The Irish Independent reports that the Financial Regulator has extended Anglo Irish Bank's waiver from strict capital rules until the end of next April, by which time the size of the group's expected full-year losses will be known.
Anglo was granted an initial derogation by the watchdog in May as it prepared to unveil a €4.1bn pre-tax loss for the six months to the end of March.
The Government has since pumped €4bn into the embattled lender to shore up its capital base.
Anglo was also able to raise a much-needed €1.7bn over the summer by buying back the bulk of its risky -- or subordinated -- bonds at a steep discount in the market.
The initial waiver allowed Anglo to lower the minimum amount of total capital held to 8pc of risk-weighted assets, down from the regulatory threshold set for it at 9.5pc.
It was originally due to run out in July, but was subsequently extended to December 31.
However, it has now been pushed back to April 30, 2010.
"The current derogation may be due to capital being further eroded by loan losses, while it is also likely that it is in advance of the commencement of the transfer of loans from Anglo to the National Asset Management Agency," Anna Lalor, banking analyst with Goodbody Stockbrokers said.
The Government estimates that banks will have to take an average discount of 30pc on €77bn worth of loans going to the "bad bank".
However, analysts expect that Anglo, which is transferring €28bn to NAMA, making it the biggest participant in the scheme, will have to suffer a higher-than-average writedown. The waiver should allow the bank to start sending loans into NAMA by the end of this year without triggering an immediate call for further state capital.
The Irish Independent also reports that stretched owners of overseas properties are walking away from their investments because they cannot afford to meet repayments, a foreign investment expert has revealed.
Many of these people re-mortgaged their homes in Ireland to put down deposits on properties abroad.
Now that the apartments are nearing completion and they are being asked to pay the full amount, they are unable to raise the funds.
Foreign property lawyer Tom McGrath said his firm was now inundated with queries from people in financial trouble.
Irish people who bought in Bulgaria in the past few years were suffering the most. He said a huge number of builders there were in financial difficulty and they were not refunding deposits to Irish investors.
"We are aware of hundreds of people, but it probably runs to thousands of people, who are just walking away from a foreign property because they cannot afford to pay for it."
The Dublin-based lawyer said that most of the problems stemmed from the fact that the Irish-based sellers of foreign properties were unregulated.
Former seller of overseas property John Mulligan said thousands of investors were sucked into buying overseas properties on the promise of getting guaranteed rents for two years. But this tends to be a scam as the guarantee is built into the price you pay. The builder would up the price and pay it back to you over two to three years and call it a rental guarantee, he said.
Unscrupulous
Mr Mulligan, who has written a book entitled 'No Place In The Sun' about unscrupulous villa sellers in Bulgaria, said buyers typically remortgaged their home to fund an overseas buy.
He estimates that between 50,000 and 100,000 Irish people bought properties in Bulgaria between 2000 and 2008. Mr Mulligan said people had typically paid €120,000 for apartments that were worth €40,000.
"They thought the rents would pay the mortgage for the first few years, but there were no rents. And now these people are in financial difficulties."
Other foreign climes where Irish investors got burned include Dubai, Turkey, Portugal and Spain.
The Irish Times reports that the Government has signalled its willingness to explore a three- to five-year restructuring of the public service involving reducing numbers, new reforms and productivity measures as an alternative to pay cuts.
It indicated, however, that “bridging mechanisms” would be needed next year to cover the gap before the savings would take effect.
The possibility of such a two-stage alternative to pay cuts emerged at talks yesterday between Department of Finance officials and trade unions on the Government’s plans to cut the public sector pay bill by €1.3 billion next year.
Unions are seeking an alternative to cuts in pay for the 300,000-plus staff on the State payroll.
At a press conference last night organised by the new 24/7 Alliance representing frontline public service staff, David Hughes, of the Irish Nurses Organisation, said that as part of possible scenarios department officials had spoken of a three- to five-year plan looking at restructuring and savings. He said that the officials had said that even with such a plan they would have to address the year 2010 and that there would have to be bridging mechanisms over and above anything else.
