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India's inflation unexpectedly slowed to a five-month low, giving the central bank room to reduce borrowing costs to shore up a slowing economy. Bonds rose.

Wholesale prices rose 8.9 percent in the week to Nov. 8 from a year earlier after gaining 8.98 percent in the previous week, the commerce ministry said in New Delhi today. That was less than the median forecast of 9 percent in a Bloomberg News survey of 13 economists. The inflation rate has dropped from a 16-year high of 12.91 percent in the week to Aug. 2.

The Reserve Bank of India has scope to cut borrowing costs further as inflation approaches a level “we can live with,'' Finance Minister Palaniappan Chidambaram said in a Nov. 18 interview. Growth in India's $1.2 trillion economy is weakening as a simultaneous recession in the U.S., Europe and Japan crimp demand for the nation's exports.

“The slowdown in inflation gives a great deal of comfort to the Reserve Bank to move ahead in cutting interest rates and to give a push to the growth momentum,'' said Shubhada Rao, an economist at YES Bank Ltd. in Mumbai. “There is a clear shift in focus.''

Bonds extended gains after the inflation report. The yield on the benchmark 10-year note fell to 7.23 percent, the lowest since January 2006, from 7.25 percent earlier. The price rose 1.3 per 100 rupee face amount to 106.92.

`Constant Vigil'

Prime Minister Manmohan Singh on Nov. 17 reviewed India's “liquidity situation'' in a meeting attended by central bank Governor Duvvuri Subbarao and “advised him to keep a very close and constant vigil over the situation and act as appropriate,'' Chidabmaram said cash advance in one hour.

The central bank has cut its benchmark lending rate twice in the past month, lowering it to 7.5 percent from a seven-year high of 9 percent. It also pared the amount lenders must set aside as reserves to cover deposits by 3.5 percentage points in a month, freeing up as much as 1.4 trillion rupees ($29.5 billion) in cash to ease lending.

The wholesale price index fell in the week to Nov. 8 because of a decline in the prices of fuel products such as jet fuel, furnace oil and naphtha. The oil index fell after Indian oil companies including Indian Oil Corp., the nation's largest refiner, cut the price of jet fuel by 4 percent.

The index of manufactured products that includes cooking oil and steel products, with a 63.7 percent weighting in the inflation basket, dropped to about 1 percent in the week, today's report showed.

Declining oil and commodity prices are cooling inflation across Asia, providing policy makers with scope to reduce borrowing costs to stimulate growth. Crude oil have fallen by 64 percent after climbing above $147 a barrel for the first time in July, while corn and wheat prices are also down by more than half from records reached earlier this year.

Today's inflation rate may be revised in two months, after the government receives additional price data. The commerce ministry increased the inflation rate for the week ended Sept. 13 to 12.42 percent from 12.14 percent.

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Bank of England Governor Mervyn King said policy makers are prepared to reduce interest rates as low as needed to prevent a recession from fueling deflationary pressures.

Asked whether he would take rates to zero, King said today policy makers “are prepared to cut bank rate to whatever level is necessary'' to make sure inflation hits the central bank's target. The Bank of England's forecasts, published today, said inflation may slow “well below'' their 2 percent goal in 2009.

The pound dropped to a record low against the euro after King today forecast a deepening recession. The bank has already trimmed the benchmark rate twice in the last month, reducing it by 1 1/2 percentage points last week to a five-decade low of 3 percent.

The downturn has worsened in the past month, reports show. Unemployment rose at the fastest pace in 16 years in October, house prices are falling the most in a quarter century and manufacturing is in its worst recession since the early 1980s. Until last week, the central bank's benchmark was the highest among the Group of Seven nations.

“Today's inflation report is a courageous acknowledgment that they are definitely behind the curve and quick action is definitely needed,'' said Chiara Corsa, an economist at UniCredit MIB. “Risks of a deflation scenario loom at the horizon.''

Pound Decline

The pound dropped to 82.38 pence per euro, extending its decline this year to 10 percent. Against the dollar, it dropped to the lowest since August 2002, falling to $1.5201 and has lost a quarter of its value since January.

