Financial & Investing

Japan’s three biggest banks are investing about 800 million dollars in «Gazprom»

2011-12-20T02:53:00.000-08:00

According to local analysts, financial investments in the Russian company under the growing global demand for gas should guarantee success and stability for the Japanese banks.

ITAR-TASS reports that Japan’s three biggest banks, which are Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation and Mizuho Bank, are going to invest about 800 million dollars in «Gazprom» in the near future. Deterioration of the financial situation in the euro area brought about the decision to invest in the Russian company.

Professional Financial And Investment Advice For Singapore Residents

2011-11-29T02:27:00.000-08:00

No matter how money savvy you are, financial and investment advice helps. It's said that hard work hardly killed anybody, but when you're above 60 and worn out with life-time of work, hard work might kill you. A well-planned retirement scheme could save you from money worries, even help you take a great vacation.

The Truth Revealed In Singapore

The shocking truth is that almost half of the young population, who is the corporate wealthy, hardly think of saving for retirement. Only eight percent of the money-endowed professionals are sure of meeting their goals. But, seven in ten of these fiery youths believe that they should start thinking about retirement planning. This is according to Zurich International Life that surveyed the professionals, residents, and expatriates of Singapore in the age group of 20's and 30's.

The people who were surveyed revealed that they need anything ranging from S$500,000 to S$1 million for a cozy retirement. Thanks to the extravagant lifestyle and extending lives, money requirement for investment planning is increasing like never before. If S$1 million does not suffice for your retirement, you better get financial and investment advice fast!

Again, most of the young professionals, no matter how influential they might be in the boardroom, still prefer to call their family or close friends for financial advice. Only a small chunk gets financial services to plan for their retirement and other benefits.

If you fear getting duped by so-called financial advisors, you must know that Singapore is a place of stringent rules. The market of Singapore is regulated. You cannot become a financial advisor just by giving a couple of advices. You must go through a tough examination process and need to fulfill certain standards to get yourself tagged as an "advisor."

Retire With Richness

What is it that's holding almost half of the professional population to start saving for retirement? It might be their knack to take risks. Or their belief in living life as it comes. But, when you reach the age that deters you from sprinting out of bed in the morning or working till wee hours, you would miss financial and investment advice terribly. Why be dependent on your kids when you can have sound wealth management and enjoy a good retired phase of life?

Singapore may not have a risk-taking population in terms of money. The survey had shown that about 64 percent of Singaporeans preferred the safest investment planning options. So, if you come in this category, it's time to take financial and investment advice for retirement and avoids taking risk for the future.

If you wish to tread un-irked through the complicated market of this place, find the best strategy to achieve your financial goals, and live a life you desire, you must get financial and investment advice. With professionals online, this isn't difficult. They tell you how to build wealth for your 60's, how to detect investment scams, and how to make the best use of money.

Eurozone blamed by US for world's economic plight

2011-09-11T00:52:00.000-07:00

Finance ministers of the G7 group of industrialised nations have gathered in the French city of Marseille this weekend to discuss how to avert a looming global economic catastrophe, as markets continue their relentless plunge and deep divisions tear apart the European Central Bank (ECB).

But instead of the predicted economic debate, it emerged on Saturday that the bad-tempered meeting was dominated by American and British warnings that political failures and broken promises in the euro zone were in danger of triggering a wider crisis.

"Seventy-five per cent of the dark things happening in the world economy are because of the euro zone," said a senior US official after a round of talks ended in the early hours of yesterday morning.

The beautiful surroundings of the 19th century Palais du Pharo, overlooking the old port of Marseille, did nothing to soothe America's growing anger at the euro zone's inability over recent weeks to take the steps needed to prevent a full blown global economic crisis.

"It was the principal cause of the slowdown we had last summer, and it's been a significant cause of the slowdown we've had this summer," said Timothy Geithner, the US Treasury Secretary.

George Osborne, the chancellor, also waded into the discussion, upbraiding the French, German and Italian finance ministers and central bankers for failing "convincingly" to implement measures agreed at an emergency euro summit in July - guaranteeing the size and powers of the eurozone rescue fund, and ensuring that Greece will not be allowed to default.

"What single thing this autumn would do most to reduce uncertainty and restore confidence? I think it is the convincing implementation of the euro zone package," he said yesterday. "But, I suspect, we haven't heard the last word on euro zone governance."

The clashes at G7, which put Britain and the US together on the sideline as members of the European single currency struggle to resolve its internal contradictions, foreshadow an autumn of disarray within the EU. Their parliaments must ratify the plan for the new EU rescue fund, which is unpopular with many voters, especially in the richer countries.

And just when scepticism among its population is at its greatest, there is finally a realisation among eurozone members that the only way to save the single currency may be a dramatic move towards more integrated economic governance.

To underline the growing fears that the single currency is heading for an existential crisis or crash - and as the G7 sat down at the conference table - the news broke on Friday afternoon that Jurgen Stark, one of the EU's most important policymakers, had resigned as the chief economist of the ECB.

Officials described the development as a "bombshell" timed to go off at the "worst possible moment" for French, German and EU attempts to bolster the fraying and tarnished credibility of the euro zone institutions. "There must be some kind of a euro death wish," said one official.

Mr Stark's resignation, ostensibly for unspecified "personal reasons", mirrored the decision of another German, Axel Weber, earlier this year not to run as the favoured candidate to become president of the ECB but instead to step down from his job as Germany's central banker.

Mr Stark's resignation, ending his lifetime's work at the head of the euro, has exposed the deepening rifts within the ECB and the EU over the political direction that European institutions have been forced to take in order to save Europe's single currency.

Like Mr Weber before him, as well as Germany's Bundesbank and central banks in Finland and the Netherlands, Mr Stark is opposed to the ECB's policy of buying euro zone government bonds to help out highly indebted countries like Italy and Spain.

The measure was one of those agreed at an emergency summit in July. But it pushes the EU towards deeper fiscal union as richer euro countries, such as Germany, assume greater responsibility for the finances of highly indebted countries.

Mr Stark, reflecting a hardening bloc of richer countries, is opposed to the move unless it is accompanied by a "quantum leap" in new powers to punish countries that breach EU budget ceilings, by imposing spending cuts.

For the first time in the EU's history, the Netherlands, a founder member of the European project, last week suggested the previously unthinkable: that countries which persistently break euro rules would either be "taken into care" or just expelled, to face economic catastrophe, unless they mended their ways.

Athens failed yet again last week to satisfy the EU and IMF that it was implementing agreed austerity measures, and it was clearly with Greece in mind that Jan Kees de Jager, the Dutch finance minister, said he was in talks with France about a rule change that would allow failed euro states to be expelled. He said he already had German and Finnish support.

"In future, the ultimate sanction can be to force countries to leave the euro," he said on Thursday. "The most important thing is to have stability in the euro zone, not in the number of member states."

Setting the scene for a bitter battle this autumn as the EU discusses tougher sanctions for indebted euro members, southern European countries have reacted angrily to the idea that they could be kicked out to face an uncertain fate.

Joaquin Almunia, the Spanish vice-president of the European commission, accused the Dutch, Germans and Finns of using "fiscal union" as a smokescreen to impose an anti-European order on an EU once driven by ideals of solidarity and a united Europe.

"Those who think that this hypothesis is possible just do not understand our process of integration," he said. "European integration is the only option."

The glow of idealistic European federalism that once surrounded the euro is fading rapidly as the debt crisis has forced countries such as Germany and the Netherlands into an unloved fiscal union with highly indebted southern European nations such as Greece.

"It has become about saving Germany's skin. The EU's idealistic image as a peace project is now overtaken by a much more brutal game of realpolitik, power and survival," said one aide to a senior EU official.

Time to focus on quality in finance, researcher says

2011-09-11T00:50:00.000-07:00

BEIJING - China's financial sector should stress quality amid rapid development and tighten supervision of foreign capital inflows, said Wang Guogang, head of the finance and banking institute at the Chinese Academy of Social Sciences.

The economist said it would be unwise for China to loosen restrictions on foreign capital as the United States might begin another round of quantitative easing.

Because China's banks offer higher interest rates than those in many developed economics, so-called hot money is likely to continue flowing in and could fuel an asset bubble, Wang told China Daily in an exclusive interview.

"China should avoid a repetition of the Southeast Asian financial crisis. The most important task currently is to tighten supervision over financial transactions" and not remove capital inflow barriers too fast, he said.

Vice-Premier Li Keqiang announced during a mid-August visit to Hong Kong that support will be given to Hong Kong enterprises in yuan-denominated direct investment in the mainland.

The Ministry of Commerce also released a draft regulation on cross-border yuan-denominated direct investment that it will seek to implement in September.

Such steps "will broaden capital circulation channels between the domestic and outbound financial markets. However, the government should carefully research the regulations and control hot money," said Wang.

The US might further increase the money supply and allow the dollar to depreciate in the long term to reduce the risks of a sovereign debt crisis, Wang said.

G-7 Finance Chiefs Vow to Support Banks as Euro-Zone Crisis Roils Markets

2011-09-11T00:43:00.000-07:00

Group of Seven finance chiefs vowed to support banks and buoy slowing economic growth as Europe’s debt crisis roiled financial markets and threatened a global recession.

“We will take all necessary actions to ensure the resilience of banking systems and financial markets,” G-7 finance ministers and central bankers said in a statement released during weekend talks in Marseille, France. “Concerns over the pace and future of the recovery underscore the need for a concerted effort at a global level in support of strong, sustainable and balanced growth.”

Renewed fears that European policy makers are failing to prevent a Greek default and contain their debt woes last week prompted investors to sell stocks and push the euro to a six- month low against the dollar. European bank and sovereign credit risk reached all-time highs as 10-year Treasury and German bund yields fell to record lows on demand for a haven.

Germany moved toward insulating its banks against the fallout of a possible Greek default and Juergen Stark’s resignation from the European Central Bank exposed the policy rifts aggravating the debt turmoil. BNP Paribas, Societe Generale SA and Credit Agricole, France’s largest banks by market value, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings, two people with knowledge of the matter said.

U.S. stock futures slide but Europe seen firmer for now

2011-08-12T00:24:00.000-07:00

(Reuters) - U.S. stock futures slid 1 percent on Friday, pulling Asian shares off early highs, as sentiment remained cautious on concerns over the European debt crisis, which will probably keep supporting safe havens like gold and Swiss franc.

Wall Street jumped 4 percent overnight in high volume, with relatively low valuations and short-term oversold conditions attracting buyers, though the see-saw moves this week appear to be continuing with U.S. equity markets set for a weaker open.

However, European shares were seen extending the previous sessions gains, with investors seen focusing again on macroeconomic fundamentals and bargain-hunters looking at beaten-down stocks.

"Markets are still trying to build a bit of a bottom and it still needs to be proved that this is the bottom," said Shane Oliver, head of investment strategy at Sydney-based AMP Capital, which has more than $100 billion in assets under management.

"For the next three months we are probably going to remain volatile. Markets may not be as messy as the last two weeks but I suspect the debt problems in U.S. and Europe will continue and concerns over a U.S. recession will linger for some time."

Volatility across financial markets has spiked over the past few weeks, with rumors flying about the health of European banks, questions mounting about the stability of money markets and growing fears that the U.S. economy may tip back into recession or a prolonged period of tepid growth.

The MSCI index of Asia Pacific stocks outside Japan was roughly unchanged on the day, trimming earlier gains as U.S. stock futures sagged.

The index lost around 3.6 percent on the week, underperforming the world index and taking Asia ex-Japan year-to-date losses to more than 11 percent.

China worried about EU, urges action on debt

2011-08-12T00:22:00.000-07:00

(Reuters) - China is worried about challenges that the Europe Union faces in the next two months and urged the bloc as well as the United States to hold down government debt, its trade minister said on Friday.

Speaking at a meeting of Southeast Asian trade ministers, Chen Deming called on governments in the United States and Europe, China's top two trading partners, to act responsibly and get their fiscal houses in order.

"We support stabilizing measures taken by relevant countries, but we hope these countries will take measures to control their government debt proportion and take bigger responsibilities," Chen said.

"We are also concerned about new challenges facing European countries in August and September," he said, but did not elaborate.

His remarks echo recent comments from Beijing, which has invested nearly all of its $3.2 trillion foreign exchange reserves, the world's largest, in dollars and euros and would loathe to see the currencies plummet on economic problems.

World financial markets have swung wildly in the past week on fears the United States may fall into another recession and that Europe cannot contain its debt crisis.

Chen noted that the world is still struggling with excess cash left behind by the loosening of monetary and fiscal policies during the 2008 financial crisis, and said Asian governments should work together to monitor the impact.

"Where would the excessive liquidity flow to? Commodities, stock markets or bond markets? We are not quite sure yet," Chen said.

On the yuan, a controversial issue among China and its trade partners, Chen reiterated Beijing's usual refrain that the currency should only rise gradually.

"We will make our own decisions and will stick to restructuring reforms of the domestic economy," Chen said, noting that China faces an "extremely complicated situation" right now.

"We will also stick to the gradual and steady currency reform," he said.

Chen's remarks come amid market talk that China may be about to shift its policy stance on the yuan soon after guiding the currency to a series of record highs.

A flurry of Chinese media reports that predicted speedier gains in the yuan have also fueled speculation.

China keeps the yuan on a tight leash as it worries any sharp gains could hurt its exports and weigh on the world's second-biggest economy.

Its trade partners, however, accuse Beijing of deliberately suppressing the yuan for trade advantage, an allegation that China has always denied.

Indeed, new data from Washington that showed the U.S. trade gap with China grew almost 12 percent in the first six months of 2011 could fuel efforts in Congress to get tough with China's currency practices.

House prices: London £1m houses jump, rest of country falls

2011-03-09T04:20:00.000-08:00

An influential monthly survey of house prices said a sharp divide had opened up between the capital – where prices are rising – and the rest of the country where prices are falling.

The introduction of a new, higher, stamp duty level of 5 per cent for properties worth £1 million or more, which comes into effect in April, is thought to be the main reason, encouraging top end houses to suddenly start selling at their asking price.

Previously the highest rate of stamp duty, which hit all properties above £500,000, was 4 per cent. The change in rates will add £20,000, for instance, to a buyer's fees of a £1.5 million house.

The relatively robust health of the City, with the return of bankers' bonuses, is another factor allowing high-end London property prices to defy the economic forces bedevilling the rest of the country, where a dearth of easy mortgages and nervous buyers has put the housing market into a trough.

The monthly Royal Institution of Chartered Surveyors report indicated that in the three months to February, 14 per cent more surveyors in London reported a rise in house prices than a fall. This compares to a balance of minus 28 across the rest of the country, with surveyors in every area more gloomy on average about prices.

UK trade deficit narrows sharply

2011-03-09T04:19:00.002-08:00

The UK trade deficit narrowed much more than expected in January, raising hopes that the economy can rebalance away from its dependence on domestic consumption of goods and services.

The Office for National Statistics said the deficit in trade in goods fell to £7.1bn from a revised £9.7bn shortfall in December and was well below the average £8.5bn average forecast by economists.

The ONS said December’s record shortfall reflected, in part, unusually heavy imports of aircraft ahead of a key tax change at the start of the year although the balance for January was also aided by a sharper rise in exports than imports.

Excluding goods such as oil, where prices move erratically, the adjusted volume of exports was 6.1 per cent higher in January than in December while the volume of imports was a more modest 1.9 per cent higher. Net imports of oil, where prices are rising rapidly, posted a sharp rise.

“This is welcome news for the UK economy and signals a further rebalancing of the economy towards export-led manufacturing growth,” said Chris Williamson, chief economist at Markit group. “For many companies, it is the strength of demand in overseas markets, rather than the exchange rate, which is the most important factor behind export sales success, and in that respect global economic growth is currently the fastest for almost five years.”

Economists noted that December’s poor showing may have reflected harsh weather which may have impeded the shipment of goods abroad.

Exports to all the UK’s most significant trade partners expanded in January, with the exception of Ireland and Italy. Imports of goods from significant partners fell with the exception of France and Germany, where the figure was slightly higher.

The seasonally adjusted surplus on trade in services was £4.1bn compared with £4.2bn in December, with the volume of exports falling by £0.1bn and the volume of imports falling by a smaller amount.

Overall, the UK’s balance of trade in both goods and services narrowed to -£3bn in January from -£5.5bn in December.

However, some economists urged caution in reading too much into the latest data. The rebound in exports “at least partly reflects a post-snow rebound – note that a similar pattern was seen during the snow in January 2010,” said Vicky Redwood, economist at Capital Economics. “Meanwhile, the drop in imports is partly just a reversal of the sharp rise in aircraft imports ahead of a tax change at the start of the year.“

Asia Central Banks Step Up Inflation Fight With Thai, Vietnam Rate Rises

2011-03-09T04:19:00.001-08:00

Asian central banks stepped up their battle against inflation as Thailand and Vietnam raised interest rates, seeking to defuse price pressures before the global jump in oil costs reverberates through the region.

The Bank of Thailand increased the one-day bond repurchase rate by a quarter of a percentage point to 2.50 percent, it said in Bangkok today. Vietnam lifted borrowing costs yesterday, South Korea is forecast to do so tomorrow and Malaysia may ask lenders to set aside more money as reserves on March 11.

A jump in crude oil costs in excess of 20 percent in the past three weeks is escalating the danger of inflation in the region that’s led the global economic rebound. China’s Premier Wen Jiabao on March 5 set tackling inflation as his top priority, as Asian policy makers grapple with consumer price pressures fueled by job and spending gains.

“There is a debate in the region over what the oil price rise would do to growth and inflation,” Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG, said after the Thai decision. Thailand and Vietnam “exemplify that and we see trends in other countries also” of policy makers focusing on fighting inflation, he said.

Thailand’s baht extended its gain to a two-month high after the rate decision, which boosted the Southeast Asian nation’s yield advantage over the U.S. where the benchmark rate has been kept near zero. The currency rose 0.1 percent to 30.33 a dollar as of 4:20 p.m. in Bangkok.

Need to Continue
“We still see the need to continue rate normalization,” Bank of Thailand Assistant Governor Paiboon Kittisrikangwan said today, pointing out that deposit rates are still below inflation levels.

Some policy members believed that the central bank should raise the key rate by more than 0.25 percentage point to anchor inflation expectations because the government may introduce stimulus policies ahead of an election, he said. The board finally agreed to raise the rate “gradually,” and voted unanimously to increase the benchmark, he said.

“The BOT continues to emphasize that a gradual rise in policy rate is a suitable policy direction,” said Nalin Chutchotitham, a Bangkok-based analyst at Kasikornbank Pcl. “We do not think that the BOT is behind the curve but risks from a supply shock in oil would change the scenario. Thailand’s growth is susceptible to rapid increases in oil prices.”

The Bank of Thailand’s rate increase was predicted by 17 out of 20 economists surveyed by Bloomberg News, with three seeing no change. Vietnam’s central bank raised the refinancing rate, one of the main policy tools identified by the State Bank of Vietnam last week, to 12 percent yesterday, boosting borrowing costs for the third time in as many weeks. The bank also lifted the discount rate to 12 percent from 7 percent.

Korea’s Decision
The Bank of Korea will increase its benchmark rate to 3 percent on March 10, according to all 15 economists in a Bloomberg survey. Finance Minister Yoon Jeung Hyun said this week the government is currently putting more focus on price stability than growth.

Malaysia may ask lenders to set aside more funds as reserves this week rather than raise interest rates, according to Credit Suisse Group AG and Citigroup Inc. Bank Negara Malaysia may increase the statutory reserve requirement ratio by 1 percentage point to 2 percent, and keep the benchmark overnight policy rate at 2.75 percent in its March 11 policy decision, Kun Lung Wu, an analyst at Credit Suisse, wrote in a report dated March 7.

Bank of Thailand Governor Prasarn Trairatvorakul said in January that inflation is a key risk to the economy and that the central bank will need to raise the benchmark rate further this year. Today’s move is the central bank’s fifth increase since mid-July last year.

Inflation Slows
The nation’s inflation slowed in February to an annual rate of 2.87 percent. The core consumer price index, which excludes fresh food and fuel, rose 1.45 percent, accelerating from the 1.32 percent pace the previous month, a government report showed on March 1. The central bank uses the core index to guide policy, and aims to keep the rate below 3 percent.

“There is a possibility the core inflation will exceed our target, but it’s still under control,” Paiboon said today. “Inflation is expected to rise significantly in the third and fourth quarter. We think inflation pressure will accelerate as the economy continues to grow close to its potential level.”

The central bank increased its inflation forecast for 2011 to a range of 3 percent to 5 percent, while saying the gain in oil and commodity costs won’t weigh on the nation’s economic growth outlook. It kept the core inflation forecast at between 2 percent and 3 percent, saying there is “upward pressure” of 0.1 to 0.2 percentage point.

Subsidy Effect
A surge in crude oil past $100 a barrel following unrest in the Middle East and Libya has clouded the global economic outlook, threatening to both boost inflation and undermine business and consumer spending. Asia’s expansion is strong enough to withstand faster inflation, Asian Development Bank Managing Director Rajat Nag said last week.

Besides raising rates, South Korea and Thailand have imposed price controls on goods and services including electricity and gas, and China has released reserves of agricultural goods.

Thai Prime Minister Abhisit Vejjajiva’s government has subsidized fuel and electricity, and controlled prices for consumer products including cooking oil and pledged to increase the minimum wage by 25 percent over two years to cushion the impact of rising prices.

Thailand’s economy last year weathered political demonstrations that led to violence killing 91 people and sparked arson attacks. Abhisit plans an election by June as his party seeks to win the most seats in an election for the first time since 1992.

Developers Complain

Southeast Asia’s second-biggest economy, after Indonesia, strengthened in the fourth quarter on increased exports and consumer spending, capping the fastest annual expansion in 15 years. The state planning agency said Feb. 21 that growth “will continue this year,” supported by the global recovery, rising incomes and agricultural prices. The agency predicted economic growth this year at 3.5 percent to 4.5 percent.

Even so, companies including LPN Development Pcl (LPN) have complained about further rate increases as higher costs have already hurt their operations. Meantime, the commerce ministry said March 1 that policy makers shouldn’t increase borrowing costs, saying that inflation is under control.

“It will be a tough year for all property developers,” said Opas Sripayak, managing director of LPN Development, which develops condominium projects in Bangkok. “Accelerating inflation and higher interest rates have significantly affected consumer confidence and spending. We have seen a slowdown in visitors to our condominium projects.”

Exports have shown resilience, with gains accelerating to an annual pace of 22 percent in January, from 19 percent in December. Hana Microelectronics Pcl (HANA), which produces parts for mobile devices including Apple Inc.’s iPhone and Research in Motion Ltd.’s BlackBerry, said Feb. 9 it may post record revenue this year as demand for its electronics products remains strong.

LSE tie-up with Toronto pressures other exchanges

2011-02-12T19:36:00.000-08:00

LONDON (Reuters) – The London Stock Exchange agreed to buy Canada's stock market operator TMX, while Germany's Deutsche Boerse was in talks to buy NYSE Euronext, signaling that exchanges globally are looking to consolidate.

The combined LSE and TMX would be the world's fourth-largest exchange and a top center for trading mining and energy shares, with $4.1 trillion of stock changing hands a year. The exchanges are looking to regain market share lost to upstart electronic trading platforms.

Other exchanges could face similar pressures. Two sources familiar with the matter said New York Stock Exchange operator NYSE Euronext is in talks to sell itself to Germany's Deutsche Boerse. A deal would allow the companies to cut costs and dominate exchange trading in Continental Europe.

LSE shares rose 9 percent after its the TMX deal was announced. The rising share price signals LSE could be getting a good deal, which in turn could allow another buyer to offer a higher price for TMX.

If the combination survives likely political opposition in Canada, a group will emerge with a market value of 4.3 billion pounds ($6.9 billion) based on Tuesday's prices, with LSE shareholders holding 55 percent.

The deal indicates a valuation for TMX of C$46.7 per share, a 16 percent premium to its Tuesday close.

With Xavier Rolet at the helm, the LSE is fighting to win back market share lost to upstart rival trading platforms after Europe opened markets in 2007 to challenge incumbent exchanges long protected behind national boundaries.

The deal will put more pressure on bourses to seek partnerships to counter the threat from bigger rivals, with particular pressure on Deutsche Boerse, though remaining independent stock exchanges are scarce.

"The big question in Europe is what about Deutsche Boerse," said a London-based banker familiar with the exchanges business, speaking on condition of anonymity.

The LSE's share of UK equity trading so far this month has been 54.9 percent, compared with 96.3 percent in February 2008, according to Thomson Reuters data. New entrants like BATS and Chi-X are rapidly gaining clout.

(Writing by Douwe Miedema; additional reporting by Victoria Howley and Sudip Kar-Gupta; Editing by Andrew Callus, David Cowell, John Wallace)

Merkel will need opposition votes for euro fund deal

2011-02-12T19:35:00.000-08:00

BERLIN (Reuters) – The German government may need a two-thirds majority in parliament to approve any deal on the new permanent rescue mechanism for the euro zone, meaning it will need opposition support for any compromise, Der Spiegel magazine reported on Saturday.

The report by the Bundestag's legal department underlines the challenge facing Chancellor Angela Merkel to convince the public and allies at home of a deal which will commit Germany to bankrolling future bailouts of euro zone member states.

At a summit in December European leaders agreed to set up a permanent mechanism from mid-2013 to solve sovereign debt problems. It will replace the temporary system -- a 750 billion euro emergency loan facility created by the EU and IMF in May.

As a quid pro quo for her support for the scheme, Merkel and French President Nicolas Sarkozy have put forward proposals for a "competitiveness pact" which is to be hammered out by March and has provoked strong opposition from other EU leaders.

Berlin's ability to compromise on the steps -- which seek to end wage indexation, raise retirement ages and lock debt limits into national constitutions -- may be influenced by what the government can sell to a domestic audience.

Der Spiegel said the legal opinion on the issue -- pointed to by an MP from Merkel's junior coalition partners -- found that a two-thirds majority would be required because the European Stabilisation Mechanism (ESM) would involve an extensive intrusion into the Bundestag's administrative sovereignty.

