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Turkey's economic growth accelerated to 6.6 percent in the first quarter from a six-year low in the previous three months as farming recovered from drought, exports boomed and consumer spending grew.

The growth rate rose from 3.4 percent in the fourth quarter, the state statistics office in Ankara said on its Web site today. The economy had been expected to expand by 5 percent, according to the median estimate of 15 economists surveyed by Bloomberg.

Manufacturing output, driven by record exports, helped sustain the 25th consecutive quarter of growth in the European Union membership candidate. The global credit crunch and a lawsuit to outlaw the ruling party, which has presided over the economic expansion, may constrain growth in the remainder of the year.

“It's a good figure but we don't think the rest of the year will be as strong as that,'' said Haluk Burumcekci, chief economist at Fortis Bank AS in Istanbul, who predicts 4.5 percent growth for the year. “As the year goes on, we will see the economy slowing as domestic demand falls.''

The agriculture sector expanded 5.6 percent, compared with a contraction of 6.9 percent in the first quarter of 2007 when low rainfall reduced the harvest in central Anatolia.

The benchmark ISE National 100 stock index gained as much as 0.6 percent after the figures were announced and was 0.97 percent lower at 35,483.0 at 11:30 a.m. in Istanbul. The lira strengthened to 1.2249 to the dollar from 1.2284 before the announcement.

European Demand

First-quarter exports jumped 44 percent from the same period of 2007 as European demand for Turkish-made goods such as cars and washing machines grew. Ford Otomotiv Sanayi AS, Ford Motor Co.'s Turkish joint venture that makes cars in western Turkey, said first-quarter profit more than doubled from a year earlier.

Industrial production expanded an average of 7.1 percent in the first quarter of the year and exports hit $11.4 billion in March, a record for a single month.

Domestic spending rose 7.1 percent. The central bank cut its benchmark overnight borrowing rate by a total of 2.25 percentage points to 15.25 percent between September and February before halting its reductions. It increased the rate by a total of 1 percentage point in May and June and may raise it again in July, the bank said on June 26.

`Political Uncertainty'

“Domestic demand was strong in the first quarter but the combination of tight monetary policy and political uncertainty will weigh on growth and pull it lower,'' said Inan Demir, economist at Finansbank AS in Istanbul. He expects 4.4 percent growth for 2008.

Official budget projections show Turkey is aiming for 5.5 percent growth this year, although a global credit squeeze is likely to curb the economy as Turkish banks often fund domestic lending by borrowing abroad. Gross domestic product, which was $659 billion in 2007, will probably increase 4 percent or 4.5 percent, Finance Minister Kemal Unakitan said on June 11.

A court case to outlaw the ruling Justice and Development Party may also lead to political instability, damping economic expansion by deterring investment. Consumer confidence has fallen to record lows since the case was launched in March.

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Two Sacramento-area couples and another local woman have been indicted on federal charges of conspiracy to commit bank fraud and other crimes tied to an alleged mortgage fraud scheme.

The eight-count indictment handed up Thursday alleged that the group "schemed to defraud mortgage lenders by submitting fraudulent loan applications in the names of straw buyers and other investors," according to a news release from the office of U.S. Attorney McGregor Scott.

Charged were Robert Martinson, 45 and his wife, Sheryl Hayden, 41, both of Newcastle; Kathleen Delapp, 44, of Auburn; and Melissa Villegas, 34, and her husband, Rick Villegas, 31, both of Sacramento. The investigation involved the FBI and U.S. Treasury Department, Internal Revenue Service and California Department of Real Estate.

According to prosecutors, Hayden, who was a licensed real estate salesperson, and Martinson operated a MAC Real Estate Services office at 7031 Watt Ave., North Highlands. The couple also allegedly owned and controlled a company called Sheryl's LLC, operated from the same address. Starting in 2003, the pair allegedly began buying "dozens of homes" throughout Greater Sacramento as investments and placed the titles in the name of Sheryl's LLC.

In 2005, the couple "wanted to unload properties from Sheryl's LLC as the housing market began to slow, so they recruited straw buyers and others to purchase the homes." Investigators say the Villegas, who both were loan processors, "helped (Martinson) create fraudulent loan applications to ensure that the deals would close" and helped pay a kickback to at least one of the fake buyers.

