Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry.

"The take here is that everyone and their mother want to be bailed out from the banks to the big three," said Owen Moogan, spokesman for Larry Flynt. "The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine."

Francis said in a statement that "the US government should actively support the adult industry's survival and growth, just as it feels the need to support any other industry cherished by the American people."

"We should be delivering [the request] by the end of today to our congressmen and [Secretary of the Treasury Henry] Paulson asking for this $5 billion dollar bailout," he told CNN Wednesday.

Flynt and Francis concede the industry itself is in no financial danger -- DVD sales have slipped over the past year, but Web traffic has continued to grow.

But the industry leaders said the issue is a nation in need. "People are too depressed to be sexually active," Flynt said in the statement. "This is very unhealthy as a nation. Americans can do without cars and such but they cannot do without sex."

"With all this economic misery and people losing all that money, sex is the farthest thing from their mind. It's time for congress to rejuvenate the sexual appetite of America. The only way they can do this is by supporting the adult industry and doing it quickly."

So far, there has been no congressional reaction to the request.

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Oil hovered below $43 on Thursday after tumbling 12 percent overnight, its largest percentage drop in seven years, as a U.S. government report showed crude stocks rose much more than expected in the world's top energy consumer.

The market will be eyeing weekly U.S. jobless claims due later in the day, and December non-farm payroll and unemployment data on Friday, which are likely to be dismal, for further clues on future demand.

U.S. crude for February delivery was up 14 cents at $42.77 a barrel by 0230 GMT, after sinking 12.3 percent to $42.63 overnight, the biggest single-day percentage loss since September 24, 2001.

London Brent crude was up 8 cents at $45.94.

"Oil prices are likely to remain choppy, and in the near term, the next potential trip-wire is U.S. non-farm payrolls data on Friday, which is likely to add to concerns over the U.S. economic outlook," said David Moore, a commodity strategist with the Commonwealth Bank of Australia.

Overnight data from the U.S. Energy Information Administration (EIA) showed that crude stocks swelled by 6.7 million barrels, more than seven times the 900,000-barrel increase analysts had expected.

Adding to the gloomy outlook, a bearish reading on private sector payrolls from ADP Employer Services on Wednesday signaled more weakness in the more comprehensive employment data report from the U.S. Labor Department due on Friday.

The ADP data showed that private employers shed 693,000 jobs in December, up from 476,000 jobs in the prior month and far more than economists estimated.

The Labor Department will also release weekly first-time claims for jobless benefits later on Thursday. Economists in a Reuters survey forecast a total of 540,000 new filings compared with 492,000 in the prior week.

"By and large, (Wednesday's) data reinforced our opinion that the weak global oil demand argument is still very much alive and well and capable of forcing crude values back to the low- to mid-$30 region," Jim Ritterbusch, president of Ritterbusch & Associates, wrote in a commentary.

Oil has fallen more than $100 from a record peak of over $147 a barrel in July, as the global economic downturn hits demand for fuel. It settled at $33.87 a barrel on December 19, the lowest level since February 10, 2004.

Mounting evidence of OPEC's compliance with production cuts and widening supply disruptions from a natural gas row between Russia and Ukraine could provide some price support, analysts said. Signs of OPEC members implementing the group's biggest-ever output cuts grew this week after Kuwait and Iran told customers of bigger supply curbs this month in a bid to prop up prices.

Russia shut down all gas flows to Europe through Ukraine on Wednesday and told Kiev it would restore supplies only after the latter had agreed to pay full market prices.

The dispute has cut heating to tens of thousands of households in Bulgaria and hit supplies as far west as France and Germany as Europe faced freezing mid-winter temperatures.

The bleak economic data overshadowed the intensifying Gaza conflict, which had underpinned oil prices earlier in the week.

Israeli aircraft and tanks pounded the Gaza Strip on Wednesday and troops battled Palestinian guerrillas on the ground as U.S. backing for a proposed truce raised expectations of an end to the 12-day-old offensive.

While the conflict does not directly threaten any oil supplies, Middle East unrest can bolster prices because countries in the region pump about a third of the world's oil.

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A fresh wave of profit warnings and job cuts soured investor sentiment on Thursday after an employment report suggested U.S. job losses in December could be the worst in almost 60 years.

Slumping demand for everything from air travel to clothing and personal computers has prompted a string of grim company reports in the past 24 hours on their outlooks, including from microchip maker Intel Corp, PC firm Lenovo, and retailer Marks & Spencer.