Merkel's center-right coalition would need backing from the opposition Social Democrats to obtain a two-thirds majority.

(Reporting by Erik Kirschbaum; editing by Patrick Graham)

Consumer sentiment hits 8-month high

2011-02-12T19:32:00.000-08:00

NEW YORK (Reuters) – U.S. consumer sentiment rose to an eight-month high in early February, boosted by recent tax cuts and optimism about the labor market, but consumers were less sanguine about the economy in the longer term.

A separate report on Friday also suggested stronger consumer activity as the U.S. trade deficit widened slightly more than forecast in December to its highest level in four months.

Consumers expect to see improvement in the economy and job market this year, but the recovery was still anticipated to fall short and worries about inflation and its effect on wages weighed, according to the latest consumer surveys from Thomson Reuters and the University of Michigan.

Consumer confidence was also boosted by the recent package of tax cuts and improved personal finances.

The preliminary February reading for the overall index on consumer sentiment came in at 75.1, up from 74.2 in January.

It was the highest level since June 2010 and was roughly in-line with the median forecast of 75 expected by economists polled by Reuters.

"Further proof that the U.S. economy is rebounding at a stronger pace than expected. It's been reflected in virtually all recent data outside of inflation data," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.

The survey's barometer of current economic conditions jumped to 86.8, the highest level since January 2008, while the gauge of consumer expectations slipped to 67.6 from January's 69.3.

"While consumers are becoming more optimistic about current conditions, they remain wary about stretching that optimism beyond the immediate future given continued headwinds in the labor market and overseas," Omair Sharif, an economist at RBS, wrote in a note.

Concerns over inflation have been creeping up lately as commodity prices rise and on jitters that strength in the economy will force the Federal Reserve to hike interest rates sooner than expected. Nonetheless, the Fed is largely viewed as maintaining its accommodative policy for some time.

The survey showed the one-year inflation expectation was unchanged at 3.4 percent, the highest rate since the fall of 2008. The five-to-10-year inflation outlook also was unchanged at 2.9 percent.

U.S. Treasuries touched session highs following the data as some worried about the long-term outlook, though markets were more focused on news Egypt's president had bowed to relentless pressure from a popular uprising and stepped down.

The December trade deficit grew nearly 6 percent to $40.6 billion as the average price for imported oil leapt to its highest level since October 2008.

Overall imports of goods and services were also their highest since October 2008, in a sign consumers and businesses are spending more as the economy picks up steam.

A separate survey of forecasters showed the U.S. economy and jobs market are expected to grow more strongly in the first quarter than previously expected.

The Federal Reserve Bank of Philadelphia's survey of 43 professional forecasters sees the economy growing at an annual rate of 3.6 percent in the current quarter, up from the estimate of 2.4 percent three months ago.

Though employment remains one of the biggest challenges for the economy, there have been signs the job market recovery is continuing, if not gaining speed.

In another positive sign, a measure of future U.S. economic growth rose to a 39-week high in the latest week, according to the Economic Cycle Research Institute, an independent forecasting group.

(Additional reporting by Caroline Valetkevitch and Steve Johnson in New York and Doug Palmer in Washington; Editing by Andrea Ricci)

China to vet inward M&A deals for national security

2011-02-12T19:29:00.000-08:00

China will launch a state-level investment review body to check that merger and acquisition deals struck by foreign firms in one of the world's fastest-growing economies do not endanger "national security," China's State Council, the cabinet, said on Saturday.

The new regulation, which will come into effect in March, is set to install a new red-tape barrier for doing business in China, the world's second largest economy where double-digit growth has attracted more than $105 billion in foreign direct investment last year.

Foreign investments in military, agriculture, energy and resources, key infrastructure, transport systems, key technology sectors and "important equipment manufacturers" may be subject to reviews, according to a statement published on the central government Internet portal, www.gov.cn.

The review will be conducted by a "foreign investment security review board" under the cabinet. Members of the board will come from the National Development and Reform Commission, the Ministry of Commerce and other agencies on ad hoc basis.

The new body could enable China to turn the tables on some countries that have previously blocked its investments on national security grounds.

China suffered the biggest knock to its deal-making confidence in 2005, when state-controlled oil firm CNOOC Ltd withdrew an $18.5 billion bid for U.S. oil firm Unocal after the Senate moved to block it on national interest grounds.

But Beijing, which introduced an anti-trust law in 2008, has also blocked deals that do not conform with its national plans in the past.

China rejected Coca-Cola's $2.4 billion bid for China's top juice maker Huiyuan, in 2009 and buyout giant Carlyle's $375 million bid for Xugong, China's biggest construction equipment maker, in 2008.

The government wants to consolidate many heavy industries such as steel into the hands of a few big players, and it has blocked several foreign attempts to buy into its huge steel sector, by far the world's biggest.

In 2007, it blocked ArcelorMittal from gaining a majority stake in China Oriental Group and in 2009 it forced Russia's Evraz Group to abandon an option to take control of Delong Holdings Ltd, a Chinese steelmaker listed in Singapore, in a $1.5 billion deal.

Obama wields scalpel to budget, avoiding much pain

2011-02-12T19:28:00.000-08:00

WASHINGTON – President Barack Obama's budget submission on Monday will take a surgical approach to a deficit problem that his Republican rivals say warrants a meat ax.

As Obama seeks $53 billion for high-speed rail over the next few years, House Republicans are trying to pull back $2.5 billion that's already been promised. He's seeking increases for his "Race to the Top" initiative that provides grants to better-performing schools; Republicans on Friday unveiled a five percent cut to schools serving the disadvantaged.

Monday's release of next year's budget plan will be likely ignored by resurgent Republicans intent on cutting $100 billion from the president's old budget.

The GOP drive to slash 2011 spending and much of the savings sought by Obama involve just a small piece of the budget pie — the annual domestic agency budgets that make up just one-tenth of federal spending. Tea party-backed House Republicans are trying to slash tens of billions of dollars in such programs to return them to levels when Obama first took office.

Obama's promise to freeze budgets of domestic agencies at 2010 levels for five years — an austere plan by itself — looks generous by comparison.

On Saturday, he promised the government will have to tighten its belt.

"This budget asks Washington to live within its means, while at the same time investing in our future," the president said Saturday in his weekly radio and Internet address. "It cuts what we can't afford to pay for what we cannot do without. That's what families do in hard times. And that's what our country has to do too."

But Obama is likely to ignore the most painful recommendation of his bipartisan budget commission when releasing his $3.5 trillion-plus budget on Monday.

While Obama invited Republicans in last month's State of the Union address to sit down and seek a "bipartisan solution to strengthen Social Security for future generations," he won't offer any specific policy prescriptions on how to fix the program. The deficit commission offered politically dangerous ideas like raising the Social security retirement age, trimming future benefit increases and reaping more payroll taxes from better-off workers.

"I'm really disappointed," said House Budget Committee Chairman Paul Ryan, R-Wis., on reports Obama won't offer proposals to extend the solvency of Social Security. "Health care, I get it. We have a difference of opinion on health care. On this issue (Social Security) ... we're like 95 percent of the way there. We were so close. We weren't there yet, but we were close."

In fact, the upcoming budget is unlikely to even meet the president's own goal set last year of getting the deficit down to 3 percent of the size of the economy by 2015. That was the job Obama gave the fiscal commission, which exceeded it with a host of painful recommendations, such as to eliminate or sharply scale back popular tax breaks, reform a financially unsound long-term care program and almost double the federal tax on gasoline with a 15 cents-per-gallon increase.

None of those steps are likely to be in the Obama blueprint.

It’s time to ease into stocks

2010-11-04T03:44:00.000-07:00

There’s no easy way to make a case for investing in the stock market based on what’s happening in the United States these days.

But let’s try anyway, because what a lot of people are doing right now with their investments isn’t helping them much.

The uncertainty that’s keeping people mired down in conservative, do-nothing investments was an underlying theme Wednesday as the U.S. Federal Reserve took another shot at reviving an economy that has generated the highest unemployment levels in 26 years.

Basically, this latest second round of quantitative easing (hence the term QE2) means the Fed will spend $600-billion (U.S.) by the end of next June to buy bonds issued by the U.S. government. Interest rates should fall as a result of the Fed’s shopping spree, and that in turn will lead, ideally, to more spending and borrowing.

The Fed’s manoeuvring is considered good news by the stock markets, which have rallied in recent weeks for reasons that include anticipation of more help for the economy. Yes, it’s odd to see the markets so happy at developments that highlight the scary shape of the U.S. economy. But there’s no getting around the fact that the U.S. markets have just had their best September in 70 years.

Can this continue? Frankly, there are many reasons to be afraid of putting money in the stock market right now.

A double-dip recession is one. Economist David Rosenberg wrote in Report on Business earlier this week that the U.S. economy is weak and could contract again. Canada’s economy is stronger, but problems in the United States cannot help but leak northward.

Another reason for caution is the plain fact that stocks aren’t cheap. While almost $1.6-trillion sits in bank accounts, GICs and bonds in this country, both Canadian and U.S. stock markets have come a long away from the depths of 2008. In September and October alone, the S&P 500 stock index jumped around 12 per cent.

In a note issued this week, the investment counselling firm Tacita Capital cautioned investors that the price-earnings ratio for the S&P 500 – that’s the most widely watched measure of how expensive stocks are – is at least a little above average according to three different ways of slicing the data.

Following Tuesday’s midterm U.S. election, political gridlock appears to be a risk for the economy and, by extension, the stock market. If extraordinary measures are needed to generate growth, can Republicans and Democrats agree on what to do?

The case for getting into the stock market now refutes none of these points. Undeniably, it’s a rotten time to think about venturing away from investments in which you can’t lose money and move into those erratic stock markets.

So, when’s a better time? Unfortunately, the stock markets never send an all-clear signal.

That’s why it’s time to get moving now by shifting some of your safe money into the stock market. Don’t lunge into stocks, ease in. Buy some stocks, mutual funds or exchange-traded funds now, repeat in three months and repeat again and again. Or, go monthly.

They call this dollar-cost averaging and it’s usually promoted as a way of ensuring you’ll get to buy some stocks when prices are low while protecting you from buying too much when prices are high. Today, it’s all about protecting your fragile investing psyche. Buy gradually and you’ll minimize the shock if there’s another financial crisis or other disaster.

One of the lessons of the past few years is that the stock markets are not for everyone. Some investors should be in guaranteed investment certificates and nothing else because, for them, the pain of losing money outweighs the benefit of making money.

Just be sure to make an informed decision about your risk tolerance. Low risk means low returns, and that in turn suggests you’ll need to either save more money for your retirement or prepare to live on less.

The stock market is not an easy path to higher returns, as we all know after 2008. But if you need to grow your money at a rate that’s better than the 1 to 3 per cent available from safe investments, then it’s your best option.

You can wait to act on this, of course. A stronger U.S. economy would be nice, and so would cheaper stocks, world peace and a Stanley Cup for the Toronto Maple Leafs. Excuses, excuses.

US STOCKS-Oracle lifts Nasdaq as options expiration arrives

2010-09-18T00:27:00.001-07:00

Oracle jumps after quarterly results, outlook

* Quadruple witching volatility muted

* Indexes up: Dow 0.1 pct, S&P 0.1 pct, Nasdaq 0.5 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to close)

NEW YORK, Sept 17 (Reuters) - The Nasdaq rose on Friday after reassuring earnings and an upbeat outlook from Oracle, with the broader market flat as the traditional trading volatility expected by the expiration of options failed to materialize.

Oracle Corp , the world's No. 3 software maker, jumped 8.3 pct to $27.46, and led the Nasdaq higher after it posted better-than-expected results and gave an outlook that topped Wall Street's forecasts.

The close of trading on Friday marked the quarterly expiration of September equity futures and option contracts, a convergence known as "quadruple witching," which tends to increase volume and swings in trades. Strategists said trading was relatively subdued, however, heading into the close.

"A lot of folks were surprised -- they were hoping they might get a little more volatility due to the quadruple witching and maybe that might create some trading opportunities, but they've been disappointed," said Bernie McSherry, director of strategic initiatives at Cuttone & Company in New York.

"The market has been fairly flat and volume has not really been up to levels that people were hoping for."

The S&P 500 managed to overcome briefly key technical resistance around 1,130, pushing through intraday highs from June and August. A decisive move above that level on solid volume would be a bullish sign.

For the week, the Dow rose 1.4 percent, the S&P 500 gained 1.5 percent and the Nasdaq gained 3.3 percent.

Support for the S&P 500's 200-day moving average remains around 1,116, a level it vaulted on Monday.

Texas Instruments Inc gained 3 percent to $25.73 after the chipmaker increased its stock repurchase program and boosted its quarterly dividend by 8 percent. [ID:nN17421065]

Research in Motion Ltd advanced 0.3 percent to $46.64, giving up most of its early gains as analysts mostly cut share price targets for the BlackBerry maker, focusing on tough competition and a weak U.S. performance rather than RIM's robust results. [ID:nN17164687]

The option expirations meant options trading had its busiest day in a year on Thursday, led by a surge in call trades. The total put-to-call ratio, often used to gauge market sentiment, fell to its lowest level since Dec. 24, 2009, according to Scott Fullman, director of derivative investment strategy at WJB Capital Group.

Volume was light with about 8.3 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by three to two, while on the Nasdaq, advancers beat decliners about four to three.

Wall Street closes up after bumpy trade

2010-09-18T00:26:00.000-07:00

Wall Street closed on Friday in positive territory at the end of a choppy session marked by signs of weakening consumer confidence and strong earning reports in the technology sector.

The Dow Jones Industrial Average gained 12.11 points (0.11 per cent) to 10,606.94 in closing trade, while The broader S&P 500 index was up 0.96 points (0.09 perent) to reach 1,125.62 points.

The tech-rich Nasdaq composite index was up 12.36 points (0.54 per cent) to 2,315.61.

The day started positive with the release of new data from the Labour Department showing consumer prices were up 0.3 per cent in August from July, slightly more than analysts' forecasts.

The market then stumbled after the release of a survey by the University of Michigan showing US consumer sentiment unexpectedly worsened in September to its weakest level in more than a year.

"Confidence edged downward in early September, as consumers judged prospects for the national economy less favourably," the survey's director Richard Curtin said in a statement.

The bullish opening was mostly attributed to better-than-expected quarterly reports from major technology firms.

Oracle Corporation reported shortly after trading closed on Thursday that its recent quarter profit climbed to $US1.35 billion ($A1.44 billion) as revenues rocketed 48 per cent to $US7.5 billion ($A8.01 billion).

Canada's Research in Motion (RIM), maker of the Blackberry, said its revenue grew 31 per cent in the last quarter to $US4.62 billion ($A4.93 billion), surpassing the $US4.47 billion ($A4.77 billion) forecast by Wall Street analysts.

US dollar rises slightly against euro

2010-09-18T00:16:00.000-07:00

The US dollar edged higher against the euro on Friday after the Labour Department said prices at the consumer level rose modestly in August.

The small rise in the consumer price index, which measures price changes at the retail level, calmed some worries about deflation in the US. Deflation would hurt the value of the dollar as wages and prices autumn.

The euro gave up a penny after the report was released on Friday morning in the US, falling from its high of $US1.3159 ($A1.40) reached earlier in the day. It fell to $US1.3043 ($A1.39) in late trading. The euro closed on Thursday at $US1.3080 ($A1.40).

The dollar also held onto its big gains of the week against the Japanese yen for a second straight day. Japan's central bank stepped in on Wednesday to weaken the yen, which had been at a 15-year high against the dollar. Such a strong yen endangered the country's manufacturers like Sony Corp and Toyota Motor Corp, which profit from exporting goods.

One dollar bought Y85.79 ($A1.07) in afternoon trading, compared with Y85.77 ($A1.07) on Thursday.

Elsewhere, the British pound fell to STG1.5625 ($A2.60) from STG1.5640 ($A2.61) on Thursday.

The Canadian dollar weakened slightly to 1.0311 to the dollar versus 1.0270 Thursday. The Swiss franc strengthened to 1.0120 versus 1.0146.

Gold for current delivery closed at $US1,275.60 ($A1,361.73) per troy ounce on Friday on the New York Mercantile Exchange, up from $US1,271.90 ($A1,357.78) late on Thursday.

Bank faces pressure to raise rates, says ITEM

2010-07-25T21:45:00.000-07:00

ITEM today says that inflation will remain above target until the end of 2011, largely as a result of the planned increase in VAT from 17.5pc to 20pc in January. Inflation has already grown faster than the Bank's 2pc goal for 41 of the past 50 months and has averaged higher than 3pc for two years, prompting several letters of explanation to the Chancellor from Mervyn King, the Bank's Governor.

GDP growth for the three months to June of 1.1pc, the strongest in four years and far higher than expectations, has added to pressure on policy-makers to raise rates from their historic low of 0.5pc. Bank policy-maker Andrew Sentance has already called for a rate rise for the past two months.

However, ITEM warns that rates will have to stay on hold until the start of 2014 if the economy is to be given a chance to recover. "The problem is that on the surface the economy looks to be inflating but once you delve deeper, you can see that the situation is very disinflationary," Mr Spencer said.

Special report: the Libya investment firm and the release of the Lockerbie bomber

2010-07-25T21:44:00.000-07:00

The terraced house just around the corner from the American embassy in London looks like most in the affluent street. Tall and elegant, only the shiny brass plaque gives a clue to what lies beyond the black front door.

The name reads Dalia Advisory Limited, a company established by Libyan businessmen just a week after the country's officials were told the Lockerbie bomber Abdelbaset al-Megrahi was being considered for release on compassionate grounds.

Dalia Advisory is in fact a "front" for the Libyan Investment Authority (LIA), a sovereign wealth fund with £80 billion, to invest in Britain and beyond. The Georgian town house, bought for £6 million, is, ironically, only a few yards from the US Embassy in Grosvenor Square.

Senior business sources have told The Sunday Telegraph that had Megrahi died in a British jail, the LIA would have taken its vast sums elsewhere. "If Megrahi had perished in Scotland, we would have become a pariah state as far as the Libyans were concerned," said one source.

Oliver Miles, a former ambassador to Libya and now deputy chairman of the Libyan British Business Council, said: "At the time of his release everyone knew that if he died in a Scottish jail, it would be bad for our relations."

But some 1,500 miles from the LIA's Mayfair headquarters, Megrahi, 58, is clinging defiantly to life despite his terminal cancer – much to the embarrassment of the authorities in Britain.

The former Libyan intelligence officer is living at government expense in a prosperous Tripoli suburb in a two-storey villa surrounded by gardens, where he is looked after by his wife, their five children and a team of medics.

He enjoys superstar status, repeatedly feted as a "much-loved" hero of the Libyan people. According to Megrahi's family, he has received up to 30,000 house guests – a white tent was erected in the garden for visitors – while newborn babies across Libya have been named after him. Gaddafi family members have also made several private visits, friends say.

But he is said to be lower in spirits than when he first arrived home, and does not leave the house – spending much of his time propped up in bed, sedated for the pain.

Prof Karol Sikora, one of the doctors who suggested Megrahi had just three months to live, insists that there is no miraculous recovery. "I am well-informed he is dying; he is just not dying as fast as we predicted," he said. Scottish authorities insist that the study by Prof Sikora and two other doctors, which was paid for by Libya, had not been considered and was not a contributory factor to Megrahi's release.

However long Megrahi now survives, the fact is business between Britain and Libya is currently booming. British exports to Libya are now double what they were a year ago while imports from Libya have risen three fold. In the first two months of this year alone, the UK exported £110 million of goods and services.

In Washington this week, the timing of the establishment of Dalia, run by an associate of Libyan leader Colonel Muammar Gaddafi's favourite son Saif, will come under the scrutiny of the powerful Senate Foreign Relations Committee at a wide-ranging hearing into the release.

Angry US politicians and victims' families are convinced that Megrahi – convicted of the murder of 270 people, 189 of them Americans, when Pan Am flight 103 was blown up over Lockerbie in Dec 1988 – was allowed home to ease oil and business deals between Libya and Britain.

There is particular focus on the role of BP, already on America's most hated list because of the Gulf of Mexico oil spill. In the US, the company is prime suspect in masterminding the release – although the British and Scottish governments and BP have all denied this.

And US-British relations are heading for a fresh crisis over the Megrahi affair as it appears that none of the five invited British witnesses will attend Thursday's hearing.

Jack Straw, the former Justice Secretary declined as he said he had nothing to do with the release. Alex Salmond, the Scottish First Minister, said that neither Kenny MacAskill, the justice minister who ordered the release, or a Scottish medical expert will be there either.

BP is to expected to send a senior executive but not the two men requested by senators – Tony Hayward, the beleaguered chief executive who may be about to leave the company, and Sir Mark Allen, the former MI6 agent who acted as a go-between for British and Libyan authorities.

Kids learn importance of savings accounts

2010-07-25T21:43:00.000-07:00

New research suggests that British parents are showing children the importance of savings accounts at an early age.

A report from Tesco Bank indicates that the average parent of a four to 15-year-old child hands out £5.80 per week in exchange for household chores, such as tidying their bedroom or mowing the lawn.

Nearly two-thirds of parents (65%) said that they had explained the concept of money to their children so that they understood where it came from and what it was for.

The report suggests that 35% of under-16s have their own savings account, while 54% keep their spare cash in a piggy bank.

Child psychologist Dr Elizabeth Kilbey, who worked on the research, said: "It's great to see so many parents across the country rewarding and reinforcing children's good behaviour with pocket money.

"You can never start financial education early enough in a child's life and this approach is by far the best way to teach children good habits."

As well as encouraging children to stash their spare cash, a recent study by Aviva revealed that 36% of parents wanted to give their offspring a kick-start with their pension savings.

Government to introduce simpler savings accounts

2010-07-25T21:36:00.000-07:00

Mark Hoban, financial secretary to the Treasury, has given a speech in which he discussed the need for a more responsible approach to personal finance. The MP said that, ahead of the recession, too few people were setting money aside in savings accounts for a rainy day, and that families needed to learn to take greater responsibility for their own finances. He also confirmed that the government is keen to encourage savings by ensuring Britons have access to simpler savings products.

Savings levels 'too low' ahead of financial crisis

Speaking at the Consumer Financial Education Body Conference in Cambridge, Mr Hoban said that families had been hit hard by the financial crisis and recession. He observed that a combination of unsustainable borrowing and poor levels of saving had exacerbated the situation, claiming that it would be "something of an understatement to say that savings levels were too low". For instance, more than a quarter of households had no savings whatsoever before the crisis and almost half had less than £1,500 in savings.

His claims are backed up by recent research by the Institute for Fiscal Studies, which found that in 2005, over 60% of families had liquid wealth worth less than a quarter of their yearly earnings. For families where the head was less than 45 years of age, average financial wealth was close to zero, and research economist Cormac O'Dea claimed that there were "very low rates of saving between 2000 and 2005", particularly among young and low-income families.

Encouraging saving

Mr Hoban revealed that the coalition aims to help people to plan for their future by improving the financial advice available to families. Secondly, he highlighted the need for improved access to "straightforward products which do what they say on the tin". And thirdly, he said that consumers need better information upon which to base financial choices.

Better advice

One of the ways in which the government plans to encourage healthy financial behaviour is to develop an advice service which provides guidance on financial matters, whether it be online, over the phone or during face-to-face appointments. Families will be entitled to an annual financial healthcheck, which will encourage people to take stock of their situation on a regular basis and provide personalised advice on how to improve their savings.

In addition to these measures, Mr Hoban revealed that the National Financial Advice service will be scrutinised to ensure families can get the support they need during times of financial distress, while the wider spending review will look at the support provided by the government for debt advice.

Simpler products

Mr Hoban recognised that consumers need to have access to products they understand and trust if they are to be persuaded to save more. The MP observed: "However well equipped people are to make choices, difficulties will persist if they are still confronted by a vast array of complex products to choose from. That is why we are proposing a new range of simple products as the second step in the consumer journey." He added: "Simple products will help everyone to make better choices and we particularly intend them to help encourage saving."

He also mentioned instant savings accounts (ISAs), which are currently held by over 17 million people. He welcomed the Office of Fair Trading's report in response to the recent 'super complaint' from Consumer Focus and insisted that the government wants to ensure ISAs are "as simple, transparent, competitive and flexible as possible".

Clearer information

Finally, Mr Hoban said that consumers need the right information to enable them to compare savings accounts effectively and choose the one that best meets their needs. He pointed out that "very few people" switch between financial products, indicating that they are either unaware of alternative accounts or are unequipped to take advantage of them. He noted: "Initiatives to improve information available to consumers are vital and industry can take steps such as including personalised interest rates in statements."

Investment banks face U.K. probe into underwriting fees

2010-06-13T02:27:00.001-07:00

LONDON (MarketWatch) -- The U.K.'s Office of Fair Trading on Thursday turned its spotlight on the investment-banking industry, launching a probe into the fees charged for equity underwriting and other services.

The consumer-protection and competition authority said initial discussions with the corporate clients of investment banks have revealed "some dissatisfaction" with the services investment banks provide.

It plans to examine rights issues and other stock sales by the 350 largest U.K. public companies, but also asked for feedback on whether the probe should be expanded to include initial public offerings or securities traded on the Alternative Investment Market.

"We plan to study the efficiency of the equity-underwriting market and identify any areas for improvement," said Clive Maxwell, senior director of services.

"Our study will also help us to advise the government in its wider thinking about wholesale financial markets," he added.

The OFT said that in 2009 companies raised around 70 billion pounds ($102 billion) of equity capital on U.K. markets as numerous firms moved to strengthen their balance sheets in the face of the recession.

U.K. companies handed over around £2 billion in fees to investments banks for underwriting and other services, which works out at an average fee of around 2.9% of the value of a deal.

The fees cover both the advice an investment bank provides and the cost of its guarantee to buy up unwanted shares if existing investors decide they don't to participate.

Fees can vary significantly depending on the level of risk perceived with the company and are likely to be higher when a company needs cash to continue operating -- as was the case with some rights issues in 2009 -- than when it's raising cash to fund an acquisition.

