23 August 2008

State of the US Economy: Plenty of Money in Drugs, No Money in Housing

There's BIG $$$Money$$$ in Drugs:

Drug stocks higher, Alpharma soars on King bid (MarketWatch.com - 22 Aug 08 - USA)
... Drug stocks edged higher Friday while shares of Alpharma Inc. soared on news that King Pharmaceuticals has offered $1.4 billion in cash for the specialty drugmaker... Shares of Pain Therapeutics were up 2% to $10.15.

King bids $1.4 bln for Alpharma, could go hostile (Reuters.com - 22 Aug 08 - USA)
... King Pharmaceuticals Inc said it has offered to acquire Alpharma Inc for $1.4 billion to expand its pain drug business and warned it would turn hostile if the company refused to accept the bid. Alpharma, which makes the pain drug Kadian and pain patch Flector plus products to treat animals, was not immediately available for comment on Friday but appears to have rejected King's proposal.

Alpharma Surges After Rejecting King's Takeover Bid Aug. 22 (Bloomberg.com - 22 Aug 08 - USA)
... Drugmakers, led by Pfizer Inc. and Merck & Co., say they are increasingly looking to make acquisitions as they anticipate losing U.S. patent protection on $18 billion of medicines this year. At the same time, the Food and Drug Administration approved the fewest number of new products in 24 years in 2007. Low stock prices and a weak U.S. dollar have also made deals more attractive, said William Kridel, managing director of Ferghana Partners Group in New York.

The FED's, or anyone else's, Efforts Can Only Delay The Collapse*:
* And wouldn't it be better for all of us if we'd face this reality sooner rather than later?

Banks Spread Deposits, and Risks: Multibank System Meets FDIC Limit, But Rates Are Lower (Online.WSJ.com - 23 Aug 08 - USA)
... Since the collapse of IndyMac Bancorp Inc.'s IndyMac Bank, the third-largest U.S. bank failure, and eight other banks this year, many consumers are looking for additional protection for their money. According to a June poll conducted by Gallup Inc., just 32% of Americans say they have a "great deal" or "quite a lot" of confidence in U.S. banks, down from 41% in June 2007 and 49% in June 2006. The latest failure came Friday, when Kansas regulators closed Columbian Bank & Trust Co., of Topeka, Kan. About $46 million of the bank's $622 million in deposits may have exceeded insurance limits, the FDIC said.

Uncertainty Over Fannie and Freddie (NYTimes.com - 22 Aug 08 - USA)
... Freddie Mac is looking for new investors to fulfill a pledge made to federal regulators earlier this year to raise $5.5 billion. That goal has become increasingly difficult as the stock prices of Freddie Mac and Fannie Mae have declined by more than 87 percent in the last year. Shares of Freddie Mac fell 35 cents, or 11 percent, to $2.81. Shares of Fannie Mae rose 15 cents, or 3 percent, to $5. In theory, declining stock prices should not pose a problem for the day-to-day operations of either company. People familiar with the finances of both firms say they have enough capital to cushion against losses through this year, as long as they can continue to borrow billions of dollars each month. As the companies’ stock prices decline, however, some buyers of debt are beginning to back away, including Asian central banks.

Fannie, Freddie Preferred Stock Downgraded By Moody's (Bloomberg.com - 22 Aug 08 - USA)
... Fannie Mae and Freddie Mac's $36 billion in preferred stock was downgraded to the lowest investment-grade rating by Moody's Investors Service, which said the increased likelihood of ``direct support'' from the U.S. Treasury may devalue the securities. The companies, which own or guarantee about $5 trillion of the $12 trillion of U.S. residential loans, were developed to expand financing to homebuyers by buying mortgages from lenders and packaging others into securities that they then guarantee. They have struggled amid rising loan delinquencies, posting $14.9 billion in combined net losses over the past four quarters.

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