He said Department of Finance officials had suggested that some of these bridging mechanisms could be “permanent in nature while others might lapse”.
Mr Hughes said the department officials had been very general in their comments but had indicated that as part of any restructuring, cuts in numbers would not be enough and productivities would be needed too.
“They did not specifically state any numbers or how it would be done. It was much more general than that. [There were] comments about the restructuring and reshaping of the Civil Service and [they] referred to things like a more integrated public service, greater mobility and a reduction in numbers and productivity.”
Some informed sources suggested last night that if the Government was to secure the €1.3 billion savings through job reductions alone, the payroll would have to be reduced by up to 30,000 people. A Government spokesman said that officials had held a general discussion with unions about the public sector but that no figures had been given.
The possibilities of public service restructuring over a three- to five-year period involving reductions in employment levels and productivity reforms are quite similar to the proposals put forward by the general secretary of Impact, Peter McLoone, as an alternative to pay cuts.
The Irish Times revealed yesterday that Mr McLoone had said in a confidential internal memo that any alternative to pay cuts was likely to involve a significant reduction in public service numbers over the next three to four years with the likelihood that some exceptional measures would be needed in 2010 to deal with the budgetary crisis next year.
Sources have suggested that these exceptional measures could involve cuts in non-core pay such as overtime. Chairman of the 24/7 Alliance, Des Kavanagh, said last night that if this were to happen “then we would be into a very serious situation”.
The Irish Times also reports the public finances deteriorated further in October, but only slightly, according to the latest exchequer returns data from the Department of Finance.
The Government has collected tax revenues of €26 billion for the first 10 months of the year, more than €1 billion or 4 per cent lower than targets set in April.
Tax revenues are now 17.1 per cent lower for the January-October period than they were in the same period in 2008. This compares with a 16.8 per cent decline in the year to the end of September. Poor receipts from income tax were the main reason behind the deterioration.
The department’s figures show that income tax receipts slipped further behind its projections in October and are now €625 million or 6.4 per cent lower than its target for this category of tax.
“The further deterioration in tax revenue in the past month in the main reflects the fact that the returns from the self-employed were a lot lower than expected,” said Alan McQuaid, economist at stockbroking firm Bloxham.
The latest exchequer figures “continue to paint a fairly bleak picture” of the public finances, he added.
Employers’ group Ibec said the October data was “disappointing” and were a reminder of the need for urgent measures to cut public expenditure.
Spending by the Government is 1.4 per cent below its targets and 1.6 per cent below spending in the same period last year.
Day-to-day Government spending is still up 0.8 per cent on last year, due to a 15 per cent year-on-year rise in expenditure at the Department of Social and Family Affairs.
However spending by this department, which is the result of the spike in unemployment, is no longer running ahead of projections. This reflects better-than-expected unemployment data in recent months, with the number of new claimants of jobseeker’s benefit beginning to stabilise.
Overall, the exchequer deficit has reached €22.7 billion – more than double the deficit that existed at this time last year.
Labour Party finance spokeswoman Joan Burton said it would be “a monumental blunder” for Minister for Finance Brian Lenihan to continue with a budget strategy that she said had led to the “financial paralysis” evident in the exchequer returns. The economy needs “some element of stimulus”, Ms Burton said.
However, Ibec economist Fergal O’Brien called on the Government to introduce measures to control public spending.
November is a key month for receipts from income tax, VAT and corporation tax. The Government expects that further weakness in tax during the month will double the shortfall from the existing €1 billion to more than €2 billion.
The Government said last month that tax receipts for 2009 as a whole would be closer to €32 billion rather than the €34.4 billion it announced in April.
Among other categories of tax, VAT remains one of the worst performers, with returns €611 million or 6.4 per cent behind projections and down 10 per cent compared to last year. However, October is not a big month for VAT returns.
The Irish Examiner reports that the main Irish banking stocks suffered another day of double-digit percentage falls yesterday on the back of widening fears that the EU will step up its pressure on banks to make further asset-stripping sacrifices to meet its state aid rules.