BP's woes do not devalue the worth of dividends

2010-06-13T02:16:00.000-07:00

BP's travails in the Gulf of Mexico have focused investors' minds on the value of the dividend. A dividend is tangible proof that the company you have invested in is rewarding you for holding the shares. No wonder, therefore, that the threat to BP's dividend has caused the share price to plummet.

At its most basic level, dividends can be a good way of increasing your wealth. It is real cash paid into your account, which you can then do with as you wish. You can spend it, invest it or reinvest it in more shares to earn more dividends in the future.

Regular dividends can be a sign that the finances of the business you have invested in are in a healthy state. It is even better if the company can raise its dividend payout consistently. That can be a strong indication that the outfit is growing.

Not all companies pay dividends, though. Some businesses believe that any cash generated from the business should be invested back into the business to finance future growth.

Some investors, known as income investors, judiciously target shares for their dividend yields. The yield, the ratio of the dividend to the share price, can be compared with the returns from savings accounts, bonds and gilts. For example, Vodafone is forecast to pay about 9p per share in the coming year. The shares cost 135p, so that would suggest a forward dividend yield of about 6.7 per cent. For every £100 of Vodafone shares you own, you would expect to get £6.70 in dividends next year.

This makes it relatively easy to compare the dividends you could receive from shares with, say, the interest you may earn from a savings account. Using the Vodafone shares as an example again, you would need to find a savings account paying interest at 6.7 per cent after tax to beat its dividend yield – impossible.

Back to BP. It has historically paid a generous proportion of its profits to shareholders in the form of dividends. In fact, about £1 out of every £9 in dividends paid by UK companies currently comes from BP. Now the company is under huge pressure, with its business in the US under threat. It just goes to show that high yields are not risk free.

That said, income or high-yield investors with properly diversified portfolios should not be too badly affected. That is because the most crucial feature when selecting shares is sector diversification. This is to spread the risks around different industries.

Admittedly, pure income chasers could end up a portfolio stuffed with certain sectors. But the risks are too high if you put too many eggs into too few baskets. Imagine if you had concentrated on just banks in 2007.

Many investors like to reinvest their dividends and this is often an excellent strategy. With a yield of 6 per cent, even with no growth in share prices, your money would double in 12 years.

Bank commission calls for 'profound reform' of banks

2010-06-13T01:58:00.000-07:00

The Future of Banking Commission wants improvements in saver protection and restructuring of banks.

The commission was set up by consumer group Which? and is chaired by Tory MP David Davis.

He told the BBC that big banks must be broken up in order to prevent another financial crisis.

"If we don't do something, next time [a crisis] happens it will break the country - it will go bankrupt," he told the Andrew Marr Show.

He said breaking up the banks would be "tough to do, but it's got to be done".

Earlier, Mr Davis said fatal flaws in the banking structure had almost crippled the world economy.

He said the commission's proposals should prevent matters coming to such a head again.

The commission, which was set up last December, gathered evidence from regulators, consumer groups and business leaders including Bank of England governor Mervyn King, the Financial Services Authority chairman Lord Turner and the current Business Secretary Vince Cable.

Its recommendations will be delivered to 11 Downing Street, with the hope that they will shape government's policy on financial reform.

Executives from the UK's largest banking groups contributed to the commission and it also took evidence from consumers.

The commission says its recommendations aim to put ordinary people at the heart of a reformed banking system.

They include reforms to the structure of banks so if they fail, depositors are protected, and the introduction of new competition and regulatory regimes that make bank boards responsible for both meeting customers' needs and for their own solvency.

Other ideas include an "ethical culture" which would see banks stop paying commissions to front-line staff.

British Airways strike enters its second day

2010-03-20T20:59:00.001-07:00

The strike by British Airways cabin crew has entered its second day, with both sides claiming the advantage.

The Unite trade union said half of BA's 250 planes had been grounded on the first day of the three-day stoppage.

But BA says it reinstated flights as so many worked, adding that 97% of cabin crew due to show up at Gatwick did so on Saturday, as did half at Heathrow.

The dispute centres on job cuts and a pay freeze. Another four-day stoppage is planned to begin on 27 March.

Unite insisted 80% of its 12,000 members had supported the first day of the walkout - the first by BA cabin crew in 13 years.

The union said BA's Terminal 5 at Heathrow was like a "ghost town", adding that the airline contingency plans were failing.

However, BA described the union's claims as "rubbish", and said it had reinstated some long-haul flights this weekend because more staff had worked, including services to Miami, Los Angeles, Tel Aviv, JFK in New York and Cape Town.

BA said its contingency plans for the first day of the strike went "extremely well".

It said more than 65% of passengers would reach their destinations, with 1,157 staff working and some cancelled flights reinstated.

BA said it was confident that it could handle 49,000 passengers on each of Saturday and Sunday, compared with about 75,000 on a normal weekend day in March.

The company is advising customers to check the BA website to find out what extra flights will now be operating.

At the start of the strike it said 65% of passengers would be able to reach their destinations, despite 1,100 BA flights out of the 1,950 scheduled being cancelled.

BBC business correspondent Joe Lynam said that, with a week's notice to plan their journey, very few passengers turned up shocked to find that their flight had been cancelled.

Former BA cabin crew manager Jamie Bowden said most of the check-in staff at Terminal 5 were working without any disruptions.

He told BBC News: "The leased aircraft that British Airways have chartered in, they are part of the normal computer system now, and so far things are going pretty smoothly."

'Management bullying'

Unite said a number of planes had been stacked up at airports, including 85 parked planes at Heathrow, 20 at Cardiff and 20 in Shannon.

Unite national officer Steve Turner: “Our pickets are strong”
It said none of the buses which normally transport crew to work had crossed its picket lines at airports.

A spokesman said: "The support we are getting shows how strongly people feel about this and is in spite of the bullying by management."

At Gatwick, all long-haul flights and more than half of short-haul flights were expected to operate as normal this weekend, along with more than 60% of long-haul flights and 30% of short-haul flights at Heathrow.

On Saturday, BAsaid London City airport was operating as normal.

Many flights are operating with the help of aircraft hired in from other carriers.

Obama says historic health plan will pass

2010-03-20T20:57:00.000-07:00

WASHINGTON (AFP) – US President Barack Obama led Democrats in a triumphant, fist-pumping rally Saturday and confidently predicted Congress would rise to a century-old challenge and pass his health care overhaul.

"It is in your hands, it is time to pass health care reform for America, and I am confident that you are going to do it tomorrow," Obama told his allies on the eve of a cliffhanger House of Representatives vote. "Let's get this done."

The proposed overhaul, a compromise between rival House and Senate versions of the bill passed late last year, would bring the United States closer than ever to guaranteeing health care coverage to all of its citizens.

Using a blend of expanded government health programs and subsidies for millions to buy private insurance, the bill would add some 32 million Americans to the ranks of those covered for a total of 95 percent of Americans a century after president Theodore Roosevelt called for a national approach to US health care.

As Obama spoke, thousands of protestors outside the Capitol chanted "Kill The Bill" and waved signs branding the president and his proposal "socialist" and lawmakers "corrupt," cheered on by the Republican minority.

"The American people are making their voices heard, here on Capitol Hill and across America. It's time for Washington Democrats to listen," said House Minority Leader John Boehner.

The House was to vote Sunday on the legislation after a year of tough debate, months of setbacks, bitter partisanship, and legislative logjams -- and a dramatic week of arm-twisting and head counts, led by Obama himself.

"This body has taken on some of the toughest votes and some of the toughest decisions in the history of Congress. Not because you were bound to win, but because you were bound to be true," Obama told lawmakers worried that the broadly unpopular proposal could carry a political price in November mid-term elections.

"I know there is a tough vote. And I am actually confident, I've talked to some of you individually, that it will end up being the smart thing to do politically because I believe that good policy is good politics," added Obama, who has staked his effectiveness and his legacy on the overhaul.

Asked whether that campaign had corralled the 216 members needed to pass the bill, Democratic House Majority Leader Steny Hoyer told reporters: "Clearly we believe we have the votes."

Democrats set the stage for a series of House votes on Sunday: First on the "rule" to govern the debate, then a package of "fixes" to the Senate's version of the bill, and then the Senate bill itself.

"We want to make it absolutely clear that we're modifying the Senate bill," Democratic Representative Chris Van Hollen, a close ally of Democratic House Speaker Nancy Pelosi, told reporters.

Van Hollen said that Democrats had dropped a controversial earlier plan, much mocked by Republicans, to avoid a direct up-or-down vote on the Senate plan and instead bundle it with the "rule" or the "fixes."

At least one Democrat had indicated he wanted to back the overhaul but could not vote for that approach.

If the measure clears the House with at least 216 votes, the Senate would take up the changes next week under rules that deny Republicans their most potent weapon, an indefinite delay called a filibuster, which Democrats lack the votes to overcome.

Democrats raised the possibility that Obama could issue an executive order reaffirming the prohibition.

Outside the Capitol, demonstrator Andy Counts of Maryland denounced the bill as "an overreach of the government, too much socialism" as he waved a sign reading: "Lies. Bribes. Corrupt. Socialist. Rats."

Asked whether he expected to change lawmakers' minds, Counts demurred, but said: "This is a start for us, the beginning of another year, two years, of work to repeal this bill," starting with November elections.

The White House touted support for the bill from the American Hospital Association, the American Medical Association -- top lobbies for US hospitals and doctors -- and the powerful AARP lobby group for the elderly.

Democrats also touted an estimate by the non-partisan Congressional Budget Office (CBO) that says the bill could cut 130 billion dollars from the bloated US deficit through 2019 and 1.2 trillion in the subsequent 10 years.

The CBO estimates the health care bill would cost 940 billion dollars over the next ten years.

Some of its most popular measures include bans on insurers denying coverage because of pre-existing illnesses, imposing lifetime caps on coverage or dropping people from coverage when they get sick.

Europe Trouble, U.S. Opportunity

2010-02-21T01:43:00.000-08:00

Across the ocean in Europe there's lots of anxious chatter about Greece's fiscal woes and the prospects for the continent's common currency, the euro.

Should U.S. investors care?

Usually, what happens overseas is a lot like what happens in Vegas: It stays overseas. But the currency turmoil in Europe -- along with the elusive nature of an easy fix -- merits more attention than the usual international kerfuffle and perhaps some adjustments to your long-term portfolio planning, especially as it relates to international investing. The euro foibles also could give an unexpected boost to U.S. stocks in the coming year.
Greenback Goes Up
The euro is one of the world's major currencies, along with the dollar and the Japanese yen. But it's still relatively young, about a decade old. And unlike the buck or the yen, it's the currency for 16 different countries, from big nations like Germany and France to geographical specks like Malta and Cyprus. While all these countries share the euro, they manage their own fiscal policies -- which brings us to the euro's current difficulties.

Greece has spent a lot more than it takes in and now faces the possibility of defaulting on its debts. Economists anticipate that the euro zone can't permit such a failure, lest it damage the credibility of the young currency. So some sort of rescue will be needed. But a rescue could encourage profligacy in other euro countries, such as Spain or Portugal.

In other words, it's a big mess.

Investors have responded by selling euros and buying dollars.The greenback has gained nearly 5% against the euro so far this year, a bout of strength few anticipated in January. Private investment firm Partners Capital surveyed more than 120 sources and experts at the start of the year and estimated that a dollar rally had about a 15% probability.

The Greek fiscal problems changed all that. For instance, economists at Morgan Stanley now expect the dollar to rise against the euro throughout the year, with a price target of $1.24 per euro. It's currently at $1.36.

A stronger dollar means American tourists headed to the Louvre, the Vatican or other euro-zone attractions will see their cash go a bit further. The dollar also is looking muscular compared to the British pound. Two years ago, it took $2 to buy one pound. Now, one can be had for $1.55.

On the investment front, the euro troubles could boost prospects for U.S. stocks for two reasons. First, the euro woes will complicate an already-bleak economic recovery in Europe.

Second, the stronger dollar gives the Federal Reserve more room to maneuver. A strong dollar helps limit imported inflation and also reduces the need for the Fed to raise short-term interest rates in order to "protect" the value of the currency.

If the Fed is sitting back, that reduces the prospect of a big correction in U.S. stocks. Many investors have been waiting for such a pullback since the lows of last March. Moreover, with the Fed on prolonged hold with rates at very low levels, fixed-income assets, like bonds, won't return very much. It might be smart now to move from bonds toward stocks. Dollar-cost averaging -- investing a set dollar amount each month -- into an index fund is the most prudent way to do this.

Amid the euro crisis during the past few weeks, markets have reduced expectations of a Fed interest-rate increase. Based on federal-funds futures trading, investors expect that rates will start to rise late this year at the earliest. (Fed-funds futures are often analyzed to extract public expectations of future Federal Reserve actions.)

Previously, investors anticipated a rate move coming as soon as this summer. Some analysts, notably at HSBC, don't expect the Fed to raise interest rates until 2011.

Best of a Rough Lot
Moreover, while the U.S. recorded fourth-quarter gross-domestic-product growth of 5.7%, the euro-zone GDP came in with a lower-than-expected gain of 0.1%. Economists at the Royal Bank of Scotland anticipate 0.9% GDP growth for the euro zone in 2010, well behind estimates for U.S. GDP growth in the mid-2% range. Japan, despite a 1.1% increase in fourth-quarter GDP, is in terrible shape and "getting worse," according to High-Frequency Economics, a Valhalla, N.Y., research firm.

That makes the U.S. the best of a rough lot in the developed world.

While the euro problems argue for favoring the U.S. in the developed world, international investing remains an important cog for long-term investing. Emerging markets are expected to grow three times as fast as the U.S. this year, according to Morgan Stanley.

Lastly, the excitement about commodities that has permeated markets for much of the past several years is likely to take a hiatus or at least face headwinds, in part because of the strong dollar. Commodities are priced in dollars and tend to move inversely to the dollar.

Analysts at Oppenheimer Asset Management cite the dollar, as well as uneven global economic activity, as two reasons commodity prices will retreat this year. Since the dollar's recent rally against the euro got under way, oil and copper prices have both dropped about 6%.

Total Qatar hosts Paris conference

2010-02-21T01:40:00.000-08:00

Total is the host sponsor of the two-day “Finance and Investment in Qatar’ forum in Paris on March 25 and 26.

The event will be held under the patronage and in the presence of HE the Prime Minister and Minister of Foreign Affairs Sheikh Hamad bin Jassim bin Jabor al-Thani.
Total E&P Qatar managing director, Philippe Guys said the high-profile event would provide significant opportunities for further co-operation between Qatari and French companies.

Expected to be the biggest and “most influential” international investment event of 2010, more than 500 high net worth businesspeople, government decision-makers and trade institutions will be in Paris to highlight investment and profit opportunities to Qatari and French businesses.

The six sessions on the two days will focus on investment climate in Qatar, energy, finance and insurance, infrastructure and real estate, healthcare, education, environment, sports and tourism.

The event will be held at Intercontinental Paris Le Grand.

Joining HE Sheikh Hamad bin Jassim on the provisional speakers’ list are France’s Prime Minister Francois Fillon, five ministers and more than 30 chairmen, CEOs and presidents of major international corporations.

Corporate executives, ministers and senior officials, and heads of investment promotion agencies from both countries will attend the “5th Finance & Investment in Qatar” Forum.

“Our Group CEO and senior executives will also attend the forum,” Guys said.

Focus on finance: Get organized for tax time

2010-01-10T02:20:00.002-08:00

Question: I can’t believe it is tax time again already. Any last minute tips?

Answer: It’s time to get organized. One of the biggest mistakes taxpayers make is not being organized at tax time. Many taxpayers want to get their taxes completed as soon as possible, but not having all of your information can lead to lost credits. Here are some hints:

Homeowners can deduct mortgage interest and property taxes, local taxes such as occupation or city taxes on wages, energy credits for high efficiency heating and cooling units, energy saving devices. Taxpayers will need receipts and specifications that meet IRS standards to qualify. Have social security cards available for all members of your household along with their birthdays.

If a taxpayer has a small business, the IRS requires good bookkeeping or records to substantiate income and expenses. Expenses should be broken down by category such as advertising, supplies, office expenses, a mileage log, any new vehicles or equipment bought and any assets sold during the tax year. If, during the year, you have formed an LLC corporation, or partnership, consult your accountant or experienced tax preparer about special rules that may apply. Do this prior to the end of the year.

If you own rental property, prepare a list of expenses and income from that property. As a landlord you can note expense repairs, mortgage interest and taxes, your mileage to collect rent and check on the property, depreciation, advertising, utilities if you pay them as well as any other expenses directly related to the rental.

If you have investments such as stocks and bonds not in your IRA or 401(k) or other retirement plans you must have a record of your stock sales including the purchase date and sale date, your cost and selling price. If you work through a brokerage, they will normally send you a statement of your transactions. Interest from banks or other sources, including non-taxable interest, dividends whether reinvested or not, distribution from retirement accounts, and contributions to retirement accounts must be included on your tax forms. Make sure before you see your tax preparer or accountant that you have all of your statements or records.

Itemized deductions reduce your tax burden. Donations, cash and non-cash to charitable institutions normally are deductible. Expenses you incur as an employee, such as using your vehicle in the conduct of your employment such as going to the bank and post office for your employer in your personal car, not to and from work, may be deductible. Casualty loss from storm damage may be deductible. Gambling losses to an extent of gambling winnings may be deductible. Uniforms and union dues for work are normally deductible. Health insurance premiums, co-pays, and other medical expenses in excess of 7 and a half percent of your adjusted gross income may be deductible, salary reductions for health insurance at your job under an employee plan not included.

Other deductions to income might include; self employed health insurance, student loan interest, alimony, Health Savings Account deductions, tuition and fees deductions, traditional IRA deductions, and moving expenses. These deductions directly reduce your gross income, dollar per dollar. Many taxpayers do not know all the potential deductions and credits available to them. Before you meet with your tax preparer, call them and ask questions:

What documents do I need?
What deductions and credits are available to me?
Where can I find helpful information to help me reduce my tax burden?
Have a “tax file” or a special place to put important tax information all year such as receipts for tax deductible items.

Find a knowledgeable tax preparer or accountant. Ask yourself these questions:

Is my tax preparer open all year in case I need help?
Does my preparer have a good working knowledge of current tax law?
Are they willing to assist me if I am audited?
Did they sign my return and put their name on my return?
Do they file electronically for me if I choose?
Remember, your preparer works for you and should assist you in paying the lowest legal tax without putting you at audit risk. In conclusion, get organized. Have all the documents necessary to reduce your tax burden. Ask your accountant or preparer questions before you go to file your income taxes.

Islamic banking in the Philippines

2010-01-10T02:20:00.001-08:00

The first and and only Islamic bank in the Philippines, the Al-Amanah Islamic Bank, began its operations in 1973 and was recently bought by the Development Bank of the Philippines.

What sets this bank apart from the traditional banks in the country? Similar to any Islamic bank, it religiously abides by the Shariah, zeroing in on its transaction rules. Most people bridge this type of banking to the concepts of prohibited interests (usury) and profit sharing.

For example, profit, according to the Qíuran, is only warranted if it yields additional values in the economy and society; unwarranted profits are surplus values 'without a counterpart.' Working under such a definition, Islamic banking minimizes exploitative contracts and unjust transactions.

Early Islamic doctrines emphasize interest as a surplus value without an equivalent real value, thus making it unacceptable. Sukuk, as an example, is an Islamic financial instrument. It is the counterpart of bonds, but differing in the aspect that these types of bonds are non-interest-bearing and is utilized without fixed income.

Islamic banking also prohibits transactions related to alcohol and pork, in deference to common Islamic doctrine. Ethics and morality are at its pedestal; thus, gambling and other games of chance are also restricted.

How then can this financial service be highly profitable?

In Islamic banking, loans either carry service charges or entail absolutely zero costs. Loans with service charges do not impose interests but asks for service compensation. This amount is further restricted by the price ceiling decided upon by authorities. Loans with no charges, meanwhile, provide a more socially responsible view made by the agents of Islamic banking. These loans are granted to farmers, to the needy, and to the other unfortunate sectors.

Clearly, these loans do not provide for a big percentage of bank profits. Hence, trade and investment financing dominate the scene. The catch, though, is to operate these activities under PLS or the profit and loss sharing scheme.

For example, in compliance with PLS, Mudaraba provides a venue to put together resources, monetary or not, in erecting a financial plan or activity. Profits and risks are shared by the bank and entrepreneur. Similar to a venture capital, the financial risk gives justification for the profits that it will rake.

This very activity is an innovative way to integrate and benefit the society by providing funds to plausibly efficient and relevant projects. A probable dilemma lies in the associated expenses in measuring and examining participants and risks, as well as negotiations and further transactions costs.

Rooting from the fact that Islamic banks are 'keepers and trustees of funds', another source of profits are gifts. These gifts lure in more customers to open savings accounts, increasing their capital. Gifts are portions of profits from the bank investments using the savings as capital source. A concept of a 'goodwill loan' is also utilized, stating that the debtor is only asked to pay the principal. An option to give a token of appreciation is placed on the table, without any form of promises. This transaction is the epitome of the Islamic interest-free loan.

The estimated rate of return concept, on the other hand, states that the bank estimates profit before financing an activity. If in actuality the project earns more that what was gauged primarily, the bank gives the excess to the client. This truly reflects their concept of profit with actual value or counterpart.

Are the Islamic banking schemes effective?

It may come as a surprise that some of the biggest companies in the world utilize Islamic banking for funding. These companies reportedly include IBM, Daewoo, GM (General Motors) and Alcatel.

The main difference between traditional and Islamic banking lies in their concepts of profit. The maximization goal of traditional banks targets the shareholders; on the contrary, Islamic banks hurdle the interest of all economic agents.

A study conducted by Celent concluded that assets under these Islamic banks grew more rapidly than those under the conventional ones. Generally, assets linked to Islamic banking experienced a growth of over 10% for the past decade. The Economist also estimates that such assets amount to US$822. This system also remained formidable in the face of the recent financial crisis.

Trends are geared towards the untapped markets with a relatively high potential for growth. These locations include Turkey and the majority of North Africa. According to Standard and Poor's, however, the profits of Islamic banking may be grabbed by conventional banks once they start offering a vast array of Islamic financial services.

Islamic Banking : A global perspective

Hotspots for Islamic banking are found all over the world, with the Middle East taking almost two-thirds of the entire pie. Mature markets in this region include Saudi Arabia and Kuwait. The former houses Al-Rajhi Banking & Investment Corp., the world's largest Islamic bank, while the latter invests on project finance.

Services offered by these Islamic banks include current accounts, credit cards, money transfers and mortgages. Although these banks collide under a unitary belief, practices may vary depending on the laws of land where they are located or their special objectives.

Moreover, the political climate and numerous circumstances pave the way for novelty and unique techniques and treatments. Specializations within this system are apparent. UAE focuses on trade financing, and Bahrain, on corporate finance and investment.

Beijing Is Urged to Lend Reserves to China Banks

2010-01-10T02:18:00.000-08:00

BEIJING -- China should consider lending some of its foreign-exchange reserves to Chinese commercial and policy banks, which could use the funds to finance overseas investment by Chinese companies, Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing said Tuesday.

His comments highlight the debate among government and industry officials about how Beijing can make better use of its huge foreign-exchange reserves, which would help prevent risks from a too-heavy concentration on holdings in dollars.

Mr. Jiang said in a speech at a conference in Beijing that because the funds would have to be used abroad, such a policy wouldn't increase domestic money supply. Banks could even swap yuan for foreign exchange, thus reducing excess domestic liquidity, he added. After massive stimulus spending and a government-backed lending boom over the past year, concerns have grown over asset bubbles and excess capacity in some domestic industries.

China's foreign-exchange reserves totaled $2.27 trillion at the end of September. The government has sought to diversify how it invests the reserves for a better return, while pledging that the dollar will remain the key currency in its reserve portfolio. Academics have discussed various diversifying strategies, including using reserve funds to build up state stockpiles of commodities such as oil and gold.

Li Yang, a vice head of the Chinese Academy of Social Sciences, a government think tank, said on the sidelines of the forum that Chinese banks have already begun using funds from the foreign-exchange reserves to finance companies' cross-border investments. He added that the size of such funds has been "quite big." But he didn't elaborate on how the mechanism works.

The comments came after recent media reports that Beijing may inject as much as $200 billion from the country's foreign-exchange reserves into China Investment Corp. -- the country's sovereign wealth fund -- a plan that, if implemented, would greatly help ease pressures on the increase of the reserves.

People's Bank of China Vice Gov. Hu Xiaolian said earlier Tuesday she is unaware of any government plans to inject fresh capital into CIC, which got its initial batch of $200 billion capital on its establishment in late 2007.

Chinese officials are generally reluctant to publicly discuss internal deliberations over policies that haven't been formally approved and it remains unclear whether Ms. Hu's comments suggest that a final decision on fresh capital injection into CIC has yet to be made, or that the government has no such plan.

Reinstate Glass-Steagall – NOW.

2009-12-28T20:00:00.000-08:00

Once upon a time, banks did banking and brokers made people broker and ne’er the twain did meet. Ditto for insurers and S&Ls and all the other sub-sectors Wall Street has now euphemistically titled the “financial services” industry, an oxymoron akin to “airline food” or “Congressional ethics.”

Sometimes I find a particularly well-written article on a subject and say, “I couldn’t have written it any better myself.” Such was the case with a recent article by Sy Harding of Street Smart Report (see his free daily blog at www.streetsmartpost.com.) I’ve quoted much of it below, followed by my comments and ideas for possible purchases…

The Glass-Steagall Act was passed in the 1930’s to help prevent a recurrence of the 1929 market crash and the Great Depression. It provided strict separation of the activities of various types of financial firms, the overlapping of which had been significantly responsible for creating the late 1920’s market bubble and subsequent crash.

Under Glass-Steagall financial firms had to divest themselves of over-lapping operations and focus on their core business.

Basically, savings banks could take in deposits from customers and loan the money out in home mortgages, auto loans and other types of personal lending.

Commercial banks could handle deposits and checking accounts of businesses and make commercial loans.

Investment banks could provide investment banking services, including arranging for companies to go public, merger and acquisition activities, making bridge loans, etc.

