Fairfax says Bank of Ireland investment solid despite country’s financial woes

TORONTO – The purchase of a nine per cent stake in Ireland’s last private bank by Fairfax Financial Holdings Ltd. is “just a regular insurance investment” but one the investment company found very attractive despite economic troubles in the country, Fairfax CEO Prem Watsa told investors Friday.

“We liked Ireland, we’ve been there for 20 years, we like The Bank of Ireland as the best bank in Ireland, the only private one, a full-service bank with 250 branches,” Watsa said on a conference call with financial analysts.

Watsa noted that while the acquisition received publicity due to its taking place in Ireland, where financial conditions have deteriorated sharply over the last several years, The Bank of Ireland has survived with solid fundamentals.

“Their capital position is very strong – Tier 1 capital is at 15 per cent, core equity capital is 10 per cent and the central bank of Ireland has very significant, very tough stress tests,” Watsa said, adding that it was notable the bank survived the tests despite a 60 per cent drop in housing prices and a 70 per cent drop in commercial property prices.

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Fairfax (TSX:FFH) has not disclosed its exact investment in the private bank. It joined Capital Research, Fidelity Investments, investment maverick Wilbur Ross and real estate investment firm Kennedy Wilson in making a euro1.12-billion investment. Though the companies all invested separately and not as part of a bloc, their combined stakes add up to about 34.9 per cent of the bank.

The Irish government is expected to maintain an interest of between 15 and 31 per cent in The Bank of Ireland, with the rest of the bank remaining in private hands. Fairfax has successfully invested in a failed bank before, spending $388 million to acquire a piece of Wells Fargo in 2008. That stake currently has a market value of more than $600 million.

The sale of at least 68 per cent of the 229-year-old bank to private shareholders keeps it out of the government’s control, unlike the country’s other banks.

Ireland’s banks were hit hard three years ago as the country was one of the first in Europe to face the recession. After years of lending to property developers, those developers were unable to repay their loans, leaving the banks in need of bailouts.

The crisis overwhelmed Ireland’s finances, costing the country an estimated euro65 billion and leading it to accept bailout money from the European Union and the International Monetary Fund.

In March, stress tests disclosed that the Bank of Ireland needed a euro5.2-billion bailout to stay afloat. Observers had predicted the government would ultimately take ownership of the bank, the last one it did not already own.

On Thursday, Fairfax reported a big increase in second-quarter profit on gains in its investment portfolio.

The company, which reports in U.S. dollars, said it earned US$83.3 million or $3.40 per diluted share in the quarter. That compared with net earnings of US$23.7 million or 87 cents per diluted share in the same 2010 period. Revenue for the three months ended June 30 was US$1.75 billion, up from US$1.39 billion.

Net premiums written by the company in the second quarter of 2011 increased 24.3 per cent to US$1.37 billion from US$1.1 billion in the second quarter of 2010, due primarily to the acquisitions of Zenith National and First Mercury.

Shares in Fairfax rose $6.67 or 1.8 per cent to trade at $376.70 Friday on the TSX.

Suddenly, a late stab at debt-limit compromise to avert US default–after weeks of sniping

WASHINGTON – In a last-minute stab at compromise, Republican congressional leaders and the White House made significant progress Saturday night toward a deal to avert a government default threatened for early next week, according to officials familiar with the talks.

Under the plan, the nation’s debt limit would rise in two steps by a total of about $2.4 trillion and spending would be cut by a slightly larger amount, these officials said. The first stage – about $1 trillion – would take place immediately and the second later in the year.

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Congress would be required to vote on a balanced budget amendment to the Constitution, but none of the debt limit increase would be contingent on its approval.

One Republican official said the two sides had settled on general concepts, but added there were numerous details to be worked out, and no assurance of a final agreement. A Democratic official said the two sides were “not really” close to a deal, but added that one could come together quickly. They spoke only on condition of anonymity about the private negotiations.

Word of significant progress after weeks of stalemate offered the strongest indication yet that an economy-crippling default might be averted.

Without legislation in place by next Tuesday, administration officials say the Treasury will run out of funds to pay all the nation’s bills. They say a subsequent default could prove catastrophic for the U.S. economy and send shockwaves around the world.

President Barack Obama is seeking legislation to raise the government’s $14.3 trillion debt limit by about $2.4 trillion, enough to tide the Treasury over until after the 2012 elections. Over many weeks, he has agreed to Republican demands that deficits be cut – without a requirement for tax increases – in exchange for additional U.S. borrowing authority.

