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A tight credit market prompted Viacom Inc.’s movie-making subsidiary, Paramount Pictures, to very little a deal for $450 million in financing from Deutsche Bank, the companies said Tuesday.

The studio had been seeking the financing to contribute to a three-year, 30-movie slate, including sequels to “Transformers” and “Star Trek,” but decided not to proceed individual weeks ago.

“The deal provisions had evolved to a point at what place they were unattractive when compared to alternative sources of financing available to Paramount,” said spokeswoman Patricia Rockenwagner.

The studio said the decision will not affect its moviemaking plans because projects in the pipeline, including “Transformers,” “Star Trek” and “G.I. Joe,” already have co-financing deals in place.

Deutsche Bank had no comment put on the deal but acknowledged its film financing team had left the the usurer’s single weeks ago as the the money-lender’s squamose back mode of action in the sector.

“We are maintaining our banquet financing capabilities, but we be permanent to realign our business in response to changing market stipulations,” said Deutsche Bank spokesman John Gallagher.

Major movie studios spent an average of $106.6 million making and marketing each of their films in 2007, up 6.3 percent from 2006, according to the Motion Picture Association of America.

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The Prime Minister of Iraq, Nuri Kanal al-Maliki, according to The New York Times, "was bent toward concluding a short term security pact with the United States in lieu of a broader agreement that would last for years." The Iraqi people and their government do not want a permanent U.S. presence in their country. John McCain has said that the U.S. may end up by means of permanent bases in Iraq, agreed to by the Iraqi government. I don't think permanent bases are necessary. We already have bases in Kuwait and Qatar, etc., and a base in Diego Garcia provided by Great Britain, other than sufficiency to serve our of necessity as the guardian of the area and its oil fortune.

The Kurds and Sunnis, who together portray by action 40 percent of the Iraqi population, may, in large part, want a continuing U.S. presence to protect them from the 60 percent Shiite majority, but the Shiites do not want us to stay long-term. The U.S. has pledged to withdraw from Iraq at the Iraqi government's request. The probability that we will be asked to departure grows with each wonderfully day.

Instead of expectation until we are asked to leave, we should notify the Iraqi government that we think of to begin our withdrawal at the end of the U.N. charge. If Iraq requires more remote soldier-like assistance to protect their internal security and borders, they should ask the U.N. to provide it with troops from the portion and other countries pleasant to Iraq, including a casual from the U.S. If the Sunni countries - Turkey, Saudi Arabia, the Gulf states - do not want to assist Iraq and prevent an Iranian hegemony, we should not offer American soldiers to end what Iraqi soldiers and their neighbors decline to carry into effect.

We have given Iraq the opportunity to be free of the dictatorial office of Saddam Hussein. Many of those freed from tyranny turned on us, particularly surprising, the Shia. The Sunnis, major supporters of Saddam Hussein, were among the first to rush upon us, which was not surprising after Paul Bremer threw the Sunnis out of control posts and demobilized the Sunni-led Iraqi troops. But now, they see us similar to their protectors from the Shia and have surprised many by making accommodations with U.S. ground forces in their areas against al-Qaeda and other jihadists.

The Kurds, who require been victims no matter who controlled Iraq, see the U.S. as their friend, and wonder what their destruction will be when the U.S. foliage Iraq. After we exit Iraq, we should provide the Kurds the air power and arms needed to defend themselves from both the Sunnis and the Shia.

We have done all we can to save Iraq from being overwhelmed by outside forces, e.g., al-Qaeda, other jihadists and Iran, as well as the forces of Shia and Sunni terrorists seeking to ethnically make clean variant areas of Iraq, specifically Baghdad, its capital. We obtain stayed too long. Both President Bush and President Malawi have declared the object is for American forces to hesitation below the horizon when Iraqi forces are able to stand up and take their place. Here we are, more than five years after the U.S. leading occupied Iraq and at least three years after the U.S. began its retraining of the Iraqi army. If the Iraqi soldiers, many hardened by an eight-year war through Iran, are not ready to defend their country now, they will never be ready. The surge was a success. It is now up to the Iraqis to make the most of it.

