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US regional banks grow on the cheap amid crisis

by Veronique Dupont NEW YORK (AFP) --

The 20-year record high bankruptcy rate for US banks and businesses is giving regional banks on sound footing the opportunity to expand swiftly and on the cheap.

"It's a significant opportunity because they are able to acquire assets that have been backed-stopped by the FDIC (Federal Deposit Insurance Corporation), that means the losses are covered by the FDIC," Standard & Poor's analyst Erik Oja told AFP.

Quite often, he added, it's a "very, very good deal for the surviving bank" that gets assets at a discount.

More than 120 banks went belly-up this year in the United States, the highest bankruptcy rate since the savings and loan crisis of 1992.

The current financial crisis has led to a big consolidation drive by the country's largest banks: JPMorgan Chase bought Bear Stearns, Bank of America acquired Countrywide and Merrill Lynch, Wells Fargo purchased Wachovia and PNC absorbed National City.

The same consolidation move is sweeping smaller, regional banks, with some launching into real takeover frenzies.

Earlier this month, California's East West Bank doubled in size after it acquired San Francisco-based United Commercial Bank.

Minnesota-based US Bancorp, the country's sixth-largest commercial bank with 264 billion dollars in assets, has expanded across the country this past year to the tune of some 26 billion dollars. In October alone, US Bancorp took over nine banks in the southwest.

Even the small Ameris Bank, of Moultrie, Georgia, the US state hardest hit by the sub-prime mortgage cisis, has bought two banks in recent weeks.

By agreement with the FDIC, Ameris acquired United Security Bank's 111 million dollar loan portfolio at a 33 million dollar discount. It also assumed 150 million dollars in deposits.

Ameris also bought American United Bank at a 20 million dollar discount, assuming 101 million in deposits and 83 million in loans.

In both cases, "the loans being purchased are covered by a loss share agreement which affords Ameris Bank significant loss protection for the next five years," Ameris said on its website.

The Stillwater, Minnesota-based Central Bank purchased four banks from its region.

A rapid expansion, however, is often based on leverage. East West, for example, financed its acquisition of United Commercial Bank with a new share issue.

Despite the FDIC loss-share agreement, takeovers are not risk-free. As with any merger, it involves harmonizing two different business cultures, computer systems and procedures, as well as keeping the best employees and clients, who often move deposits to a rival bank, Oja said.

Banks planning a takeover must first touch base with the FDIC, which looks into their financial standing before allowing access to a target bank's balance sheet and possibly giving a green light for bids.

The purchasing offer for the target bank has to be reconciled with the asking price, and the FDIC also makes sure the takeover does not reduce banking services in rural areas.

Putin backs Medvedev's call for Russia modernisation

by Marina Koreneva SAINT PETERSBURG (AFP) --

Russian Prime Minister Vladimir Putin on Saturday strongly backed President Dmitry Medvedev's call for economic modernisation, moving to smother talk of differences between the two leaders.

Medvedev had in a state-of-the-nation address on November 12 made his strongest call yet for Russia to end its dependence on oil exports and modernize its economy, in a speech some analysts saw as a challenge to Putin.

"I am sure that this call reflects the mood of all of Russian society," Putin responded in a keynote speech to the annual congress of the ruling United Russia party in Saint Petersburg as Medvedev looked on.

"The crisis, with all its severity, has shown how costly it is for a country to reject innovation, have low work productivity, waste resources and have a slow bureaucracy," Putin said in his hour-long speech.

"The president posed the question about the necessary, thorough modernization of the Russian economy -- overcoming chronic backwardness and moving the country to a more modern level of development," Putin added.

United Russia, which holds a majority of 315 out of 450 seats in the lower house of parliament, has been criticised by some analysts for holding a dominant position akin to that of the Communist Party in the Soviet Union.

The party showed off its confidence with a glitzy conference marked by a deafening rendition of the Russian national anthem and the attendance of celebrities ranging from pop singers to Olympic gymnasts to cosmonauts.

