Forcing people to look at things in new ways!

Economy is emerging to force people to look at things in new ways...........
source :www.bloomberg.com

Bob Corker said yesterday that a crisis like the U.S. automakers’ fight for survival can create opportunities by forcing people to look at things in new ways.
The first-term Republican might just as well have been talking about his own career.
Corker, a former mayor of Chattanooga who became a senator just two years ago and ranks last in seniority among the 10 Banking Committee Republicans, emerged from relative obscurity to become a key figure in the 11th-hour negotiations over a proposed $14 billion auto-industry loan package.
While the effort ultimately collapsed in partisan discord over union wages, Corker, 56, stands as a rare winner in the debate.
“I’m hard-pressed to think of another member who’s been here such a short period of time who’s made such an impression on colleagues of both sides of the aisle,” says Senate Republican Leader Mitch McConnell of Kentucky.
Majority Leader Harry Reid seconded McConnell’s assessment. “I’ve been extremely impressed with Bob Corker,” says Reid, a Nevada Democrat. Illinois Senator Dick Durbin, the No. 2 Democrat, says Corker did a “magnificent job.”
Corker tried to broker a deal after Senate Republicans turned their backs on appeals from Vice President Dick Cheney and White House Chief of Staff Josh Bolten to support the bailout package. The House had approved a plan, backed by President George W. Bush, for short-term loans to keep General Motors Corp. and Chrysler LLC from running out of cash early next year.
Plan B
Corker’s proposal became Plan B. His package sought to overcome Republican doubts, without alienating Democrats, by making creditors exchange some bonds for stock, and by cutting union wages to levels competitive with amounts paid at U.S. factories owned by European and Asian automakers.
“Crisis is when good things happen -- when you make people do things” they wouldn’t ordinarily do, Corker says.
When executives from Detroit’s Big Three automakers appeared before the banking committee last month, Corker originally suggested bankruptcy as a way to restructure the industry. He started moving toward efforts to broker a compromise after a Dec. 3 briefing on GM’s restructuring plan and a meeting with GM Chief Operating Officer Fritz Henderson.
The following day, he proposed a plan that became the blueprint for possible compromise, saying he was willing to give the automakers a chance to solve the crisis without bankruptcy if the government got a “big stick” to force reforms.
Closed-Door Talks
As the Senate considered the House-approved bailout on Dec. 11, the freshman Republican holed up for seven hours behind closed doors on the first floor of the Capitol with the Democrats’ top negotiator, Banking Committee Chairman Christopher Dodd, as dozens of reporters crowded the ornate hallway outside, waiting for news.
The talks included Stephen Feinberg, founder of Cerberus Capital Management LP, which owns Chrysler; Ford Motor Co. lobbyist Ziad Ojakli; GM lobbyist Ken Cole, and United Auto Workers union lobbyist Alan Reuther. Treasury Secretary Henry Paulson and GM’s Henderson kept tabs by telephone, Corker later said.
The sticking point, which ultimately killed prospects for an agreement, was a Republican demand to set a specific date for cutbacks in auto-worker wages and benefits. Corker says lawmakers were “three words” away from a deal. “Had we agreed on a date, any date that’s reasonable, I think it would have passed the Senate with 90 votes,” he says.
Falling Short
Instead, on a 52-35 tally, supporters of the package fell short of the 60 votes they needed to end Senate debate and proceed to a vote to approve the measure.
Dodd says wage-reduction demands had more to do with jabbing the Democrats’ loyal union constituency than with reforming the automobile industry.
The banking committee chairman, in response to a question, later acknowledged that Corker’s lack of seniority may have hindered his ability to sway more Republican colleagues. Still, “you’ll hear no criticism from me about how Bob Corker handled himself,” Dodd says. “I respect him immensely for stepping up and making the effort.”
Corker will have to make an even greater effort to build clout when the Senate reconvenes next month. There he’ll find himself in a minority wielding less influence, with Republicans holding 41 or 42 of the body’s 100 seats compared to 49 now.
Frist’s Successor
Before this week, Corker was perhaps best-known for prevailing in a hard-fought 2006 race against then-U.S. Representative Harold Ford for the Tennessee seat vacated by former Senate Republican Leader Bill Frist.
Corker founded Bencor Corp., which got its start by installing drive-through windows at fast-food restaurants and grew into a shopping-center construction company with operations in 18 states. After selling his construction business, Corker ran commercial real estate companies. He was elected in March 2001 to a four-year term as mayor of Chattanooga, Tennessee’s fourth-largest city.
After the bailout failed in Congress, the Bush administration said yesterday that it may provide short-term auto-industry aid from the $700 billion financial rescue package approved earlier this year. Corker says an aid plan should include conditions similar to those he proposed, which Paulson could impose “by fiat.”
Reid says Corker’s efforts will “pay dividends next year” when a new Congress is likely to renew consideration of ways to bolster the automobile industry.
“We weren’t able, based on his good work, to arrive at something on which we could get enough Republicans to agree,” Reid said on the Senate floor after negotiations collapsed. “But he did some wonderful work, and I think the work he did is going to pay dividends next year.”