Delapp, a loan processor for MAC Real Estate and account executive for Aegis Mortgage, allegedly used her position to forge signatures and forwarded at least one loan application she knew was false "in order to assure the transactions were processed." She received commissions or other compensation from Aegis after placing most of the loans with the company, investigators said payday loan. Martinson and Hayden received loan proceeds from the home sales and the others received fees and other compensation, investigators said.

Among those defrauded by the criminal actions was IndyMac Bank, according to the U.S. Attorney's office.

Hayden was arrested Friday and Rick Villegas surrendered. Martinson and Melissa Villegas had been previously arrested and freed on bond. Investigators didn't say whether Delapp was in custody.

If convicted, each defendant could be sentenced to as much as 30 years in prison and fined up to $1 million.

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JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz) says it has tapped Bear Stearns’ former Asia CEO to run its sovereign wealth group, joining other Wall Street banks in seeking more business from state-run funds from the Middle East and Asia.

JPMorgan completed the fire-sale acquisition this month of Bear Stearns (BSC_pf.N: Quote, Profile, Research, Stock Buzz), following its stock plunge and collapse this year. Like the rest of Bear’s employees, the future of former Asia head John Moore was uncertain.

Sovereign wealth funds are the state-run investment vehicles that, through mainly soaring oil prices or trade surpluses, have amassed trillions of dollars and have increasingly invested it in companies across the world, from Wall Street to London.

Last August, New York-based Bear appointed Moore as its Hong Kong-based Asia CEO, as it tried to build its business overseas. Previously, he was co-head of fixed income for Europe.

Before Moore’s arrival, Bear was a small player in Asia payday advances. At the time, Bear said it was focused on catching up with bigger rivals such as Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) in markets outside the United States.

Moore joined Bear Stearns in 2001 as global head of agency capital markets in New York. He moved to London to manage fixed income sales and trading in 2004, and in 2006 became co-head of fixed income in Europe.

JPMorgan’s move to hire him as their sovereign wealth chief comes as other Wall Street firms seek to tap the funds’ growing business across the globe.

In April, Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) said its head of consumer, retail and media for Europe, Middle East and Africa, Makram Azar, would take on the newly created role of global head of sovereign wealth funds. Azar is based in Dubai. 

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Sales of U.S. previously owned houses probably rose in May from a record low as depressed prices lured some buyers into the market, economists said before a report today.

Resales rose 1.2 percent to a 4.95 million annual rate, according to the median forecast of 72 economists surveyed by Bloomberg News ahead of a report by the National Association of Realtors. April's sales pace of 4.89 million matched the lowest level since records began in 1999.

A drop in property values may have spurred demand in some of the most depressed areas, such as California and the Midwest. Even so, rising mortgage rates, a glut of unsold homes, and stricter borrowing rules indicate the real estate recession will persist for most of the year.

“We're not quite convinced we've reached a bottom yet,'' said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts.

The Realtors group is scheduled to release the report at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 4.75 million to 5.15 million.

Other reports today may show that firings eased last week and the economy grew in the first quarter at a faster pace than previously estimated.

Initial jobless claims fell to 375,000 last week, from 381,000 a week earlier, according to the Bloomberg survey median. While down, the level of applications still indicates the job market is soft.

Economic Growth

Gross domestic product rose at a 1 percent annual rate for the first three months of the year, compared with the 0.9 percent pace estimated last month, according to the survey median. Following the fourth quarter's 0.6 percent growth rate, the economic expansion for the six months ended in March was the weakest in five years.

Federal Reserve policy makers yesterday left the benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, and said growth risks had diminished while higher energy costs boosted the threat of inflation.

The “ongoing housing contraction,'' stricter lending rules and the jump in fuel costs were among the factors the central bankers predicted would hurt economic growth for at least the rest of the year.

Declines in residential construction have been a drag on growth since the first quarter of 2006 bad credit payday loans. In addition, demand for furniture and building materials has sagged and home prices and consumer confidence have fallen.