But President Barack Obama has threatened to veto any legislation that would require a second vote in Congress for any additional borrowing authority to take effect, saying that would invite a recurrence of the current crisis in the heat of next year’s election campaigns.

First word of an effort to reach a compromise came at mid-afternoon from Senate Republican Leader Mitch McConnell and House Speaker John Boehner – Obama’s principal Republican antagonist in a contentious new era of divided government. Both GOP leaders said they were in touch with the White House and hopeful of a deal.

Senate Majority Leader Harry Reid heatedly denied their claims of progress on the Senate floor a short while later, but several hours later said events had changed.

“There are many elements to be finalized…there is still a distance to go,” he said in dramatic late-night remarks. “I’m glad to see this move toward co-operation and compromise,” he added.

He said he was optimistic any agreement would not include a short-term extension of the nation’s debt limit – a point on which Obama has insisted.

Officials familiar with the discussions said that while the first-step increase in borrowing authority and cuts in spending would happen at once, the next step would be somewhat more complicated.

The additional increase in borrowing authority, about $1.4 trillion, would be linked to creation of a special committee of lawmakers charged with recommending deficit cuts of a slightly larger size. If the panel failed to act, or its proposals were rejected in Congress, automatic spending cuts would take effect to slice spending by slightly more than $1.4 trillion, possibly affecting Medicare and the Pentagon.

The terms under discussion appeared to satisfy key demands made by both sides.

Obama would prevail on insisting that after the legislation is passed, Congress would not be required to vote for debt limit increases to take place. Republicans would win spending cuts slightly larger than any debt limit increase and avoid any higher taxes.

Reid said that at the request of White House officials, he was postponing a test vote set for shortly after midnight on his own legislation to raise the debt limit while cutting spending.

Republicans opposed his bill, and said in advance they had the votes to block its advance.

Halfway around the world, on a visit to Camp Leatherneck in Afghanistan, the nation’s top military officer fielded questions from troops asking if they would be paid in the event of a default.

“I actually don’t know the answer to that question,” said Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, although he told them they would continue to go to work each day.

Obama, in his weekly radio and Internet address, said there were several ways out of the gridlock that has prevented action by Congress, then added, “There is very little time.”

But to get to the endgame, Republicans and Democrats had to go through the formality of killing each other’s bills – scoring their own political points – before they could turn to meaningful negotiations.

And a few hours after the president spoke, House Republican leaders engineered a vote to defeat the Reid-drafted proposal to raise the debt limit on a near-party line vote at mid-afternoon.

That was payback of sorts – Reid had arranged the rejection of a House-passed bill on Friday within minutes after it reached the Senate.

Individual lawmakers expressed anxiety about the prospect that faced the country if it were to default for the first time in history.

“I’m worried about Congress defaulting on our country,” said Sen. Johnny Isakson, R-Ga., urging lawmakers to find common ground. He suggested that spending cuts take place automatically if necessary to ensure the debt limit does not expire before 2013.

With financial markets closed for the weekend, lawmakers had a little breathing room, but not much. Asian markets begin opening for the new work week when it is late Sunday afternoon in the capital.

In his remarks at a news conference, McConnell said Obama “needs to indicate what he will sign, and we are in those discussions.”

He said later he had spoken several times during the day with Vice-President Joe Biden, who played a prominent role in earlier attempts to break the gridlock that has pushed the country to the verge of an unprecedented default.

Boehner said that despite the partisanship of recent weeks, “I think we’re dealing with reasonable, responsible people who want this crisis to end as quickly as possible and I’m confident it will.”

The talk of compromise contrasted sharply with the day’s earlier developments as both the House and Senate convened for unusual Saturday sessions.

The House voted down legislation drafted by Democrat Reid to raise the government’s debt limit by $2.4 trillion and cut spending by the same amount.

The vote was 246-173, mostly along party lines and after debate filled with harsh, partisan remarks.

Republicans said the Reid spending-cuts plan was filled with gimmicks and would make unacceptable reductions in Pentagon accounts. “It offers no real solutions to the out-of-control spending problems,” said Rep. Alan Nunnelee of Mississippi, part of a group of 87 first-term Republicans who have led the push for deeper spending cuts.