Asian stocks fell for the first time in nine sessions, even as governments and central banks pledged further action to try to limit the damage from a global crisis unlike any seen since the Great Depression of the 1930s.

"Everyone's been saying the market has factored in bad economic data and poor results, but now we're seeing that this wasn't really true," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities in Tokyo.

"From here on we may see the real recession, and in that sense, the rise in global stock markets around the end and start of the year may actually have been based on errors of judgment."

Economic data remained unrelentingly bleak.

U.S. private employers shed close to 700,000 jobs in December, far more than economists had estimated; a report by ADP Employer Services said on Wednesday, suggesting a more comprehensive government report on Friday will be dismal as well.

"This is shockingly awful," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

"If the recent relationship between the ADP numbers -- after their recent revisions -- and the official payroll data holds, then we should expect a number of about minus-700,000 on Friday, the biggest drop in 59 years."

Before the ADP report, the median of forecasts in a Reuter's poll on the government's report was for a loss of 500,000 jobs in December.

Workers are being laid off elsewhere too. German unemployment rose in December for the first time since February 2006, data on Wednesday showed.

Governments and central banks around the world have promised trillions of dollars in stimulus spending, slashed interest rates and bailed out companies to try and prevent more bankruptcies and contain spiraling job losses.

The Bank of England is expected to cut rates by at least 50 basis points to 1.5 percent on Thursday, the lowest in the central bank's history of more than 300 years.

The Bank of Japan has already cut rates to a rock-bottom 0.1 percent and Governor Masaaki Shirakawa said on Thursday the central bank could do more to stabilise financial markets.

Governments are expected to rack up steep budget deficits to fund spending plans.

The U.S. budget deficit will swell to a record $1.186 trillion in fiscal 2009, congressional forecasters said on Wednesday, as tax receipts shrink and the government bails out banks and automakers.

Such a deficit would be around 8-9 percent of gross domestic product based on annual economic output of close to $14 trillion.

Japan's deficit is expected to grow to about 15 trillion yen ($162 billion), or more than 2 percent of GDP, in the year to March 2012, the Nikkei business daily reported.

In South Korea, President Lee Myung-bak ordered officials to take preemptive measures to counter what he called a state of national economic emergency.

He had warned last month that Asia's fourth-biggest economy would shrink in the first half of this year for the first time in a decade.

In a sign that some of the extreme risk aversion of late 2008 had waned, governments from emerging economies including the Philippines, Turkey, Brazil and Columbia raised a total of $4.5 billion from international debt markets in the first trading week of the new year.

Just $2 billion was raised by emerging market sovereigns in the preceding four months as the collapse of Lehman Brothers sent global capital markets into a tailspin.

"The strong interest we received from domestic and global investors was key to the completion of the deal," Philippine Finance Secretary Margarito Teves said in a statement on Thursday after the sale of a $1.5 billion, 10-year bond.

STOCKS, OIL WEAK

Still, fresh concerns about profits and crumbling demand rattled equity and commodity markets.
Industrial metals prices dropped and oil slipped below $43 a barrel, extending a massive 12 percent fall the previous session as U.S. crude stocks rose on the back of weak demand.

China's Lenovo, the world's fourth biggest PC maker, which bought IBM's PC business in 2005, said on Thursday it was likely to post a significant loss in the December quarter and was cutting 2,500 jobs to reduce costs.

Macquarie Group, Australia's top investment bank, warned it faced extremely tough market conditions in the December quarter that would hit its profits.

On Wednesday, microchip giant Intel said again that slack demand for computers would hurt revenues, its second warning since November, sending its shares lower.

UK retailer Marks & Spencer announced it was cutting jobs and shutting stores as sales slid, while US Airways said it would post a loss for 2008.

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New York Times reported that, after a roller coaster 2008 of record highs to devastating lows, US domestic steelmakers are now turning to government for orders that, until the September collapse, had come from manufacturers and builders.

As per report, the ailing United States steel industry is pressing President elect Mr Barack Obama for a public works plan that could be worth up upwards of USD 800 billion over 2 years to boost flagging demand for US made steel. The industry is one of many others in the nation looking for a piece of the stimulus plan pie.

New York Times quoted Ms Nancy Gravatt spokeswoman of American Iron & Steel Institute as saying that "We are sharing with the president-elect's transition team our thoughts in terms of the industry's policy priorities."