Prices Drop

The S&P/Case-Shiller index earlier this week showed prices in 20 U.S. metropolitan areas fell 15.3 percent in April from a year earlier, the steepest decline since records began in 2001.

Rising rates of defaults and foreclosures may bring more homes onto the market and put even more pressure on prices. Banks repossessed twice as many homes in May as they did a year ago and foreclosure filings rose 48 percent, according to RealtyTrac Inc., a real estate database in Irvine, California.

The California Association of Realtors yesterday said sales in that state rose 18 percent in May from the same month last year as median prices dropped 35 percent.

The increase was due to a high number of “distressed sales,'' the group said.

Recent reports suggest the housing slump will continue. The Mortgage Bankers Association's index of loan applications to purchase homes fell last week to the lowest level in more than five years.

The Commerce Department said yesterday that sales of new homes fell to a 512,000 pace last month, the second-lowest reading since 1991. At that pace, it would take 10.9 months to sell all the houses currently on the market.

Timelier Gauge

While sales of previously owned homes account for about 85 percent of the market, new home sales are considered to be a timelier indicator because they are based on contract signings. Resales are tabulated once a transaction is closed, which typically occurs a month or two later.

“It feels to us as though we're pretty much on the bottom, but that doesn't make you feel too good,'' Robert Toll, chief executive officer of Toll Brothers Inc., the largest U.S. luxury-home builder, said in a Bloomberg Television interview June 24. “We have noticed some good times coming back in some markets, but in other markets, there's no sign of recovery.''

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Federal Reserve Chairman Ben S. Bernanke, by voicing concern about inflation and the slumping dollar, has fanned investor expectations for an interest-rate increase as soon as August. He may regret it.

Raising rates may exacerbate the economic slowdown and roil banks whose losses sent their stocks down the most in a decade this month. Forgoing a rate boost next quarter risks damaging the Fed's credibility and deepening its divisions. Already this year, three officials have dissented on rate decisions.

While Bernanke's warning that the Fed will “strongly resist'' a jump in inflation expectations led traders to bet on a rate increase, economists are more skeptical. All 101 in a Bloomberg News survey said the Federal Open Market Committee will keep the benchmark rate unchanged tomorrow and most analysts this month predicted officials will stand pat until 2009.

“That's the dangerous game,'' said Scott Anderson, senior economist in Minneapolis at Wells Fargo & Co., the fourth-largest U.S. bank by market value. “Instead of putting the shot across the bow on inflation,'' Bernanke might have “held off a few more months to let the credit crisis heal a little bit more.''

The Fed chief shifted stance after soaring costs of energy and imported goods threatened to stoke consumer price expectations. Gasoline climbed 37 percent in the past year, according to AAA. Import prices excluding petroleum rose the most since 1988 in the 12 months to May, government figures show.

Bernanke's Message

Bernanke said at a Boston Fed conference June 9 the risk of a “substantial downturn'' in the economy had diminished and accelerating inflation “would be destabilizing for growth.'' The previous week, he said the falling dollar caused an “unwelcome'' increase in domestic prices and the Fed was “attentive'' to the problem.

There are widespread expectations among traders for a rate rise in the next three months: There are 36 percent odds of a boost in August and 93 percent in September, according to futures contracts on the Chicago Board of Trade. Economists in a monthly Bloomberg survey through June 11 projected the Fed will keep the rate at 2 percent this year, according to the median estimate.

The FOMC began gathering today in Washington at 2 p.m. and will release its statement tomorrow at around 2:15 p.m.

“Unless the inflation expectations and the numbers come down, they're going to have to raise rates,'' William Ford, a former Atlanta Fed chief who's now at Middle Tennessee State University in Murfreesboro, said in a Bloomberg Radio interview. “If he's saying we're going to fight inflation but he's all bark and no bite, division is what's going to happen.''

Rate Decisions

Dallas Fed President Richard Fisher, Philadelphia Fed chief Charles Plosser and William Poole, who retired from the St. Louis Fed in March, dissented on rate decisions this year faxless payday loans.

The FOMC usually has seven Fed board members and five district-bank heads. Two board positions are now vacant, and a third opens in August with Governor Frederic Mishkin's departure.