Not even Democrats seemed to like the legislation very much, although many emerged from a closed-door meeting of the rank and file saying they would vote for it.

Rep. Lloyd Doggett, D-Texas, called it “the least worst alternative to avoid default.”

Yet with their votes, many Democrats signalled their readiness for compromise by voting to cut spending without raising taxes. Many Republicans insist taxes must not be raised to cut into federal deficits, even for the wealthiest Americans and for big oil companies.

House Democratic leader Nancy Pelosi said Boehner “chose to go to the dark side” when he changed his own legislation to satisfy tea party lawmakers and other critics.

There were catcalls from the Republican side of the aisle at that, and Pelosi responded by repeating that the speaker “chose to go to the dark side.”

The House-passed bill provides for a $900 billion debt limit increase, coupled with $917 billion in federal spending cuts.

The last-minute change requires both houses of Congress to approve a constitutional balanced budget amendment as a precondition for additional borrowing authority to take effect.

Republicans ridiculed Reid’s legislation.

“Not only does it fail to address our spending and debt problem, it won’t even prevent a downgrade of our credit rating,” said Rep. Scott Garrett, R-N.J. “We need actual cuts to government spending to address our long-term debt crisis, not phantom cuts and accounting gimmicks.”

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Associated Press writers Donna Cassata and Matt Yancey in Washington and Lolita Baldor in Afghanistan contributed to this report.

Somalia: More aid needed; Troops surround market controlled by Somali militants, trade fire

MOGADISHU, Somalia – African Union and Somali militants traded barrages of fire at a new front line in Mogadishu on Friday, as AU forces gained new territory. The country’s president appealed for more international aid, saying the government can’t feed all the overwhelming number of Somalis suffering from famine.

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The African Union military force fears that al-Shabab militants may try to attack the camps that now house tens of thousands of famine refugees in the Somali capital, disrupting the distribution of food aid. A new offensive to push the militant front line farther back from the camps began Thursday.

A battlefield commander, Col. Paul Lokech, told The Associated Press on a visit near the front line Friday that a Pakistani fighter was commanding the al-Shabab troops battling his forces nearby, and that the militants were “active.” Al-Shabab counts hundreds of foreign fighters among its ranks. Speaking of the Pakistani, Lokech said: “Don’t worry, I’ll get him.”

Mortar fire and guns rang out nearby, as the militants put up more resistance than the AU forces had expected.

“They’re worried about the ground they’ve lost,” Lokech said.

The African Union and Somali troops have been fighting a concerted offensive against al-Shabab all year, and have gained a large swath of new territory in Mogadishu. But the fight took on a new importance in recent days as tens of thousands of famine refugees began squatting in squalid, hunger-filled refugee camps here.

President Sheik Sharif Sheik Ahmed said Friday that his government has created several refugee camps, but that his country needs urgent support because it can’t support the level of aid that is needed. Ahmed also said the military has weakened al-Shabab, and that “soon they will be defeated.”

The government spokesman went even further, saying the famine response from aid agencies “is too slow” and that the crisis is even more severe than the U.N. has said. He noted that diseases are spreading through the camps, including measles.

“The current famine situation in Somalia actually demands urgency, not only assessments and far-off responses, because many Somali children are dying in the county on a daily basis for lack of help,” said Abdirahman Omar Osman. “We are asking the international community to increase their efforts and help these people facing misery. We believe the famine is bigger than the U.N. said.”

The drought and the famine it’s caused in Somalia have affected more than 11 million people, including 2.2 million Somalis who live in al-Shabab controlled territory in south-central Somalia where aid groups can’t deliver food. Thousands are crammed into squalid refugee camps in the capital.

Though the masses arrived in hopes of finding food, many are not yet being fed, leading to an untold number of deaths in the camps.

A second U.N. plane landed in Mogadishu on Friday with more than 20 tons of nutritional supplements on board. A Kuwait Air Force transport plane also landed in the capital and offloaded sacks of food.

The World Food Program said with its second delivery Friday it has airlifted nearly 31 tons of ready-to-use food into Mogadishu. A WFP plane with 10 tons of peanut butter landed Wednesday in Mogadishu, the first of several planned airlifts in coming weeks.

WFP says it is supplying a hot meal to 85,000 people daily at 20 feeding centres in Mogadishu, but many refugees can’t find the feeding sites or don’t know about them.