Brokerage firms could handle investment services for investors.

Insurance companies provided insurance and annuities.

Real estate brokerage firms provided real estate services on a commission basis.

Mutual funds invested in stocks, bonds, or other assets and sold shares to the public to provide them with diversified portfolios.

The financial sector screamed and yelled, but the separations were made fairly quickly and enforced. And none of the dire consequences Wall Street firms warned would be the result if government set up such restrictions took place. All sectors of the financial system managed to flourish very well for the next 60 years under the separations and restrictions.

But in the late 1990’s, banks and insurance companies began looking over their walls in envy at the big profits that brokerage firms and mutual funds were making from the booming stock market. Brokerage firms looked over their wall at the profits that could be made from packaging home mortgages, auto loans, etc. into leveraged investment derivatives…

…in 1998 they began lobbying Congress, and bombarding the media with articles and interviews aimed at having the public accept the idea of tearing down the walls… Overnight the walls disappeared. Banks were suddenly in the brokerage business, introduced their own mutual funds, were neck deep in investment banking, had huge trading departments trading for their own profits, etc. Brokerage firms were providing home mortgages, packaging the mortgages of other lenders and selling them to investors, etc.

And we soon saw the results with the stock market bubble in 2000, and the subsequent real estate bubble just a few years later, and the near collapse of the entire financial system last year under the weight of all the toxic assets that had mushroomed on the balance sheets of all types of financial firms…

…Wall Street of course claims that the abolishment of Glass-Steagall in 1999 was a good thing, that it resulted in innovative investment changes that strengthened the economy and markets.

Huh? We’ve had two recessions and two severe bear markets since 1999, with buy and hold investors still way underwater over the last 10 years, consumers in worse trouble than they’ve been in since the great Depression, and the financial system near total collapse for the first time since the 1929 crash and its aftermath…

In the late 1990s, Congress and President Clinton embraced the campaign spearheaded by Sandy Weill, then head of Citicorp, to rescind Glass-Steagall. Weill and his ilk paid $200 million in lobbying fees for this endeavor in the 1997-98 election cycle alone (and contributed another $150 million directly to various Congressmen and other politicians during those months.) That was chump change to Wall Street – and, in fact, it came out of the pockets of Citicorp and other shareholders, without Weill or his cabal of cohorts having to put up a penny of their own to pull off this taxpayer heist. No matter the source, it was enough to buy respect, votes, or whatever. And we are still paying for it today.

(According to PBS's "Frontline," just days after the Treasury Department agreed to support the repeal, Treasury Secretary Robert Rubin accepted the job as Weill's chief lieutenant at Citigroup. Weill and co-boss John Reed thanked President Clinton, whom Weill called in the middle of the night to keep the deal going, personally.)

There are only two times our elected representatives give a damn what we think – the first Tuesday in November in the years we elect our President and the first Tuesday in November two years hence. In fact, they still don’t care what we “think” even on these dates but they sure as hell worry about how we’ll vote. If enough of us tell them we will vote them out of office unless they restore Glass-Steagall, this is the year – these are the key months in which-- they will listen. Not because they care what we think, but because if we vote them out, they’ll have to find honest work somewhere (or become lobbyists, of course) and they’ll then be saddled with the same health care system and pension system they voted for the rest of us.

If we are successful in restoring Glass-Steagall, I would look at a number of regional banks like Wilmington Trust (WL), Bank of Marin (BMRC), Bank of Hawaii (BOH [FREE Stock Trend Analysis]), United Bankshares (UBSI), Trustmark (TRMK), Heartland Financial (HTLF [FREE Stock Trend Analysis]), Sterling Bancshares (SBIB) and Capital City Bank Group (CCBG) to do exceedingly well and recommend them for your further research. If we fail to reinstate Glass-Steagall, these banks might still do quite well, but more as takeover candidates by money-center banks Too Big Too Fail, Too Stupid to Succeed Without Regularly Reaching Into Our Pockets.

Write your Congresspersons, every one. Tell them you will vote them out in a flash if they don’t immediately reinstate Glass-Steagall. I live at Lake Tahoe in Nevada, 10 minutes from the People’s Republic border. If I believe we can vote out Harry Reid, the man who gave Congressional ethics its standing as an oxymoron – and I do – and his cohorts to the far left of us on the map – and I do -- your representatives should be easy!

In the finance game, biggest job growth will be for referees

2009-12-12T20:06:00.000-08:00

People who knew how to make a quick buck held some of the fastest-growing jobs two years ago. Now, the growth industry is in helping financial firms figure out how to follow the rules.

Financial examiners and compliance officers are expected to be two of the 30 fastest-growing U.S. occupations over the next 10 years, according to a Labor Department report released last week.

Two years ago, financial analysts -- the people at investment firms who pore over stocks and bonds -- were on that list. But after the financial crisis, that occupation has fallen out of the top 30.

Robert R. Johnson, senior managing director at the CFA Institute, a membership group for money managers and financial analysts, said the report is good news for the financial markets.

"The finance industry grew so rapidly that people were attracted for the wrong reasons," he said. "People were buying and selling assets they didn't understand." If securities firms and other institutions increase their focus on compliance, he said, "that's wonderful news for investors."

The number of jobs for financial examiners is projected to grow more than 40 percent from 2008 to 2018, the Labor Department's report said. Examiners are employed by banks, insurance companies and other firms, as well as by the government agencies that regulate them. They're charged with ensuring that the firms comply with the state and federal rules that govern their industries. The occupation will account for 38,000 jobs in 10 years, the department said.

Compliance officers perform similar work and are employed mostly by government regulators and financial firms. They are more numerous than examiners, and the number of such jobs is forecast to jump 31 percent, to a total of 341,000, by 2018, the department said.

The number of jobs for accountants and auditors is expected to rise by 279,000, the department said, to nearly 1.6 million.

All these professions "will benefit from an increasingly complex regulatory environment," the department said. Congress is considering wide-ranging legislation to tighten the rules governing Wall Street.

Every two years, the Labor Department projects how many jobs the economy will generate over the next decade, and in what industries and occupations.

Many of the occupations the department expects to grow the fastest are concentrated in the health-care industry.

The number of home health aides is expected to jump by 50 percent, to 1.4 million, by 2018, the department said. It projects there will be 104,000 jobs for physician assistants, who can provide less-costly care than doctors -- a 39 percent increase.

The job market in information technology is expected to keep growing. Businesses are using more complex internal networks and strengthening their computer security, the department said. And mobile computing is growing more popular.

Providing health care for pets is also likely to be a growing field: The department said the number of veterinarians and vet technicians should each increase by about a third.

Ghana: Country, China Enter Into Agreement on Oil and Gas

2009-12-12T20:05:00.000-08:00

The China Development Bank (CDB) has, in a financing agreement with the Ghana government and the Ghana National Petroleum Corporation (GNPC), disclosed plans to support the development and the utilization of Ghana's oil and gas.

It also seeks, in the financing agreement, to support the development of the agriculture, transportation and energy sectors among others.

The financing agreement was signed under a memorandum of understanding by the Minister of Finance and Economic Planning, Kwabena Duffuor on the behalf of the Government of Ghana, Nana Boakye Asafu Adjaye, the Managing Director of GNPC on behalf of the company and Mr. Zahao Jianping signed for CDB.

Addressing the media on the agreement at the signing ceremony in Accra, Fiifi Kwettey, Deputy Minister for Finance and Economic Planning said the agreement, which was a long term cooperation, will support GNPC to accelerate and optimize the development and utilization of national oil and gas resources and their proper integration into sustainable national development.

He explained that the Ghana - China cooperation will enable the development of national capacity and infrastructure in the production, processing transportation and marketing of oil and gas, while ensuring that the oil and gas development will support rather than undermine other productive sectors.

Through the agreement, he noted, CDB will also support priority agricultural, industrial and infrastructure investments to create sustainable jobs and equitable growth.

The Minister of Finance and Economic Planning, Kabana Duffuor said that "the Government of Ghana welcomes investors to work hand in hand with Ghana in the development of the country's hydrocarbon resources as well as other sectors of our national economy. The signing of the agreement, according to him, was a boost to this effort.

Obama blasts Wall Street for economic crisis

2009-12-12T20:00:00.000-08:00

SAN FRANCISCO (MarketWatch) -- President Barack Obama blasted Wall Street for worsening the economy's downturn and promised to make financial markets more transparent and accountable.

In his weekly radio and Internet address Saturday, the president applauded the House of Representatives for passing sweeping financial reform legislation and said the economy is recovering from the "irresponsibility" of Wall Street firms that "gambled on risky loans and complex financial products, seeking short-term profits and big bonuses."

It was "risk management without the management," Obama said. "Their actions, in the absence of strong oversight, intensified the cycle of bubble-and-bust and led to a financial crisis that threatened to bring down the entire economy."

Obama also blamed an "era of easy credit" for some of the excesses. "Millions of Americans borrowed beyond their means, bought homes they couldn't afford, and assumed that housing prices would always rise and the day of reckoning would never come," he said.

"It was a disaster that could have been avoided if we'd had clearer rules of the road for Wall Street and actually enforced them," the president said.

The House on Friday narrowly approved the most comprehensive financial industry regulations since the Great Depression, including new restrictions on the biggest banks and the Federal Reserve. The legislation also would create a Consumer Financial Protection Agency to oversee mortgage, credit card and other banking products. Read about the House vote.

Obama urged the Senate to act quickly on its own financial reform proposals to ensure that the "risky dealings that sparked the crisis would be fully disclosed and properly regulated." And he criticized Republicans and financial industry lobbyists for blocking efforts to mandate tougher rules.

In an interview with CBS' "60 Minutes" program scheduled for broadcast on Sunday, Obama condemns bankers for taking government bailout money and are now collecting handsome bonuses.

"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Obama said, according to excerpts from the interview released Saturday.

"What's really frustrating me right now is that you've got these same banks who benefited from taxpayer assistance who are fighting tooth and nail with their lobbyists ...up on Capitol Hill, fighting against financial regulatory control," the president said.

In the Republican address on Saturday, U.S. Rep. Marsha Blackburn of Tennessee focused on climate change and the international summit that Obama is slated to attend on Dec. 18 in Copenhagen.

Blackburn criticized Democrats for wanting to "impose a 'cap-and-trade' national energy tax, a bureaucratic nightmare that would make households, small businesses and family farms pay higher prices for electricity, gasoline, food and virtually every product made in America.

London's Finance Job Openings Grow

2009-09-17T03:13:00.000-07:00

LONDON -- The number of new job vacancies created in August in London's financial-services sector jumped 18% in August from a month earlier, representing the largest monthly rise in new jobs this year, recruitment company Morgan McKinley said Thursday.

This rise bucked the traditional trend for new vacancies to drop off during the summer months and reflected growing confidence in the financial markets in line with rising stock markets and signs of improving business conditions at banks, the company said in its London employment monitor.

"There has been an obvious progression in terms of confidence levels within the City hiring market," said Andrew Evans, managing director of Morgan McKinley's financial services division.

"This increased commitment to hire coupled with positive results from the FTSE recently and an improving [mergers and acquisitions] outlook will hopefully drive the continuation of encouraging jobs figures into the month of September," he added.

Despite the monthly improvement in the jobs market, the number of new jobs vacancies coming on to the market was still down 39% from August last year, Morgan McKinley said.

The average City salary remained at £50,574 ($83,467), which was largely unchanged on a month-to-month basis and only 0.3% higher from August a year earlier.

SKorea finance chief shrugs off currency gains

2009-09-17T03:12:00.000-07:00

SEOUL, South Korea -- South Korea's finance chief shrugged off the country's strengthening currency Thursday, saying that the market should be left to determine exchange rates as the won closed at a nearly one-year high.

"As to the weakness and strength of currencies that is for the market and for investors to judge," Minister of Strategy and Finance Yoon Jeung-hyun said during a question-and-answer session with reporters from foreign media organizations.

Yahoo! BuzzWeakness in the won, which fell nearly 26 percent against the dollar last year, has helped boost South Korean exports by making the country's products more competitive in overseas markets. And that has helped underpin Asia's fourth-largest economy amid the global slump.

Yoon said the won's strength comes amid global weakness in the greenback. He also suggested the government would only step into the market if movements become unbalanced, though gave no indication such an intervention was imminent.

Yoon spoke as the South Korean won rose to a nearly one-year high. The currency closed at 1,204.80 to the dollar Thursday, its strongest finish since 1,187 on Oct. 1, 2008.

The won, which has risen 3.7 percent this month and is 30 percent above an 11-year low hit in March, has strengthened in line with gains in South Korean shares. The Korea Stock Price Index, the country's benchmark exchange, advanced 0.7 percent Thursday to end at 1,695.47, a nearly 15-month high.

Comment On This StoryStrong demand for shares by foreign investors has helped propel the Kospi to a gain of 50.8 percent so far this year. Daily net buying of shares by foreign investors reached its highest level in almost two years Wednesday, according to the Korea Exchange.

In an earlier speech, Yoon said that South Korea's economy is recovering from the depths it hit late last year during the global financial crisis, but cautioned that risks remain and the government remains vigilant.

"Barring unforeseen external shocks, the Korean economy is likely to keep gathering steam," Yoon said. He added that the economy is likely to perform better than this year's forecast of a contraction of 1.5 percent.

"Though the work of recovery continues with some satisfaction, this should not lead to complacency, while many people are still out of work and the economy faces uncertainties and risks," he said.

The economy expanded a revised 2.6 percent in the three months through June compared to the first quarter, the central bank said earlier this month, amid signs government and central bank efforts to stimulate demand are working. It was the fastest growing quarter in 5 1/2 years. Initially, the bank had estimated the economy grew 2.3 percent.

In the first quarter, the economy managed growth of just 0.1 percent, which came after a 5.1 percent contraction in the fourth quarter of 2008.

Compared to the same period a year earlier, however, gross domestic product contracted 2.2 percent in the second quarter, highlighting the impact the global economic downturn has had on South Korea.

Japan's new finance head faces tough economic road

2009-09-17T03:10:00.000-07:00

TOKYO — Faced with the daunting task of reinvigorating the world's second-biggest economy, Japan's freshly installed prime minister turned to one of his party's most experienced hands as finance chief.

Delivering change may well depend on veterans like Hirohisa Fujii who know how to work the system.

At 77, Fujii is the new Cabinet's oldest member whose lengthy resume includes a previous stint as finance minister in the early 1990s. Earlier in his career, he spent more than two decades working in the Ministry of Finance.

Fujii takes over at a critical time for Japan's economy, which is struggling to emerge from its deepest recession since World War II. People are anxious amid record unemployment, falling wages and intensifying deflation.

Although he has a reputation as a fiscal conservative, Fujii said this week that improving the economy will be his top priority even at the expense of Japan's precarious fiscal health. The Organization for Economic Cooperation and Development — a grouping of industrialized nations — predicts Japan's public debt, already the highest among member countries, may reach 200 percent of gross domestic product next year.

"Of course, government finances are important, but my principle is that the economy comes before government finances," Fujii said Wednesday, according to Kyodo news agency.

Prime Minister Yukio Hatoyama's Democratic Party of Japan could bring sweeping changes to Japan Inc. by shifting the focus of the government's economic policy to workers and families instead of corporate profits. The party has promised cash handouts to families with children, toll-free highways and income support for farmers. The estimated bill comes to 16.8 trillion yen ($184 billion) when fully implemented starting in the 2013 fiscal year.

Hatoyama must overcome doubts about whether his largely untested government can actually execute. In that regard, Fujii is the logical choice to assuage such fears, analysts said.

His experience adds substance to the neophyte government and as a product of the bureacracy, Fujii could help balance the Democrats' spending ambitions with more fiscally conservative finance ministry officials. His budgetary know-how will likely come in handy as the Democrats search for waste to slash in order to fund their initiatives.

Despite recent comments, economists agree that given his background, Fujii is unlikely to support rampant government spending that would seriously undermine public finances.

"What the Democrats need to show in next budget is how they will earn their money, not just spend," said Martin Schulz, economist at Fujitsu Research Institute in Tokyo. "If they don't, they will lose their trust immediately from the public and Ministry of Finance."

Critics also worry that the Democrats' people-friendly policies could put companies at a disadvantage and derail Japan's long-term growth prospects.

Businesses will likely pay for the Democrats' policies with higher corporate taxes, said Kyohei Morita, chief Japan economist at Barclays Capital.

"For households, this Cabinet is good in the short-term," he said. But "if we want the economy to recover, we need a strong corporate sector."

Fujii has already made waves by coming out against intervention in foreign exchange markets and suggesting that a strong yen is not necessarily a bad thing. The dollar hit a seven-month low against the Japanese currency after his comments this week, edging into the lower 90-yen range.

Under Liberal Democratic rule, Japan had favored a weaker yen, which benefited exporters like Toyota Motor Corp. and Sony Corp. As the yen rises, the value of their overseas profits shrinks and products become more expensive for consumers abroad.

The Democrats, including Fujii, argue that a stronger yen is good for Japanese consumers and their purchasing power.

"The DPJ's basic political ideology is to redistribute income in favor of consumers, taken from firms, especially exporters, which were the main beneficiaries under the LDP government's weak yen policy," said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co., in a report.

Business groups may be wary, but so far they are holding back, waiting to see what the new government tackles. Although it was critical of the Democrats' policies during the campaign, the Keidanren, Japan's biggest business lobby, issued an upbeat statement Wednesday.

Japan : Rocking the Vote and the Boat

2009-08-27T18:57:00.000-07:00

With the lower house election quickly approaching, it appears that the opposition Democratic Party of Japan (DPJ) is poised for a big victory. Analysts expect the DPJ to win more than 300 seats out of 480 seats.

The win would end the 50-year ascendancy of the Liberal Democratic Party (LDP). Although no one can predict how the DPJ will perform once in charge, the shift alone is an important event for Japan as well as its neighbors and allies.

DPJ leader Yukio Hatoyama has eagerly discussed his party’s economic model, while shying away from controversial foreign and defense policy proposals. According to local sources, the DPJ is still divided regarding the country’s geopolitical relationship with the US. But these are issues that will become more important after the uppper house election in 2010.

Nevertheless, DPJ has promised to grow domestic demand and shift away from its export-driven model that favors big businesses, an ambitious goal that will require a great deal of effort--especially given the state of the Japanese economy and government’s massive debt burden. Nevertheless, the DPJ has indicated that it won’t raise the consumption tax for several years.

If those policies succeed, investments will favor the nonmanufacturing sector (i.e. services), as opposed to established manufacturers and exporters. The latter have benefited handsomely from the LDP’s ascendancy, especially in the 1990s, and made rewarded the party through huge financial contributions. Such a shift would also strengthen the Japanese yen.

That being said, the DPJ is a center-left party and will also focus on other important issues like civil service reform, pension reform and medical reform. Observers also expect it to address social issues, such as stagnating wages, inadequate labor protection rules and spotty child-care allowances.

Investors should monitor key cabinet positions to see whether pro-growth people will be appointed. The most important appointments will be in Welfare, Finance, Agriculture, Trade/Industry, Internal Affairs and Communications, Land & Transport, and Administrative Reform. The party’s Policy Affairs Chairman will also be an important appointment.

Although the historic significance of the upcoming election for the country shouldn’t be downplayed, it will take a lot of effort to shake Japan from its economic torpor.

Investors should keep an open eye to the new government’s progress; any positive results will be enough to attract real interest from institutional investors. For those seeking early exposure to these changes, look at banks, retailers and tourist-related services and real estate companies. Transitioning out of stocks issued by exporters would also be a good idea.

Evaluating Your Energy Tariff Options

2009-08-27T18:55:00.000-07:00

Managing household utilities is somewhat more complicated than in decades past. However, this can be good news, since it provides the consumer with the opportunity to compare different options and get the best tariff on electricity and gas services. Here are some factors to consider as you look at different tariffs.

Your pattern of usage is very important. Do you use electricity to heat and cool your home, rather than gas? Perhaps you cook a great deal and have a gas appliance. Knowing how much you use of each service allows you to determine if you can take advantage of any special discounts that are based on the rate and type of utility usage that applies to your household.

Some tariffs provide discounts based on your willingness to prepay for the services, while others may extend a small break on accounts that are automatically paid monthly by a bank debit. If you currently pay manually each billing cycle, automated payment plans may not only be convenient but also save you a small sum over the course of a year.

If more than one provider supplies services in your area, compare the tariff options offered by each one. You may find that they are more or less identical, or there may be one provider that offers something that would be a great help to you and your budget. You will never know unless you take the time to investigate.

Managing utility costs is one of the more prominent tasks involved with keeping within the monthly budget. Don’t automatically assume there is nothing you can do to control these costs. Look into all your options, then make choices that will serve your household in the best possible way.

Stanford group finance officer admits huge fraud

2009-08-27T18:53:00.000-07:00

WASHINGTON — The chief financial officer of the investment company owned by Texas cricket mogul Allen Stanford Thursday pleaded guilty to charges stemming from a complex seven-billion-dollar fraud.

James Davis, 60, the former chief financial officer of Houston-based Stanford Financial Group, pleaded guilty to fraud and obstruction charges, the Department of Justice said in a statement.

Davis admitted he and his co-conspirators defrauded investors who bought about seven billion dollars in certificates of deposit administered by the Antigua-based Stanford International Bank.

He admitted the scam dated back to 1990 when he and his co-conspirators began making false entries into the bank's ledgers about its revenues and revenue balances, the DOJ said.

Stanford, 59, a flamboyant Texan billionaire who sought to revolutionize the world of cricket, pleaded not guilty in June to 21 charges of fraud, money-laundering and obstruction.

He is being held without bail in a jail near Houston, Texas, awaiting trial, and officials said Thursday he had been hospitalized. Attorney Robert Luskin said the disgraced financier was suffering a "heart condition of some kind."

Davis admitted Thursday the team misappropriated most of the bank's investor assets, including by diverting more than 1.6 billion dollars into undisclosed personal loans to a co-conspirator, the Justice Department added.

Despite this, Davis and his co-conspirators claimed the bank's investments were "well-managed, safe and secure," boasting to investors that its earnings and assets were increasingly annually.

The company's chief investment officer Laura Pendergest-Holt has pleaded not guilty to charges arising out of the affair including fraud and conspiracy to commit money-laundering.

The Department of Justice has also charged accountants Mark Kuhrt and Gilberto Lopez, who worked for Stanford-affiliated companies, and Leroy King, head of Antigua's financial services regulatory commission.

Stanford's case is the most high-profile alleged scam since Wall Street financier Bernard Madoff was charged in a 50-billion-dollar pyramid scheme in December.

Madoff, 71, is now serving a 150-year sentence for cheating thousands of people and institutions, including celebrities, charities and leading banks, over several decades.

Stanford was the man behind the eponymous Stanford Super Series Twenty20 cricket competition, which culminated with his team of hand-picked Caribbean Superstars last year defeating England at his own ground on the Caribbean island state of Antigua and Barbuda.

He had become a larger than life figure in Antigua, where his company was the largest employer and where he was even knighted in 2006 by the Caribbean island nation's governor-general.

The England and Wales Cricket Board cut ties with him after the allegations surfaced. No date has yet been set for his trial, but he faces up to 375 years in jail if convicted.

Asian economies outpace US and Europe on growth track

2009-08-18T22:19:00.001-07:00

SINGAPORE: Asia is outpacing the United States and Europe in the rebound from the global economic slump, thanks to multi-billion dollar stimulus packages and robust demand from China, analysts said.

Second-quarter indicators showed the region's recession-hit economies such as Singapore and Hong Kong have returned to the growth path despite sluggish demand from the US and European markets, their main export destinations.

Countries with bigger domestic populations, including China, India, Indonesia, South Korea, the Philippines and Vietnam, have been growing during the global downturn although the pace has slowed.

Japan, the world's second largest economy, lumbered out of recession in the second quarter and Prime Minister Taro Aso credited the government's stimulus package for the achievement.

In contrast, US gross domestic product was estimated to have shrunk 1.0 per cent in the second quarter, and the eurozone economy dipped a milder than expected 0.1 per cent after Germany and France emerged from recession.

US-based credit ratings firm Standard and Poor's said that five of the 14 Asia-Pacific economies it covers will post positive growth this year, with nine expected to report contractions.

But by next year, all 14 should post year-on-year growth, led by China's projected expansion of 8.0-8.5 per cent.

The US economy is forecast to contract by 2.9 per cent this year and grow 1.5 per cent in 2010, it added.

Asian economies were hammered after a crisis in the US housing market sparked global financial and economic turmoil late last year.

Some analysts said the impact on Asia showed that the region's fortunes remain largely linked to the West and that there would be no recovery until after the industrialised economies had rebounded.

But the speed and strength of the region's recovery showed it is not entirely dependent on the US economy.

"The pattern we're seeing is that while the US remains a very significant contributor to Asian growth, it has become less significant over time," Subir Gokarn, Standard and Poor's chief economist for the Asia Pacific, said at a recent media briefing in Singapore.

"The ability of the Asian region to use its domestic policy instruments... and also take advantage of what is a growing regional market is helping it sort of move a little bit ahead of the recovery in the US and Europe."

He stressed that US and European consumers remain important drivers for Asian growth.

But he noted: "Both increasing affluence within the region and increasing integration within the region have helped it to withstand the shock a little more effectively than I think some people were concerned about in the early part of 2009."

Massive stimulus packages rolled out by Asian governments to perk up domestic demand played an important role in helping the region weather the downturn, Gokarn said.

The packages totalled more than one trillion US dollars, according to a Standard and Poor's tally, led by China's staggering US$585 billion in spending.

"Asian governments came into the crisis with a strong fiscal position and relatively low debt which allowed them to react rapidly and aggressively," Mark Williams, an economist with consultancy Capital Economics, told AFP.

"This has certainly helped shore up growth, and continued loose fiscal policy could play a role in supporting domestic demand in the next few years."

Williams said Asia's more export-reliant economies such as Singapore, Malaysia and Hong Kong were unlikely to return to high-flying growth in the medium term.

Gokarn said strong demand from China also helped cushion the blows of reduced exports to the West.

"China has become sort of a locomotive in the region. We are seeing significant shifts in export baskets away from the US," he said.