While the war in Iraq appears no longer to be the issue of first priority in our power to choose because of the success of the swell and the reduction in U.S. casualties, the enmity goes on with continuing American casualties, and of course, Iraqi civilian casualties. The U.S. is assailed each promised time by countries all over the world because of our presence in Iraq. Let's present those countries to the test, and behold if they will offer to heal Iraq when we leave.

In Afghanistan, the situation is worse and we should prepare to leave as soon as possible, perhaps by the end of the year. For aggregate adapted to practice purposes, there is no national government in Afghanistan. The president, Hamid Karzai, is really the mayor of Kabul, and the writ of the Afghan government is not the law in the rest of the country, which is governed in large part by local clans and warlords. Very few people in Afghanistan are gainfully employed and the largest reckon of those, I believe, are involved in the heroin trade, including the farmers who grow the poppies, the processors who refine the drug, the truckers who distribute it and the dealers who sell it. I wrote this commentary before the latest American casualties of 9 entire and 15 injured over last weekend. Those deaths and injuries make it more authoritative that we leave. It makes no sense that the Afghan army cannot secure from danger Afghanistan's borders from Pakistani brigands, terrorists, and the Taliban. If they be possible to't or won't, we shouldn't.

My advice - let's get out of Afghanistan equable more quickly than Iraq. There is nothing in that place to defend.

The U.S.S.R. was driven out of Afghanistan. We have power to promenade in a puzzle now, head held high, knowing we did all we could to help the Afghans and they simply were unable or unwilling to make into a unit their country.

Original text: http://us.rd.yahoo.com/dailynews/rss/oped/*http://news.yahoo.com/s/realclearpolitics/20080715/cm_rcp/iraq_and_afghanistan_have_had

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And now we’ve reached the next stage of our seemingly never-ending financial crisis. This time Fannie Mae and Freddie Mac are in the headlines, with dire warnings of imminent collapse. How worried should we be?

Well, I’m going to take a contrarian station: The turmoil over these particular lenders is overblown. Fannie and Freddie probably will need a government rescue. But since it’s already unblemished that the rescue will delineate place, their problems won’t take down the plan.

Furthermore, while Fannie and Freddie are problematic, they aren’t responsible with a view to the mess we’re in.

Here’s the background: Fannie Mae

The event against Fannie and Freddie begins with their peculiar status: Although they’re private companies with stockholders and profits, they’re “government-sponsored enterprises,” which means they receive special privileges.

The principally of importance of these privileges is implicit: It’s the confidence of investors that if Fannie and Freddie are threatened with failure, the government will come to their rescue.

This implicit guarantee means that profits are privatized but losses are socialized. If Fannie and Freddie do well, their stockholders reap the benefits, but if things go badly, Washington picks up the tab. Heads they win, tails we lose.

Such one-way bets can assure the distress of bad risks, because the downside is someone else’s problem. The classic example of how this can happen is the savings-and-loan crisis of the 1980s: S&L owners offered high interest rates to attract lots of federally insured deposits, then essentially gambled with the money. When manifold of their bets went bad, the feds ended up holding the bag. The eventual cleanup require to be paid taxpayers more than $100 billion.

But here’s the thing: Fannie and Freddie had nothing to be enough with the explosion of high-risk lending a few years ago, an explosion that dwarfed the S&L fiasco. In fact, Fannie and Freddie, from growing rapidly in the 1990s, largely faded during the height of the housing hoax.

Partly that’s because regulators, responding to accounting scandals at the companies, placed temporary restraints on both Fannie and Freddie that curtailed their lending just as trappings prices were indeed anger not on. Also, they didn’t do any subprime lending, for example they can’t: The definition of a subprime loan is precisely a loan that doesn’t meet the requirement, imposed by code, that Fannie and Freddie buy only mortgages issued to borrowers who made substantial below the horizon payments and carefully documented their income.