Yet Medvedev -- who has made pledges for reform in Russia his calling card -- said it was also time for United Russia to modernize and appeared to scold it over alleged violations in local elections earlier this year.

"The party needs to modernise and make itself more flexible. It needs to start winning in an open fight," Medvedev said in a speech just before Putin's keynote address.

"Democracy exists, at the end of the day, not for the party... but for the citizen," said Medvedev.

In a rare rebuke for the ruling party, the president lambasted regional offices of factions, including United Russia, for letting "office intrigues" and "administrative procedures" get in the way of democracy in elections.

Parliament speaker Boris Gryzlov hailed the speeches, which he described as setting out "how the country will look in 10 years time".

He said the congress had also set the seal on the concept of "Russian conservatism" as the party's main ideology.

Putin is the leader of United Russia, although curiously he and Medvedev have declined to become card-carrying members of the party in an apparent bid to stand above the fray of day-to-day politics.

Putin congratulated United Russia, which dominates the Russian parliament, on working to prevent the economic crisis from turning into the financial meltdown that Russia had experienced in 1998.

"We have held this promise," Putin said to a burst of applause from thousands of delegates in his home city.

But he also warned that Russia's GDP would still contract 8.0-8.5 percent this year. "This is not as much as we expected... but it is still a lot and worse than in several other countries," Putin said.

Putin pledged the government in 2010 would press on with its policy of offering state guarantees for corporate loans, allowing companies to take out around 500 billion rubles (17.2 billion dollars) in credit.

Economists say Russia has suffered especially badly in the economic crisis due to its failure to implement reforms during Putin's 2000-2008 presidency when it was helped by high oil prices.

The speech represented a reversal of the November 12 state-of-the-nation address when Putin -- still seen by most as the Russian number one -- had sat quietly and attentively as Medvedev laid out his vision for Russia's future.

But this time it was Medvedev who listened to the speech, although he had earlier repeated his call for economic modernization in his shorter introductory address.

Top German economists critical of tax relief: report

BERLIN (AFP) --

A panel of top German economists, which has slammed the country's huge public debt, says Chancellor Angela Merkel's new government should take back its "gift baskets" of tax relief, a German weekly reported.

Merkel "promised us that the government would do everything so that our gloomy forecasts would not happen... They can therefore pack up again their beautiful gift baskets," Wolfgang Franz, head of the so-called "Five Wise Ones", told Der Spiegel in the issue to be published Monday.

The influential panel of economists has forecast growth of 1.6 percent for 2010, which it says is not enough to replenish the public coffers. Two weeks ago they criticised the lack of "concrete information" from the new centre-right government about their plans to reduce the deficit and deal with expected massive drop in tax revenue.

A tax relief package, already voted on by the German parliament amounting to some 8.5 billion euros (12.6 billion dollars), is set to take effect in January.

In the panel's annual report released earlier this month, the economists issued a sharp attack on the new government saying its plans to reduce the country's ballooning debt were "vague" and "deceptive".

Merkel, re-elected in September at the head of a new coalition, failed to recognise the scale of the challenges facing Europe's biggest economy, it said.

In particular the new coalition of conservatives (CDU) and liberals (FDP) has failed to spell out how it will reduce Germany's budget deficit and an "exit strategy" for reducing massive stimulus measures propping up the economy, the panel said.

Michel Fuchs, deputy head of the CDU parliamentary group, called the panel's criticisms "not only presumptuous and false, but also dangerous".

"We are an independent group.... We deliberately express ourselves in terms that are clear and not very diplomatic," Franz told Der Spiegel.

"Our mandate is to warn against bad developments, not to sing someone's praises."

He said "the government cannot rely only on growth, which will not be enough to generate the 37 billion euros which we estimate are needed between now and 2016 to consolidate" the public finances.

Data from the national statistics office earlier this month indicated that the German economy made a comeback in the second and third quarters of 2009 from its worst post-war recession, in large part owing to huge injections of cash -- some 80 billion euros -- from the state.