The deterioration in the U.K. currency can be “a helpful part of the rebalancing, provided it doesn't affect our ability to meet the inflation target,'' King said. The bank has “no wish to see it fall very sharply.''

The Bank of England's key rate is now the second-highest among the Group of Seven nations. The Federal Reserve last month lowered its main rate to 1 percent, matching the lowest in a half century, and this month the European Central Bank cut its benchmark by a half point to 3.25 percent.

The Bank of England's forecasts show the U.K. economy will contract through 2009 and inflation will slow below the government's 1 percent minimum unless it cuts rates further short term cash loan.

Deflation Concern

Slowing growth and falling commodity prices are sparking concerns that inflation could give way to deflationary pressures. U.K. manufacturers' raw material costs and output prices fell at the fastest pace in 22 years in October, the Office for National Statistics said Nov. 10.

The central bank's forecasts, presented as fan charts, show deflation has slipped into the range of possible outcomes over the next three years and King conceded there's a “risk'' that consumer prices will start to fall. The bank's central forecast is still for an inflation rate just over 1 percent, based on market interest rate expectations.

The Bank of England tries to hit a central inflation target of 2 percent and is obliged to keep it within a range of 1 to 3 percent.

Today's report prompted some banks to lower forecasts for the benchmark U.K. interest rate. Barclays Capital and BNP Paribas forecast a 1 percentage-point reduction at the December decision, compared with an earlier prediction for a half-point cut.

King, fielding criticism that he underestimated the risks facing the economy, said “the world has changed'' since the collapse of Lehman Brothers Holdings Inc. in September.

“We have seen the biggest banking crisis since the outbreak for the First World War and arguably even bigger than that,'' he said. The forecast revisions are the largest the Bank of England has made since gaining rate-setting authority in 1997.

In a television interview pooled among broadcasters, King said that while the U.K. faces “unprecedented times,'' the economy may improve as soon as next year.

“I think 2009 will be a difficult year but I would hope that by the end of that we would start to see clear signs of improvement,'' he said.

“When the facts change, then we'll change bank rate,'' King said. “That's what we've done, and we're ready to do it again.''

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Carl-Wilhelm Vogel, director of the Cancer Research Center of Hawaii, has resigned after nine years on the job.

The University of Hawaii at Manoa issued a statement on Thursday praising Vogel’s leadership since his appointment in 1999. Vogel told PBN that his last day as director will be Dec. 31, after which he will stay on with the center as a faculty member and continue with research.

He declined to say why he is stepping down.

The university said it will begin a nationwide search for a new permanent director soon and Vogel is expected to assist with the transition of leadership default payday loan.

“UH Manoa is grateful for Dr. Vogel’s many contributions,” said University of Hawaii at Manoa Chancellor Virginia Hinshaw in a statement. “Dr. Vogel will continue his service to UH Manoa as he resumes his research as a member of the Cancer Center faculty.”

The university said the center will continue with its plans to build a new $200-million cancer research facility in Kakaako.

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New York Attorney General Andrew Cuomo is seeking information from the nine largest banks, including Charlotte-based Bank of America Corp, regarding their plans for paying bonuses.

The banks have agreed to accept $125 billion as part of a $700 billion financial bailout package approved by the U.S. Congress. Under the plan, the federal government will buy shares in the banks in a move designed to unfreeze the credit markets.

An additional $125 billion of the $700 billion has been set aside for other financial institutions creditreports.

In a letter sent to the nine banks, Cuomo also asks the boards to explain what mechanisms they have in place to protect taxpayer funds.

Cuomo also requested the information from New York-based Merrill Lynch & Co. Inc. (NYSE:MER), which BofA (NYSE:BAC) is buying in a $50 billion deal. The purchase is expected to close in the first quarter, pending shareholder approval.

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The U.S. housing slump probably showed no sign of ending and the trade deficit shrank in August, a month before the turmoil in financial markets came to a head, economists said before reports this week.

