to do so by a continuing downturn in loan demand, while Bank of America said it saw better "long-term opportunity" in working through its own loan officers.

Wachovia spokesman Don Vecchiarello said in a statement that the company "recognized some opportunities to re-position our business" given the current market conditions.

Earlier this month, Wachovia named former Treasury Undersecretary and Goldman Sachs executive Robert Steel as chief executive, replacing the ousted Ken Thompson. Within a week of being on the job, the bank's shares tumbled to a new 17-year low.

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T. Boone Pickens says U.S. must rely less on foreign oil

By DAVE MICHAELS / The Dallas Morning News

Pickens pitches wind power to Congress
WASHINGTON – T. Boone Pickens has a new role model: Al Gore.

Mr. Pickens, a longtime Republican partisan, and Al Gore, the former Democratic vice president, don't agree on much when it comes to politics. But Mr. Gore's global-warming awareness campaign has set a bar for Mr. Pickens' own effort to sound alarms about the dangers of depending on foreign oil.

"The goal is to have a greater impact than Al Gore has had on global warming," said Jay Rosser, a spokesman for Mr. Pickens. "He envisions an aggressive campaign to make this the No. 1 public policy issue in America and drive to real measurable change."

Whether that will happen is uncertain, but Mr. Pickens has already made it to Washington, where he presented his plan to a Senate panel on Tuesday. Afterward, the Texas oilman said he's approached both presidential candidates about discussing his plan for reducing the country's dependence on foreign oil.

"We still don't have the candidates talking about it," Mr. Pickens said. "I want to elevate it into the presidential debate."

With Congress taking heat for high gasoline prices but deadlocked over whether to expand domestic drilling, the presidential race offers a shortcut for influencing energy policy.

Mr. Pickens, 80, plans to take part in a Las Vegas energy summit next month – where he'll appear with Senate Majority Leader Harry Reid and former President Bill Clinton – that will develop recommendations to be unveiled at both parties' political conventions.

While Mr. Pickens has garnered Democratic praise for his plan, he has more natural ties to Mr. McCain's campaign. Sen. Joseph Lieberman, a close McCain ally and national-security hawk, invited Mr. Pickens' testimony before the Senate Homeland Security and Government Affairs Committee on Tuesday.

Mr. Lieberman, I-Conn., voiced frustration with "incremental steps" toward a viable energy policy and said he was "spoiling for some bold T. Boone Pickens-type action."

"I hope his boldness will infect a lot of other people here in Washington," he said.

Tuesday's hearing was loaded with the kind of peak-oil predictions that Mr. Pickens has used to make headlines. At one point, he said oil could reach $300 a barrel if demand continued to outstrip supply.

His plan turns on reducing demand by boosting wind power for electricity and using natural gas to power automobiles. Mr. Pickens, who is heavily invested in West Texas wind farms, is running a $58 million advertising campaign to promote his ideas and earning a lot of free attention from the media.

No stranger to politics, Mr. Pickens has hired a dozen Washington lobbyists to keep his ideas in circulation, according to aides. Other lobbyists are talking to governors with renewable-energy agendas, including Montana Gov. Brian Schweitzer and Kansas Gov. Kathleen Sebelius, aides said.

Mr. Pickens still insists that regular people are more important to his plan than lobbyists. His Web site features links to groups that say they have hundreds of members in nearly every state.

Mr. Pickens was coy Tuesday about who would build the national grid needed to carry renewable energy from West Texas and other wind corridors to the rest of the country. He estimated its price between $70 billion and $100 billion.

"If the government wanted to build a grid, do it," he said. "But if they don't want to do it, I think the money is there to do it privately."

Kenneth B. Medlock III, a fellow in energy studies at Rice University's Baker Institute Energy Forum, said the strength of Mr. Pickens' plan is its use of available energy sources, rather than new technology such as advanced biofuels, which don't exist.

Some of his goals, such as reducing oil imports by 30 percent in 10 years, are aggressive, Dr. Medlock said. They would turn on advancements in power storage and a faster turnover in vehicle fleet to natural gas-powered automobiles.

