Merrill Lynch says rich turning to gold bars for safety

Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or “paper” proxies.

Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. “People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs,” he said, referring to exchange trade funds listed in London, New York, and other bourses.

“They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands,” he said.

Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June.

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Postal Service Looks To Cut 40,000 Jobs In First Layoff In History

“We lost 2 billion dollars and like any other business we have to stay afloat.” And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide. Lavelle Pepper with the post office in Shreveport says they too are feeling the affects of the same disease hitting the country… a struggling economy. “We employ about 685,000 people. If we do layoffs it would include clerks, carriers, mail handlers across all crafts.”

Pepper says the postal service is looking to eliminate 40,000 jobs nationwide. There’s not an exact number on how many of those could be from the Ark-La-Tex. Pepper says workers who are not part of union with six or less years of service would likely be the first on the chopping block. “We’ve identified 16 thousand people that are not covered under contract. We’ll see what those numbers add up to.”

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Starbucks releases full list of store closures

Nervous about whether your corner Starbucks is still going to be there to deliver that jolt of caffeine?

It’s a fair question plenty of folks are asking after Starbucks Corp. announced that it would shut 616 company-owned stores by early 2009 as part of a broader plan to boost profit and traffic at its U.S. locations.

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Fannie-Freddie lifeline puts taxpayers on the hook

Now that the federal government has thrown a lifeline to mortgage giants Fannie Mae and Freddie Mac, taxpayers could be on the hook for billions more if the crisis of confidence spreads.

There were encouraging signs Monday for the rescue plan, but also signs of concern — notably on Wall Street, where shares of the two companies slumped further — that the plan won’t be enough.

Other banks are already teetering: National City Corp. shares fell nearly 15 percent on rumors of financial trouble, even though it said it was experiencing no unusual depositor or creditor activity. And Washington Mutual Inc.’s shares fell 35 percent, to a paltry $3.23 amid worries about whether it had enough cash to handle the mortgage market downturn. WaMu said that it did.

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State, city layoffs: 45,000 and counting

The latest hit to the economy could come from state houses and city halls across the nation, which are in their worst budget crisis in years.

With falling revenue from sales and income taxes, and property-tax declines looming, states, cities and towns have already laid off tens of thousands of government employees. Many expect more job cuts ahead as public officials struggle to balance their budgets.

The American Federation of State, County and Municipal Employees, a public employees union, says about 45,000 government layoffs have been announced this year.

All but four states are set to begin their new fiscal years on July 1, which means that tough decisions will have to be made soon. Economists say that cutbacks in jobs and spending by local governments could be a major drag on the overall economy.

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Pinellas Sheriff fights for budget

Clearwater, Florida – Pinellas County Sheriff Jim Coats went to the county commission on Tuesday hoping to get $2.7 million dollars of his budget back.

Coats told commissioners that he needs the money to fund critical programs that help offenders insure offenders don’t return to jail.

The sheriff says he’s already sent layoff notices to 24 detention deputies. Coats is also worried about the future of his DUI and Traffic Units.

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‘Everything Must Go’ at LNT Store Closings

Linens ‘n Things has scheduled a May 29 auction for the liquidation rights to the approximately 120 stores it will close in connection with its Chapter 11 bankruptcy, even as creditors line up to be heard over the auction procedures and agency agreement.

In the meantime, the troubled 589-unit retailer reports that a “significant number” of vendors have resumed shipping on terms, although the company has yet to identify which suppliers and under what terms. Those moves come as suppliers are still assessing LNT’s debtor-in-possession credit facility and, in some cases, are seeking credit insurance or factoring for those shipments.

Speculation continues to fly concerning potential bidders for LNT’s total business. Late last week an executive for GHCL, the Indian parent of Dan River — which is now in liquidation — flatly denied that that company was in talks to acquire Linens ‘n Things. The same media reports from business outlets in India identified Welspun as another possible suitor.

“This is a rumor only,” B.G.K. Nair, general manager of corporate sales and marketing, GHCL, said from the company’s corporate headquarters in Noida, India. We are not [seeking to acquire] them.”

It was GHCL chairman Sanjay Dalmia who broadly hinted two years ago that his firm might be interested in an American specialty textiles retailer with all the attributes of LNT. It is unknown if there were ever any serious discussions.

Welspun USA coo and evp Charles Gaenslen said, “We are not in the market to buy LNT or any other U.S. retailer.”

Reports through the industry and financial circles suggested that LNT’s controlling shareholder, Apollo Management, might be continuing to buy up the retailer’s debt paper in a bid to improve its standing against other secured noteholders. Those reports could not be confirmed, although that is similar to the strategy used by financier Carl Icahn in his successful 2005 bid for WestPoint Stevens out of bankruptcy. (His victory, however, is still being challenged in court years later by other secured creditors.)

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