With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Ten More to Be Charged in Madoff Case; British GDP Suffers Highest Drop in Half a Century; Housing Price Drops Slowing; GM Attempts to Emerge From Bankruptcy; Corn & Soybean Planting Up; AIG Gets Government-Backed Board; Japanese Memory Maker Gets Bailout
Ten more people will be charged in the Ponzi scheme masterminded by newly sentenced Bernie Madoff, The Associated Press has learned. An anonymous source would not detail what the potential charges would be or say whether any of the 10 people include Madoff's family or former employees. So far only Madoff and an accountant accused of failing to make basic auditing checks have been criminally charged in the multibillion-dollar scam.
Declining manufacturing and construction sectors contributed to the United Kingdom's gross domestic product to fall by 2.4% in the first quarter, the most in more than 50 years, The New York Times reports. Citigroup Inc. (NYSE: C) economist Michael Saunders said the second quarter, which ended yesterday (Tuesday), would also probably show contraction but the recession should be nearing its end soon. Despite this, he said, "I don't think the recovery will be strong in the U.K."
The hemorrhaging in the housing market is slowing as The Standard & Poor's/Case-Shiller index of 20 major cities showed the smallest monthly decline in prices since June 2008. The index dropped by 18% in April from the year before, but for the third month in a row it was not a record decline. "It seems that some stabilization may be appearing in some of the regions," S&P index committee Chairman David M. Blitzer told The Associated Press. A rising unemployment rate and foreclosures could halt any substantial turnaround as the number of homeowners at least two months behind or in foreclosure jumped in the first quarter from the previous quarter, the Treasury Department said yesterday (Tuesday).
General Motors Corp. (OTC: GMGMQ) was in bankruptcy court seeking approval to sell its best assets to a new, smaller company supported by billions in government loans and unburdened by old debts. Judge Robert Gerber sorted through several motions pertaining to GM's plan to emerge from bankruptcy as a leaner company, cutting off some arguments with "please do not duplicate any other objections," according to an AFP report. Should the 850 objections by creditors be dismissed and GM emerges from bankruptcy, creditors can appeal.
Fears of rising food costs were partially quelled as farmers planted an unexpectedly large crop of corn and soybeans this year, according to an Agriculture Department report. A record 77.5 million acres of soybeans were planted through June, while 87 million acres of corn were planted, up 1 million acres from last year and the second largest corn acreage in more than 60 years. The corn boost is giving new life to ethanol producers, who are slowly starting to ramp up production and look at reopening plants that were shut down last year when grain prices skyrocketed and oil prices fell, Advance Trading Inc. commodity research analyst Brian Basting told The Associated Press. "It appears to be a slow healing process" in the ethanol industry, Basting said. "We're seeing the (profit) margins creep back into positive territory."
American International Group Inc. (NYSE: AIG) got a new board of government-approved directors at its annual meeting yesterday in New York, Reuters reports. The U.S. Treasury Department or the trustees overseeing the government's stake in the company recommended the election of at least seven board members. Outgoing Chief Executive Officer Edward M. Liddy said he was confident the new board would name a new chairman and CEO. The U.S. government owns an almost 80% stake in AIG.
Troubled Japanese chipmaker Elpida Memory Inc. has received a $1.7 billion bailout in public and private funds. The move is meant to salvage Japan's only major maker of dynamic random access memory chips used in PCs, as well as 6,000 workers at Elpida, which suffered record losses last year when semiconductor demand went south. "It's a fine balance," Credit Suisse Group AG (NYSE ADR: CS) Chief Equity Strategist Shinichi Ichikawa told The New York Times. "Japan has decided it must save Elpida for the sake of Japanese industry," but "going too far means keeping zombie companies alive."