"Typically those sorts of things take longer than 10 years to occur," Dr. Medlock said. "I'd say 20 years is probably more feasible."

The plan faces other technological hurdles. Because wind doesn't blow all the time, the country would need backup sources of power or a way to store electricity when it wasn't needed, which Mr. Pickens said "is not too far into the future."

Some lawmakers have questioned whether using natural gas for transportation would drive up its price, which is high but lower than oil on a per-gallon basis.

Such concerns helped stall climate-change legislation. Opponents warned that new controls on coal-fired power plants would trigger widespread switching to natural gas as a feedstock.

"We have had such pressure from the chemical industry and others that use it ... to make it available to them so they can keep jobs here, that we have not focused on automobile engines to be fed by natural gas," said Sen. Pete Domenici, R-N.M.


How America can wean itself off foreign oil, according to T. Boone Pickens:

•Use eminent domain to site the transmission infrastructure needed to ship wind and solar power around the country from its source in Texas and the Midwest.

•Authorize a 10-year, $15 billion federal tax credit for wind- and solar-power projects.

•Require that all government vehicles – including public transportation buses – use compressed natural gas instead of diesel or gasoline.


T. Boone Pickens is blazing an independent path as he pushes leaders to adopt his plan to wean the U.S. off foreign oil. While lawmakers from both parties quote him liberally, Mr. Pickens has criticized both parties for promoting measures that he thinks are insufficient and even feckless:

•On Democrats' proposal to lower prices by removing oil from the government's Strategic Petroleum Reserve: "A waste of time. We need to fix a problem, not fool around with stuff like that."

•On Democrats' insistence that financial speculators are to blame for driving up the price of oil: "That is just wasting time as far as I'm concerned. The market is the market, and you have 85 billion barrels of supply, and demand is 86 and a half billion barrels. Eight-five billion doesn't cover 86 and a half billion."

•On Republicans' arguments that new coastal drilling is a vital part of reducing foreign imports: "I'm not a big believer. I think you are going to get a rude awakening as to the value of the East and West Coast when it's opened up and when it's put up for sale."

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Thanks to Olympics, Beijing gets its Eiffel Tower, of sorts

The new China Central Television headquarters building is seen in Beijing Thursday July 17, 2008.  The building consists of two angled towers connected at the top to form a continuous loop of horizontal and vertical sections. The spectacular 230 meter (755 foot) building, one of Beijing's tallest, will house more than 10,000 staff.  The building is one of a series of landmarks, notable for their futuristic design, that will greet visitors to the Olympics Games, which open Aug. 8. (AP Photo/Greg Baker)
AP Photo: The new China Central Television headquarters building is seen in Beijing Thursday July 17, 2008....

By Tim Johnson, McClatchy Newspapers

BEIJING — London has Big Ben, Paris has the Eiffel Tower , San Francisco has the Golden Gate Bridge and now Beijing has an iconic structure that's likely to identify the city forever.

It's an audacious monolith that looks like two drunken high-rise towers leaning over and holding each other up at the shoulders.

The eye-catching building, which is nearly finished, will be the headquarters of China Central Television, the staid propaganda arm of China's ruling Communist Party , and it's perhaps the boldest and most daring of several new buildings that have given Beijing a stunning new appearance for the upcoming Summer Olympic Games.

In keeping with the playful nature of the new buildings, all have weird popular names. There's "the egg" and the "bird's nest." The "water cube" isn't far away, and lastly there's "short pants," also known as the "twisted doughnut."

The last of them is the new television building, the CCTV headquarters, and it can nearly make one dizzy standing on the ground and looking up at its odd, teetering 49-story towers connected by a multistory, cantilevered, jagged cross section over open space at a vertiginous 36 stories up in the air.

Designed by Dutch architect Rem Koolhaas, the building has been called an "angular marvel" and a "dazzling reinvention of the skyscraper."