Despite Asia's rapid growth, the US economy will maintain its global economic dominance, Williams said.

"The US is still the world's largest economy, by a long way, and it dominates organisations such as the International Monetary Fund so it can shape global economic reform in a way that no other nation can," he said.

- AFP/yb

Global economic recovery has started, says IMF chief economist

2009-08-18T22:17:00.001-07:00

WASHINGTON : The global recovery from recession underway requires a delicate rebalancing of economies -- notably between the United States and Asia -- to sustain it, the chief IMF economist said Tuesday.

"The recovery has started. Sustaining it will require delicate rebalancing acts, both within and across countries," Olivier Blanchard said in an IMF article, released in advance of publication Wednesday.

Blanchard cautioned that predictable models based on past recoveries from recessions would not apply to the worst global slump in seven decades.

"The world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come," he said.

The United States, the epicenter of the crisis, "is central to any world recovery," he said in the article, titled "Sustaining a Global Recovery."

Blanchard said two rebalancing acts will have to come into play to sustain the global recovery: a switch from public to private spending and the rebalancing of international trade flows.

The latter would require "a shift from domestic to foreign demand in the United States and a reverse shift from foreign to domestic demand in the rest of the world, particularly in Asia," he said.

Pointing to a decline in American household consumption -- which "represents 70 percent of total US demand" -- and a rise in the personal saving rate that is expected to persist for some time, Blanchard estimated a 3.0 percentage point drop in the ratio of consumption to US gross domestic product, a broad measure of economic output.

With the 3.0 percent drop unlikely to be made up by increased investment and the eventual phase-out of the massive fiscal stimulus, "US net exports must increase" for the US recovery to occur, he said.

Key to the rebalancing act will be an increase in foreign demand for US goods, particularly in countries with large current account surpluses, notably in China and other Asian countries.

"From the point of view of the United States, a decrease in China’s current account surplus would help increase demand, and sustain the US recovery. That would result in more US imports, which would help sustain world recovery," the top economist at the 186-nation institution said.

China may be willing to pursue that "because it may well be in its own interest," said the economist, but other emerging market Asian countries that run large current account surpluses have weaker incentives than China to boost internal demand.

Blanchard recalled that in a typical recession model, lower-than-normal growth gives way to higher-than-normal growth for some time, until the economy has returned to its normal growth path.

"The current global recession is far from normal," he said, citing the breakdown in parts of the economic system.

"In advanced countries, the financial systems are partly dysfunctional, and will take a long time to find their new shape," he said.

Emerging market countries may not see dwindled capital inflows return to pre-crisis levels for a few years.

The end result of the global crisis: possibly a permanently lower potential output, he said.

Blanchard said the IMF's upcoming edition of the twice-yearly World Economic Outlook will cover 88 banking crises over the past four decades in a wide range of countries.

"While there is large variation across countries, the conclusion is that, on average, output does not go back to its old trend path, but remains permanently below it."

- AFP /ls

Asian stocks mostly up, mirroring Shanghai rebound

2009-08-18T05:36:00.000-07:00

HONG KONG (MarketWatch) -- Chinese shares clawed back some lost ground Tuesday as investors looked for bargains in metals stocks following the previous session's steep losses.

The bounce in Shanghai helped some other major Asian markets to end higher after falling into negative territory during the session. Japanese stocks nudged slightly higher in modest volumes, while Indian stocks jumped in afternoon trading as investors covered their short sales.

"Given how overheated Chinese stocks had been, this correction was inevitable, and some would say it was necessary," Tachibana Securities analyst Kenichi Hirano said.

China's Shanghai Composite ended up 1.4% at 2910.88 a day after it suffered the biggest percentage loss of 2009. It seesawed through the session as analysts remained divided over the future course of the market.

3,5003,0002,5002,0001,50009FMAMJJA"The rally in equity prices has disguised what are still large imbalances in the real economy. And, as equity prices fall, these imbalances will find themselves under more scrutiny, especially after July's economic data disappointed," Royal Bank of Scotland economist Ben Simpfendorfer wrote in a report.

But Jing Ulrich, head of China equities and commodities at J.P. Morgan said that "in the event of further correction, the Chinese authorities will be prepared to put a floor under the stock prices." Beijing may do that by slowing measures to absorb excess liquidity and by eliminating stamp duty on equity transactions, she added.

Stocks which lost heavily in the previous session led Tuesday's rebound, with Yunnan Copper rising 5.6% in Shenzhen and Aluminum Corp. of China /quotes/comstock/13*!ach/quotes/nls/ach (ACH 27.94, -2.20, -7.30%) rising 4.2% in Shanghai.

Steel giant Baoshan Iron & Steel gained 3% after Nomura International upgraded the stock to buy from neutral, citing a better operating outlook.

Elsewhere in Asia, Japan's Nikkei 225 Average gained 0.2%, Hong Kong's Hang Seng Index advanced 0.8%, Australia's S&P/ASX 200 slipped 0.2%, Taiwan's Taiex stumbled 2.1%, South Korea's Kospi inched up 0.2% and New Zealand's NZX 50 slid 0.5%.

"A pause equals taking profits. The trading world is rightly locking in some of the outperformance of [assets associated with] risk and I expect this not to be a one-day event. This may well go on for weeks, yet I don't expect Wall Street down 2.0% every night," said Southern Cross Equities director Charlie Aitken.

Stock futures point to higher Wall Street open

2009-08-18T05:32:00.000-07:00

U.S. stocks were poised to join a worldwide rebound from Monday's big selloff.

Stock index futures were moderately higher Tuesday, following the lead of overseas markets that rose in part on upbeat economic news from Germany. A research institute has reported that consumer confidence is rising in the country, Europe's largest economy.

However, there is still much uncertainty in the U.S., where retailers are reporting earnings results that show American consumers are still wary. Home Depot Inc. has issued its second-quarter results, joining other retailers in reporting a drop in its sales.

The world's largest home improvement retailer said its second-quarter profit fell 7 percent, but its adjusted results beat Wall Street's expectations, as cost cuts partly offset weak sales. Home Depot also lifted its guidance for full-year earnings.

Dow Jones industrial average futures rose 51, 0.6 percent, to 9,171. Standard & Poor's 500 index futures rose 5.40, or 0.6 percent, to 983.70, while Nasdaq 100 index futures gained 11.00, or 0.7 percent, to 1,577.25.

Some rebound was to be expected after Monday's big drop, which took the Dow down 186 points. Stocks fell sharply and bond prices soared on growing fears that nervous consumers won't be able to spend enough to lift the economy into recovery.

Investors will receive more insight into anxious consumers as Saks Inc., Target Corp., and discount retailer TJX Cos. report second-quarter results.

Meanwhile, a Commerce Department report is expected to show the third straight monthly improvement in home construction. Economists surveyed by Thomson Reuters predict the department will say that construction of new homes and apartments grew 3.1 percent in July, while building permits, seen as a good indicator of future activity, rose 3 percent.

The report is scheduled to be released at 8:30 a.m. EDT.

Overseas, Japan's Nikkei stock average rose 0.2 percent. In afternoon trading, Britain's FTSE 100 was up 0.9 percent, while Germany's DAX index and France's CAC-40 were up 0.6 percent.

Meanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.51 percent from 3.47 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.18 percent from 0.17 percent late Monday.

The dollar fell against other major currencies, while gold prices rose.

German Investor Confidence Rose to Highest Since 2006

2009-08-18T05:29:00.000-07:00

German investor confidence jumped to its highest level in more than three years in August after government stimulus and rising exports pulled Europe’s largest economy out of recession.

The ZEW Center for European Economic Research said its index of investor and analyst expectations rose to 56.1 from 39.5 in July. Economists predicted a gain to 45, according to the median of 35 forecasts in a Bloomberg News survey. That’s the highest since April 2006. The survey aims to predict economic developments six months in advance.

Germany’s economy expanded 0.3 percent in the second quarter, a report showed last week, bringing an end to the worst slump since World War II sooner than forecasters had expected. While rising exports and government programs may keep growth on track, higher unemployment threatens to restrain the recovery.

“The German economy is out of recession, but not out of the woods,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “In all the enthusiasm about the recent numbers and the near-term outlook, there are still some impediments to a real recovery, the most pressing one being the worsening labor market.”

The euro rose as much as 0.2 percent after the ZEW figures, climbing as high as $1.4154. It traded at $1.4119 at 12.25 p.m. in Frankfurt.

Kuwaiti Islamic Bank Returns to Investments in US

2009-08-18T05:24:00.000-07:00

KUWAIT CITY (AP) -- Kuwait's largest Islamic bank said Sunday it has signed a $450 million deal with a U.S. real estate investment trust to buy high income residential real estate in major American major cities.

The deal between Kuwait Finance House and Denver, Colorado-based apartment building owner UDR Inc. is the second major foreign investment by a rich Gulf nation in the past few days.

''The joint venture will seek to acquire high income residential real estate in major cities in the United States,'' according to a statement posted on KFH's Web site. Under the deal signed in London on Friday, KFH's participation is 70 percent while UDR will shoulder a 30 percent share, the statement said.

Gulf countries and their sovereign wealth funds have been adopting an increasingly cautious approach to foreign investment as the global economic meltdown eroded demand and prices for crude oil, their main source of revenue, and hammered equity and credit markets.

But this deal, coupled with Qatar's announcement Friday that it will buy a 10 percent stake in German sports car maker Porsche SE, as well as acquire 17 percent of Volkswagen AG's ordinary shares, could indicate that the oil rich sovereign wealth funds are again looking abroad. The Qatar investment is valued at over $10 billion.

The Islamic bank said the joint venture will target class ''A'' assets with a minimum value of $20 million that are less than 7 years old, and the venture intends to be fully invested over a two-year period. The bank said it was targeting an internal return rate of 12 to 14 percent annually.

Ali al-Ghanem, KFH's international real estate manager, said the partnership with UDR shows the bank was trying to return as a ''major player'' to the American real estate market, after it had liquidated a large portion of its investments there before the economic crisis began.

The statement quoted Tom Toomey, UDR's president and CEO as saying the company was looking forward to investing with its new partner during ''these opportunistic times.'' He said his company owns 50,000 apartment homes around the United States, as well as thousands of houses under renovation.

Japan interest rates kept on hold

2009-08-11T00:16:00.000-07:00

Japan's central bank has kept its key interest rate unchanged and underlined its cautious outlook for the economy.

The board of the Bank of Japan unanimously opted to kept interest rates at 0.1% after a two-day meeting.

It said conditions in the world's second largest economy had stopped worsening but that unemployment would stay high and consumer spending low.

Analysts do not expect Japan's central bank to raise rates for some time, predicting a slow recovery.

"We are expecting the rebound to slow down somewhat later this year or early next year," said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo.

Interest rates have been on hold since December, when Japan reduced rates from 0.3%.

Also on Tuesday, the Cabinet Office issued a cautious monthly report. While it said the economy was "picking up" it added it remained in a "difficult situation."

Japan, which is heavily reliant on exports, has been hit by the slowdown in demand overseas.

China’s Exports, Lending Fall, Adding Pressure to Keep Stimulus

2009-08-11T00:14:00.001-07:00

Aug. 11 (Bloomberg) -- China’s exports and new loans tumbled in July and industrial output rose less than estimates, adding pressure for policy makers to maintain stimulus spending to revive growth in the world’s third-biggest economy.

Exports fell 23 percent from a year earlier, the customs bureau said. Industrial production gained 10.8 percent, the statistics bureau reported. New loans plunged to 355.9 billion yuan ($52 billion), less than a quarter of June’s level, the central bank said.

China will maintain its “moderately loose” monetary policy and “proactive” fiscal stance to bolster domestic spending in the face of slumping exports and industrial overcapacity, Premier Wen Jiabao said Aug. 9. The government wants to avert bubbles in stocks and property and bad loans after a record $1.1 trillion of lending in the first half helped to drive a 7.9 percent economic expansion in the second quarter.

“There’s an element of fragility in the recovery,” said Glenn Maguire, chief Asia-Pacific economist at Societe Generale in Hong Kong. “The government needs an appropriately loose monetary policy.”

Urban fixed-asset investment for the seven months to July 31 climbed 32.9 percent, the statistics bureau said. That was less than a 33.6 percent gain through June and the 34 percent median estimate in a survey of 22 economists.

‘Worrying’ Number

“The fixed-asset investment number is worrying because government-sponsored investment is a pillar of the recovery,” said Tao Dong, chief Asia-Pacific economist at Credit Suisse AG in Hong Kong. “This set of data should postpone any thought of more aggressive tightening; the economy is slowing down a little bit.”

The Shanghai Composite Index gained 0.6 percent as of 1:21 p.m. local time. The yen rose for a second day against the euro and the dollar as investors sought the safety of Japan’s currency because of the weaker-than-estimated output number and the export decline.

The gain in industrial production compared with a 10.7 percent advance in June and economists’ median forecast for an 11.5 percent increase.

The export decline matched economists’ estimates and was the third-biggest since China’s shipments began to shrink in November last year. Imports fell 14.9 percent, leaving a trade surplus of $10.63 billion.

The production figure suggested the economy “started the third quarter on a slightly softer tone,” Ben Simpfendorfer, a Hong Kong-based economist for Royal Bank of Scotland Plc, said in a Bloomberg Television interview. “It’s a modest disappointment.”

Loans Tumble

July’s new loans were the least since the government dropped quotas limiting lending in November last year and pressed banks to support a 4 trillion yuan stimulus package. None of 11 economists surveyed forecast such a low number. M2, the broadest measure of money supply, rose 28.4 percent.

UBS AG said in a July 31 note that the scale of China’s new lending in the first half was “neither sustainable nor necessary.” New loans of 300 billion yuan to 400 billion yuan a month in the second half would be “more than enough” to support the nation’s recovery, the report said.

Chinese banks usually “frontload” lending in the first half of each year.

Retail sales rose 15.2 percent in July from a year earlier, the statistics bureau said, up from 15 percent in June, as stimulus spending buoyed domestic demand.

Consumer prices fell 1.8 percent last month from a year earlier, the biggest decline since 1999, the bureau said. Producer prices dropped a record 8.2 percent.

China’s economy will grow 9.4 percent this year, topping the government’s 8 percent target, Goldman Sachs Group Inc. said yesterday. The credit boom and stimulus package helped General Motors Co. to report a 78 percent increase in vehicle sales in China in July.

Infrastructure spending also aids companies including BBMG Corp., Beijing’s biggest cement supplier, which saw its shares surge 56 percent on its first day of trading in Hong Kong on July 29 on expectations China’s stimulus will spur asset investments and housing demand.

Poland’s Asset Sales May Be Best Option to Finance 2010 Deficit

2009-08-11T00:04:00.000-07:00

By Katya Andrusz and Dorota Bartyzel

Aug. 11 (Bloomberg) -- Poland’s government may decide today that selling state-owned companies is its best option for financing a budget deficit after tax revenue slumped and public debt swelled.

A government advisory panel late yesterday cleared the way for Cabinet to discuss a proposal by the country’s Treasury to speed up asset sales. The plan, as outlined by Treasury Minister Aleksander Grad on July 23, would raise as much as 37 billion zloty ($12.7 billion) over the next 18 months.

The move would help finance Poland’s general government deficit, which the European Commission estimates will widen to 7.3 percent of gross domestic product next year from 6.6 percent in 2009, without forcing the government to borrow through bond sales. The proposal has also roused opposition from the government’s junior coalition partner, led by Deputy Prime Minister Waldemar Pawlak, and provoked trade unions to call a two-hour strike by workers at copper producer KGHM Polska Miedz SA for 6 a.m. today.

“The fiscal threat is so great that it puts privatization in a new context,” said Michal Boni, chief adviser to Prime Minister Donald Tusk, in an Aug. 8 interview with television station TVN24. “The rigors of an excessive deficit mean we need to look for subtle instruments.”

Poland remains the only one of the European Union’s eastern members so far to have avoided a recession. Even so, next year’s budget is vital to boost the economy and put Poland back on track for euro adoption.

“It’s high time that Poland undertook real privatization,” said economist Miroslaw Gronicki, a former finance minister, by phone. “Any revenue from privatization means a reduction in debt, and as far as the budget is concerned it’s an extremely sensible move.”

Abandoned Target

Tusk’s government is seeking to speed up sales of state assets after the government was forced last month to raise its 2009 deficit target by 48 percent after tax revenue slumped in the wake of the global economic crisis. The country abandoned its 2012 euro adoption target without setting a new deadline.

According to Stanislaw Gomulka, who served as deputy finance minister under the current government, asset sales would allow the government to circumvent political obstacles to resolving its fiscal dilemma. President Lech Kaczynski has said he would veto any attempt to raise taxes as a way of increasing budget revenue, while his twin brother and leader of the main opposition party, Jaroslaw, has ruled out cooperating on measures to augment revenue.

‘Virtually Impossible’

“The legislative route is virtually impossible for the government, so privatization is the only way out,” Gomulka said by phone. “Union protests have been a big factor in the lack of privatization in recent years -- but the situation has got so bad now this constraint might have been lifted.”

Opposition from the government’s coalition partner, led by Deputy Prime Minister Pawlak, may urge policy makers to hesitate before turning to asset sales.

Poland needs “level-headed privatization, not a quick mass sale,” he said in an interview with the newspaper Gazeta Wyborcza last month. Pawlak has argued that workers and managers at state-owned companies should be given the first opportunity to buy stakes if the government puts them up for sale.

The Treasury has said it may sell as much as the entire 42 percent stake that the state holds in KGHM. Boni has since said the government won’t sell more than about 10 percent in the company. The government needs to retain effective control of the company even if it sells some of its shares, Boni said.

The government’s need for deficit financing in 2010 is so “desperate” that it will probably sell a 10 percent stake in KGHM, no matter how much the unions protest, said Michal Marczak, a Warsaw-based analyst at BRE Bank SA.

“The unions know the government needs cash and will fight to gain some benefits,” Marczak said. “They’ll win something, the government will sell a stake and life goes on.”

Wiedeking Leaves Porsche to Pave Way for Volkswagen

2009-07-22T22:54:00.000-07:00

(Bloomberg) -- Porsche SE Chief Executive Officer Wendelin Wiedeking will step down after 16 years, paving the way for a merger between the 911 sports-car maker and Volkswagen AG.

Wiedeking, 56, as well as Chief Financial Officer Holger Haerter will leave with immediate effect, Stuttgart-based Porsche said in a statement distributed over the DGAP newswire today.

Wiedeking had opposed selling Porsche’s automotive unit to VW, Europe’s largest carmaker. Instead he engineered a strategy of accumulating Volkswagen shares, raising Porsche’s stake in VW to more than 50 percent this year excluding options that could be converted into an additional 20 percent holding. The swoop for VW also boosted Porsche’s debt to 10 billion euros ($14.2 billion), forcing the CEO to turn towards the company’s owners for capital and to court Qatar for an investment.

“Wiedeking’s course has split the families and caused major irritations in Porsche’s working ties with VW,” said Stefan Bratzel, head of the Center of Automotive Research Institute in Bergisch Gladbach, Germany. “Wiedeking has no place in a combined VW-Porsche carmaker.”

Wiedeking’s salary contract stipulates that he earns 0.9 percent of Porsche’s pretax profit, according to the company. Based on the 8.57 billion-euro pretax income reported for the year through July 2008, the CEO received about 77 million euros, making him better paid than any leader of the 30 companies in Germany’s benchmark DAX Index, which includes VW and not Porsche.

Overnight Showdown

Wiedeking’s departure was announced after a meeting of Porsche’s supervisory board. At the same gathering, directors supported Porsche’s plan for a capital increase of at least 5 billion euros, and a proposal to negotiate an investment by a Qatar investment fund, Porsche said.

Volkswagen’s own supervisory board is scheduled to meet at noon in Stuttgart and will likely confirm its commitment to combine with Porsche, making Porsche one of VW’s 10 brands, a person familiar with the talks said.

“Porsche’s myth must continue to be visible in an integrated company,” Guenther Oettinger, prime minister of the state of Baden-Wuerttemberg, where Porsche is based, told Germany’s ARD television network.

Wiedeking transformed Porsche, almost bankrupt when he took over as CEO in August 1993, into the automaker with the highest profit margins for the industry. In 2005, he began using cash from the luxury-vehicle business to acquire shares of VW, a company that builds more cars in a week than Porsche does in a year.

Goliath Wins

The David-bests-Goliath tactics worked until Wiedeking’s efforts to topple power structures at VW failed and the economic crisis thinned profits and spooked banks.

Wiedeking and Haerter see their departure “as a significant contribution to the appeasement of the situation and to support the forming of an integrated car manufacturing company,” Porsche said today. “Both gentlemen will accompany the handover at the board of management level positively and support their respective successor in their tasks.”

Wiedeking will be followed by Michael Macht, head of production. The 48-year-old Macht joined Porsche in 1990 and joined the company’s executive board in 1998. Macht graduated from the Stuttgart Technical College in 1986 with a degree in mechanical engineering. Thomas Edig, board member in charge of human resources, will become Macht’s deputy.

Intel Jumps After Asian Consumers Spur Comeback

2009-07-14T21:32:00.000-07:00

July 15 (Bloomberg) -- Intel Corp. rose as much as 8.4 percent in late trading yesterday after its revenue forecast topped analysts’ estimates, indicating that shoppers in Asia are helping reignite demand for personal computers.

Sales will be as much as $8.9 billion in the current quarter, Intel said yesterday. That compares with an average estimate of $7.86 billion in a Bloomberg survey of analysts.

PC makers are boosting orders for chips in anticipation of increasing demand in the second half, Chief Executive Officer Paul Otellini said. While businesses probably won’t start buying new PCs until next year, consumers in Asia -- especially China - - are leading the recovery, he said. Intel reported a 12 percent jump in second-quarter sales from the previous three months, the largest sequential increase since 1988.

“Intel’s results reflect the stabilizing environment,” said Patrick Wang, a New York-based analyst at Wedbush Morgan Securities. Wang, who rates the stock “outperform,” owns the shares personally. “It was a superb quarter for them.”

Intel, based in Santa Clara, California, jumped as much as $1.42 to $18.25 yesterday in extended trading. The shares, up 15 percent this year, closed at $16.83 on the Nasdaq Stock Market.

Intel’s Asia-Pacific sales were $4.41 billion last quarter, up 21 percent from the first quarter. Sales in the Americas rose 12 percent sequentially, while Europe dropped 9.4 percent.

Asian Chipmaker Shares

The forecast helped shares of chipmakers and PC manufacturers advance in Asian trading. Samsung Electronics Co., the region’s biggest semiconductor maker, gained 4.6 percent in Seoul to 663,000 won, the highest since June 26, 2008. Hynix Semiconductor Inc., the world’s second-largest computer-memory maker, rose as much as 3.7 percent. Toshiba Corp., Japan’s biggest chipmaker, added 2.1 percent.

Acer Inc., the world’s second-biggest maker of laptop computers, climbed 2.4 percent to NT$64.20 in Taipei. Wistron Corp., the world’s third-biggest contract producer of laptop computers, gained 4 percent to NT$61.80.

Intel set aside funds in the second quarter to pay a $1.45 billion European Union fine, resulting in its first loss in 22 years. The net loss was $398 million, or 7 cents a share, compared with a profit of $1.6 billion, or 28 cents, a year earlier.

European Fine

The European Union announced the fine in May, saying the company used illegal rebates to thwart competitors. Intel, which accounts for about 80% of the PC processor market, is appealing the decision.

Excluding the European fine, Intel reported a profit of 18 cents a share. That topped the average analyst estimate of 8 cents. Revenue fell 15 percent from a year earlier to $8.02 billion, compared with the $7.29 billion predicted by analysts.

There is “a clear expectation for a seasonally stronger second half,” Otellini said on a conference call.

Gross margin, the percentage of sales remaining after excluding costs of production, will be about 53 percent this quarter, Intel said. Chris Danely, an analyst at JPMorgan Chase & Co. in San Francisco, had predicted 51 percent.

Sales typically decline in the second quarter from the first, then begin to rise again in the third quarter -- when computer makers increase orders to meet back-to-school demand.

First to Report

Intel kicked off two weeks of earnings reports by technology companies such as International Business Machines Corp., Google Inc. and Microsoft Corp. The use of Intel’s chips in everything from laptops to supercomputers makes its earnings an indicator of industry demand.

Intel cut its 2009 budget for plants and equipment to about $4.7 billion, down from $5.2 billion last year. The company had said previously that the budget would be little changed from 2008.

PC sales may drop 4 percent this year as companies slash spending on technology, according to El Segundo, California- based ISuppli Corp. That would be the first decline since 2001, when the dot-com bust left a glut of PCs.

Intel’s Otellini said yesterday that the company isn’t expecting corporate spending to improve this year. Microsoft’s new operating system, Windows 7, will likely fuel purchases next year, he said.

Asian markets inch higher amid economic jitters

2009-07-09T23:09:00.000-07:00

HONG KONG (AP) -- Most Asian markets eked out slight gains Friday as investors failed to get inspiration from U.S. corporate earnings and signs of deflation emerged in Japan.

The back-and-forth trade wrapped up a lackluster week that saw major benchmarks pull back as investors worried the recent rally was overestimating the speed and scale of any recovery in the world economy.

Investors seemed little encouraged by the tepid overnight gains on Wall Street, where stocks inched higher following aluminum maker Alcoa Inc's narrower-than-expected second quarter loss.

Analysts pointed to low trading volumes as a sign many investors were still awaiting more guidance while others were taking a break for the summer months.

"I think after the massive rally it's only natural that markets are consolidating now," said Khiem Do, a Hong Kong-based fund manager who helps oversee more than $8 billion in Asian equities at Baring Asset Management. "I think the surprise is that the correction has not been more severe."

Markets throughout Asia fluctuated in early trade.

In Tokyo, the Nikkei rose 20.18 points, or 0.2 percent, to 9,311.24 as Japan's central bank said wholesale prices fell 6.6 percent in June from a year earlier -- the biggest fall on record and the latest evidence that deflation is returning to the world's second-biggest economy.