“Our feeding centres continue to operate in spite of the difficult security situation and WFP is moving stocks out of our warehouse in Mogadishu to feed growing numbers of internally displaced Somalis who have fled the famine zone to the capital,” the U.N. agency said Friday.

The AU offensive that began Thursday has seen AU troops move up the east side of Mogadishu’s largest market – Bakara. The troops now control three sides of the market – the west, south and east – and AU force spokesman Lt. Col. Paddy Ankunda said Friday that the gains mean that tactically speaking the AU essentially controls the market.

Forces are now moving toward the city’s large sports stadium, from which al-Shabab fires artillery, Ankunda said.

Putting a face on the young conscripts that fight for the ragtag force that is al-Shabab, three militant fighters surrendered to AU forces and were being questioned on Friday. The three are teenagers: ages 14, 15 and 17.

Also Friday, the World Bank said it did not renew funding for a project to help more than 1 million Kenyans to withstand recurrent droughts after some money could not be accounted for.

Johannes Zutt of the World Bank said the group chose not to give new funding to the Kenyan government for the Arid Lands Natural Resource Management Program until it accounts for $4.1 million that was used. The unaccounted money was part of $120 million the bank gave to the project from 2003 to 2010.

Critics say mismanagement and endemic corruption in Kenya’s government are partly to blame for the hunger situation in Kenya where the U.N. anticipates that 3.5 million people will need food assistance in coming months. Tens of thousands of Somalis have also trekked to neighbouring Kenya and Ethiopia, hoping to get aid in refugee camps.

The Kenyan government says it is looking into the fraud allegations.

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Associated Press reporter Abdi Guled in Mogadishu, Somalia and Tom Odula in Nairobi, Kenya contributed to this report.

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Attack on the ‘Throne’: Indie retailers have beef with Jay-Z, Kanye West over release plans

NASHVILLE, Tenn. – Scores of independent record store owners are calling out Jay-Z and Kanye West over release plans for their much-anticipated “Watch the Throne” collaboration.

Owners signed a letter that calls the exclusive deals with iTunes and Best Buy “bad news” and asks two of music’s top stars to reconsider and allow more than 1,700 indie retailers equal access.

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“We know that you are busy, and that you put most of your energies into creating great music, but we are writing to you in the hope that you will hear us and take the time to rectify this matter,” the letter states. “As representatives of the independent record store music community, we are asking you to allow record stores and music fans equal access to your new album.”

Exclusive deals are now common for top acts and it’s unclear why the letter’s original writers, the organizers of Record Store Day, chose this project to object. Doyle Davis, co-owner of Grimey’s New and Preloved Music in Nashville, said some of the letter’s signees will pull current and previous releases by the two artists from their shelves, though he will not go that far.

Jay-Z and West have agreed to give iTunes customers access to “Watch the Throne” on Aug. 8, four days ahead of everyone else. And Best Buy will exclusively sell a deluxe album till Aug. 23 when other retailers will have access.

Jay-Z’s spokesman had no comment and West’s did not immediately reply to an email from The Associated Press.

Record Store Day has become something of a holiday for independent retailers each April. This year, dozens of artists provided exclusive vinyl, performances and other perks.

Fans lined up, sometimes hours early and around the block, to score new music from acts like Radiohead and The White Stripes. Independent stores have suffered a marked decline over the last decade, casualties of the ascendance of box stores, digital music sales and a poor economy.

Now they say they just want a fighting chance.

“We believe this is a short-sighted strategy, and that your decisions will be doing great damage to over 1,700 independent record stores – stores that have supported you and your music for years,” the letter states.

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AP Music Editor Nekesa Mumbi Moody contributed to this report.

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Contact Chris Talbott at 杭州桑拿按摩论坛杭州夜生活twitter杭州夜网/Chris_Talbott.

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APNewsBreak: Rosa Parks reveals attempted rape in essay among archive items seeking new home

NEW YORK, N.Y. – Long before Rosa Parks was hailed as the “mother of the civil rights movement,” she wrote a detailed and harrowing account of nearly being raped by a white neighbour who employed her as a housekeeper in 1931.

The six-page essay, written in her own hand many years after the incident, is among thousands of her personal items currently residing in the Manhattan warehouse and cramped offices of Guernsey’s Auctioneers, which has been selected by a Michigan court to find an institution to buy and preserve the complete archive.