Its engineering is so complex that the designers say such a building couldn't have been built a few years ago. That's because it took immense computing power to ensure that the design could withstand huge pressures in the earthquake-prone capital. Some 10,000 tons of steel were used in its construction.

As much as it's a challenge to gravity, the building is a challenge to the mind, critics say, defying conventions of skyscrapers as vertical shafts thrusting straight up.

"It captures the spirit of the country at this point in time, a really daring spirit to look into the future and try the impossible," said Rocco Yim , a Hong Kong architect who sat on the jury in 2002 that selected the winning design for the tower.

Yim dismissed the criticism that's poured in from ordinary Chinese, some of whom say the building lacks Chinese features. Others say it's too costly, at $800 million , or that its 44-acre footprint is too big for such a central city location.

" The Eiffel Tower was detested by half the population of Paris when it was built," Yim said.

Deng Xuexian, a professor of architecture at Tsinghua University , said new designs often generated opposition before they became recognized as global landmarks.

" The Sydney Opera House was criticized by many people, even members of Parliament. However, it has become a landmark construction of Australia ," Deng said.

Even admirers sometimes voice ambivalent feelings.

"It is a little bit weird. I don't know how it keeps steady," said Hua Jia, a university design student. "But I think it is great, very modern."

With the Olympic Games as a showcase, Beijing officials early this decade commissioned cutting-edge buildings, drawing the hottest designers from the global architectural world and giving a platform to what some wags dubbed "star-chitecture."

Among the new buildings:

— The 91,000-seat Olympic Stadium is a tangle of seemingly random steel "twigs" curved into a graceful bowl and designed to look like a bird's nest. Swiss firm Herzog & de Meuron, which also designed the Tate Modern museum in London , created the stadium.

— A stone's throw from the "bird's nest" is the "water cube," an Olympic aquatic center covered with translucent blue panels that give it the appearance of being covered in bubble wrap. At night, it offers an otherworldly blue glow.

— In the heart of Beijing , slightly to the west of Mao Zedong's portrait looking across Tiananmen Square , a shimmering, egg-shaped titanium dome rises from behind reflecting pools. Designed by French architect Paul Andreu , it's the new National Theater . Most people just call it "the egg."

— The dazzling new $3.8 billion terminal at Beijing Capital International Airport , designed by Briton Norman Foster and built by 50,000 workers in just four years, is purported to be the largest structure and the most advanced airport terminal in the world.

It might seem incongruous that a nation such as China , allergic to political reform and still insistent on calling itself communist, would willingly engage daring architects, spending vast sums on prestige projects.

Indeed, some foreign architects wriggle a bit when they're asked whether they're supporting China's one-party state with their designs, retorting that the new buildings themselves coax China to engage more with the world, not only in appearance but in function.

CCTV, the sole Chinese broadcaster, with some 15 channels, wants one day to rival CNN and the British Broadcasting Corp. Its new headquarters includes broadcasting studios, program production facilities, digital cinemas and enough space to make it the second largest office building in the world, after the Pentagon outside Washington .

The architects have built huge glass panels in the floor of the cantilevered cross section of the building, so that visitors can get the woozy sensation of walking above nothing but air.

In a statement, Koolhaas' partner, Ole Scheeren , said a new young generation was rising to power at CCTV and "the many publicly accessible functions of the new building point towards a democratization of the institution."

Since the building is like a large loop, usual hierarchies are diminished. The top floors will include public spaces for employees, rather than offices for top honchos, and communal corridors are designed to let employees and visitors peer into studios and see the inner workings of one of the world's biggest media companies.

Outside the building are a public entertainment area and outdoor filming areas.

Just how open the complex will be to the public is yet to be seen, however. Security concerns may limit entry, isolating the building.

Yim, the Hong Kong architect, said that the headquarters must generate vibrant activities and pull in people from the surrounding city in order to propel itself into the ranks of world-class buildings.

"That will be the test of whether it is a great piece of architecture rather than just an eye-catching structure," Yim said.

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