The number of Americans signing contracts to purchase previously owned homes probably fell 1.1 percent in August, according to the median estimate in a Bloomberg News survey ahead of Oct. 8 figures from the National Association of Realtors. The drop in oil prices caused imports to fall, narrowing the trade gap, a report two days later may show.

Job losses swelled last month, stock markets tumbled as commercial and investment banks collapsed, and money-market rates jumped to records as the credit crisis intensified. Passage of the government's $700 billion rescue plan failed to ease concern the economy will falter, signaling the Federal Reserve may need to lower interest rates.

“The economy was on the way down even before the latest tightening in the credit crunch,'' said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts. “The economy's tailspin and the tightening of the credit noose argue strongly for interest-rate cuts'' by the Fed.

Pending home sales may have declined in August for a second month, the first back-to-back drop since March. A slowdown in demand will add to the glut of unsold houses, pushing property values down even more.

Home Prices

A private report last week showed home prices in 20 U.S. cities declined at the fastest pace on record in the year ended July. The S&P/Case-Shiller home-price index dropped 16.3 percent from July 2007.

Declining home prices threaten to throw more properties into foreclosure, prompting banks to keep reining in credit.

KB Home, the fifth-largest U.S. homebuilder by revenue, last month reported wider than forecast third-quarter losses after sales plummeted 56 percent compared with the same period a year earlier.

“Market fundamentals appear unlikely to improve significantly in the near term, as foreclosures continue to rise, housing inventory overhang remains at historically high levels and mortgages have become more difficult to obtain,'' Chief Executive Officer Jeffrey Mezger said in a statement Sept (instant payday loans). 26.

Congress last week passed the administration's rescue package that lets the government buy troubled assets from financial institutions damaged by the subprime crisis. President George W. Bush signed the measure into law Oct. 3.

Payrolls Drop

Employers cut 159,000 workers from payrolls in September, the most since 2003, and the unemployment rate was unchanged at a five-year high of 6.1 percent, the Labor Department said last week.

Odds the central bank will lower its benchmark rate, currently at 2 percent, by at least a half percentage point between now and its next meeting on Oct. 29 rose to 100 percent on Oct. 3 compared with no chance a month earlier.

The trade gap probably shrank 5.1 percent to $59 billion from $62.2 billion in July, according to the median estimate in a Bloomberg News survey ahead of Commerce Department figures on Oct. 10.

The cost of a barrel of crude oil averaged $119.77 in August, down from $132.04 in July. Prices have retreated further since then, dropping below $92 a barrel last week.

Exports, Growth

While the decline in the trade gap reflects forecasts for a drop in oil imports, economists will also be looking for evidence that American exports are starting to suffer as economies in the euro zone and Japan falter.

A stronger dollar is also making U.S. products less competitive. The dollar has gained nearly 7 percent since Aug. 1 against a trade-weighted basket of currencies of major trading partners.

Import prices are projected to drop 2.8 percent in September after a 3.7 percent drop the prior month, a Labor Department report Oct. 10 may show according to the Bloomberg survey.

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The trade group representing the state’s manufacturing industry is joining the fight to keep new restrictions on the payday lending industry intact.

The Ohio Manufacturers’ Association on Monday endorsed a yes vote on Issue 5 to maintain restrictions on the state’s payday lending industry created through House Bill 545. A no vote would strip away a 28 percent annual interest rate cap and reinstate the maximum 391 percent allowed before H.B. 545 went into effect at the beginning of September.

Detailing its opposition to the referendum, the association used similar reasoning that sparked state lawmakers’ push to impose the lower interest rate cap.

“Congress already has capped the interest rates that payday lenders can charge military families,’’ association President Eric Burkland said in a statement. “Ohio manufacturers want those same benefits extended to all Ohio families.’’

Lined up with Gov. Ted Strickland and leaders of both chambers of the Ohio General Assembly to support the new restrictions are the Ohio Farm Bureau Federation, Ohio Roundtable, Habitat for Humanity and the Coalition on Homelessness and Housing in Ohio, among others.

The payday industry group working to bring the measure to the ballot, Ohioans for Financial Freedom, has the backing of the Ohio Chamber of Commerce, Ohio Grocers Association and other small businesses in the state.