Mr Daniel DiMicco CEO of Nucor said that he will use his position as a member of the US Department of Commerce's manufacturing council to push for the use of domestically produced steel. He added that the domestic steel industry wants the new administration to address the worst economic slowdown in our lifetime through a recovery program that has in every provision a buy America clause.

In the second half of 2008, US steel output declined after a notably strong first half. Since September 2008, capacity utilization rates have declined to about 50% at some plants while widespread layoffs have been announced at a number of companies. Before tumbling with the rest of the economy last year, US steel prices had reached all time highs that resulted in some significant corporate revenues.

The Metals Service Center Institute reported another month of declining shipment volumes in the US during November, saying that turmoil unleashed by the housing and financial crisis for depressing North American economic activity. Steel service centers were especially hard hit. US service centers' steel shipments declined 32.7% from the November 2007 shipment total, to about 2.71 million tons. For the first 11 months of 2008, US service centers shipped 44.4 million tons of steel products. The MSCI noted that the last time YoY steel shipments fell so markedly was during the 1980-82 recession.

According to preliminary data from the US Department of Commerce's Census Bureau, imports, which account for about 30% of all steel sales in the US, are also hurting as customers disappear. Total imports of steel products in November fell by 28.1% MoM versus the October import total, and finished steel imports fell by 17.3%. For the first 11 months of 2008, total imports of steel amounted to 29,694,045 tons, a decline of 4.9% versus January to November 2007 period.

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U.S. Negotiating More Aid for Bank of America

The U.S. government is close to committing billions in additional aid to Bank of America Corp. as the nation's largest bank by assets tries to digest its Jan. 1 acquisition of Merrill Lynch & Co., according to people familiar with the situation.

The discussion began in mid-December when Bank of America, already the recipient of $25 billion in federal rescue funds, told the U.S. Treasury Department it was unlikely to complete its purchase of the ailing Wall Street securities firm because of Merrill's larger-than-expected losses in the fourth quarter, according to a person familiar with the talks.

Treasury, concerned the deal's failure could affect the stability of U.S. financial markets, agreed to work with the Charlotte, N.C. lender on the "formulation of a plan" that includes new government capital. The terms are still being finalized, this person said, and details are expected to be announced with Bank of America's fourth-quarter earnings, due out Jan. 20.

Any possible arrangement might protect Bank of America from losses on Merrill's bad assets. There would be a cap on the amount of losses the bank would have to absorb with the federal government being on the hook for the remainder, according to one person familiar with the matter.

The possible deal is further evidence of the banking system's delicate condition and its hunger for more capital, despite billions of dollars already invested in financial institutions by the federal government. Thus far, Bank of America has received $25 billion in federal rescue aid.

U.S. futures up as $400 bln bank losses protected

CEOs of JPM, C, and BAC listen to what they had to say in yesterday's commentary!

RBS Sees Massive Losses, Shares Crash

Last year "June 18, 2008---> RBS Predicts Global Market Crash: What's In It for Them?"

Now we know what's in it for them!

LONDON (AFP) -- Royal Bank of Scotland said Monday it expected an annual loss of up to 28 billion pounds -- a record in British corporate history -- due to the credit crisis and its part-takeover of ABN Amro.

The news sent shares in the state-controlled bank crashing by more than 71 percent to just 10 pence (11 euro cents) on London's FTSE 100 index, which was down 1.45 percent overall in late afternoon trade. Other banks were also down sharply.

In reaction, British Prime Minister Gordon Brown, who unveiled a second banking-sector rescue package worth tens of billions of pounds earlier Monday, slammed RBS for making investment decisions that were "clearly wrong."

"Now we know that so much was lost in (higher-risk) subprime loans in the US and now we know that some of that was related to the purchase of ABN Amro, I think people have a right to be angry that these write-offs are happening and that these write-offs were caused by decisions that were made about international investments that were clearly wrong investments," Brown said.

Even at the low-end of its estimated losses -- 22 billion pounds (24 billion euros, 32 billion dollars) -- Royal Bank of Scotland was on course to post the biggest loss in British corporate history.

That record is currently held by telephone giant Vodafone, which recorded a loss of 15 billion pounds in 2005-2006 after being forced to revalue assets.

"Credit and market conditions in the fourth quarter of 2008 were particularly challenging and RBS estimates the group will report for full year 2008 an attributable loss, before exceptional goodwill impairments, of between 7.0 and 8.0 billion pounds," RBS -- now majority-owned by the taxpayer -- said in a trading update on Monday.