Berkshire Hathaway to buy reinsurer from ING

Warren Buffett's Berkshire Hathaway on Friday reached a deal to buy a reinsurer from Dutch financial-services giant ING for $433 million (300 million euros), part of a busy week in which the Omaha, Neb.-based investment group is opening a bond insurer and buying an industrial group.
As the Dutch firm wants to concentrate on its core insurance, banking and asset management business.
ING is taking a capital loss after tax of 100 million euros this year on the sale. Berkshire Hathaway didn't immediately issue a statement on its side of the deal.
NRG, formerly called Nederlandse Reassurantie Groep, hasn't taken on new business since 1993. NRG's life reinsurance subsidiaries have been sold and a number of the remaining insurance liabilities were successfully settled, ING said.
The deal comes on the same day that Berkshire Hathaway is opening Berkshire Hathaway Assurance, a bond insurer for cities, counties and states that issue bonds to finance sewer systems, schools, hospitals and other public projects, The Wall Street Journal reported.
Many bond insurers have run into difficulty with their triple-A credit ratings in jeopardy because of the increased risk from the mortgage-related bonds they insure, which could potentially erode their capital.
The bond insurer unit will begin operations in New York before moving to California, Puerto Rico, Texas, Illinois and Florida, Buffett told the Journal.
"Ideally we'd be licensed in every state, but there's a limit to what we can do," Buffett told the newspaper.
On Christmas, Berkshire Hathaway announced a deal to buy 60% of Marmon Holdings, an industrial group owned by trusts benefiting members of the Pritzker family of Chicago, for $4.5 billion. The investment firm will buy the rest of the company over the next five to six years.
Marmon, with annual revenue of around $7 billion, holds more than 125 manufacturing and service businesses worldwide,

Berkshire Hathaway
Berkshire Hathaway is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Berkshire Hathaway's core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. The Company averaged a 25%+ annual return to its shareholders for the last 25 years while employing large amounts of capital and minimal debt.
Warren Buffett is the company's chairman and CEO. Buffett has used the "float" provided by Berkshire Hathaway's insurance operations (a policyholder's money which it holds temporarily until claims are paid out) to finance his investments. In the early part of his career at Berkshire, he focused on long-term investments in publicly quoted stocks, but more recently he has turned to buying whole companies. Berkshire now owns a diverse range of businesses including candy production; retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; and manufacture, import and distribution of footwear.

Sallie Mae's stock, decladed sales raise $3 bln

Sallie Mae , the largest educational lending company in the United States, said it sold $1 billion of convertible securities and $2 billion of common stock, raising more money than it had expected to pay off bad derivatives bets.
Sallie Mae sold common stock at $19.65 a share, equal to the company's closing share price on Thursday. The common stock sale offering was increased from an originally planned $1.5 billion, signaling strong demand.
The mandatory convertible preferred securities will offer a dividend of 7.25 percent, until investors convert them into common stock, or until their mandatory conversion on Dec. 15, 2010.
Sallie Mae, formally known as SLM Corp, said on Wednesday it was issuing $2.5 billion of convertible preferred securities and common shares, with about $2 billion of the proceeds going to pay off derivatives known as equity forward contracts.
Sallie Mae used equity forwards as part of its share buyback plan for years. The contracts allowed the company to reduce the cost of buying back its shares as long as its stock price kept rising.
But if Sallie Mae's share price fell far enough, the company had to buy back a large number of shares at above-market prices.
In this case, Sallie Mae will use about $2 billion from its offering to buy back about 44 million shares, now worth closer to $865 million at current market prices. The rest of the proceeds will be used for general corporate purposes.