Michelin chief announces new factory in Brazil: report

PARIS (AFP) --

French tyre maker Michelin will build a new factory in Brazil at a cost of hundreds of millions of dollars, the company's chief executive Michel Rollier told a newspaper Saturday.

The tyre factory will be in Resende, close to Rio de Janeiro, and will start production in 2013, Rollier told financial newspaper La Tribune.

The plant will allow Michelin to "triple its capacity" in the region, he said.

Rollier also said that Michelin planned an "investment project worth 800 million dollars (540 million euros)" for one of the company's Chinese factories.

He told French radio the company is now targeting China, India and Brazil, predicting markets in Western countries would not see substantial growth.

The news followed an announcement Monday by the tyre maker of plans to build a factory in India at a cost of 867 million dollars.

It also comes as the tyre maker is cutting more than 1,000 jobs in France.

Michelin reported in October its sales fell 10.9 percent in the third quarter on a 12-month comparison to 3.75 billion euros amid a slump in global demand.

Dutch workers protest pending retirement age rise

THE HAGUE (AFP) --

Thousands of workers protested in four Dutch cities on Saturday against a government decision to increase the state retirement age from 65 to 67 by 2025.

"We think it is wrong for the government to seek to achieve savings by making people work longer," Paulus Plas, a spokesman for the country's largest labour organisation, the FNV, told AFP.

Plas said 20,000 to 30,000 workers took part in each of the protests, the largest of which took place in the western port city of Rotterdam, where he said up to 20,000 showed up.

Police put participation in Rotterdam at closer to 5,000 and said the protest went off without incident.

The Dutch cabinet last month announced that the pensionable age would rise to 66 in 2020 and 67 five years later, citing deteriorating state finances and the need to boost labour participation as the Netherlands deals with a greying workforce.

"Currently, we have four working people for every pensioner; soon this will be two to one. What does this mean for the younger generations?" Dutch Prime Minister Jan Peter Balkenende said.

People would still be able to retire at 65 but on a lower pension, and there would be special protective measures for people who do many years of "heavy work."

Opposition political parties and labour organisations oppose the changes.

A recent FNV-commissioned opinion poll found that three quarters of Dutch nationals do not support the plan, believing that they would themselves be disadvantaged by it.

According to Plas, "people with the lowest levels of education, who start working earlier, earn less and have a shorter life expectancy will suffer the most."

Thousands of Spanish farmers protest low prices

MADRID (AFP) --

Thousands of Spanish farmers on Saturday marched through the streets of Madrid, halting traffic to protest the low prices they receive for their produce which they say is leading them to financial "ruin."

The farmers and their supporters came from across the country and they walked behind tractors along Madrid's main avenues under banners with the theme "The countryside is heading towards ruin, take action."

"Prices must be held steady. Producing a kilogramme of olives costs me three times more than the price they are sold for," a farmer from the southwestern region of Extremadura, Antonio Sanchez, told AFP.

Spain's largest farmers federations -- the ASAJA, COAG and UPA which organised the demonstration -- say farmers suffered a 26 percent drop in real income between 2003 and 2008, while their costs rose by 34 percent during this time leading to the loss of 124,000 jobs.

They want the government to guarantee the minimum prices paid for their products by commercial middlemen who they say are taking too high a cut and limits on prices rises for fuel, fertilisers and pesticides.

"The cauliflower which I sell for 30 cents is resold for 1.50 euros in the supermarket. Profits must be shared, its unjust," said Fernando Ambros Carpi who runs a farming cooperative near the southern town of Arco de la Frontera.

Spain's agriculture sector accounts for around three percent of the nation's gross domestic product.

Putin backs Medvedev's call for Russia modernization

by Marina Koreneva SAINT PETERSBURG (AFP) --

Russian Prime Minister Vladimir Putin on Saturday strongly backed President Dmitry Medvedev's call for radical economic modernization, in an apparent bid to smother talk of differences between the leaders.