"The group is currently reviewing the carrying value of goodwill and other purchased intangibles on its balance sheet as part of the finalisation of the year end results. Preliminary findings indicate an estimated impairment charge in the region of approximately 15 to 20 billion pounds," it said.

The additional losses are largely linked to the value of RBS assets secured after a consortium of which it was a part took over Dutch banking group ABN Amro in 2007.

The government separately said it would convert its preference shares in RBS obtained during October's bailout and worth five billion pounds into normal shares.

This would mean the bank would no longer have to pay a fixed dividend to the government, thus freeing up cash to lend. In return, the taxpayer's stake in RBS would increase to almost 70 percent from 58 percent.

"The dislocation of credit markets and the global economic downturn continue to hit RBS hard, as with many other banks," the bank's chief executive Stephen Hester added.

"We are making progress in recognising excess risk and dealing with it. Significant uncertainties and risks inevitably remain. In this context, the support we are receiving from government benefits all our stakeholders and enables us to provide more customer support in return."

The bank said that its retail and commercial banking businesses in Britain remained profitable, with the losses coming in its global banking and markets division.

In a bid to raise cash, Royal Bank of Scotland last week sold its stake in Bank of China for 1.6 billion pounds.

RBS, alongside HBOS and Lloyds TSB, which have merged, has been a leading beneficiary of the government's banking sector bailout, announced last October, after the global credit crunch savaged markets and economies worldwide.

The bank has faced criticism over its leading role in the takeover of ABN Amro for 71 billion euros (100 billion dollars). The consortium's bid was sealed shortly before the credit crunch slammed into global markets.

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The Crash Warning

The founder of Apollo Group and his son sold $71 million in stock.

THE FOUNDER AND CHAIRMAN of Apollo Group (ticker: APOL), which runs the for-profit University of Phoenix, has been selling large blocks of shares in the past two weeks as the company's shares soared.

Chairman John Sperling and his son Peter have sold $71 million in Apollo stock from Jan. 15 to 22. The father and son have also relinquished another $89 million in shares this month under a prior agreement. Over that time period John Sperling has sold 500,000 shares for $44 million in January, at an average per-share price of $88.05. Peter Sperling sold 301,179 shares for $27 million, at an average price of $88.72 per share.

The Sperlings have sold large blocks of shares in the past -- John Sperling even sold more than $50 million in shares in January 2008. But the recent sales, along with a trend of insiders exercising large blocks of shares and selling them, constitutes what InsiderScore.com calls an "aggressive selling trend" at the company. John Sperling continues to own about 19 million class A shares, accounting for about 12% of the outstanding shares. Peter Sperling, who is also a vice chairman, now owns about 9 million class A shares, or about 5.5% of the shares.

The Sperlings control the voting power in the company through their ownership of all of the class B shares, which do not trade publicly. Class A shareholders cannot vote.

Their timing, looking at the stock's short-term performance, was excellent. Since peaking at $90 during intraday trading last Thursday, shares have fallen, hitting $82.46 at the end of the day Monday.

Apollo didn't return a phone call seeking comment.

Notwithstanding the recent dip, Apollo, like other for-profit education companies, has soared. Shares have risen 56% in the past three months.

Even as investors flee blue-chip companies in virtually every other sector, they have flocked to for-profit education companies, some of which have been reporting higher enrollment. University of Phoenix, which accounts for the vast majority of Apollo's profits, reported on Jan. 9 that it saw enrollment grow 18% year-over-year in the fiscal first quarter of 2009.

Apollo, which reported declining margins in the past few years as students shifted into its lower-cost associate's degree programs, has since expanded those margins by raising its tuition. The federal government, in addition, has made subsidized Stafford loans more available to students, and rates on those loans are expected to decline to 3.4% by 2011 from their current rate of 6.1%, wrote GARP Research and Securities analyst George Sakellaris, who rates the stock at Buy.

Some analysts also expect rising unemployment to help the company as laid-off workers go back to school. The company's marketing looks to capitalize on that trend: "If you are in an industry hit hard by the economy, now is the time to consider a curriculum in a growing and more stable area such as education or nursing," University of Phoenix president William J. Pepicello wrote in a letter posted on the school's Web site. The University of Phoenix, which offers classes online, caters particularly to older students who may be looking for more training or a new degree.

But could the sales by the Sperlings indicate that investors have been a bit too bullish, pushing price-to-earnings multiples past reasonable levels? Barron's associate editor Michael Santoli recently wrote that "maybe a dose of skepticism is warranted for this over-liked sector." (See Streetwise, Jan. 26, 2009)