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Sallie Mae is launching public offerings of both common stock and mandatory convertible preferred stock to raise up to $2.5 billion in capital.
The Reston-based student lender, which manages $160 billion in education loans, plans to use about $2 billion of the net proceeds from the two proposed offerings to settle its outstanding equity forward purchase contract, pursuant to which Sallie Mae will repurchase more than 44 million shares of common stock, the company said in a statement.
Sallie Mae (NYSE: SLM), formally known as SLM Corp., said any proceeds remaining from the public offerings after settling this contract will be used for general corporate purposes.
UBS Investment Bank and Citi will serve as joint book-running managers for the offerings, which include the issuance of $1.5 billion of common stock and $1 billion of convertible preferred stock.
Separately, Sallie Mae disclosed in a regulatory filing the terms and conditions of a separation agreement with Kevin Moehn, the company's executive vice president of sales and originations, who is leaving Sallie Mae.
Moehn will receive a cash payment totaling $1.5 million as well as a cash bonus of $285,000. He has also agreed to provide consulting services for 12 months following his termination of employment for a monthly fee of $16,500, Sallie Mae said in a filing with the Securities and Exchange Commission.
The agreement also provides that Moehn will not compete with Sallie Mae for six months following his termination of employment, and that he will not solicit or hire company employees for 24 months following his termination of employment.
Earlier this month, Sallie Mae announced that Moehn and June McCormack, the company's executive vice president of servicing, technology, sales and marketing, would be leaving the firm. Sallie Mae has promoted two executives to replace them.
Stock in Sallie Mae fell more than 11 percent on Thursday, to close at $19.65 per share. The company's shares have fallen about 43 percent in the last month and more than 57 percent over the past year.
Investors haven't reacted well to news that Sallie Mae's proposed acquisition by two private equity firms and two banks is not going through.
In April, the buyout group of J.C. Flowers & Co. LLC, Friedman Fleischer & Lowe LLC, Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) agreed to purchase Sallie Mae for about $25 billion.
The buyout group sent a revised offer to Sallie Mae's board in October, arguing that new legislation which cuts federal subsidies to student lenders could materially hurt Sallie Mae's financial performance.
Sallie Mae's board didn't accept the revised -- and lower -- offer. The Reston company then filed a lawsuit against the buyout group, seeking a $900 million breakup fee that was part of the original deal.
In recent weeks, Sallie Mae said that it held discussions with representatives of the buyout group to resolve their dispute. But the buyout group indicated to Sallie Mae that it would not submit a new proposal to buy the student lender, according to Sallie Mae.