"I am sure that this call reflects the mood of all of Russian society," Putin said in a keynote speech to the annual congress of the ruling United Russia party in Saint Petersburg.

The party showed off its confidence with a glitzy conference marked by a deafening rendition of the Russian national anthem and the attendance of celebrities ranging from pop singers to cosmonauts.

"The party needs to modernize and make itself more flexible. It needs to start winning in an open fight," Medvedev said in a speech just before Putin's keynote address.

"Democracy exists, at the end of the day not for the party... but for the citizen," he said.

Putin is the leader of United Russia, although curiously he and Medvedev have declined to become card-carrying members of the party in an apparent bid to stand above the fray of day-to-day politics.

Putin congratulated United Russia, which dominates the Russian parliament, on working to prevent the economic crisis from turning into the financial meltdown that Russia had experienced in 1998.

"We have held this promise," Putin said to a burst of applause from thousands of delegates in his home city.

Economists say Russia has suffered especially badly in the economic crisis due to its failure to implement reforms during Putin's 2000-2008 presidency when it was helped by high oil prices.

But this time it was Medvedev who listened to the speech, although he had earlier repeated his call for economic modernization in his shorter introductory address.

Economists: Stimulus package helped

WASHINGTON, Nov. 21 (UPI) --

A consensus has formed among U.S. economists that President Barack Obama's $787 billion economic stimulus package, though messy, is working, analysts say.

They contend the package did indeed save the American economy from the free-fall it was experiencing a year ago and grow again, or at least keep from shedding more jobs than it would have, The New York Times reported Saturday.

It was worth doing — it's made a difference, Nigel Gault, chief economist at IHS Global Insight of Lexington, Mass., told the newspaper. I don't think it's right to look at it by saying, 'Well, the economy is still doing extremely badly, therefore the stimulus didn't work.' I'm afraid the answer is, yes, we did badly but we would have done even worse without the stimulus.

The economy was weaker than we thought at the time, so maybe in retrospect we could have used a little bit more and little bit more front loaded, added Joel Prakken of Macroeconomic Advisers.

But Martin Feldstein, a conservative Harvard economist, told the Times, There should have been more direct federal spending that would have added to aggregate demand. Temporary tax cuts and one-time transfers to seniors were largely saved and didn't stimulate spending.

Report: Hershey readies bid for Cadbury

NEW YORK, Nov. 21 (UPI) --

U.S. chocolate giant Hershey is considering launching a bid for control of British counterpart Cadbury, The New York Times reported Saturday.

Citing people briefed on the matter, the Times said Hershey is considering a challenge to Kraft's existing $16.7 hostile takeover bid for the British confectioner.

The sources told the Times that any Hershey bid for Cadbury would have to be worth at least $17 billion and would represent a leap from the long-held financial conservatism of the U.S. chocolate maker, which has reportedly been working with JPMorgan Chase and the Merrill Lynch unit of Bank of America to obtain financing for the bid.

The newspaper said that while Cadbury and Hershey already have distribution ties, the U.S. company had assumed it couldn't compete with Kraft's offer. The financial markets, however, have loosened in the meantime.

Cadbury, which is reportedly reluctant to merge with Kraft because it views the conglomerate as a slow-growth company that would limit its opportunities, could be more receptive to an overture from Hershey, the Times said.

Census finds no shortage of job-seekers

WASHINGTON, Nov. 21 (UPI) --

The U.S. Census Bureau says it is having little trouble finding census workers for its 2010 survey in a struggling economy.

With temporary jobs that pay between $10 and $20 per hour, applicants with advanced degrees and years of professional experience are flocking to sign up for the positions, which will give U.S. labor market a slight jolt next year, The Wall Street Journal reported Saturday.

What we're seeing now is blowing our socks off, Wendy Button, the decennial recruiting chief for the bureau, told the newspaper. We're seeing a huge response to very little media.