That means the presidents, who tend to dissent more than governors, may get a majority. The Senate has yet to confirm the Bush administration's board nominees, though Democratic Senator Christopher Dodd of Connecticut, who chairs the Senate Banking Committee, has said he may hold a vote on at least one of the picks.

Officials are increasingly sounding the alert that they're prepared to raise rates this year.

“If we don't take action and stay on top of the situation,'' inflation will probably accelerate, James Bullard, Poole's successor, said June 11. Bullard doesn't vote this year. The Fed must “act preemptively,'' Plosser said June 12.

Price Expectations

Consumers anticipate annual inflation of 3.4 percent in the coming five years, a 13-year high, a Reuters/University of Michigan survey showed this month. A measure of price expectations based on 10-year Treasury inflation-protected securities has also risen this year, to 2.46 percent.

A measure of prices tied to consumer spending has averaged annual gains of 3.3 percent so far this year, up from 2.5 percent in 2007. Excluding food and energy costs, the Commerce Department's index has averaged 2 percent increases this year, compared with a 1.8 percent average pace since 1998.

Bernanke has said the slowdown should alleviate price pressures. The economy expanded 0.9 percent in the first quarter, capping the weakest six-month performance in five years.

The downturn is weakening U.S. banks already struggling with the credit crisis and the worst housing slump in a quarter century.

The Standard & Poor's 500 Banks Index is down 20 percent in June, on course for the worst month since August 1988. More than 100 lenders have been forced to close, halt operations or sell themselves since the beginning of last year.

Quarterly Profit

Fifth Third Bancorp, Ohio's second-biggest bank, said June 18 most of its quarterly profit will evaporate after already posting nine consecutive declines.

A private survey released today showed that home prices in 20 U.S. metropolitan areas fell in April by 15.3 percent from a year earlier, the most on record for the S&P/Case-Shiller home- price index. Separately, consumer confidence dropped more than forecast to the lowest in more than 16 years, according to the Conference Board.

“The issue here is whether the Fed is willing to risk an escalation of inflation and then a bigger recession later, or acts earlier, taking a risk of a smaller recession, but preventing inflation from getting out of hand,'' Poole said in a Bloomberg Television interview.

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Money transfer services firm Western Union Co. said Friday it expects 2008 earnings to be at the higher end of its guidance range of $1.18 to $1.22 per share and raised its long-term earnings growth goal as well.

Excluding a charge of 7 cents per share tied to restructuring, Western Union forecast earnings on the higher side of its operating earnings estimate of $1.25 to $1.29 per share.

Analysts polled by Thomson Financial, on average, forecast earnings of $1.28 per share for the year. Analysts do not always include special charges in their estimates.

Western Union now expects restructuring charges to total $79 million for the year, instead of $69 million because of a decision to close its San Francisco facility.

Western Union also raised its long-term earnings per share growth estimate to a range of 15% to 18% cash advance now. The previous estimate was 12% to 14%.

"Our decision to raise the long-term EPS objective comes from our confidence that we are successfully executing on Western Union’s strategy that positions us extremely well in the huge and growing global money transfer marketplace," Christina Gold, Western Union’s chief executive, said in a statement.

Western Union (WU, Fortune 500) plans to improve profitability by accelerating growth in its consumer-to-consumer business, globalizing its consumer-to-business segment, developing new products and services and reducing costs. 

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General Motors Corp. says 18,657 of its hourly workers will leave the company by July 1, via buyouts and early retirement offers.

The company previously said about 19,000 would accept the offers. It released final numbers on Thursday.

The number includes 1,259 workers who retired before the offers were made but were told they could take the packages.

GM (GM, Fortune 500) expects to replace some of the workers at a new entry-level wage of about $14 per hour guaranteed cash advance loan. That’s about half the rate of current production workers.

The departures will help GM as it closes four pickup truck and sport utility vehicle plants.

The Detroit company announced earlier this month it would close the plants due to sagging sales of truck-based vehicles. 

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Former U.K. Chancellor of the Exchequer Nigel Lawson said Federal Reserve Chairman Ben S. Bernanke may be “regretting'' the fastest pace of U.S. interest-rate cuts since 1984 as global inflation accelerates.