Home price fell in USA 6.1%

The demand of homeHome price fell in USA 6.1% price fall specialist is watching their invest conciously,
Home prices in 20 U.S. metropolitan areas fell in October by the most in at least six years, a private survey showed today.
Property values fell 6.1 percent from October 2006, more than forecast, after dropping 4.9 percent in September, according to the S&P/Case-Shiller home-price index. The decrease was the biggest since the group started keeping year-over-year records in 2001. The index has fallen every month this year.
Prices will probably remain under pressure as the jump in foreclosures puts even more homes on the market just as stricter lending rules make it harder for buyers to find financing. Declining values make it harder for owners to tap home equity for extra cash, posing a risk to consumer spending.
``With supply overhang enormous and mortgage financing tougher to obtain, home prices are going to decline considerably further in the quarters ahead,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm.
Compared with a month earlier, home prices dropped 1.4 percent, the biggest one-month decline since records began. The figures aren't seasonally adjusted, so economists prefer to focus on the year-over-year change.
The median forecast of 12 economists surveyed by Bloomberg News projected a 5.7 percent decline.
Broad Decline
The index is a composite of transactions in 20 metropolitan areas. Seventeen cities showed a year-over-year decline in prices, led by 12 percent slumps in Miami and Tampa, Florida. Three, including Charlotte, North Carolina, Seattle and Portland, Oregon, showed an increase from a year earlier.
All 20 areas covered showed a drop in prices compared with September.
``The current state of the single-family housing market remains grim,'' Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, said in a statement.
Shiller and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
A report on Nov. 21 from the National Association of Realtors showed home prices fell in one third of U.S. cities last quarter.
The housing market may continue to weaken as an increase in foreclosures adds to a glut of unsold homes on the market, spurring sellers to cut prices, economists said.
Sales Report
Figures this week from the Commerce Department may show new homes sold at an annual rate of 718,000 in November, down from October's 728,000 rate, based on the median estimate of economists surveyed by Bloomberg News.
Sales of new houses probably will fall 8.9 percent in 2008 after a 25 percent drop this year, according to a Dec. 13 forecast from Fannie Mae, the largest mortgage buyer.
``The market is too challenging to make predictions for fiscal 2008,'' Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., said on a conference call on Dec. 19. ``It will be a difficult year.'' The Red Bank, New Jersey- based company reported a net loss of $467 million for the three months ended Oct. 31.
Residential investment has subtracted from economic growth for the past seven quarters. Home building dropped at a 20.5 percent annual pace in the third quarter, the most since 1991.
The S&P/Case-Shiller index and another by the Office of Federal Housing Enterprise Oversight track the same home over time and more accurately reflect price trends, economists said.
Price gauges from the Commerce Department and the Realtors group can be influenced by changes in the types of homes sold. Higher sales of cheaper homes relative to more-expensive properties will bias the figures down.

Deal :Berkshire to Pay $4.5 Billion for Pritzkers' Marmon

Warren E. Buffett may be a choosy shopper, but when he sees a firm he likes, he moves fast.
After just two weeks of negotiations, Mr. Buffett, who has been looking for acquisitions on which to spend his company’s billions of dollars, snagged an industrial conglomerate in a deal announced Tuesday. The Pritzker family of Chicago will sell to Mr. Buffett’s firm, Berkshire Hathaway, a 60 percent stake in Marmon Holdings for $4.5 billion.
The deal would go a long way toward unwinding the business holdings of the Pritzkers, a process that started in 2001. For Mr. Buffett, the deal represents his largest acquisition outside the insurance industry and suggests that he is finally finding some deals he can get excited about.
Berkshire will acquire the remaining 40 percent of Marmon over the next five or six years at a price that will be based on the future earnings of the company. In 2006, Marmon posted revenue of $7 billion and profit of $1 billion from operations like wire and cable, railroad tank cars and water treatment systems.