Census officials told the Journal that when they hired address canvassers last summer they had to cut off applications two months earlier than planned due to the overwhelming response -- in Charlotte, N.C., for instance, about 40,000 people put their names on waiting lists to take the census' employment test.

The newspaper said the final number of hires won't be known until the number of U.S. residents who return their census forms is determined. The forms will be mailed out early next year. But California's census offices told the Journal they plan to hire about 110,000 workers between January and June.

Report: NBC's owners argue over valuation

LOS ANGELES, Nov. 21 (UPI) --

U.S. cable giant Comcast's bid to acquire NBC Universal has been delayed by disagreements over the value of the company, sources say.

Citing unnamed people close to the negotiations, the Los Angeles Times reported Saturday that NBC Universal's U.S. and French owners are fighting among themselves over arriving at a valuation for the French firm's stake in the television and movie company.

NBC Universal's owners include General Electric Co., which holds 80 percent of the media company, while France's Vivendi controls 20 percent. Sources told the Times they are arguing over the value of the minority position held by Vivendi, and are still $500 million apart in reaching an agreement.

Another source indicated the two sides could be as far as $900 million apart in value.

Times sources said G.E. has placed a total value of $27 billion to $30 billion in NBC Universal, which would put Vivendi's share at about $5.4 billion.

Turkey sticks to nuclear power plan

ANKARA (AFP) --

Turkey is determined to build a nuclear power plant and will launch a new project to replace a failed tender, Energy Minister Taner Yildiz was quoted as saying Saturday.

"The fact that the tender was scrapped does not mean that the process is scrapped. Our determination on nuclear power plants is persisting," Yildiz said in Kizilcahamam town, near Ankara, Anatolia news agency reported.

Energy authorities Friday cancelled a 2008 tender won by a Russian-led consortium to build Turkey's first nuclear power plant after a top administrative court suspended parts of the regulation governing the process.

Yildiz said officials were working on a new model of realising the project through shorter procedures, adding that the involvement of the public sector might be also considered.

A consortium led by Atomstroyexport, Russia's state nuclear giant, was the only bidder in the scrapped tender to build four nuclear reactors with a total capacity of 4,800-megawatts at the Mediterranean town of Akkuyu.

The tender had been under fire since it emerged that the consortium was the sole bidder and offered above-market prices for supplying electricity to the Turkish grid.

The auction was held in September 2008, amid global financial turbulence, with Ankara rejecting requests by interested companies for a postponement.

Turkey plans to build three nuclear power plants in hopes of preventing a possible energy shortage and reducing dependence on foreign supplies but the project is fiercely opposed by environmentalists.

Ankara abandoned an earlier plan to build a nuclear plant at Akkuyu in 2000 amid a severe financial crisis and protests from environmentalists in Turkey, Greece and Cyprus.

Critics say Akkuyu is close to a seismic fault line, pointing at a powerful earthquake that killed more than 140 people in the neighbouring province of Adana in 1998.

EU criticises financial pledges to GM Europe

BERLIN (AFP) --

EU Industry Commissioner Guenter Verheugen has criticised informal financial pledges to General Motors by countries vying to save jobs at factories belonging to the automaker's European unit.

"I understand that some countries have already made informal promises. I find that alarming," he told German magazine Spiegel in comments to be published Monday.

According to Spiegel, GM Europe has received offers of 400 million euros (600 million dollars) from Britain and between 300 and 400 million euros from Spain, and Poland has offered tax breaks.

Belgium offered up to 500 million euros for the GM factory in Antwerp to stay open, but this was declined, the magazine reported.

Verheugen said he wanted to "avoid putting jobs up for auction" at GM Europe, called Opel in most countries and Vauxhall in Britain.

The commissioner holds talks Monday in Brussels with European economy ministers and representatives of GM to discuss the future of the US car maker's European business.

The newly named head of GM Europe Nick Reilly is expected to attend the session.