Ohioans for Financial Freedom turned in about 422,000 signatures backing the referendum at the end of August, but it hit a snag last week when it agreed to toss out about 13,000 signatures collected by a California company that failed to file required paperwork prior to gathering voter signatures paydayloans. Opponents of the payday group, however, have said they’re confident the measure will come before voters in November even if the Financial Freedom must make a last-minute move to collect more signatures.

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Central banks including the U.S. Federal Reserve may begin accepting assets denominated in foreign currencies as collateral to increase liquidity in the world's financial markets, the Nikkei newspaper said.

Six central banks including the Fed, European Central Bank, Bank of Japan and Bank of England are discussing the plan, Nikkei reported today without saying where it got the information or naming the other two banks get a free credit report.

Central bankers struggled to restore confidence in markets last week as banks hoarded money on concern more financial companies will follow Lehman Brothers Holdings Inc. into bankruptcy.

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The bankruptcy of Lehman Bros. Holdings (NYSE: LEH) is sending shockwaves through South Florida real estate circles.

The investment firm bankrolled close to $2 billion in South Florida real estate projects.

The Chapter 11 filing comes at a time when finding capital to bankroll commercial real estate transactions can be like looking for a needle in a haystack.

“Lehman provided a lot of liquidity,” said Paul Jones, president of Pyramid Realty Group, a Coral Gables-based real estate advisor, debt placement, restructuring and disposition firm. “The big fear is that they are going to dump their assets and devalue the rest of the market.”

While the investment bank’s financial problems have largely sidelined Lehman from funding deals in recent months, it still has stakes in many of South Florida’s priciest and highest profile projects.

According to published reports and press releases, Lehman backed $226.5 million for construction of Donald Trump’s condo tower in Hollywood, $47 million for the new Canyon Ranch Miami Beach resort, and was part of the private consortium that infused $565 million into the Fontainebleau in Miami Beach.

What will happen to these assets and others will ultimately be up to the bankruptcy court. But, some expect most to be liquidated to pay off Lehman’s $613 billion in debts and more than 100,000 creditors.

“I think that paper is going to get sold at whatever number buyers will pay,” said Phil Bloom, chief lending officer at CCR Cos. in Miami. “The residential side is basically nonperforming at this time.”

Bloom said the loss of Lehman signals the end an era of the big investment house’s risky real estate roulette.

“It is going to go back to the days when deposit banks and deposit institutions are doing most of the lending,” he said.

Lehman has been a financing force in the region for more than a decade, having backed a legacy of aggressive, highly entrepreneurial deals cash advance now. Among them: upstart Americas Capital Partners’ $323.2 million grab of Highwoods Properties’ entire South Florida portfolio in 1999 and Boca Raton-based T-Rex Capital’s $138.6 million acquisition of the former IBM campus in Boca Raton the following year.

“None of those deals would have gotten done today,” said Tom Mulroy, CEO of T-Rex Capital, which since has sold off the former IBM campus and land holdings.

He said would-be investors are still sitting on the sidelines waiting for the bottom of the market, which further restrains needed capital infusions into real estate.

And, available capital to buy commercial real estate is likely to remain at a trickle until next year, said Charles Foschini, vice chairman of South Florida markets at CB Richard Ellis.

“It is a difficult market to get deals done,” he said, but he noted that South Florida is well positioned for a speedy rebound once the money starts to flow.

“While the financial markets may be in decline, the fundamentals are very strong.”

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Good Eats, the start-up grocer that had planned to lease space where Corti Brothers grocery has operated for years on Folsom Boulevard in East Sacramento, plans to announce Wednesday that it will "back away" from its effort to locate there to give the Corti family a chance to resolve things with the building’s landlord.

In an open letter to grocer Darrell Corti and residents of East Sacramento, Good Eats partners Michael Teel — the former chief executive of the Raley's Inc. grocery chain — and Michael Ashker said they reached the decision after meeting with Corti last Friday.

"We have always held Mr. Corti and Corti Brothers in highest regard and our intention remains to find ways to work together with Darrell Corti," the letter states.