Hong Kong's Hang Seng rose 20.01, or 0.1 percent, to 17,810.60 while Australia's index gained 0.8 percent and Singapore's market rose 0.1 percent.

But South Korea's Kospi lost 0.3 percent and Shanghai's main index shed 0.1 percent.

In New York Thursday, the Dow Jones industrial average rose 4.76, or 0.1 percent, to 8,183.17, the second day of modest gains after a 161-point drop on Tuesday. The blue chips crossed zero 108 times during trading.

The broader Standard & Poor's 500 index rose 3.12, or 0.4 percent, to 882.68.

Oil prices were little changed in Asia, with benchmark crude for August delivery down 9 cents at $60.32 a barrel. The contract rose 27 cents Thursday.

The dollar was slightly lower at 92.93 yen compared to 93.02 yen. The euro fell to $1.3979 from $1.4018.

Japanese Bonds Fall as Dealers Cut Holdings Before Debt Sales

2009-06-30T23:28:00.000-07:00

July 1 (Bloomberg) -- Japanese bonds declined, ending a two-day gain, on speculation primary dealers reduced debt holdings before the Ministry of Finance increases the size of its 10-year auction tomorrow.

Benchmark yields rose from a three-month low before the government sells 2.1 trillion yen ($21.6 billion) of the securities, 10 percent more than its previous sales as it issues a record 130.2 trillion yen of debt this fiscal year. Primary dealers, which are required to bid at government debt sales, often sell bonds prior to auctions in case prices decline before they can pass on new securities to investors.

“There’s a chance increasing debt sales will boost yields of longer-dated debt,” said Makoto Yamashita, chief Japan interest-rate strategist in Tokyo at Deutsche Securities Inc. “Investors apparently want to lock in recent gains in bonds.”

The yield of the benchmark 10-year bond rose 1 basis point to 1.36 percent as of 1:29 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. It fell to 1.345 percent yesterday, the lowest since April 2. The price of the 1.5 percent bond due June 2019 dropped 0.09 yen to 101.227 yen. A basis point is 0.01 percentage point.

Ten-year bond futures for September delivery declined 0.04 to 138.06 at the Tokyo Stock Exchange.

Japan’s 10-year bonds yesterday completed their second consecutive quarter of losses, the longest slide since the six months ended June 2006 after the finance ministry in April said it would boost bond sales by 15 percent this fiscal year for stimulus measure to help pull the nation out of a recession.

Rich, poor nations seek deal for U.N. finance meeting

2009-06-23T22:29:00.000-07:00

UNITED NATIONS (Reuters) - Rich and poor nations on Tuesday edged closer to a deal on proposals for reforming the global financial system, but diplomats said there must be changes if a U.N. conference this week is to adopt them.

A three-day U.N. General Assembly meeting on the financial crisis and its impact on the developing world, originally scheduled for June 1-3, was postponed to June 24-26 when it became clear negotiators had no agreement on draft proposals.

Although the meeting has been billed as a summit, no Western leaders are expected to attend and only 14 presidents and prime ministers will show up. The other 112 countries taking part will send lower-level delegations.

The heads of the International Monetary Fund and World Bank will also be sending deputies, U.N. officials said.

Western envoys said that reflected dissatisfaction with the meeting's organizer, leftist U.N. General Assembly President Miguel D'Escoto of Nicaragua.

The top speakers are to be Venezuelan President Hugo Chavez and Bolivian President Evo Morales, both well-known leftists.

The run-up to the conference has highlighted differences between radicals who want to give the 192-nation General Assembly much more say in tackling the financial crisis and major powers intent on keeping control in their own hands.

With less than 24 hours to go before the conference opens at U.N. headquarters, diplomats told Reuters they were closing in on an agreement on a set of proposals they hope the conference will adopt.

D'Escoto told reporters that most of the work on the draft proposals was now done, though he said they would still have to be approved by the 126 nations attending the meeting.

The draft financial reform proposals are outlined in a 15-page document, obtained by Reuters. Diplomats from Western and developing countries said the document will be amended further once the conference begins on Wednesday.

Western diplomats described the new draft as a dramatic improvement over an initial version prepared by D'Escoto.

The initial draft contained language that had nothing to do with finance, the diplomats said.

Still, they were concerned about sections in the current draft, including a call for greater U.N. involvement with the IMF, World Bank and other global financial institutions.

Another issue that developed and developing nations disagree on is a recommendation for the General Assembly to create a council of economic experts to provide advice to member states on dealing with the economic crisis.

Some Western powers fear that such a council could lead to unwelcome economic meddling by the U.N.

Diplomats also criticized language in the draft that speaks of "deficiencies in national and international financial regulation and supervision," and calls for greater regulation of hedge funds and financial products like derivatives.

One senior diplomat from the Group of 77 bloc of developing nations complained that the draft proposals had been watered down to satisfy Western nations' concerns, though he predicted that an amended version would be adopted by consensus.

"I am satisfied with the way it's going," said D'Escoto, a Roman Catholic priest who was Nicaragua's foreign minister in the 1980s while the left-wing Sandinistas were in power.

He also rejected criticism of the summit and the way it has been organized: "What is important is what will be agreed."

DISAGREEMENTS

Disputed parts of the draft reform proposals, U.N. diplomats said, include the future role of the United Nations in the global financial system and a "follow-up mechanism" to monitor fulfillment of promises made at this week's meeting.

Poor nations outside the Group of 20 club of big developed and developing economies -- a group that includes India, China and Brazil -- want the U.N. to play a leading role in the global financial system, an idea Western powers reject, the diplomats said.

A 401(k) Mismatch

2009-06-23T22:26:00.000-07:00

In an environment like this, investors expect companies to do whatever they can to resuscitate shrinking profit margins. Layoffs, salary freezes, the free soda in the company cafeteria—nothing is sacred, not even the 401(k) program. Almost 250 companies have stopped matching employees’ contributions to their retirement savings or reduced the match since the beginning of the year (compared with virtually no cuts a year earlier). Dozens more say they plan to. And that, experts say, is a cost-cutting measure that investors shouldn’t be so quick to applaud.

It’s not as though companies are cavalierly axing these benefits; indeed, cutting the 401(k) match is a drastic measure for a troubled company, says Laura Sejen, global director for strategic rewards consulting at Watson Wyatt—and one that is among the last cost-saving moves a troubled firm tries. An increasing body of evidence sheds some light on why: Retirement benefits are an important component of employee satisfaction and loyalty, both of which are cost-effective for companies and good for long-term shareholders. Alex Edmans, a finance professor at Wharton, looked at the connection between employee satisfaction and stock price and found that when companies keep employees happy, their stock outperforms the broad market by more than double. Retirement benefits are only one component of employee satisfaction, he noted, “but the connection is logical.”

The effect of cutting the 401(k) match isn’t measured just over the long term; it indicates other, more immediate, financial trouble as well. A dividend cut is likely in the offing, if it hasn’t happened already, experts say. Of the dividend-paying companies that cut or suspended their 401(k) matches, 18 percent (one out of six) followed by cutting payments to shareholders, too.

Cutting retirement benefits can also prompt higher worker turnover, notes Julie Gorte, who looks at corporate behavior for the Pax World group of mutual funds. Hiring and training a new employee can cost up to four times the ex-worker’s annual salary, according to Pax research, which makes cutting that 3 percent match seem a little less prudent. The bottom line, says Gorte: When a company in your portfolio cuts its retirement benefits for its workers, they shouldn’t be the only ones who take notice.

New Obama initiative seeks fix to finance regs

2009-06-17T00:51:00.000-07:00

WASHINGTON (AP) — President Barack Obama wants to strengthen the government's authority over financial institutions in a sweeping attempt to modernize a regulatory latticework that failed to detect early signs of a worldwide crisis.

The president was to detail the administration's overhaul plan on Wednesday, recommending new powers for the Federal Reserve; a new consumer protection agency to govern lending and credit; and new rules that would reach into currently unregulated regions of the financial markets.

An 85-page draft of the administration's plan details an effort to change a regulatory regime that Obama's economic team maintained had become too porous for the innovations and intricacies of the today's financial markets.

With Congress already embroiled in health care legislation, Obama has set an ambitious schedule, pushing lawmakers to adopt a new regulatory regime by year's end.

Obama said Tuesday his administration was going to put forward "a very strong set of regulatory measures that we think can prevent this kind of crisis from happening again."

The financial sector and lawmakers from both parties concede the need for significant changes in the rules that govern the intricate and interconnected world of banking and investment. But the details of Obama's proposal already are facing resistance, signaling a tough sell for a president who is spending major political capital on his health care overhaul.

Under Obama's plan, the Fed would gain power to supervise holding companies and large financial institutions considered so big that their failure could undermine the nation's financial system. But even as it gains new powers, the Fed also would lose some banking authority to a new Consumer Financial Protection Agency.

Obama's proposal would require the Fed, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury approval before extending credit to institutions in "unusual and exigent circumstances."

The expanded Fed role and the new consumer regulator are likely to be the two main political flash points in the administration's proposal. Many bankers oppose a new consumer protection regulator and many lawmakers worry the Fed could become too powerful. Friction over those points could slow any major overhaul.

Besides having the Federal Reserve supervise "systemically significant" institutions, Obama will recommend a council of regulators, which would include the Fed, to monitor risk throughout the broader financial system. The arrangement is designed to prevent crashes like those that felled AIG and Lehman Brothers.

In conjunction with the Fed's authority over large financial institutions and the new consumer agency, Obama also will propose:

_ Additional protections for investors, including greater disclosure by hedge funds; regulation of credit default swaps and over-the-counter derivatives that previously operated outside of government oversight; and new conditions on brokers and originators of asset-backed securities.

_ A system for the orderly disposition of any troubled, interconnected firm whose failure poses a risk to the entire financial system, together with rules that insist that financial institutions hold more capital to avoid over-leveraging.

Obama's plan does not attempt major consolidation of turf-conscious regulatory agencies and does not inject itself into an ongoing debate over whether to bring some insurance companies under federal oversight.

"We don't want to tilt at windmills," Obama said on CNBC.

Obama's decision to create a consumer agency comes amid criticism that mortgage lenders and credit card companies have taken advantage of unwitting customers and saddled them with debt.

The new regulator would have the power to demand that customers have the option of simple financial products, to impose fines and to allow states to pass laws that are stricter than the federal standards. Consumer protections are now spread among various state and federal authorities, including the Fed, the Securities and Exchange Commission, the Federal Trade Commission and banking regulators.

Financial lobbyists rallied against the new agency, saying it's impossible to separate bank regulation from oversight of the products they offer.

"We're supposed to be trying to plug holes and connect dots" with the regulatory overhaul, said Scott Talbott, top lobbyist with the Financial Services Roundtable. "The consumer regulator idea moves in the opposite direction."

Sen. Chuck Schumer, D-N.Y., called the new consumer products agency "the cornerstone of regulatory reform." The Fed and other banking regulators, he said, were too focused on the "safety and soundness" of the institutions they oversee, and "did not do a very good job of protecting consumers."

Rep. Bill Delahunt, a Massachusetts Democrat who has helped write a consumer protection bill in the House, said: "Here we are just beginning to extract ourselves from this mess that was on the cusp of total collapse, and the banks don't want further regulations. Give me a break."

The administration will also have to use its political skills to strengthen the Fed. While Democrats generally agree with a need for regulatory changes, many oppose a Fed with expanded powers.

Sen. Christopher Dodd, chairman of the Senate Banking Committee, has advocated an alternative plan to strip the Fed of its regulatory role entirely and create a new consolidated bank regulator that would assume the roles that the Fed and Federal Deposit Insurance Corp. now play in helping regulate state-chartered banks.

Dodd, however, is a strong proponent of a consumer protection agency and is likely to champion that component of Obama's plan.

Wall Street tumbles after G8 finance meeting

2009-06-17T00:47:00.000-07:00

NEW YORK (AFP) — Wall Street stocks tumbled Monday after the Group of Eight finance chiefs warned the global economic outlook remained uncertain, despite encouraging recovery signs.

The Dow Jones Industrial Average dropped 135.06 points (1.53 percent) to 8,664.20 in opening trades.

The tech-rich Nasdaq fell 25.37 points (1.36 percent) to 1,833.43 and the broad-market Standard & Poor's 500 index retreated 15.67 points (1.66 percent) to 930.54.

"This negative disposition is being attributed to reports that Russia made dollar-supportive comments and that G8 ministers discussed how they should prepare to unwind stimulus spending as the economic recovery begins to take root," said Patrick O'Hare of Briefing.com.

"Of course, this could also be a case of participants simply looking for a reason to take some money off the table," O'Hare said, noting the S&P 500 stands 42 percent above its March 6 low.

Monday's market action came after Wall Street indices closed narrowly mixed Friday in directionless, thin trade. The Dow had climbed 0.32 percent, joining the other major indices in wiping out losses since the start of the year. The Nasdaq fell 0.19 percent while the S&P 500 edged up 0.14 percent.

UN: "Nature Kicks Carbon Capture's Butt"

2009-06-09T02:29:00.000-07:00

The United Nations Environment Programme released a report last Friday for World Environment Day titled "The Natural Fix? The Role of Ecosystems in Climate Mitigation." In it, UNEP makes the case for investing in protecting fragile ecosystems as a form of carbon mitigation instead of carbon capture and storage technology. The report highlights the ways in which nature is better at regulating carbon than CCS through the carbon cycle and how preserving nature's role in carbon regulation will bring greater and cheaper benefits.

The report explains that the priority ecosystems to protect are tropical forests and peatlands. Reducing deforestation by 50 percent by 2050 could prevent the release of 50 gigatonnes of carbon into the atmosphere this century, which meets 12 percent of the emission reduction recommendation by the IPCC. Peatland restoration could prevent the release of up to 0.8 gigatonnes of carbon per year.

The other main area that the report devotes attention to is agriculture. UNEP believes the agriculture sector could be be mostly carbon neutral by 2030 if necessary policies are adopted, therefore preventing the release of 2 gigatonnes of carbon per year.

The report calls for governments to draft carbon management policies that rely more on ecosystem protection and restoration and less on funding CCS technologies, particularly during the upcoming climate convention in Copenhagen.

Wall Street on the Offensive

2009-06-09T02:25:00.000-07:00

Bolstered by the policies of the Obama administration, Wall Street is waging a political offensive to shed the minimal limits on executive pay that were tied to government bailout funds and to further weaken regulations on the banks’ speculative practices.

This week, the Federal Reserve Board and the Treasury Department are expected to give the OK for many of the biggest banks to pay back the billions of dollars in cash infusions they received last October under the $700 billion Troubled Asset Relief Program (TARP).

The banks’ rush to repay the taxpayer handouts has nothing to do with altruism or a desire to make restitution for the disaster they have inflicted on society by gambling on subprime mortgages and other semi-criminal activities. They are eager to repay the money in order to escape restrictions on executive pay as well as other requirements, such as limits on dividends and stock repurchases.

By repaying the TARP money, moreover, the banks will save billions of dollars they would otherwise have to pay the government in the form of dividends on the preferred shares they gave the Treasury in return for the cash infusions. And having repaid the TARP money, they will be in a stronger position to get back to “business as usual,” i.e., making exorbitant profits by speculating with borrowed funds.

The TARP cash comprises only a relatively small part of the government subsidies that have flowed to Wall Street. These include hundreds of billions of dollars in government guarantees on the banks’ debt, virtually interest-free loans from the Federal Reserve, Fed purchases of mortgage-backed securities, and other government programs designed to prop up the financial markets. The total commitment in public funds for these efforts runs into the trillions of dollars.

Among the firms expected to receive approval to repay their TARP funds are many, if not all, of the nine companies that were deemed by the Obama administration to have sufficient capital to withstand a deeper recession in the so-called bank “stress tests,” the results of which were announced a month ago. They include JPMorgan Chase, Goldman Sachs, American Express, US Bancorp, State Street, and Bank of New York Mellon.

The stress tests were rigged by the Fed and the Treasury to give the 19 largest banks and financial firms a clean bill of health. The administration presented a picture that understates the critical state of the banks’ finances so as to justify keeping them in private hands, boost investor confidence and the banks’ share prices, and provide a rationale for foregoing tougher bank regulation.

In the run-up to the stress test results, the Obama administration intervened repeatedly to reassure the markets that it would do nothing to challenge the property or wealth of the financial elite. Obama and his treasury secretary, Timothy Geithner, repeatedly declared their support for capitalism and private ownership of the banks. They intervened to block congressional legislation that would have imposed a tax surcharge on bonuses awarded by bailed-out firms. They laid out detailed plans to use government funds to enable the banks to offload their bad debts. And their Auto Task Force, run by investment bankers, made clear that it would force Chrysler and General Motors into bankruptcy in order slash the jobs and wages of auto workers, setting a precedent for similar attacks on every section of the working class.

They declared in advance that they would not allow any of the banks being tested to fail, making clear that there was no limit to the taxpayer bailout of the financial industry.

The result has been a run-up of stock prices, 34 percent overall since early March, with financial stocks surging even higher. One key index shows large-bank stocks rising 87 percent.

JP Morgan stock has jumped 118 percent. Bank of America shares are up 263 percent. Its CEO, Kenneth Lewis, has made a tidy profit of over $2 million on 400,000 shares he bought earlier this year.

Investors are rushing to buy up stock offerings by the banks, even though they continue to hold an estimated $1 trillion in toxic mortgages on their balance sheets. The Wall Street Journal reported on June 3, “Money is pouring in so fast that surprised bankers can hardly believe it, especially since most investors didn’t want to go near financial stocks just three months ago, even though they were nearly 40 percent cheaper.”

As Richard Bove, an analyst at Rochdale Research, put it in a note to clients last week, the banking industry is on the verge of a “golden age.”

What is the basis for this surge in investor enthusiasm for bank stocks? It is the government’s assurance that it will cover the banks’ bad gambling debts, dollar for dollar.

The Journal quoted William Mutterperl, a Wall Street lawyer and former vice chairman at PNC Financial Services Croup, as saying, “I’m an optimist by nature, but it’s perplexing because there are still problems out there. No one has suggested foreclosures are going down, and I don’t think anyone is saying loan quality is getting any better.”

Analysts at Moody’s Investors Service warned last Tuesday that US banks could lose $640 billion through next year. “In such a scenario, absent continuation, and likely deepening, of US government capital and liquidity support programs for the banking industry, numerous banks would be insolvent,” the Moody’s analysts wrote.

The Obama administration’s good offices have encouraged the big banks to launch a multi-front offensive to block any measures that would limit their profit-making, and to weaken already existing regulations.

Last February, for example, financial firms and banking organizations launched a multi-million-dollar lobbying drive to change mark-to-market accounting rules that forced banks to report losses or write-downs totaling $175 billion in 2008. Mark-to-market essentially requires banks to value their assets according to prevailing market prices. The banks have balked at this standard, demanding instead the right to assign their own values to their bad debts, using “internal models.”

With the aid of $286,000 in campaign donations to the 33 members of a key House subcommittee, the Fair Value Coalition, the lobby group set up by the banks, succeeded in getting the industry rule-making body, the Financial Accounting Standards Board, or FASB, to give the banks immense latitude in suspending mark-to-market rules.

The Wall Street Journal on June 3 published an investigative report detailing the banks’ use of campaign fund bribes and other monies to get their way. The Journal reported that the banking coalition spent a total of $27.6 million in the first quarter of 2009 on its lobbying effort.

It focused its drive on a House Financial Services subcommittee chaired by Rep. Paul Kanjorski, a Pennsylvania Democrat. Kanjorski received $18,500 from Fair Value Coalition members in the first quarter. Over the past two years, Kanjorski has received $704,000 in contributions from banking and insurance companies, the third-highest among members of Congress.

Barney Frank of Massachusetts, the Democratic chairman of the Financial Services Committee, received $8,500 from the coalition.

Kanjorski and other recipients of the bankers’ largess from both parties grilled the head of FASB, Robert Herz, at a committee hearing on March 12, demanding that he expedite a review of mark-to-market rules and threatening him with a bill to broaden government oversight of his board if he failed to comply.

Herz got the message, and on April 12, in advance of the stress test results and early enough to enable the banks to pad their first-quarter financial reports, FASB announced the changes demanded by the lawmakers.

According to the Journal, the American Bankers Association was the biggest contributor to the campaign funds of committee members in the weeks before the March 12 hearing. The newspaper quotes ABA President Edward Yingling as boasting, “We worked that hearing. We told people that the hearing should be used to talk about the big problems with ‘mark to market,’ and you had 20 straight members of Congress, one after another, turn to FASB and say, ‘Fix it.’”

The Journal notes: “The change helped turn around investor sentiment on banks.... Wells Fargo & Co. said the change increased its capital by $4.4 billion in the first quarter. Citigroup Inc. said the change added $413 million to first-quarter earnings.” The newspaper cites a tax and accounting analyst, who estimates that the accounting changes will increase bank earnings in the second quarter by an average of 7 percent.

The Journal quotes Lynn Turner, the former chief accountant of the Securities and Exchange Commission and a former FASB member, as saying “he doesn’t think the banking industry will be satisfied until mark to market accounting is dismantled completely. ‘Despite efforts by FASB to give ground to the banks, enough is never enough, he says.”

Green Energy Overtakes Fossil Fuel Investment, Says UN

2009-06-04T19:10:00.000-07:00

Green energy overtook fossil fuels in attracting investment for power generation for the first time last year, according to figures released today by the United Nations.

Wind, solar and other clean technologies attracted $140bn (£85bn) compared with $110bn for gas and coal for electrical power generation, with more than a third of the green cash destined for Britain and the rest of Europe.

The biggest growth for renewable investment came from China, India and other developing countries, which are fast catching up on the West in switching out of fossil fuels to improve energy security and tackle climate change.

"There have been many milestones reached in recent years, but this report suggests renewable energy has now reached a tipping point where it is as important - if not more important - in the global energy mix than fossil fuels," said Achim Steiner, executive director of the UN's Environment Programme.

It was very encouraging that a variety of new renewable sectors were attracting capital, while different geographical areas such as Kenya and Angola were entering the field, he added.

The UN still believes $750bn needs to be spent worldwide between 2009 and 2011 and the current year has started ominously with a 53% slump in first quarter renewables investment to $13.3bn.

Counting energy efficiency and other measures, more than $155bn of new money was invested in clean energy companies and projects, even though capital raised on public stock markets fell 51% to $11.4bn and green firms saw share prices slump more than 60% over 2008, according to the report, Global Trends in Sustainable Energy, drawn up for the UN by the New Energy Finance (NEF) consultancy in London.

Wind, where the US is now global leader, attracted the highest new worldwide investment, $51.8bn, followed by solar at $33.5bn. The former represented annual growth of only 1%, while the latter was up by nearly 50% year-on-year.

Biofuels were the next most popular investment, winning $16.9bn, but down 9% on 2007, as the sector was hit by overcapacity issues in the US and political opposition, with ethanol being blamed for rising food prices.

Europe is still the main centre for investment in green power with $50bn being pumped into projects across the continent, an increase of 2% on last year, while the figure for America was $30bn, down 8%.

But while overall spending in the West dipped nearly 2%, there was a 27% rise to $36.6bn in developing countries led by China, which pumped in $15.6bn, mostly in wind and biomass plants.

China more than doubled its installed wind turbine capacity to 11GW of capacity, while Indian wind investment was up 17% to $2.6bn, as its overall clean tech spending rose to $4.1bn in 2008, 12% up on 2007 levels.

A number of Green New Deals - government reflationary packages designed to kickstart economies and boost action to counter climate change - have been laid out by ministers around the world.

The slump in global renewable investment during the first quarter of 2009 has alarmed the UN and New Energy Finance, the London-based consultancy that compiled the figures for the UN.

Michael Liebreich, chief executive of NEF, said the second quarter had revealed "green shoots" of recovery, which indicated this year could end up with investment at the upper end of a $95bn to $115bn range, but still a quarter down on 2008 at the least.

About $3bn of new money had been raised via initial public offerings or secondary issues on the stock markets in the second quarter, compared with none in the first three months of this year.

The New Energy Index of clean tech stocks, which had slumped from a 450 high to 134 by March, had since bounced back to 230, while more project financing had been raised in the last six weeks than in the 13 before that, he said.

But Steiner and Liebreich are still anxious that politicians do more to stimulate growth.

"There is a strong case for further measures, such as requiring state-supported banks to raise lending to the sector, providing capital gains tax exemptions on investments in clean technology, creating a framework for Green Bonds and so on, all targeted at getting investment flowing," said Liebreich.

It is important stimulus funds start flowing immediately, not in a year or so, he added: "Many of the policies to achieve growth over the medium-term are already in place, including feed-in tariff regimes, mandatory renewable energy targets and tax incentives. There is too much emphasis amongst some policy-makers on support mechanisms, and not enough on the urgent needs of investors right now."

Japanese companies cut capital investment

2009-06-04T19:08:00.000-07:00

In the first quarter of 2009 Japanese companies cut their capital investment at the fastest pace in the last 54 years, a governmental survey says.

The 25% decline from the same period in 2008 on plant and equipment followed a 17% fall from October to December last year, announced the survey by Japan's finance ministry that was released Thursday in Tokyo.

Japan has been one of the major economies worst hit by the global downturn; export firms have been particularly affected by the drop in worldwide consumer spending.

The Japanese gross domestic product (GDP) contracted by a record annual rate of 15% during the January-March quarter of 2009.

Japan's Finance Minister Kaoru Yosano said Wednesday that the country's economy will probably begin growing again this quarter, echoing a prediction made last month by Bank of Japan Governor Masaaki Shirakawa.

A growth of 1.6% in industrial output -- the first gain in six months -- led economists to predict a modest growth for the world's second largest economy in the coming months.

Analysts are also optimistic about Prime Minster Taro Aso's $160B stimulus plan to boost consumption, which accounts for about 55% of Japan's GDP.

China exports fall as domestic demand surges

2009-05-14T01:34:00.000-07:00

China exports fall as domestic demand surges
2 days ago

BEIJING (AFP) — China's efforts to boost domestic demand to fight the global financial crisis showed strong signs of success Tuesday, with investment in infrastructure rising as exports fell.