Dec. 26 (Bloomberg) -- Billionaire Warren Buffett's Berkshire Hathaway Inc. will pay $4.5 billion for 60 percent of Marmon Holdings Inc., adding another family run company that prospered without shareholder demands for short-term profits.
Chicago's Pritzker family, which controls Global Hyatt Corp., built Marmon into a group with $7 billion in annual sales and 125 units including operations serving the railroad and energy industries. Operating income more than tripled from 2002 to 2007, Omaha, Nebraska-based Berkshire said in a statement yesterday.
Marmon has ``businesses that are fairly niche-oriented where they have dominant positions established over time,'' said Thomas Russo, who manages about $3.5 billion at Gardner Russo & Gardner in Lancaster, Pennsylvania and counts Berkshire as its largest holding. ``They have a history under the Pritzkers of being liberated from the quarterly earnings game.''
Buffett, 77, built Berkshire over four decades, buying out- of-favor stocks and manufacturers to transform a failing textile maker into a $210 billion holding company. His biggest investment last year was the $4 billion purchase of Iscar Metalworking Cos. from Israel's Wertheimer family.
Marmon is ``our kind of company,'' Buffett said in an interview with CNBC today. ``It's in some very basic businesses but good businesses.''
Berkshire, which had more than $45 billion in cash as of Sept. 30, is as prepared as it has ``ever been'' to buy a ``big business outright,'' Buffett told shareholders at an annual meeting in May. He's said he'd be willing to spend as much as $60 billion on the right company.
The Marmon acquisition is set to be completed in the first quarter of 2008, with Berkshire acquiring the remainder of the company by 2014 at a cost based on future earnings.
Trains, Cranes
Marmon employs 21,500 people, mostly in North America, the U.K., Europe and China, according to the company's Web site. Its businesses include a dozen companies that manufacture wire and cable products for energy and construction use.
The Chicago-based group also has a transportation-services operation that produces railroad cars and leases tank containers in China. Operating income was $794 million last year, according to the Web site.
The businesses ``are not prone to widespread technical obsolescence,'' Russo said. ``They would have a relationship with their suppliers and customers that give them an ongoing partnership.''
Berkshire had about 217,000 employees as of Dec. 31 in businesses ranging from auto insurer Geico Corp. and carpet manufacturer Shaw Industries to ice cream company International Dairy Queen Inc. and business-jet fleet operator NetJets Inc.
Largest Since 2005
The Marmon takeover is the largest announced by Buffett since 2005, when Berkshire's utility company agreed to buy PacifiCorp from Scottish Power Plc for $5.1 billion in cash and assume $4.3 billion in debt. Buffett has also been investing in railroads, disclosing in April that he purchased a $3 billion stake in Fort Worth, Texas-based Burlington Northern Santa Fe Corp., the second-largest railroad in the U.S. after Union Pacific Corp.
Buffett prefers buying companies outright rather than investing in stocks because ``that way he can control the reinvestment decisions,'' Russo said. ``He would have the appetite and the balance sheet to underwrite almost limitless investments through their operating entities.''
Marmon has an ``impressive record of growth and profitability,'' Buffett said in the statement. ``The decision to purchase and work out the details of this transaction was done without delay.''
Berkshire spokeswoman Jackie Wilson and Chief Financial Officer Marc Hamburg didn't return calls seeking comment. David Dees, a spokesman for Marmon, had no comment.
Pritzker Breakup
The Pritzker family has discussed breaking up its holdings since the 1999 death of Jay Pritzker, who began the hotel company in 1957 by buying the Hyatt House in Los Angeles. The family's investments range from a global credit-check company to a maker of artificial joints. Marmon was acquired in 1953 by Jay and his brother Robert, according to the statement.
``This transaction is being done in the context of the previously reported restructuring of our family business interests,'' Marmon Chairman Tom Pritzker said in the statement.
In August, the family said it would sell a minority stake in Global Hyatt to investors including Goldman Sachs Capital Partners for $1 billion. In 2006, the family agreed to sell snuff maker Conwood for $3.5 billion to Reynolds American Inc.
In January 2005, actress Liesel Pritzker and brother Matthew Pritzker, settled a $2 billion suit accusing Tom Pritzker and other relatives of cheating them out of their inheritance.
Inheritance Suit Settled
The siblings claimed their trust-fund assets were being transferred to accounts benefiting other relatives and the family foundation. Terms of the deal weren't disclosed.
Tom Pritzker was ranked by Forbes as the 117th wealthiest person in the U.S. with a net worth of $3 billion. Buffett was second with $52.4 billion, the magazine said.
Buffett will work with Tom Pritzker, Marmon Chief Executive Officer Frank Ptak and former CEO John Nichols over the next five to six years ``in continuing to build Marmon,'' Berkshire said in the statement.
Berkshire, which traded at $2,950 on Dec. 31, 1987, is poised to post its 17th annual gain in 20 years. It climbed $3,980 Dec. 24 to $137,980 in New York Stock Exchange composite trading. The stock is up 25 percent in 2007, outpacing the 5.5 percent gain for the Standard & Poor's 500 Index.
The company's largest purchase was the acquisition of General Re, the largest U.S. reinsurance company. The stock deal was valued at $16 billion when it was completed in 1998.
`Simple' Businesses
Buffett's investment criteria include companies with ``good returns on equity,'' little or no debt, ``simple'' businesses that he can understand, and consistent earnings, he said in Berkshire's latest annual report. Buffett doesn't participate in auctions for companies and can tell prospective sellers within five minutes of an offer if he is interested in completing a deal, he said in the report on March 1.
The Marmon acquisition ``was done just the way Jay would have liked,'' Buffett said in the statement. ``No consultants or studies.''