The partners said the possibility of opening their own store at the Corti site at 5810 Folsom Boulevard began when approached by a real estate broker last October about leasing there and were told that Corti Brothers would not be renewing its lease cash til payday loan. Negotiations began in earnest in April after the landlord confirmed that Corti wasn’t renewing, they said. They signed a lease agreement in July.

Corti, president of Corti Brothers, has said that he learned without warning in early July that he had lost the month-to-month lease for the store. He said he planned to close the Folsom Boulevard location Sept. 30, but that the store was profitable and would seek a new location.

It's unclear, however, whether the decision by Ashker and Teel means the Good Eats deal for that site is dead or on hold.

A separate Good Eats kitchen is opening at Folsom Boulevard and Seville Way, the partners stated.

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• Job growth in Florida was only 0.5 percent in 2006-2007, down from a high of 4 percent in 2004-2005 and compared with 1 percent for the U.S. in 2006-2007.

• The industry with the biggest job loss was construction, down 8.3 percent in 2007. The biggest gainers were services such as personal services and health care.

• Unemployment was 4.1 percent in 2007, up from 3.2 percent in 2006.

• Hispanics, and men, were the groups that saw the largest increases in unemployment in 2007.

• Underemployment, including people who are not working enough hours and who are discouraged from looking for work, was 8 percent in 2007, but for African-Americans the figure was 11.3 percent and 10 percent for Hispanics.

• Fifteen percent of the unemployed have been without work for at least half a year.

• In the U.S. as a whole fewer people are in the labor force now than in 2000, before the last recession. However, in Florida, labor force participation has increased. The exception was African-Americans, who never recovered the labor force participation rates they had in 2000.

• Job growth, unemployment, and related statistics have worsened in 2008, so the current situation for workers is much worse than indicated by these annual figures for 2007. As of July 2008, Florida unemployment was 6.1 percent, which was 2 percent higher than a year earlier.

• Workers wages in Florida did not grow at all in 2007, and for the nation actually fell.

• Florida’s median wage, $14.70 per hour in 2007, fell from 27th place in the nation’s states in 2006 to 30th place last year.

• African-Americans and Hispanics have been losing ground compared with non-Hispanic Whites. In 1979, African-Americans and Hispanics made over 80 percent of what Whites made, but by 2007 the figures dropped to less than 77 percent.

• Wage inequality is still extremely high in the state. In 1979 a high wage earner at the 10th percentile earned 2.92 times what the bottom a low-wage worker at the 20th percentile earned no fax payday advances. In 2000, the ratio grew to 3.48 and in 2007 it was 3.55.

• Median household income in Florida in 2007 ($45,794) was 91 percent of the corresponding U.S. figure, and the median four-person family income ($68,494) in Florida was 93 percent of U.S. norms. This is in line with historic Florida performance on these measures.

• Official poverty in Florida in 2007 was 12.5 percent, up one percent from the year before, and identical to the U.S. poverty rate of 12.5 percent.

• In 2007, Florida had the 3rd highest percentage (20.2 percent) of residents without healthcare coverage among the 50 states. It ranked 46th in private sector employer-provided health insurance. The state ranks extremely badly on these measures.

• In 2007 Florida ranked 50th of the 50 states in private sector pension coverage.

• Private sector unionization of Florida workers was only 2.5 percent in 2007, contributing to lower wages, wage inequality, and lower rates of healthcare coverage and pension benefit coverage.

• From 2000 to 2007 the Miami-Ft.Lauderdale and Tampa Bay metropolitan areas had the 2nd and 3rd highest rates of inflation among major metropolitan areas in the nation.

• Miami-Ft. Lauderdale ranked 9th in the country for cost of living in 2007.

• Floridians pay an average of 7.4 percent in state and local taxes, ranking 47th in the nation. However, because so little of Florida’s taxes can be deducted on a federal tax return, the total tax burden for Florida residents is actually higher than it is for a typical U.S. resident.

• Ninety percent of Floridians drive a car, truck or van to work, and almost 80 percent commute alone. With rising gas prices, this puts a heavy financial burden on working people.

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