In Britain, Lloyds Banking Group and Royal Bank of Scotland (which owns Ulster Bank here) is being forced to sell off branches and/or subsidiaries by Brussels.
AIB dropped 23c, or 13.73%, yesterday to close at €1.44 and Bank of Ireland was down by 12.19%, or 20c, at €1.40 — both banks have shed 50% of their share value inside the past week — while Irish Life & Permanent (IL&P) fell by 17.37%, or 91c, to €4.33.
The ISEQ fell by 2.14% to 2,811.73 points to continue its negative follow on from a very poor October — which proved to be its worst performance for 11 months.
"Steep falls were experienced across all sectors, with financials losing 38.8% and industrials 8.9%. Small caps outperformed, with a loss of 3.3%, while the top 10 fell by 16.1%.
"The index closed the month below the important 3,000 mark, having spent only 38 consecutive days above it. It was the poorest performing month since November 2008," Davy Stockbrokers said in its latest monthly market monitor, yesterday.
Back to yesterday and apart from some rare climbers (C&C up 10c at €2.55; Ryanair back up by 1.24%/4c at €2.93; Elan up 8c at €3.78 and Kerry Group up 15c at €20.40), there was a pan-sector slump. Bakery specialist Aryzta fell by 70c to €25.50. Building materials firms CRH and Kingspan down by 22c at €16.94 and 11c at €5.40, respectively.
But it was moves in the banking sector which affected European markets in the main. London’s FTSE was predictably down — on the back of the Lloyds and RBS news — by 1.3% at 5,037 points. RBS’s stock fell by 7% to 35p. There was also a 1.5% fall on the CAC in Paris and a 1.9% fall in Frankfurt.
Doubts over how quickly the global recession will end dragged down the main US markets in early trading — both the Dow Jones and the Nasdaq down by 0.6%.
The Financial Times reports that markets are suddenly nervous. After a period of extraordinary gains for equities, commodities and corporate bonds – an eight-month rally that began in March– risk aversion is back.
The mood of uncertainty first emerged in the second half of October, but if anything has deepened in the opening days of this month. That is not surprising. Central banks in the US, the UK and the eurozone are holding policy meetings this week and the US October jobs report, due on Friday, will give investors a key update on what appears to be a jobless recovery.
In the US, much attention is focused on whether the Federal Reserve’s Open Market Committee will alter the wording of its policy statement, for the first time since March, when its two-day meeting concludes on Wednesday.
European stocks on Tuesday hit their lowest levels in more than a month, while London’s FTSE 100 briefly fell below 5,000 for the first time since early October. Japan’s Nikkei 225 Average currently sits below 10,000, lower than it was in mid-June. Overall, developed-market equities have eased at least 5 per cent in recent weeks, while emerging markets have corrected about 9 per cent.
After rising more than 60 per cent from its March low by mid-October, the S&P 500 has subsequently lost 5 per cent and is back to levels seen a month ago.
“This is a risk trade that has gone a long way and people who have definitely made money on the trade are paring back as we approach the end of the year,” says Alan Ruskin, strategist at RBS Securities.
Renewed concerns about the banking system have added to the general nervousness. On Tuesday, Lloyds Banking Group and Royal Bank of Scotland announced that they were raising £54.5bn in moves agreed with the UK government and the European Commission. On the same day, UBS, Switzerland’s largest bank, reported a larger-than-expected loss for the third quarter. At the weekend, CIT Group, the US commercial lender, filed for bankruptcy.
On Tuesday in New York, financials were weighing down the S&P 500, but the rally in this sector since mid-March has been massive, and due for a correction, say analysts. By mid-October, the S&P financials index had rallied 160 per cent, and by Tuesday had corrected 10 per cent.
The degree of apprehension among investors is clearly illustrated by the Vix, which is an index of equity options on the S&P and often dubbed Wall Street’s fear gauge.