The Fed reduced its benchmark rate by 3.25 percentage points to 2 percent between September and April 30 to stave off a recession following the collapse of the U.S. subprime-mortgage market. The Bank of England, also facing a slowdown, cut its key rate by 0.75 percentage point to 5 percent. The European Central Bank left rates unchanged at 4 percent for a year and signaled this month it may raise them in July.

“The Bank of England has been very cautious and careful and it has been much closer to the views of the European Central Bank,'' Lawson, 76, who was finance minister from 1983 to 1989 under former Prime Minister Margaret Thatcher, said in a telephone interview. “It has not gone conspicuously the way of the Fed, where I suspect that Mr. Bernanke's now regretting it.''

U.S. consumer prices rose 0.6 percent in May, the most since November, the Labor Department said June 13. Inflation in the euro area accelerated last month to a 3.7 percent annual rate, the fastest since June 1992, the European Union reported June 16.

Inflation caused by rising commodity prices is the biggest threat to the world economy, eclipsing concern about the seizure in the credit markets, finance ministers from the Group of Eight nations said June 14. The World Bank said on June 10 that global economic growth will probably slow to 2.7 percent this year from 3.7 percent in 2007.

Oil `Bubble'

Rising food prices and a “speculative bubble'' in oil markets will prompt central banks to lift rates, leading to a “growth recession'' where the rate of expansion is lower than historical trends, Lawson said in the interview.

Crude oil rose 95 percent from a year ago and traded at an all-time high of $139.89 a barrel in New York June 16 no fax payday loans. Corn for December delivery also traded at a record $7.915 in Chicago.

“Most of the central banks are very, very clear on just how dangerous it is to let inflationary expectations get out of hand,'' he said.

Traders see a 48 percent chance the Fed will raise its target rate for overnight bank loans from 2 percent as early as August, up from 4.1 percent odds a month ago, futures contracts on the Chicago Board of Trade show. The chances of an increase in October are 99 percent, the contracts show.

Michelle Smith, a Fed spokeswoman in Washington, declined to comment on Lawson's remarks.

`Shallow' Recession

The slowdown in the U.K. is going to last “longer than most people expect,'' while remaining “shallow,'' Lawson said. The economy, the second-largest in Europe, grew 0.4 percent in the first quarter, its weakest pace since 2005, as higher credit costs hurt construction and business services slowed, according to the Office for National Statistics.

“This is the hangover after the binge,'' Lawson said. “It's going to be very, very difficult for the next two to three years for the global economy.''

The U.K. won't adopt the euro in place of the pound as a global slowdown heightens tensions between members of the 27- nation European Union, Lawson said. Ireland vetoed the bloc's new government treaty June 13, sinking an agreement that needed ratification by all EU countries.

“There are going to be considerable strains within the euro area,'' Lawson said. “There are going to be a number of countries that found the single currency satisfactory during the benign period, that are now going to hurt much more under these difficult conditions.''

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Citigroup says it will restructure hedge fund Old Lane, integrating its investments into Citi’s Securities and Banking business.

The move will be completed during the first quarter. Citi Chief Executive Vikram Pandit was the co-founder of Old Lane, which was sold to the bank in 2007.

Citi (C, Fortune 500) says it will buy some Old Lane hedge fund assets at fair value, which will let Old Lane clients take their money out as of July 31 cheap payday loans. All former Old Lane partners, including Pandit, will keep their investments in the funds. 

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Starbucks Coffee Co. said Thursday that it has reached a licensing agreement with food and beverage concessions company SSP to open coffee retail stores in more than 150 airports and train stations in Europe.

Starbucks will give SSP licensing rights to its brand in markets that include France, Germany and Great Britain. Under the terms of the agreement, the stores are expected to open within the next three years.

Financial terms were not disclosed.

"This collaboration aligns with our strategy to accelerate growth in our international business," said Starbucks Chairman, President and Chief Executive Howard Schultz http://paydayintime.com. "It provides us with a strong platform to further expand the Starbucks (SBUX, Fortune 500) brand across Europe." 

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