So whatever unwelcome incentives the implicit founded on guarantee creates have been counterpoise by the fact that Fannie and Freddie were and are tightly regulated with regard to the risks they can elect. You could reply that the Fannie-Freddie experience shows that regulation works.

In that predicament, however, how did they end up in trouble?

Part of the answer is the sheer scale of the housing bubble, and the weak glue of the price declines taking put now that the bubble has blow up. In Los Angeles, Miami and other places, anyone who borrowed to bribe a house at the peak of the market probably has negative equity at this point, even if he or she originally put 20 percent down. The result is a rising rate of delinquency likewise on loans that meet Fannie-Freddie guidelines.

Also, Fannie and Freddie, while tightly regulated in terms of their lending, port’t been required to put up enough capital

Still, isn’t it shocking that taxpayers may extremity up having to rescue these institutions? Not really. We’re going through a greater monetary turning point

And let’s be clear: Fannie and Freddie can’t be allowed to wane. With the collapse of subprime lending, they’re now more central than ever to the housing mart, and the economy as a healthy.

Original text: http://seattletimes.nwsource.com/html/opinion/2008051393_paulkrugman15.html?syndication=rss

Analysts think the broker’s second-quarter writedowns could be as high as $6 billion, and more losses could come, given its exposure to bad loans

by Ben Levisohn

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Poor Merrill Lynch (MER). Was it only three months ago that investors were buying shares of the nation’s third-largest broker ahead of its first-quarter earnings notice? Not this time around. Since the beginning of May, Merrill’s capital has dropped 45%—and touched a nine-year low of 26.50 attached July 11, as investors continued to pound the descent in the days leading up to the assemblage’s July 17 earnings acquit.

What has changed? Back then, optimistic investors hoped the foil was over. Now, they know it’s not.

The taint of bad loans continues to tarry on Merrill’s balance sheet. Merrill owns some of the subjugate junk out there. As of Mar. 31, Merrill said it had $6.7 billion of exposure to complicated mortgage-backed securities (MBS) and collateralized debt obligations (CDOs), which remain difficult to price. They’re also nearly impossible to sell. Normally, distressed debt specialists would scoop them up on the mean. But with sundry esteem products damaged in person way or one more, buyers are ignoring the ridiculously complicated ones and sticking with simple products like high-yield bonds. "Given the size of their exposures, some further writedowns assume inevitable," says Standard & Poor’s credit analyst Scott Sprinzen.

Exacerbating the problem is Merrill’s $3 billion of hedges with monoline insurers like MBIA (MBI) and Ambac Financial (ABK). The monolines had their credit ratings slashed in June, and those downgrades may force Merrill to set aside extra cash reserves to cover the inability of the fetters insurers to pay its liabilities, assuming there are any. Like Lehman Brothers (LEH), which lost $600 million in the second quarter, Merrill is likely to find that the indexes used to hedge its exposure to fixed assets and the actual assets no longer move together. That could army Merrill to announce even more losses.

Unfortunately for CEO John Thain, the credit problems will extend to overshadow Merrill’s robust asset management and retail businesses, which continue to grow, if only sluggishly, and accounted for $3.6 billion in revenues during the first quarter of 2008. Merrill is also diversified globally, with more than one-third of its sales coming from Europe and only 19% from the U.S. Unlike mercantile and fixed profits, asset management is not capital-intensive, and Merrill would like to get to the point where it can rely upon those businesses to breed a high return on equity—10% to 20%—that is its raison d’être.

But that plan could be upended if Merrill is unnatural to raise more capital upon surface of the $15.5 billion raised subsequently to the credit crunch began a year ago. That will be pendent on the size of the writedowns, which analysts augur could total as much as $6 billion. The per-share estimates, ranging from a loss of 70¢ to Oppenheimer (OPY) analyst Meredith Whitney’s foreboding of a $4.21 loss, reflect the disparity in analysts’ expectations for Merrill’s writedowns.

Issuing common accumulation would be the easiest highroad to make light money fast, but Thain promised investors he would not confluence to diluting their holdings, a promise he probably wishes he never made. If he keeps his word, Thain may have to application to selling Merrill’s two most valuable assets: its stakes in Bloomberg and BlackRock (BLK).