After flirting with a benign level of 20, just seven trading sessions ago, Vix is now back above 30 and once more flashing a fear signal that stocks could fall a lot more.
This suggests that soothing words from central bankers, and stronger-than-expected economic data in the coming days may not spare the risk trade from a further correction.
A tendency by investors to book profits means that markets are not only being hit by bad news such as worries in the banking sector. There is also an element of selling risky assets when stronger data unexpectedly arrives. This week, better manufacturing data in the US provided a brief boost to risk assets, as the ensuing rise in prices tempted investors to sell. The same thing happened last week when the US announced better-than-expected third-quarter GDP data.
“When markets are correcting, they are vulnerable to bad news and it’s hard for good news to spur the rally, and that is what we are seeing,” says Mr Ruskin. Just how entrenched this mood is among investors should be apparent when the FOMC concludes its meeting on Wednesday.
An old game has returned to global markets – guessing when central banks will signal monetary tightening via changes in their policy statements.
“Lurking below the surface are growing fears about the early withdrawal of monetary stimulus,” says Julian Jessop, chief international economist at Capital Economics.
While an actual rate hike may not be in prospect until the second half of 2010 at the earliest, bond traders suspect the Fed could update its view on monetary policy on Wednesday.
At its March meeting, the FOMC stated: “Economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The use of “extended period” has been repeated in subsequent statements. As the economy has shown signs of recovery, so a debate over whether the Fed statement should evolve has begun.
“The consensus is that there will be no change, but there is a possibility that they tweak the statement,” says Rick Klingman, managing director at BNP Paribas. “The problem with staying with the same language for a long time is that it becomes a bigger deal when you eventually change it.”
While the FOMC may elect to retain the current wording on Wednesday, the bond market is on guard for a change soon.
This month, Ben Bernanke, the Fed chairman, will speak at the Economic Club of New York, and then next month the FOMC will meet for the final time this year.
“It is not inconceivable that the FOMC might start to fiddle with the adjectives in its statement as soon as the December FOMC meeting, providing that Fed officials use their public appearances in the coming weeks to explain why a more neutral-sounding statement would not necessarily imply a near-term rate hike,” says Lou Crandall, economist at Wrightson Icap.
That could well foment further volatility in risk assets before the US Thanksgiving holiday this month.
“There’s a sense among investors that we need to clear the decks and get this year-end risk-trade correction out of the way, before buying the dip that emerges,” says Mr Ruskin.
The FT also reports that the European Commission on Tuesday raised its forecast for European economic growth next year, but said the recovery from recession would come at the price of record-high budget deficits and public debt.
In its six-monthly economic outlook, the Commission predicted that the 27-nation European Union would grow by 0.7 per cent next year and 1.6 per cent in 2011, after a slump of 4.1 per cent in gross domestic product this year.
The forecast for 2010 was significantly more positive than the Commission’s estimate in May of a 0.1 per cent fall in GDP. It reflected the impact of multibillion-euro government deficit-spending programmes, emergency support measures for the financial sector and interest rates cut to almost zero.
“The EU economy is coming out of recession,” Joaquín Almunia, the monetary affairs commissioner, said.
“This owes much to the ambitious measures taken by governments, central banks and the EU that have not only prevented a systemic meltdown but have kick-started the economy.”
However, government borrowing to combat the financial crisis and recession has been on such a large scale that none of the eurozone’s 16 countries will have a budget deficit below 3 per cent of GDP – the agreed ceiling in normal times – in either 2010 or 2011.
The eurozone’s aggregate budget deficit was projected at 6.4 per cent this year, 6.9 per cent next year and 6.5 per cent in 2011. By far the most seriously affected countries were Ireland, forecast to have a deficit of 14.7 per cent in both 2010 and 2011, and Greece, whose deficit was estimated at 12.2 per cent in 2010 and 12.8 per cent in 2011.
Greece has become the focus of fiscal concerns in the eurozone after its newly elected socialist government disclosed a huge hole in the public finances, which it blamed on its conservative predecessor’s policies and faulty gathering of statistics.