Analysts said the impact of a four-trillion-yuan (580-billion-dollar) package unveiled in November to stimulate demand at home had started to be felt as China moves towards an investment-heavy growth model.

Exports fell 22.6 percent in April to 91.9 billion yuan from a year earlier in the sixth straight monthly decline, according to figures from the customs bureau.

But urban fixed asset investment, an indicator of the government's progress in lifting growth by funding infrastructure projects, was up 30.5 percent in the first four months of 2009, the National Bureau of Statistics said.

According to research firm Moody's Economy.com, this represented the highest rate of growth since July 2006.

"This very obviously shows that domestic demand is quite good because of the fiscal stimulus package, and external demand is still too weak," said Xu Jian, a Beijing-based economist at China International Capital Cooperation.

China's massive export machine -- a main driver of growth over the past three decades -- was battered late last year as the global financial crisis hurt overseas demand.

The slowdown has led to the closure of thousands of exporting factories in the country's manufacturing heartlands, and, according to government data, at least 25 million migrant workers from poor rural areas are now unemployed.

Figures released by the statistics bureau showed that funds for fixed asset spending in China have come overwhelmingly from domestic sources so far in 2009.

Investments by domestic enterprises in the first four months of the year were up 34.6 percent, while investment by foreign businesses in the same period was down 1.2 percent, it said.

According to the customs data, China's exports in April rose 6.9 percent compared to March, and imports increased 15.1 percent.

Glenn Maguire, chief economist for the Asia Pacific region at Societe Generale, said this was consistent with an economy that was being driven by very strong fixed-asset investment growth.

"As China moves to an investment- and infrastructure-heavy growth model, what we are seeing is the economy is sucking in imports to meet that," he said.

The statistics bureau also said that spending on new projects increased by 90.7 percent in the first four months of the year.

This suggested "that aided by the fiscal stimulus, total fixed investment is still likely to rise solidly in coming months," said Qian Wang of JP Morgan.

But Matt Robinson, an economist at Moody's Economy.com, cautioned that the strong growth in investment was not necessarily the sign of a good economic outlook.

"Strong stimulus spending and a surge in new loan approvals appear to be driving the strong growth in investment, rather than a healthy economic outlook," he said in a research note.

The customs bureau highlighted Tuesday a slight improvement in the situation, saying the drop in trade in April had slowed by 1.9 percentage points compared to that of the first three months of the year.

Xu said that he expected exports to gradually improve towards the end of the year.

"But in the future, the government will definitely focus their policy more on consumption, as it knows its economy is imbalanced," Xu said, adding that this would take time.

Should soda drinkers pay a sin tax?

2009-05-14T01:27:00.000-07:00

Should soda drinkers be taxed extra to help pay for the president's proposed health care plan?

The Senate Finance Committee heard a proposal Tuesday to levy a 3-cent tax on sodas as well as energy and sports drinks like Gatorade to do just that. Diet sodas would be exempt. The Congressional Budget Office estimates that a 3-cent tax would generate $24 billion over four years.

The argument is not only is soda a luxury -- albeit a very, very cheap one -- but it increases the risk of extra poundage and obesity, thus increasing the risk of diabetes and other costly health woes. Shouldn't those who choose to risk their health by consuming nutritionally worthless and potentially health-damaging beverages have to pay for the consequences?

The other question is will a tax dissuade consumers from drinking soda? Or do we care if does or not?

The bottomline is that if Americans want health care for all, then someone will have to pay. Should it be you?

Lois Kazakoff

Is Islamic finance the answer?

2009-05-14T01:19:00.000-07:00

Experts in Islamic finance believe their way of doing business has shielded them from the global credit crisis.

But how does it differ from conventional Western finance?

A former executive director of the International Monetary Fund, Dr Abbas Mirakhor, says wider Islamic economics relies on God's guidance, handed down almost 1,400 years ago.

There is a "consciousness of a supreme creator and a system that he has provided", he says.

What we know as the conventional Western way does not have that, which is "really the major difference between the two", he adds.

In practical terms, the most significant difference is that charging interest is not allowed in Islamic finance.

Neither are most forms of speculative investment permitted, such as hedging or derivatives trading.

"We don't recognise the concept of interest... to look for some profit from trading money," explains Dr Bambang Brodjonegoro from the Islamic Development Bank.

"In the Islamic concept, money is strictly for the purpose of exchange or storing value, but not for the transaction of looking for excessive profit," he says.

Sharing risks

How then, does an Islamic bank, and a customer who puts money in that bank, make a profit?

The system is asset-based, with tangible assets or commodities at the heart of it. There are buyers and sellers, not borrowers and lenders.

Here is a comparison.

In Los Angeles a customer who wants to borrow money to buy a car would go to a conventional bank and agree a loan. The bank would hand over the money.

There would be regular repayments, which include interest accrued on the loan.

In Lahore a customer could go to an Islamic bank and sign a contract with the bank to buy a car from them.

The bank would not loan the money but buy the car itself. Then it would sell it to the customer at a mark up.

The customer would agree to pay back the cost in instalments over a regular period.

One of the core principles at the heart of Islamic economics is risk sharing. The bank and the people who put their money in it share any profit, or loss, from investments.

"In Islam we appreciate merit, so if someone works harder in a business...they (the bank) will get the sharing benefit," explains Dr Brodjonegoro.

"The more important thing is that there will be no bank that rules everything. It will be bank and borrowers at the same level and they share the risk and benefit."

Flu and the Mexican economy : A Painful Tune

2009-05-06T09:36:00.000-07:00

TRADITIONAL May Day rallies have been cancelled in Mexico as the country begins a five-day suspension of “non-essential” activities. The president, Felipe Calderón, has called off (or put behind closed doors) sporting events and concerts, ordered the closure of bars and nightclubs, and introduced general measures to keep people apart, from Friday May 1st to May 5th, in the latest effort to tackle the spread of swine flu. The order seems irrelevant: in Mexico City, the capital, residents have been staying inside anyway for much of the past week, and schools have been closed for several days. One estimate suggests that, as a result, the city’s retail and service industries are losing at least $55m a day.

Just what the economic impact of swine flu will be on Mexico is becoming clearer. A ban on restaurants seating customers is likely to double the cost to the city’s businesses. The capital accounts for roughly a fifth of national GDP (and similar measures are affecting other parts of the country). Financial markets have reacted. Since the emergency began on April 24th the local stockmarket has fallen by 3% (led by a 15% slide in an airport operator, Grupo Aeroportuario del Pacifico). The local currency, the peso, has dipped by about 4% against the dollar, although it recovered slightly on May 1st in response to news that the Inter-American Development Bank would lend the country $3 billion to combat the flu and the economic crisis.

Mexico’s tourist industry is also suffering. So far, America, Canada and some European countries have advised citizens to avoid travel to Mexico. Argentina has suspended flights from the country and several large tour operators have cancelled trips there. The European Union is resisting French demands for a suspension of flights, but more widespread bans could be in the offing. They will hurt the economy directly, as would any lingering aversion to travel to Mexico once bans are lifted. Mexico welcomed 21.4m tourists in 2007, from whom it earned $14.1 billion.

Airlines are inevitably battered too. The impact of the severe acute respiratory syndrome (SARS) gives an indication of what damage swine flu might inflict on this industry. In April 2003, at the height of the SARS outbreak, airline-passenger arrivals in Hong Kong were nearly two-thirds lower than they had been the month before. Hotel-occupancy rates, too, fell dramatically throughout East Asia. For Mexico similar drops would hurt: travel services made up 72.8% of its service exports in 2007.

Although it seems clear that swine flu is not spread by eating pork, worries about safety could also affect trade in goods, an important part of the Mexican economy (exports made up 27% of its GDP in 2008). China has banned imports of Mexican pork. With trade already contracting fast all over the world, because of recession, the latest anxiety over swine flu risks becoming an excuse for protectionist measures.

Mexico’s finance minister, Agustín Carstens, suggests that the flu will inflict only limited economic damage on the domestic economy, perhaps knocking 0.3-0.5% off GDP. But this comes on top of a severe downturn. The IMF’s latest forecasts indicate that Mexico’s economy will shrink by 3.7%, without factoring in the flu. As swine flu spreads, economic impacts will be felt beyond Mexico, too. Airlines beyond Mexico are affected when tourists cancel bookings. America buys a very large share of Mexico’s exports, and companies there may find their costs affected if they have to look elsewhere for supplies.

A full-scale pandemic is still not certain: nor is it clear how much humans beyond Mexico might suffer. So far no deaths of non-Mexicans have been reported from swine flu. But the potential exists for a pandemic to cause significant economic damage. In 2008 the World Bank estimated that a global flu pandemic similar in its deadliness to the 1918-19 Spanish flu could kill over 70m people worldwide, and could cause the world economy to contract by 4.8%. This seems overly pessimistic in today’s circumstances, partly because some of the effects that economists worry such a pandemic could cause—collapses in consumer confidence, delayed investment plans, trade declines—have already happened because of the global slump. But the slump also means that government budgets are already overstretched in many countries and government spending would be the key to rapid containment.

The World Bank has set aside $25m for Mexico in immediate aid to buy medicine to battle the swine flu. It also has the cushion of a $47 billion precautionary line of credit with the IMF. It did not expect to need to draw this down: but it had not reckoned with swine flu.

From Economist.com

Finance Fallacy: Saving vs. Investing

2009-05-06T09:30:00.000-07:00

Understanding today's economy is hard enough without having to wrestle with popular misconceptions and misinformation. In a new series, Paul Solman and guests debunk the conventional wisdom to help make sense of our economic world.

Saving doesn't mean safe
PAUL SOLMAN: Saving -- safe. Investing -- risky. This is a thing you read over and over again everywhere on the Internet. All these different financial literacy sites, so called, and I happen to know that it personally gives you agita, [Professor Zvi Bodie], or palpitations, sometimes high blood pressure. This drives you nuts, right? Why?

ZVI BODIE: It drives me nuts because it contradicts what we teach in the basic course in economics, even in high school. Students are taught that saving equals your income minus what you spend on consumption. That's the definition of saving.

PAUL SOLMAN: It's what's left over.

ZVI BODIE: It's what's left over after you consume your income. How you invest it is about, you know, how much of it goes into a savings account, how much of it goes under a mattress, how much of it goes into stocks and other risky assets. So, investing in and of itself is not taking risk. You can invest safely. It's simply how you are allocating your saving and the aggregate or the total investment in any given period of time is by definition equal to the total amount of saving.

PAUL SOLMAN: Well, but you can understand then why people would conflate the two and say, 'Oh well, savings and investment - it's the same amount, so it's the same thing.' But...

ZVI BODIE: Well I think what causes the confusion is that you're using the word "safe" and you have things like savings accounts. So, in the popular parlance, as opposed to the economics definitions, it is the case that saving is what you put into a savings account.

False belief: Investing equals risk
PAUL SOLMAN: But so what's the difference? Why does it make you so upset? I mean, it's just because it betrays this fundamental discipline that you teach and grew up in, or you think that there's actually something pernicious happening as a consequence?

ZVI BODIE: There is something very pernicious happening and that is that you have, in not following the economics definitions, you have now made it impossible for someone to invest safely by definition. Because if you want to invest, you have to take risk!

PAUL SOLMAN: According to this...

ZVI BODIE: According to this new rubric, let's say -- the popular rubric. So, if I choose for example, as I do and you know this, to put 100 percent of my savings into safe Treasury-protected accounts -- I-Bonds, TIPS. According to the popular definition, I'm not investing. But I sure as hell am investing!

PAUL SOLMAN: And as I am I when I follow your lead in so doing. So, what's happening is that the investment community, by promulgating this notion that investing is taking a risk and saving is playing it safe, is essentially inducing people to take more risk than they otherwise would?

ZVI BODIE: That is correct. And it's not the only way they do it because in general they say saving is what you do for the short run, investing is what you do for the long run. So, the minute you say, 'Well, I'm saving for retirement,' then they say, 'Well, that means you want long-run investments like stocks.'

PAUL SOLMAN: And of course... And here's the way we'll end this Finance Fallacy segment: They make a whole lot more money selling us stocks than they do selling us anything else.

After the gold rush

2009-04-24T02:00:00.000-07:00

The spree is over, the global economy is in ruins and our political masters are in disarray. Make no mistake, writes John Gray, the neoliberal era is over – but at what cost?

One of the more entertaining ironies of the global financial crisis is the United States government demanding that the rest of the world follow its lead in implementing radical Keynesian policies. It is not just that after the events of the past months few people take American pretensions to financial leadership seriously any longer. More to the point, no Keynesian policies of any kind had a place in the economic orthodoxy – the deservedly forgotten “Washington consensus” – that US officials preached to the world, and imposed on various countries through the IMF and the World Bank, during the decades that preceded the outbreak of the crisis. Then, sound money and balanced budgets were the touchstones of economic virtue – not, of course, for the US, which has always displayed a fine disregard for these neoliberal dogmas in its own case, but for everyone else, and most particularly for the world’s poor countries.

Now, the United States is promoting cheap money and deficit financing as global panaceas while doing nothing to change the neoliberal policies that it did embrace, such as the deregulation of banking by the Clinton administration. In a parody of the government-controlled crony capitalism that Washington has relentlessly criticised in emerging economies, the Obama administration is doling out vast sums to chosen banks while allowing them to continue to act as hedge funds. The result is that the US has itself become a kind of hedge fund, and of the more highly leveraged and less well-managed variety that has fared so badly recently.

In these uncertain times it is easy to lose sight of the larger picture and longer view; most reportage and commentary is fixated on ephemera. What people need is a reliable guide to the financial crisis as a historical process, showing how collapsing banks and steeply rising unemployment are part of a large-scale shift in events and ideas. Paul Mason’s Meltdown is the book they are looking for. The economics editor of BBC2’s Newsnight, Mason presents a richly detailed narrative of the events of the past year while setting the story firmly in the context of the flaws in the type of capitalism that was let loose over the past 20 years.

Writing in January this year as he finished the book, he spelled out the future course of the crisis in terms of two possible scenarios, predicting “either a hard and effective nationalisation of the banks or a long, life-changing global slump. There is a slim chance that we will escape with a short, sharp recession – but it looks slimmer by the day. Either way, the neoliberal era is over.”

It is a characteristically astute assessment. As even mainstream economists have recognised, the creeping extension of government ownership is highly unsatisfactory. Partial bank nationalisation leaves the locus of decision-making and accountability unclear, while the scale of toxic debt in the system as a whole remains unknown. Moreover, despite promises about financial regulation at the G20 meeting, it seems unlikely that anything will be done to counter the merging of casino-like investment banking with ordinary deposit-taking that was a cause of the crisis.

Nationalising the banking system on a different and better model would be a useful move, and may even have been necessary if the crisis was to be contained effectively. As Mason points out, Hyman Minsky – one of the few economists whose work is helpful in understanding the crisis – advocated socialised banking as a condition of sustainable market capitalism. However, if there was ever a time when banking could be subjected to root-and-branch reform, it has probably passed. Gordon Brown can legitimately claim to have prevented the imminent collapse of the British banking system (even if, as Mason notes, the detailed work was done by civil servants working into the small hours over takeaway meals and stale coffee).

But there was never much chance that the government would grasp the nettle of nationalisation. The entire New Labour project has been shaped around embracing the City and letting finance capitalism rip; and entrenched habits of mind have dictated that extending state ownership – even where it might stabilise market capitalism – could not be seriously envisioned. Instead, the British state has taken over the unknown liabilities of insolvent banks; as a result, it faces a future of uncertain solvency.

The situation is worse in America, where the political system has been captured by the financial institutions. Given the line-up of Clintonite has-beens who are in charge – figures such as Larry Summers, an important player in the 1999 repeal of the Depression-era Glass-Steagall Act, which limited speculation by banks – it is hardly surprising that radical banking reform is not on the agenda. Even so, the Obama administration’s inept handling of the bailout can only have damaged America’s image further. The fusion of the political and economic processes, against which successive White House administrations have railed in their incessant homilies on the proper regulation of emerging economies, is nowhere more evident than it is in Washington. The details are cloaked in secrecy, but it is clear there is a huge ongoing redistribution of wealth from taxpayers to financial institutions.

With decision-making in the hands of an inward-looking and not very competent oligarchy, America now bears more than a passing resemblance to an emerging economy. The US has opted to monetise its debts – in other words, to inflate them away. This is the reality behind the sudden revival of Keynes and the febrile hype about deflation. In one sense, there can be little doubt that the ultra-Keynesian mix of extremely low interest rates with fiscal stimulus and quantitative easing will work. There is no limit to the amount of money that can be created; inflation will eventually return, leading to real devaluation of debt. To that extent, the current crisis – at least the part of it arising from the build-up of debt – will be resolved.

But, as might have been pointed out by Keynes (a more realistic thinker than many of his latter-day disciples), these policies will not deliver stability. In countries that are heavily dependent on foreign capital they can easily be counterproductive. There must be a risk of another and larger run on the pound, and, further down the road, increasing pressure on the status of the dollar as the world’s reserve currency. Why should the world’s creditors continue to lend to countries bent on debauching their currencies and thereby devaluing the investments these countries have built up in them? They have no alternative, it will be argued, because they rely on US markets for their exports. China will have to put up with watching the value of its holdings of US government debt melting away. Again, how can China start pulling out its investments without triggering a run on the dollar, in which the value of those investments is further diminished?

Well, we shall see. China’s rulers may not have much choice in the matter. If the contraction of the global economy continues, they may be compelled to deploy national reserves to prop up the domestic economy and stave off civil unrest. In any case, China does not have to sell its existing holdings; it can simply stop replacing them, which would have the effect of raising interest rates and aborting any US recovery. Either way, it would be unwise to rely on the lopsided economic relationships of the past few decades surviving a once-in-a-century global upheaval.

The upshot of Mason’s analysis may be more unsettling than he realises. Now that the time for root-and-branch banking reform seems to have passed, the global economy seems to be heading for the “long, life-changing global slump” he identifies as one of the two scenarios facing the world. This will not be a rerun of the 1930s, if only because the US, along with other countries, has opted for inflation, but it will surely be life-changing. The collapse of the neoliberal project continues, and there is no sign of a successor.

John Gray

Banks adopt new fraud-control measures

2009-04-21T23:44:00.000-07:00

Banks in the UAE have launched new security improvements that include changing account numbers after a series of fraud cases.

Emirates NBD has told all its customers that it is upgrading its customer relationship management (CRM) system. Account numbers will be changed once the information systems of the merged banks – Emirates and National Bank of Dubai – are integrated.

One of the fraud cases involved a swindler who escaped with Dh1.5 million after producing a fake driving licence when he was asked to show ID. And a criminal syndicate used forged credit cards to purchase jewellery and other valuables in Sharjah.

Banks that recently jacked up their security procedures are once again enhancing their CRM systems in an effort to make them foolproof.

An official spokesman for Emirates NBD said he could not comment on the case of the customer who allegedly lost Dh1.5m "because it is a court and police case". But he confirmed the bank was upgrading its CRM systems.

"We have every intention of upgrading the systems," he said. "The group already has several highly specialised systems within our high-net-worth businesses and a market-leading system is already in place for the customers of the National Bank of Dubai, which is an Emirates NBD company. Our intention is to incorporate this into other group entities.

"As part of Emirates NBD's continuous investment in the latest technology and as part of the integration between the two banks, Emirates NBD is in the process of upgrading its IT system. We have chosen Finacle from Infosys as the new core banking system for Emirates NBD. We are migrating both, Emirates Bank and NBD, in two phases onto the new system.

"We are making every effort for this transition to be as seamless and smooth as possible for us and our customers. Upon completion of this upgrade the account numbers will, indeed, change but everything else will remain the same."

He said existing automated credits and debits would continue to operate as usual and current ATM, debit and credit cards would not be affected. Existing PINs, cheque books and post-dated cheques would also be unaffected and current internet banking, BankNet and smartBusiness IDs would remain valid.

Anil Kumar, Managing Director of Futech Software Solutions, said: "Banks are currently upgrading their CRM systems to plug loopholes concerning the identification of customers. The improvements will help counter staff to verify the identity of customers in different ways, including signature matching and photographs. We have enhanced the system for a few banks and others will have to follow suit."

World Bank to Boost Safety Net Spending

2009-04-21T23:37:00.000-07:00

WASHINGTON (AFP) — The World Bank said Tuesday it would triple its social safety net investments to 12 billion dollars over the next two years to help developing nations weather the global financial crisis.

The World Bank said it was increasing investments in social protection programs in health and education "to protect the most vulnerable people from the worst effects of the global economic crisis."

The investments will be in the form of loans to governments to finance the creation or the improvement of programs for the poor.

"This lending includes rapid social response programs and conditional cash transfers, where families are granted money transfers in exchange for sending their children to school and for regular medical checkups," the 185-nation development lender said in a statement.

"Increasing investments in social protection programs have been found to be effective in both stimulating spending and protecting the poor at a relatively low cost, often less than one percent of a country's gross domestic product (GDP)."

The Washington-based institution cited several successful examples of this type of program, in Brazil and Ethiopia.

The bank noted it had lent in early April 1.5 billion dollars to Mexico to expand Oportunidades (Opportunities), a government program aimed at helping the 25 million people that live in the five million "most vulnerable" households in the country.

The World Bank announced in November that it was going to increase its lending to the developing world over the next three years, through its International Bank for Reconstruction and Development arm (IBRD).

The IBRD focuses on middle income and creditworthy poor countries.

Ahead of Friday's meeting in Washington of the Group of Seven and Group of 20 finance chiefs, World Bank president Robert Zoellick called on the international community to not forget the impact of the global crisis on the world's poorest people.

"Most attention in the current crisis has been focused on developed countries where people face the loss of homes, assets and jobs. These are real hardships," Zoellick said in the statement.

"But people in developing countries have much less cushion: no savings, no insurance, no unemployment benefits, and often no food," he said.

Under the stepped-up investment in social protection programs, the bank said it would increase its fast-track facility for countries in the throes of the food price crisis to 2.0 billion dollars from 1.2 billion dollars.

Gold demand pushes through $100bn barrier as investors turn to recognize store of value

2009-02-22T03:06:00.000-08:00

The World Gold Council's regional office in Dubai announced that the UAE gold jewellery sales increased by 17% in 2008 to cross Dhs13.7bn compared to Dhs11.4bn in 2007.

Total gold demand in the Middle East in Q4 of 2008 was up 1% on the levels of Q4 of 2007. Around 90% of total consumer off take in the region is in the form of jewellery, and weakness in this sector (down 7%) largely offset extremely strong growth in the net retail investment (139%). The surge in investment demand was reasonably widespread across the region, 300% in Saudi Arabia, 67% in Egypt, 38% in UAE and 2% in other Gulf countries (all compared to Q4 of 2007).

During 2008 as a whole, total off take in the region was down a modest 2%. The resilience of Egypt were demand rose 12% largely offset weakness in the UAE (-4%), Saudi Arabia (-4%) and other Gulf countries (-13%). The annual figures reflected strong growth in investment demand, but Egypt was the only region to record positive growth in jewellery consumption.

Lama Al Saheb, Head of Marketing & PR for Middle East region, commented:

'In the UAE, demand during October's Diwali festival was particularly strong with the help of lower, more stable gold price during that time. Notably, net retail investment was up by 38%. Demand for gold coins and low production cost 22K gold jewellery such as bangles and chains absorbed the benefits of the excess demand.

'The impact of marketing and promotional gold jewellery campaigns is more important now than ever. The continuous efforts that the World Gold Council and its partners from the gold trade in several countries in the region is essential in order to maintain a healthy gold market environment in the coming period,' added Lama Al Saheb.

Saudi Arabia was also notable for a surge in investor demand. The increase from just 1.7 tonnes in Q4 of 2007 to 6.8 tonnes in same period of 2008 represents a tripling in investment off take.

In Egypt, the jewellery demand over recent quarters has been noticeable for its stability and resilience. Q4 of 2008 was up 6% in tonnage terms on the levels of a year earlier. Over the whole year, the growth rate was 11%.

On an international level, the most striking trend across the year was the reawakening of investor interest in the holding of physical gold. Demand for bars and coins rose 87% over the year with shortages reported across many parts of the globe. Jewellery demand was up 11% in dollar terms at almost $60bn for the whole year, but down 11% in tonnage terms at 2,138 tonnes. The adverse economic conditions across the globe coupled with high and volatile price impacted jewellery buying in key markets, but resilient spending on gold jewellery indicates the strength of underlying demand, indicated by strong buying when the market offered attractive price points.

Aram Shishmanian, the new CEO of the World Gold Council, said, 'These figures confirm that investors around the world recognise the benefits of holding gold during this time of unprecedented global financial crisis, recession and the spectre of future inflation. Gold has a gain proven its core investment qualities as a store of value, safe haven and portfolio diversifier and this has struck a chord with nervous investors. Whilst current market conditions have impacted consumer spending on jewellery, purchasers in many of the key gold markets understand gold's intrinsic investment value and continue to buy. The economic downturn and uncertainty in the global markets, that has affected us all, is unlikely to abate in the short term. Consequently, I anticipate that gold as a unique asset class will continue to play a vital role in providing stability to both household and professional investors around the world.'

Omantel falls after Q4 results

2009-02-14T23:41:00.000-08:00

by Raissa KasolowskyThis on Sunday, 15 February 2009

Oman Telecommunications Co (Omantel) lost 1.64 percent, bucking the benchmark MSI's upward trend after posting a 67 percent drop in fourth-quarter net profit.

The telecoms firm booked a 18.88 million rial ($49.04 million) impairment losses linked to its Pakistani unit.

The benchmark rose 0.76 percent to 4,846 points, with Galfar Engineering Co gaining 5.89 percent.

Kuwait:

In Kuwait, Kuwait Finance House and Agility rose 3.57 percent and 1.49 percent respectively.

The index KWSE edged up 0.17 percent to 6,625 points.

Global Investment House declined 5.75 percent. The firm said on Thursday it had reached an agreement with Jordan's Housing Bank for Trade and Finance to release bank deposits seized by a court over a $13 million loan dispute.

UAE:

Dubai's Emaar Properties plummeted 5 percent in early trading, leading the benchmark to decline 1.5 percent to 1,486 points.