GM stunned the European auto sector earlier this month when it scrapped a decision to sell off its European operation to Canadian auto parts maker Magna International and Russian state bank Sberbank.

The US company decided instead to hold on to its European division and restructure the unit itself.

The automaker is counting on financial support from European governments where factories of its European unit are based for help with the restructuring as part of a 3.3-billion-euro plan.

Berlin had backed the original plans to sell the unit and offered several billion euros in aid to support the transaction.

Germany is home to about 25,000 Opel workers, roughly half of GM Europe's total workforce.

Putin backs Medvedev's call for Russia modernization

SAINT PETERSBURG (AFP) --

Russian Prime Minister Vladimir Putin Saturday strongly backed President Dmitry Medvedev's call for radical economic modernization, in an apparent bid to smother talk of differences between the leaders.

"I am sure that this call reflects the mood of all of Russian society," Putin said in a keynote speech to the annual congress of the ruling United Russia party in Saint Petersburg.

"The crisis, with all its severity, has shown how costly it is for a country to reject innovation, have low work productivity, waste resources and have a slow bureaucracy," Putin said.

Putin congratulated United Russia, which dominates the Russian parliament, on working to prevent the economic crisis from turning into the financial meltdown that Russia had experienced in 1998.

"We have held this promise," Putin said to applause from thousands of delegates.

Economists say Russia has suffered especially badly in the economic crisis due to its failure to implement reforms during Putin's 2000-2008 presidency when it was helped by high oil prices.

The speech represented a reversal of the November 12 state of the nation address when Putin -- still seen by most as the Russian number one -- had sat quietly and attentively as Medvedev laid out his vision for Russia's future.

But this time it was Medvedev who listened to the speech, although he had earlier repeated his call for economic modernization in a short introductory address.

Austria in talks with Russia over South Stream

VIENNA (AFP) --

Austria has begun talks with Russia in view of joining Moscow's South Stream gas pipeline project, Austrian newspapers reported on Saturday.

The economy ministry said it had opened negotiations with Russia on Friday regarding its potential involvement in the project, the daily Die Presse reported.

South Stream is seen as a rival to the EU's Nabucco pipeline, aimed at reducing Europe's dependence on Russian gas.

Both projects, which have yet to be completed, would terminate in Austria, from which gas would then be supplied to the rest of Europe.

The Austria Press Agency (APA) noted that the two countries would first have to sign an "intergovernmental agreement" before Austrian oil and gas group OMV could begin direct negotiations with Russia's gas monopoly Gazprom.

No deadline has been set for the talks, APA added.

Chancellor Werner Faymann already discussed Austria's involvement in South Stream with Russian Prime Minister Vladimir Putin during a recent trip to Moscow.

The project, backed by Gazprom and Italy's ENI, is scheduled for completion by the end of 2015, bringing Russian gas under the Black Sea to Bulgaria, before branching off to Austria or Greece.

The 7.9-billion-euro (11.6-billion-dollar) Nabucco pipeline project, scheduled to start in 2014, is meanwhile due to pump Caspian gas to Europe via Turkey, while bypassing Russia.

Putin backs Medvedev's call for Russia modernization

SAINT PETERSBURG (AFP) --

"I am sure that this call reflects the mood of all of Russian society," Putin said in a keynote speech to the annual congress of the ruling United Russia party in Saint Petersburg.

"The crisis, with all its severity, has shown how costly it is for a country to reject innovation, have low work productivity, waste resources and have a slow bureaucracy," Putin said.

Putin congratulated United Russia, which dominates the Russian parliament, on working to prevent the economic crisis from turning into the financial meltdown that Russia had experienced in 1998.

"We have held this promise," Putin said to applause from thousands of delegates.

Economists say Russia has suffered especially badly in the economic crisis due to its failure to implement reforms during Putin's 2000-2008 presidency when it was helped by high oil prices.

But this time it was Medvedev who listened to the speech, although he had earlier repeated his call for economic modernization in a short introductory address.