The Commission forecast that Greece’s public debt would soar to 124.9 per cent of GDP next year and 135.4 per cent in 2011 – far above anything seen in the euro’s 10-year life – from 112.6 per cent this year.
Under the EU’s rules, a country aspiring to join the eurozone is supposed to have a budget deficit of 3 per cent or less and public debt of 60 per cent or less, or figures that are at least descending towards those levels.
But the economic crisis has inflicted such havoc on Europe’s public finances that Commission officials said all the good work achieved by eurozone member-states since the euro’s launch in 1999 had in effect been wiped out.
Aggregate public debt in the eurozone is forecast to rise to 84 per cent of GDP next year and 88.2 per cent in 2011 from 78.2 per cent this year. The debt level stood at 66 per cent in 2007.
EU leaders agreed at a summit in Brussels last week that governments should concentrate on putting their public finances in order, but that the economic recovery was too fragile for the effort to start in earnest until 2011.
The New York Times reports that October was far and away the best month American retailers have had since consumers put the brakes on spending last autumn. Major categories had robust sales growth for the first time in more than a year, new figures show.
On Thursday, when individual chains report their October sales, the industry is expected to post its strongest sales figures yet in this recession. Contrary to predictions made only a few weeks ago, the nation’s stores could be poised for a merrier Christmas this year than last.
To be sure, the enthusiasm of industry professionals is tempered. A major reason the latest numbers look so good is that they are being compared with figures from October 2008, the first full month of a brutal nationwide spending freeze.
“Things are better than they were a year ago,” said Michael McNamara, vice president for research and analysis at SpendingPulse, an information service by MasterCard Advisors. “But we’re still below where we were two years ago.”
The latest sales figures come from his organization, which estimates sales for all forms of payment, including cash, checks and credit cards. They show, for example, that sales of women’s apparel increased 0.6 percent in October, the first positive figure since August 2008.
However, women’s apparel sales are still 12.2 percent lower than in the heyday of consumer spending, in October 2007. That theme — up compared with last year, but still down compared with the height of the boom — played out across several retailing categories, including jewelry and luxury goods.
Nonetheless, the signs of recovery were unmistakable in the sales numbers that MasterCard Advisors released late Tuesday.
One sign was that retailers were able to drive sales in October without offering the kinds of deep margin-eroding discounts they dangled last year. “That’s generally a positive,” Mr. McNamara said. “Even though the number of purchases may not be spiking, it could be an indication that inventory and demand are more lined up.”
Another positive sign is that retailers and analysts are beginning to see some stabilization in California, one of the places hit hard by the recession. Big chains like Mervyn’s and Gottschalks went belly up there. Recently, though, major retailers with a presence in California — Target, Costco, J.C. Penney and Kohl’s — have said to varying degrees that they were seeing improved sales and customer traffic.
Mr. McNamara said apparel sales on the West Coast increased 2.2 percent in October. “We are showing a positive comparison for the first time in the last year,” he said.
In a research report last week titled “Christmas in Southtown: California Dreamin’,” Bill Dreher, a senior research analyst with Deutsche Bank Securities, said companies like Costco and Nordstrom were “seeing solid results in California,” and underscored that Kohl’s has had sales growth for several months now. (Kohl’s has also gained significant market share in California, having snapped up 36 Mervyn’s stores on the cheap.)
“With this earnings acceleration going into Christmas,” Mr. Dreher said, “it looks like early predictions of flat-to-down Christmas sales will turn out to be stale.”
Many analysts, economists and the National Retail Federation are forecasting holiday sales to be the same or slightly worse than last year. But more bullish analysts, at Deutsche Bank and Citi for instance, think sales for the industry will rise 1 to 2 percent.
Over all for the industry in October, apparel sales increased 3.4 percent compared with the period a year ago, luxury goods rose 6.5 percent, jewelry increased 7.2 percent, and department store sales declined 1.5 percent, according to SpendingPulse.