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In 1955, Parks, was a black, middle-aged seamstress who refused to give up her seat to a white passenger on a bus in Montgomery, Alabama. She is credited with inspiring the civil rights movement with her solitary act of defiance, which led to the Supreme Court outlawing segregation on buses. She received the nation’s two highest honours in her lifetime, the Presidential Medal of Freedom and the Congressional Gold Medal of Honor.

She died in 2005 at age 92, leaving the trove of personal correspondence, papers relating to her work for the Montgomery branch of the National Association for the Advancement of Colored People (NAACP), tributes from presidents and world leaders, school books, family bibles, clothing, furniture and more – about 8,000 items in all.

The Associated Press was provided with some samples of the documents in the archive, including portions of the essay. Archivists had reviewed the documents for Guernsey’s and provided descriptions of their contents.

Civil rights historian Danielle McGuire said she had never before heard of the attempted rape of Parks and called the find among Parks’ papers astounding.

It helps explain what triggered Parks’ lifelong campaign against the ritualistic rape of black women by white men, said McGuire, whose recent book “At the Dark End of the Street” examines how economic intimidation and sexual violence were used to derail the freedom movement and how it went unpunished during the era of racial segregation in parts of the U.S.

“I thought it was because of the stories that she had heard. But this gives a much more personal context to that,” said McGuire, an assistant professor of history at Wayne State University in Detroit. Her book recounts Parks’ role in investigating for the NAACP the case of Recy Taylor, a young sharecropper raped by a group of white men in 1944.

Of her own experience, Parks wrote, “He offered me a drink of whiskey, which I promptly and vehemently refused. . He moved nearer to me and put his hand on my waist. I was very frightened by now.”

“He liked me. .. he didn’t want me to be lonely and would I be sweet to him. He had money to give me for accepting his attentions,” she wrote.

“I was ready to die but give my consent never. Never, never.”

Guernsey’s President Arlan Ettinger said her personal papers reveal a much more complex individual, one who spent a lifetime fighting for racial equality and against the sexual violence of black women.

“It is wonderful and breathtaking,” Ettinger said. “It will be up to the institution that ends up with it to make this material known to the world.”

Proceeds from the sale will go to resolve a dispute over her estate, divided between her relatives and the Rosa and Raymond Parks Institute for Self Development that she created in 1987.

Guernsey’s, known for its sale of iconic and celebrity collections, took an inventory of Parks’ homes in Detroit soon after she died and is looking for an institution to buy her archive, which Ettinger described as the most complete he’s ever seen.

The only thing missing, he quipped, is the bus itself. The bus is in The Henry Ford, a museum in Dearborn, Michigan.

The archive reveals an infinitely complex individual, Ettinger said.

Parks worked on many cases with the NAACP, including the Scottsboro defence of nine black teenage boys accused of rape in Alabama in 1931. She was involved in the black power conventions in the 1970s and the anti-apartheid movement in the 1990s.

Parks wrote on anything she could get her hands on. The backs of church pamphlets and NAACP flyers are filled with her thoughts and observations.

There are detailed notes on how African-American citizens should comport themselves during the bus boycott following her arrest that lasted 382 days and about the organization that led it, the Montgomery Improvement Association, headed by a young pastor named the Rev. Martin Luther King, Jr.

Elsewhere, she laments about life under the oppressive segregation laws and asks what is wrong with the world when her jailer refuses her a drink of water.

She also vividly recalls an incident when she was 10 years old involving a white boy who threatened to hit her. Demonstrating some of the determination she exhibited on the bus decades later, Parks writes “I picked up a small piece of brick and drew back to strike him if he should hit me. I was angry. He went his way without further comment.”

Parks’ memoirs include one with author Jim Haskins and another with one of her attorneys in the early 1990s, but by then said McGuire, “her story was pretty much well-rehearsed, and limited to her time in Montgomery and the bus incident.”

“Her story had become mythic and iconic … I can’t imagine what that felt like for her to have a whole history of activism and political work erased and turned almost into a cartoon character,” said McGuire.

Guernsey’s has talked to about 20 museums, libraries, university and churches about buying the archive over the past three years.

“There hasn’t been a group that didn’t desperately want it but had to face the reality whether they could afford it,” Ettinger said, adding that he was currently in discussions with three separate entities – an institution and two individuals who could buy the archive with the intention of donating it to a museum or other cultural institution.

He declined to give an exact figure but said $8 million to $10 million was in the “ballpark.”