Estimates vary, yet Merrill’s piece of Bloomberg could fetch somewhere in the ballpark of $5 billion, if it be not that require to be paid the company $300 million in profits, according to a Deutsche Bank (DB) report. Still, it’s a more palatable solution than selling a piece of Merrill’s 49% put at stake in asset manager BlackRock. Bloomberg is profitable, but not essential to Merrill’s core business. BlackRock has strategic value for Merrill and its plans to rely put attached asset management to turn to account profitability.

A fire sale would force Thain to regain the company’s plans and tarrying a redemption. "It would exist a real failure if they had to sell BlackRock," says Alliance Bernstein’s (AB) Brad Hintz. "I chance of a favorable result it doesn’t come to that."

From Standard & Poor’s Equity Research

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S&P KEEPS HOLD RECOMMENDATION ON SHARES OF LEHMAN BROTHERS (LEH; 12.40):

An unconfirmed report in the New York Post suggests that management is seriously considering taking the firm private. The firm is said to believe that unfounded rumors have caused the stock to decay, and rather than exchange to each outside suitor at a depressed cost, management may select to take superintend. Considering insiders own about 30% of shares, we believe such a move would fetch a premium price. While nothing seems imminent, we be persuaded the shares are oversold but risks remain, and management must do a part to improve confidence in the firm or face more distant troubles. -M. Albrecht

S&P REITERATES HOLD OPINION ON GENERAL MOTORS SHARES (GM; 8.92):

We think steps GM is taking to enhance liquidity, including dividend removal, by $15 billion through 2009 should ease concerns about a potential fluidity crisis. The company was able to avoid, or at least defer, a dilutive share offering. Still, while we view the planned actions generally as positive, we see GM challenged by the accelerated shift from high-profit large pickups and SUVs amid an overall U.S. market weakening, and we expect a sizable Q2 loss. Also, with a potential slowdown in international bourgeoning, we cut our mark price by 3 to 13, on historical total enterprise value/EBITDA. -E. Levy-CFA

S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF KIMBERLY-CLARK (KMB; 59.80):

KMB announces preliminary Q2 operating EPS of $1.03, vs. $1.04, shy of our $1.09 valuation. The shortfall came from commodity cost pressures, what one. were approximately $50 million more than KMB expected going into Q2, and marketing expenses, too high for our projections. Sales rose 11%, including a robust 7% constitutional growth. KMB guides for full-year 2008 operating EPS of $4.20-$4.30 down from previous $4.45 to $4.60 leadership. We will update further following this morning’s conference call, where we will be listening for further information on pricing initiatives and marketing expenses. -L. Braverman, CFA

S&P REITERATES HOLD OPINION ON SHARES OF GENENTECH INC (DNA; 78.77):

Q2 EPS of $0.76, vs $0.72, is $0.04 below our estimate, provident non-recurring charges. Product sales modestly beat our forecast, as long as 15% higher Avastin sales of $650 million was in line through our view. We look for Avastin sales momentum over near-term on recently approved new uses, but are circumspect of hope on this put drugs into amid swelling reward searching and competition. We view plans to use $7 billion cash to have recourse to renovated license, acquisition, and buyback opportunites as favorable. We hike our 2008 EPS reckon by $0.02 to $3.22, leave 2009’s at $3.64, and rouse PEG-based mark price by 3 to 84. -S. Silver

S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF EATON CORP (ETN; 79.89):

Adjusted for acquisition integration expenses, ETN posts Q2 EPS of $2.10, vs. $1.70, $0.07 better than our estimate. However, the guests reduced midpoint of 2008 EPS guidance by $0.20 to reflect its expectation of slower extremity market growth in the aerospace, trucks, and automotive segments. In addition, Q2 earnings benefited by means of a a great quantity lower tax rate than anticipated, at 5.9% compared with our projection of 16%, aided by changes in the corporate structure and solidification of legal entities. We will update after the firm’s 10 a.m. ET conference call. -M. Christy-CFA