E-commerce was the most robust sector, increasing 18.7 percent — the third consecutive month of double-digit growth — because of strong sales of small, low-price goods.
October is typically a clearance month, though some industry professionals consider it an early indicator of Christmas sales. It appears the month started off strongly. Analysts think stores benefited from cool weather, Columbus Day discounts, and last-minute back-to-school shopping. Halloween may have hurt sales slightly, though, because this year it fell on a Saturday, typically a shopping day, Mr. Dreher said.
Even so, analysts at Standard & Poor’s Equity Research said in a report on Monday that “consumers appear to be shopping again for apparel and some home fashions.”
Whether there will be enough merchandise to go around this Christmas remains to be seen. Mike Moriarty, a partner at A.T. Kearney, a management consultancy, said many retailers were intentionally low on inventory. “They’re going to have an unhappy but maybe a safe holiday,” he said.
The NYT also reports that Republicans swept contests for governor in New Jersey and Virginia on Tuesday as voters went to the polls filled with economic uncertainty, dealing President Obama a setback and building momentum for a Republican comeback attempt in next year’s midterm Congressional elections.
But in a closely watched Congressional race in upstate New York, a Democrat who received a late push from the White House triumphed over a conservative candidate who attracted national backers ranging from Rush Limbaugh to Sarah Palin, the former Alaska governor.
In New Jersey, a former federal prosecutor, Christopher J. Christie, became the first Republican to win statewide in 12 years by vowing to attack the state’s fiscal problems with the same aggressiveness he used to lock up corrupt politicians.
He overcame a huge Democratic voter advantage and a relentless barrage of negative commercials to defeat Jon S. Corzine, an unpopular incumbent who outspent him by more than two to one and drew heavily on political help from the White House, including three visits to the state from President Obama.
“We are in a crisis; the times are extraordinarily difficult, but I stand here tonight full of hope for the future,” said Mr. Christie, 47, who will become New Jersey’s 55th governor. “Tomorrow begins the task of fixing a broken state.”
Mr. Corzine, 62, who entered politics a decade ago after a career at Goldman Sachs, conceded at 10:55 p.m. “It has been quite a journey,” he said. “There’s a bright future ahead for New Jersey if we stay focused on people’s lives, and I’m telling you, I’m going to do that for the rest of my life.”
With 98 percent of precincts reporting, Mr. Christie had 49 percent of the vote, Mr. Corzine 44 percent.
In Virginia, where Mr. Obama was the first Democratic presidential nominee to carry the state since 1964, Robert F. McDonnell, a Republican and former state attorney general, rolled to victory over R. Creigh Deeds, a veteran state senator.
With 99 percent of precincts reporting, Mr. McDonnell had 59 percent and Mr. Deeds 41 percent. Mr. McDonnell’s victory, along with Republican victories in the races for attorney general and lieutenant governor, ended eight years of Democratic control in Richmond.
In New York’s 23rd Congressional District, Douglas L. Hoffman, a little known accountant running on the Conservative Party line, conceded after midnight to his Democratic rival, Bill Owens, after driving a moderate Republican from the race.
The three races marked the first major elections since the country plunged into the worst recession in decades, and basic economic issues — job losses, foreclosures, taxes — were front and center.
In Virginia, Mr. McDonnell, avoided divisive social issues, concentrating instead on his plans to create jobs, improve the economy and fix the state’s transportation problems.
In New Jersey, Mr. Christie held Mr. Corzine, a onetime Goldman Sachs chief executive, accountable for rising unemployment, persistent budget deficits, and his failure to gain control over skyrocketing property taxes, the nation’s highest. Voters embraced Mr. Christie even though he offered little detail about how he would fix the state’s chronic financial problems and instead appealed to voters hungry for change.
Voters in both states remained strongly supportive of President Obama, exit polls conducted by Edison Research showed, though they said that was not a factor in their decisions. But independent voters, who in New Jersey favored the president in 2008 and in Virginia split between Mr. Obama and John McCain, delivered strong margins for both Mr. Christie and Mr. McDonnell, the surveys showed.