Obama touts Asia trade to create jobs

WASHINGTON (AFP) --

US President Barack Obama, back from a tour of Asia, called Saturday for the United States to produce more goods to sell across the Pacific, touting trade as a way to revive the troubled US economy.

Facing rising unemployment and slipping poll numbers, Obama assured the public that creating new jobs back home was his top priority on the week-long tour that took him to Japan, Singapore, China and South Korea.

"I traveled to Asia to open a new era of American engagement," Obama said in his weekly radio address, recorded while he was in Seoul.

"Above all, I spoke with leaders in every nation I visited about what we can do to sustain this economic recovery and bring back jobs and prosperity for our people -- a task I will continue to focus on relentlessly in the weeks and months ahead," he said.

Obama, who was elected in the midst of the worst economic crisis in decades, said the lesson of the turmoil was that the world's largest economy should not fuel its growth on going into debt.

"In order to keep growing, we need to spend less, save more and get our federal deficit under control," Obama said.

"We also need to place a greater emphasis on exports that we can build, produce, and sell to other nations -- exports that can help create new jobs at home and raise living standards throughout the world," he said.

If the United States increased exports to Asia-Pacific nations by five percent, "we can increase the number of American jobs supported by these exports by hundreds of thousands," Obama said.

Union reports on injuries to hotel workers

CHICAGO, Nov. 21 (UPI) --

A union representing U.S. hotel workers says women, Hispanics and Asians are more likely to be hurt doing their jobs.

Many hotel employees blame the larger beds chains use to tempt guests, The Miami Herald reported.

Francine Jones, who has been working for hotels for 18 years, is a housekeeper at the Hyatt Regency Chicago. The mattresses, the carpets, the vacuums -- it's all very heavy, she said during a teleconference organized by Unite Here, the union.

A group of researchers retained by the union analyzed data on injuries. They concluded women, Asians and Hispanics are 1.5 times more likely to be hurt on the job than white men.

Hispanic housekeepers had an even higher injury rate, twice that of all hotel employees.

Unite Here is negotiating contracts with several chains. Union officials say negotiators have been trying to get contractual language aimed at preventing injuries, including supplying fitted sheets so housekeepers do not have to lift mattresses to tuck sheets in.

Lawyer: Many homeowners should walk away

TUCSON, Nov. 21 (UPI) --

A law professor says many U.S. homeowners should embrace foreclosure instead of fighting it.

Brent White of the University of Arizona is the author of Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis, which was published in Arizona Legal Studies, ABC News reported.

In states like Arizona, California and Florida, where housing prices rose precipitously and then crashed, many people owe more than twice the current value of their homes, White said. Because rents have also dropped, they are often paying far more on their mortgages than they would pay in rent.

But he said emotions can interfere with economic reality.

A lot of it has to do with shame, guilt and fear, White told ABC.

The Mortgage Bankers Association said about one-third of U.S. homeowners, 15 million, are underwater, owing more than the value of the house. But only 4.5 percent are in foreclosure.

Sarah Tinsley, a spokeswoman for the association, said anyone advising homeowners to walk away is irresponsible.

Hershey Trust backs bid for Cadbury: report

NEW YORK (AFP) --

A charitable trust controlling US chocolate maker Hershey is backing a bid of 17 billion dollars for Britain's Cadbury, the Wall Street Journal reported Friday.

The Journal, citing several people familiar with the matter, said the Hershey Trust is pressing to top the hostile bid from US food giant Kraft estimated at some 16.5 billion dollars.

The bid, if it emerges, could include 10 billion dollars in cash from Hershey as well as two billion dollars worth of Hershey shares, the report said. Additional funds may be sought from other investors.

The Journal reported earlier that Hershey was mulling a joint bid with Italian confectioner Ferrero.

On Wednesday, a Cadbury spokesman told AFP that it would only consider a takeover offer which delivered "full value" for Cadbury.