Clive Peeters to shut down six stores, George Soros warns on Act II of GFC: Economy Roundup

The receivers of collapsed whitegoods retailer Clive Peeters will shut down six stores, with the loss of 75 jobs, as the business is prepared for sale.

Phil Carter from PPB said in a statement the stores in Townsville, Ipswich, Mildura, Warrnambool, Bunbury and Canning Value will close at the end of trade on June 15.

“The receivers, with the assistance of key management, conducted a review of individual store performance and identified these stores as unsustainable,” he said.

“It is disappointing that these closures will result in job losses up to 75 out of a total of 1,200 staff, but we have minimised the impact of this by redeploying employees into other stores as far as possible.”

Carter also said the receivers have now confirmed supply arrangements, and that up to June 30 all remaining gift certificates will be honoured at face value.

“While we have no legal obligation to do so, we have agreed to honour gift certificates as a thank you to our loyal customers.”

“We have experienced strong interest in the sale process and have requested submissions of non-binding offers by next Friday, June 18. We then propose to deal with shortlisted parties only.”

Meanwhile, billionaire investor George Soros believes we are now entering the second act of the global financial crisis, with debt pressures in Europe possibly serving as a catalyst for a second recession.

”The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said at a Vienna conference. ”Indeed, we have just entered Act II of the drama.”

Soros said the situation is “eerily” similar to the market in the 1930s, when governments were put under extreme pressure to cut down deficits.

”When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken centre stage, but the effects are liable to be felt worldwide.”

Additionally, Soros said credit default swaps, used by investment banks during the onset of the global financial crisis, were a “license to kill” and should only be allowed under certain circumstances.

In the mining industry, BHP Billiton chairman Jac Nasser has said a petroleum tax would not solve any of the problems of the Government’s proposed resources super profits tax.

“As I write, there is speculation that the (Petroleum Resource Rent Tax) is a solution. It isn’t,” he told shareholders in a letter.

“For reasons we do not understand the government chose not to undertake consultation on the nature and design of the proposed super tax prior to its announcement.”

Shares higher after Wall Street lead

The Australian sharemarket has opened higher today after good results on Wall Street, where shares rose by over 2% due to positive results from Europe and promising job data.

The benchmark S&P/ASX200 index was up 55 points or 1.26% to 4491 at 12.00 AEST, while the Australian dollar also increased by over 1% to US85c.

Commonwealth Bank shares rose 1.5% to $52.13, while NAB shares gained 0.7% to $24.56. Westpac rose 2% to $23.09 as ANZ also gained 0.9% to $22.83.

Goodman Group has constructed two new investment vehicles with CB Richard Ellis Realty Trust, focusing on Britain and the remainder of Europe. The company said these funds would invest in “pre-committed logistics development opportunities”.

“This announcement further highlights the momentum that has been building across our business and demonstrates the group’s ability to capitalise on growth opportunities while maintaining our strong balance sheet position,” chief executive Greg Goodman said in a statement.

Also in the mining industry, the Federal Government has said it has nothing to fear regarding a High Court challenge to its profit tax, but Western Australia attorney-general Christian Porter believes otherwise.

“I have no doubt, should this destructive tax reach the stage of legislation, that, to prevent the economic vandalism that would occur, major constitutional litigation would result,” he told ABC Radio. “Western Australia is already planning for its role in that challenge should it come to that.”

Commonwealth not budging on Storm resolution scheme

As reported by the Australian Financial Review, Commonwealth Bank has told Storm Financial investors it will not negotiate any changes to the resolution scheme already set up after the company’s collapse.

The bank has reportedly written to several law firms saying it won’t discuss “any variation to the proposal framework”.

Overseas, US president Barack Obama may meet with BP officials after the head of the Government’s cleanup effort requested such a meeting.

“Our administration is not going to rest or be satisfied until the leak is stopped at the source, the oil in the Gulf is contained and cleaned up, and the people of the Gulf are able to go back to their lives,” Coast Guard admiral Thad Allen wrote in a letter to Carl-Henric Svanberg, chairman of BP.

On Wall Street, investors were pleased with new figures from the Labor Department showing initial claims for state unemployment benefits dropped 3,000 to 456,000 last week. The Dow Jones Industrial Average recorded its best day in nine, gaining 273.28 points or 2.76% to 10,172.23.