In New Jersey, a sprawling corruption case begun by Mr. Christie, which culminated in July with the arrests of dozens of politicians and others, appeared to have taken its toll on the Democratic get-out-the-vote machinery. In Hudson County, a party bastion where a number of Democratic officials were charged, only 39 percent of registered voters cast their ballots, county officials said.
The races in New Jersey, Virginia and New York attracted intense interest because they provided the first test of President Obama’s ability to transfer the excitement he unleashed last year to other Democratic candidates.
The White House, to varying degrees, became involved in all three races, worried that defeats would undermine the public’s perceptions of the president’s political clout and his ability to pass major legislation.
With polls of the Virginia race showing Mr. Deeds falling further behind, the White House refrained from an all-out effort on his behalf, though Mr. Obama campaigned with Mr. Deeds twice.
In New York, however, the president’s aides played a pivotal role in helping Mr. Owens over the weekend, engineering a surprise endorsement from the moderate Republican who had abandoned the race under pressure from conservatives.
And in New Jersey, the White House took a firm hand in guiding Mr. Corzine’s re-election campaign, culminating in rallies featuring the president campaigning with the governor in Newark and Camden on Sunday.
The victor in Virginia, Mr. McDonnell, 55, is a social and fiscal conservative, but ran on a more moderate platform that appealed to voters in the suburbs in Fairfax County, where he was raised. By contrast, Mr. Deeds, 51, had a difficult time introducing himself to densely populated Northern Virginia.
Mr. Deeds sought to portray Mr. McDonnell as a radical conservative by publicizing his 20-year-old master’s thesis, which criticized working women and single mothers. But polls showed voters found Mr. Deeds’s commercials too negative.
The New York race emerged in the national spotlight after President Obama appointed the district’s long-serving congressman, John M. McHugh, a Republican, as secretary of the Army. Almost immediately after local Republican leaders chose Dede Scozzafava, a supporter of gay rights and abortion rights who embraced the federal stimulus package, she came under attack by conservatives as heretical.
Leading conservative voices lined up behind Mr. Hoffman, of Lake Placid, and opponents of same-sex marriage and abortion flooded the district with volunteers from across the country.
In the final days of the campaign, Ms. Scozzafava stunned her party by withdrawing from the race and then backing Mr. Owens. Vice President Joseph R. Biden Jr. traveled to Watertown on Monday to rally Democrats and disgruntled Republicans, but the event drew only about 200 people.
In New Jersey, Mr. Christie attacked Mr. Corzine’s economic leadership, saying he had driven jobs and residents from the state. The governor countered that Mr. Christie offered no viable plan for digging New Jersey out of its enormous financial hole.
Christopher J. Daggett, a former state and federal environmental official, made a splash with a plan to cut property taxes and a strong debate performance, but was hobbled by weak fund-raising. After reaching 20 percent in one public-opinion poll, he failed to break out of the double digits.
New Jersey was a deep-blue state, and Mr. Obama’s election boosted Democratic registration, giving the party a 700,000-vote advantage. Mr. Corzine assailed Mr. Christie, who was named United States attorney by President George W. Bush in 2001, as a philosophical clone of Mr. Bush.
The White House, viewing New Jersey as its best hope for victory, poured resources into the race. The president’s pollster overhauled the campaign’s message, White House aides reviewed Corzine commercials and attended strategy sessions, and cabinet officials lined up to appear at Mr. Corzine’s side.
But Mr. Corzine’s abiding unpopularity — his highest approval rating followed his 2007 car accident and was chalked up to pity — suggested that even “Obama surge” voters who voted for the first time last year could not tilt the outcome in the governor’s favor.
No issue loomed larger in New Jersey than the economy, which Mr. Corzine assured residents in January ranked as his No. 1, 2 and 3 priorities. But Mr. Christie never wavered from a simple strategy: making the vote a referendum on Mr. Corzine and highlighting how his supposed Wall Street financial skills had been a bust for the state.