Emaar Properties on Thursday posted a loss of 1.77 billion dirhams ($481.9 million) in the fourth quarter due to heavy US writedowns.

Abu Dhabi's main index ADI edged 0.01 percent lower to 2,254 points. Arkan Building Materials Co lost 6.98 percent, while Sorouh Real Estate fell 2.89 percent. (Reuters)

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The gloom gets gloomier with each passing day

2009-01-24T06:54:00.000-08:00

Dan Gardner, The Ottawa Citizen
Published: Saturday, January 24, 2009
'The slump is the longest, if not the deepest, since the Great Depression," notes the cover story in Time. "Traumatized by layoffs ... U.S. consumers have fallen into their deepest funk in years. 'Never in my adult life have I heard more deep-seated feelings of concern,' says Howard Allen, retired chairman of Southern California Edison. 'Many, many business leaders share this lack of confidence and recognize that we are in real economic trouble.' Says University of Michigan economist Paul McCracken: 'This is more than just a recession in the conventional sense. What has happened has put the fear of God into people.'"

Depressing stuff. Then, in the Vancouver Sun, I read a story about Stephen Roach, one of the most respected economists on Wall Street, who warned that the massive losses on stock markets have produced a "negative wealth effect" that may "plunge the North American economy into its worst recession since the 1930s."

Worried yet? Of course, you are. That's the new culture we live in, a "culture of recession," as a writer in Toronto Life called it. It is "a culture that has generated feelings of sheer panic for some, extreme despair for others, and uncertainty and unrest for just about everyone else."

Like I said, grim times. I'm glad they're over.

The first quotation comes from an article published January 1992. The second dates from March 2001. The third appeared in March 1993.

Writing in the Globe and Mail a few weeks ago, novelist Douglas Coupland discussed what he called "gloomageddon." (If nothing else, Coupland is a fabulous neologist.)

"I spoke with friends decades older than me and I asked them what it felt like to have a mortgage in the 1970s and early 1980s, and they said it obviously didn't feel too good. And then I asked them how scary it felt in general to weather the early 1970s financial woes and all of the subsequent cyclical downswings since then. The unanimous agreement seems to be that, while previous downswings were no cakewalk, what's happening at the end of 2008 is weirder, darker and spookier than anything that's come before. It obsesses them and eats up a huge slice of their everyday imaginative lives in a way previous recessions never did."

They aren't alone. Plenty of people are certain the current crisis is "weirder, darker, and spookier than anything that's come before."

But Coupland and his friends made a serious mistake: They assumed that how people remember feeling during past recessions is a complete and accurate reflection of how they actually felt.

This assumption is based in part on the popular belief that memory is accurate and unchanging, and therefore reliable. But that belief is wrong. Memory is organic. Our recollections grow and evolve, wither and die, in response to new information, circumstances, and psychological needs. Never change? Our memories never stop changing.

So if you search your memory of, say, 1988 and you cannot recall worrying about economic collapse, that is not conclusive evidence that you did not worry about economic collapse in 1988. In fact, there's a good chance you did worry about economic collapse that year, whether you remember it or not: The Black Monday stock market crash happened in October 1987, and a No. 1 New York Times best-seller in 1988 was Ravi Batra's The Great Depression of 1990.

New York Times in finance talks with Mexican magnate

2009-01-17T22:18:00.000-08:00

NEW YORK (AFP) — The New York Times Company is holding talks with Mexican billionaire Carlos Slim about investing in the newspaper to help it ease its financial problems, The Wall Street Journal reported.

Citing unnamed "people familiar with the matter," the newspaper said on its website that the talks might yet fall apart, but one of the options being discussed is a preferred-stock issue.

Under this scenario, the Times Co. would issue Slim preferred stock, which carries no voting right but pays an annual dividend, in return for his investment, the report said.

According to The Journal, the investment would be similar to a loan.

But preferred shares are often convertible into common stock after a defined period, the paper said.

People familiar with the matter said Slim would likely invest several hundred million dollars in Times Co., The Journal added.

Times Co. is planning a special board meeting next week, according to the report.

Bernie Madoff's man to see

2008-12-20T23:15:00.000-08:00

Debonair middleman Robert M. Jaffe finds himself in a most uncomfortable place

This story was reported by Jenn Abelson, Beth Healy, and Casey Ross of the Globe Staff. It was written by Abelson.

PALM BEACH, Fla. - Even in the rarefied world of high society in Palm Beach, Robert M. Jaffe cut quite the figure. With his impeccably coiffed hair, a golf game to envy, and a $17 million waterfront mansion, he was a man to be seen.

He was also the man to see, if you wanted in on a sure thing - Bernard L. Madoff's investment fund.

Jaffe moved among the rich and richer in Palm Beach and Boston, finding suitable clients, among the many who clamored to get a piece of Madoff's irresistible, too-good-to-be-true investment returns.

But now the 64-year-old Newton native finds himself at the center of one of the biggest scandals to rock the financial world, which has wiped out billions of dollars from an A-list of the powerful and famous, as well as his closest friends, family - and himself.

As investigators unravel the $50 billion Ponzi scheme allegedly masterminded by Madoff, Jaffe has become the subject of intense scrutiny as the New York money manager's debonair middleman. Unlike Madoff, who was aloof and rarely attended parties, Jaffe relished his access to wealthy friends and investors at country clubs and charity galas.

"Jaffe had access to Madoff, and that made him a superstar. He was bigger than life," said Herb Gray, a Boston native with a home in Palm Beach. He is a close friend of Robert I. Lappin, a Swampscott resident whose private family foundation financed trips to Israel for Jewish youth but was forced to shut down this month after losing all of its estimated $8 million to Madoff.

As Madoff's financial empire has crumbled, so has Jaffe's place at the pinnacle of Palm Beach's social life. At the ritzy Mar-a-Lago club, an angry investor who lost millions with Madoff confronted Jaffe at a party last Saturday. Massachusetts Secretary of State has since subpoenaed Jaffe related to the scheme. And his son's engagement party, which was supposed to be held at the exclusive Palm Beach Country Club last night, was abruptly canceled.

"He's in a terrible position. It's a tragedy," said Lawrence Sperber, a Boston lawyer who has a home in Palm Beach and has known Jaffe for more than 40 years and has friends who have lost millions of dollars. "Was he out selling Madoff? Yes. Did he use his contacts to sell the product? Yes. But he's as much a victim. I don't think he had any idea. And he's messed up his relationship with the rest of the world."

As vice president of Cohmad Securities Corp., a company set up primarily to bring in clients for Madoff, Jaffe offered coveted access to the legendary New York firm. Jaffe used to keep a small office on Commonwealth Avenue in Boston, but the MBA dropout functioned more as a symbol of the extraordinary wealth and status Madoff clients could achieve.

British PM visits Pakistan after Mumbai attacks

2008-12-14T00:07:00.000-08:00

ISLAMABAD (AFP) — British Prime Minister Gordon Brown arrived in Pakistan Sunday for talks aimed at calming tensions with India as Islamabad accused its neighbour of violating its airspace, drawing a swift denial.

Brown travelled here from New Delhi, where he earlier held talks with Indian Prime Minister Manmohan Singh on security in the wake of the devastating attacks on Mumbai, which New Delhi has blamed on "elements" in Pakistan.

"I will talk to the president of Pakistan and I will explain the concerns that the Indian people have about what has happened," Brown said before leaving India.

The British leader said he would raise India's concerns during talks with Pakistan President Asif Ali Zardari, and accused the banned Pakistani militant group Lashkar-e-Taiba (LeT) of being behind the attacks that left 172 dead.

"We know that the group responsible is LeT and they have a great deal to answer for," he said in India. "I will talk to the president of Pakistan and I will explain the concerns that the Indian people have about what has happened."

Relations between India and Pakistan have plummeted in the wake of the devastating assault on India's financial capital.

Brown's visit comes just hours after Pakistan said Indian jets made an "inadvertent" intrusion into its airspace, which threatened to further harm ties between the nuclear-armed South Asian states.

Pakistan's air force said Indian jets had Saturday flown over the Pakistani-administered part of Kashmir and the eastern city of Lahore, both places where Lashkar-e-Taiba is active.

The government in Islamabad said it had confirmed the incident with India.

"We contacted the Indian air force and they said the violation was inadvertent. We don't want to escalate the situation," Information Minister Sherry Rehman said.

But a spokesman for India's air force denied the accusation.

"There has not been any airspace violation as has been alleged," Wing Commander Mahesh Upasani told AFP.

Late last month, gunmen ran riot in Mumbai, leading to a 60-hour siege in which hundreds of terrified locals and tourists were caught up. Nine of the 172 people killed were attackers. The last assailant is in Indian custody.

India last week called Pakistan the "epicentre" of terrorism and demanded it do more to crack down on militant groups on its soil, but ruled out military action.

Pakistan has arrested key leaders of LeT, the group India accuses of carrying out the Mumbai attacks, and shut down a charity accused of being a front for the group, freezing its assets and detaining dozens of members.

But it says it will not hand over any suspects to India, which it says has not yet provided any evidence implicating Pakistanis in the attacks.

India and Pakistan have fought three wars since independence from Britain, and Brown's visit is part of a concerted international effort to ease the pressure between the two nations.

Britain has previously urged India and Pakistan, whose long-running dispute over divided Kashmir is a fault line of geopolitical significance, to work together in the wake of the devastation.

Brown's Foreign Secretary David Miliband said earlier this month that "violent extremism is a threat to the very integrity of both of those countries."

Nearly 1,500 people have died in bomb blasts, most of them suicide attacks, since the Pakistani Taliban launched a terror campaign after the deadly military raid on the Al-Qaeda linked Red Mosque in Islamabad in July 2007.

Plan to wipe out London NHS debt

2008-12-08T03:22:00.000-08:00

Health bosses are planning to wipe out millions of pounds worth of debt in a cash bail-out proposal for the NHS.

Primary Care Trusts in London have agreed to work together to help debt-ridden hospitals.

According to NHS London, figures show the capital's health debt will reach £579m by 2011 unless action is taken.

NHS London described the decision as groundbreaking and said the plan would see the "historic NHS debt across the capital wiped out".

Under the plan, PCTs will invest part of their money in a joint fund over the next two years to provide £275m.

Financially challenged

They will also relinquish a surplus NHS London funding pot of £304m to make up the difference and clear the debts of ailing trusts.

The move will provide "a debt-free sustainable health service able to deliver high quality care for all Londoners", NHS London said.

Over the last few years the financial health of the NHS in London has improved significantly, and most organisations have returned to the black.

But six hospital trusts are described as "financially challenged" with another five not expected to get out of the red before 2011.

Bold and decisive

"Unless action is taken it is estimated that the 11 trusts and one PCT will be faced with a historic debt of £392 million in 2011," NHS London said.

The 11 hospital trusts referred to are Bromley; Queen Elizabeth Hospital; Queen Mary's Sidcup; Lewisham; Barking, Havering and Redbridge Hospitals; Whipps Cross; St George's; Barnet and Chase Farm; North West London; West Middlesex, and Newham. The PCT is Hillingdon.

Paul Baumann, finance director at NHS London, said: "PCTs should be congratulated for taking this bold and decisive action.

"Failure to deliver this proposal would mean that a number of organisations would be unable to deliver the improvements promised in healthcare for London and healthcare across London would remain patchy.

The capital's 31 PCTs will discuss the idea and decide whether to implement it at board meetings running from Monday.

Homebound Soldiers's Mental Health Crisis - Bach Flower has a Remedy

2008-12-02T06:56:00.000-08:00

Military bases and the civilian health care system are bracing themselves for a surge in demand for mental health care resources.

Crunch expected as President-elect Barack Obama is committed to pull U.S. troops out of Iraq within 16 months (Reuters).

According to a report from a Congressional hearing on mental health problems confronting soldiers returning from Iraq and Afghanistan, about 20% of the 1.5 million soldiers deployed to those war fronts will return from battle suffering from mental health problems.

The reports projects that about 20% or 300,000 (the size of a large city) will return suffering with clinical anxiety, depression, sleeplessness or post-traumatic stress disorder. A more recent survey found that in fact half of the National Guard troops returning from battle report mental health problems.

These illnesses not only affect the returning soldiers, but they have a cascading effect on the families including the approximately 700,000 children in the United States with at least one parent returning from battle. The expected hundreds of thousands of cases will overflow from the VA and the Department of Defense into and burden the civilian health care system. Bettina Rasmussen, CEO of BachFlower.com says that Bach Flower has a remedy for that.

Ms. Rasmussen (BFRP) is a Bach Centre licensed practitioner and an author on natural remedies. She recently sent a letter to the Department of Defense asking them to explore the cost-effective benefits of all-natural remedies for reducing the symptoms associated with PTSD as part of the recovery regime.

The first wave of 15,000 returning soldiers landed at Fort Campbell, Kentucky; and military health officials at the Department of Defense are bracing for the surge in mental health cases wondering if there are sufficient resources to handle it. The next large wave is expected to arrive in February. Col. Richard Thomas, the Fort Campbell director of health services, has roughly doubled his staff of psychologists and behavioral specialists and is searching for more.

A report by the Army's Mental Health Advisory Team released in 2007 found that 28 percent of soldiers who had been in high-intensity combat were experiencing post-traumatic stress disorder, or acute stress.

It also found that the percentage of soldiers with severe stress, emotional, alcohol or family problems had risen more than 85 percent since the invasion of Iraq five years ago.

General Peter Chiarelli, vice chief of staff of the Army is monitoring how Fort Campbell handles their caseload in order to develop a plan on how other bases around the nation will handle the surge in PTSD cases.

Not all will be rosy when the soldiers come home. Soldiers are faced with adjustment to new realities, some of them quite unpleasant. Many are greeted by marital problems, financial difficulties, disintegrating relationships and family unity.

According to Fort Campbell military health officials, more than 3,000 of the initial 15,000 troops returning home will experience headaches, sleep disorders, irritability, memory loss, bouts of violence, sense of hopelessness, relationship strains or other symptoms linked to stress disorder.

The base officials say that about 85 percent of those soldiers with stress disorder symptoms will recover with the help of treatment or medication; but the other 15 percent will require more intensive help.

A year later has not seen any improvements. According to an Army study reported in the New England Journal of Medicine in July of 2007, one in 8 soldiers returning from war suffer Post Traumatic Stress Disorder (PTSD). Symptoms of PTSD include having flashbacks, nightmares, feeling detached, irritable, resorting to violence, having trouble concentrating or sleeping.

Super Fishing Market planned for 2009 Hutchwilco New Zealand Boat Show

2008-11-29T03:02:00.000-08:00

Super Fishing Market planned for 2009 Hutchwilco New Zealand Boat Show

New Zealand’s favourite boat show is about to get even better with the addition of an expanded “Super Fishing Market”.

The Super Fishing Market is likely to be one of the true highlights of the 2009 Hutchwilco New Zealand Boat Show.

With the biggest range of fishing products in New Zealand ⎯ including over $2m worth of new fishing equipment! ⎯ this will be a real “must see” for all those with an interest in fishing. Not only will there be all of the latest fishing equipment from all of the major brands, there will also be guaranteed “show super specials”.

These will be popular leading brand products available only at the show at super low prices.

The show’s popular how-to fishing seminars will also be expanded.

Those planning on visiting the 2009 Hutchwilco New Zealand Boat Show with friends and family will also be able, for the first time, to make group bookings on line, through the show’s website: www.boatshow.co.nz.

The show’s informative and entertaining Toyota Marine Finance Discover Boating InfoCentre will also be further expanded in 2009 with more interactive displays.

These are designed to help people discover everything they need to know about getting into and enjoying boating. The Hutchwilco Pool will again be a centrepiece of the Discover Boating InfoCentre with demonstrations, displays and entertaining activities for both adults and children.

As always, leading boat manufacturers will use the Hutchwilco New Zealand Boat Show to showcase their latest models, many displaying these to the public for the first time. The very latest outboards, electronics and marine accessories will also be on display, often having arrived in the country just days before the show opens.

New Zealand’s most popular boat show will also again be supported by some of New Zealand’s leading marine and media companies. These include Hutchwilco, The Radio Network, The New Zealand Herald, Yamaha and Toyota Marine Finance.

Organisers expect the show to have a fresh and exciting feel with a number of new exhibitors planning to display at the show for the first time and several existing exhibitors looking to expand their stand areas.

The 2009 Hutchwilco New Zealand Boat Show will again be held at the ASB Showgrounds in Greenlane, Auckland. It will open on Thursday May 14 and run through to Sunday, May 17.

Bush proclaims summit 'productive'

2008-11-15T19:20:00.000-08:00

Jon Ward THE WASHINGTON TIMES
Sunday, November 16, 2008

World leaders at Saturday's global economic summit in Washington agreed on a statement of principles and actions aimed at halting the worldwide economic downturn and improving investment and banking oversight, with the Bush administration saying it had laid down a marker for the defense of free markets as the plans move forward.

The general list of commitments included a call for coordinated stimulus spending within each country, better regulation of banks and complex investment products that avoids "overregulation," more inclusion of emerging economies in global governance, and a need to avoid protectionism.

"I don't think we could have predicted how productive this meeting was going to be," President Bush said.

The group is expected to meet again in April, possibly in London, during President-elect Barack Obama's first few months in office.

The summit agreement did not address differences between the U.S. and Europe over what form future regulation should take, leaving each country to make those decisions for itself while encouraging better communication among regulators.

And the idea promoted by British Prime Minister Gordon Brown, for a so-called "college of supervisors" that would oversee large financial institutions whose dealings cross international borders, was not given any regulatory powers.

"In advance of the summit, there had been much discussion: Was this going to result in an assault on capitalism or the death of capitalism, or the revamping of the free-market system?" said a senior Bush administration official, briefing reporters at the White House. "Uh, quite to the contrary."

The Bush administration, having secured language in the agreement that spoke of the need to reform the International Monetary Fund and World Bank, appeared to soften in its opposition to increasing the IMF's bankroll.

"Whether the current resources are adequate or not is to be determined," said a senior finance official who had previously said the IMF had enough money to help struggling economies.

Japan said Friday it was willing to contribute $100 billion.

Hu Jintao (left)

Welsh Oyster card 'flexibility'

2008-11-04T00:04:00.000-08:00

A Welsh version of London's Oyster card would bring passengers in Wales greater flexibility, according to an economist.

In a report for the Institute of Welsh Affairs, Will Hutton also suggests a Transport for Wales body to bring more private money to buses and trains.

He argues the organisation could then borrow money against revenue from the smart cards and use this to invest.

The Welsh Assembly Government said it was already rolling out smart cards which could be adapted if required.

In the report, Unpacking the Progressive Consensus, Mr Hutton argues the assembly government takes too restrictive a view of using private money to improve public services.

Private finance

"Why shouldn't a Transport for Wales collect the fares and, like Transport for London, have borrowing capacity against that publicly owned, but independently gathered, revenue base?

"We would have a non-state institution that would drive a coach and horses through Rhodri Morgan's progressive consensus," he writes.

He argues that the need for increased investment in health and education means more private finance schemes will be needed.

"In turn this means that Wales will have no alternative but to start a debate on the private finance initiative. To think otherwise will be to behave like King Canute in face of the rising tide."

Mr Hutton is the chief executive of the Work Foundation and a former economics correspondent on the BBC's Newsnight programme.

A spokesperson for the Welsh Assembly Government said: "We are rolling out our Smartcard scheme across Wales and are actively looking at ways in which this can be developed further.

"The technology exists for this to be turned into a version of the Oyster Card if we want to go down that route in due course."

The Labour AM for Merthyr Tydfil Huw Lewis has previously called for assembly powers to regulate buses and base it on the London model, which could eventually lead to a Wales-wide Oyster card.

The report is being launched in association with Cardiff University's Wales Governance Centre.

Bavarian bank accepts Germany's help

2008-10-22T20:47:00.000-07:00

by MT Bureau - October 23, 2008

Munich, Germany -- Germany's second largest regional bank will be the first to participate in the country's $642.5 billion bailout package, a Bavarian official said.

Bavarian Finance Minister Erwin Huber, who said he would resign because of the bank's problems, said Bayerische Landesbank of Bayern would "apply for stabilization measures," Deutsche Welle reported Wednesday.

The bank is partly owned by the state of Bavaria, Germany's largest state by area.

The bank was applying for $7.2 billion in aid. Subsequently, it will have to comply with restrictions that include submitting its riskier lending practices to government review, sending dividends to the government and maintaining its practice of lending to small- and medium-sized businesses, the report said.

In addition, executives pay at the bank will be capped at around $642,000.

Copyright 2008 by United Press International.

World finance chiefs heading for Washington for crunch talks

2008-10-10T00:37:00.000-07:00

WASHINGTON (AFP) — Finance chiefs from the world's richest nations are set to meet in Washington for a crucial but uncertain meeting at a time of unprecedented fear about the global financial system.

The Group of Seven meeting will bring together finance ministers and central bankers on Friday from the United States, Germany, Japan, France, Britain, Italy and Canada for some collective-thinking on the credit crunch and crashing stocks.

They are to be joined by counterparts from emerging markets including Brazil, Russia, India and China for an impromptu gathering of the expanded so-called G20 group.

The United States finds itself in a rare position of weakness, facing many allies that have been highly critical of its economic policy and regulatory system blamed for the problems.

The gathering will be closely watched by investors, who are eager to see solutions and cross-border action by the world's leading powers to help a return to normal lending practices and calm stock markets.

US Treasury Secretary Henry Paulson said Wednesday the meeting would be a forum "to discuss the steps that each of us are taking to confront this crisis and ways to further enhance our collective efforts."

Treasury Under Secretary David McCormick said the meeting would be "heavily focused on current economic conditions, financial market developments and our collective and individual policy responses to recent financial market turmoil."

A final statement from the group is expected late on Saturday.

Paulson played down the possibility of a one-size-fits-all response to the crisis, however, stressing the different challenges by each country.

The four European members of the G7 have themselves been unable to find a common response and other countries have declined to follow the example set by the United States despite pleas from Paulson.

The US approved a 700-billion-dollar rescue package for financial firms last week that will see the Treasury buy up toxic debt from banks in a bid to encourage them to continue lending.

A European source told AFP at the beginning of the week that it was difficult to predict what would be in the final communique given the rapid developments in the crisis .

On Wednesday, leading central banks unleashed coordinated interest rate cuts on Wednesday in their latest attempt to counter the financial problems, caused by bad debts linked to declining house prices in the United States.

Japanese Prime Minister Taro Aso on Tuesday urged the G7 to send a "strong message" on the market turmoil.

"If the G7 fails to send a strong message, it will have a big impact which I am concerned could spread to Japan," Aso told reporters.

"I would like them to make an effort to reach an agreement that everybody can support," he said.

Tension is expected at the meeting given recent comments by countries affected by the crisis.

German officials in particular have been openly critical in the past weeks, saying the United States and Britain had delayed for years efforts to regulate financial markets that were out of control.

"The United States lacked laws, a regulatory framework that would have prevented" what Social-Democrat Finance Minister Peer Steinbrueck called "uncontrolled speculation" in an interview on September 28.

"The USA will lose its superpower status in the global financial system. The world financial system is becoming multi-polar," Steinbrueck said on September 25 in a speech to parliament.

http://afp.google.com/article/ALeqM5g-NCpUcOmQqUUhFkmZdPglcT_jOQ

Israel PM Olmert tells Cabinet he is resigning

2008-09-21T03:31:00.000-07:00

By AMY TEIBEL

JERUSALEM (AP) — Israel's corruption-tainted prime minister told his Cabinet on Sunday that he would step down, following through on a promise to allow the new leader of the ruling party to try to form a coalition government.

But Ehud Olmert did not say when he would formally submit a letter of resignation, leaving the exact timing of his departure unclear. Israel Radio reported that Olmert would hand the letter to President Shimon Peres later in the day, but the report could not be confirmed.

In televised remarks at the opening of Israel's weekly Cabinet meeting, Olmert said he would tell ministers of his "intention to resign the office of prime minister of the state of Israel."

He pledged to stand by Foreign Minister Tzipi Livni, who was elected last week to replace him as chairman of the governing Kadima Party. Livni has been busy in recent days lobbying potential partners to join a new coalition under her leadership.

"I wish Tzipi Livni luck in forming a government as quickly as possible," Olmert said. "I will be at her disposal and will help her with all my might to form a government."

Olmert is being forced from office by a series of police investigations into his financial dealings. He had promised to resign as soon as a new Kadima leader was chosen, and at a party meeting Friday, Livni pointedly brought up that pledge.

Even though she is now head of Kadima, Livni does not automatically become prime minister. Peres would have to first appoint her to try to put together a governing coalition — something he is expected to do after Olmert formally resigns. After assigned that task, Livni would have six weeks to form a new government. Should she fail, new elections would be called for early 2009, a year and a half ahead of schedule.

Polls show that in the event of an election, Kadima would be in a tight race with the hawkish Likud Party, headed by opposition leader Benjamin Netanyahu, a former prime minister.

Over the weekend, Livni met with leaders of two small factions outside the coalition, hoping to shore up any government she could put together. Any accords that might emerge from talks with the Palestinians and recently renewed, indirect negotiations with Syria would benefit from broad-based parliamentary backing. The current government controls 67 of parliament's 120 seats.

Neither Kadima nor its coalition partners appear eager for a new election, fearing they would be ousted from power. But the ultra-Orthodox Shas Party, which could be key to building a new coalition, has already said it would not join a government willing to share Jerusalem with the Palestinians.

As lead peace negotiator, Livni is committed to discussing all the outstanding issues between Israel and the Palestinians. The fate of Jerusalem, whose eastern sector the Palestinians claim for a future state, is at the core of the conflict.

Kadima was founded in 2005 by then-Prime Minister Ariel Sharon. But Sharon suffered a debilitating stroke in early 2006, pushing Olmert into the leadership role.

Olmert led Kadima to victory in 2006 parliamentary elections. But his term in office was troubled by a series of police investigations, Israel's inconclusive 2006 war against Lebanese Hezbollah guerrillas and months of peace talks with the Palestinians that have yielded no breakthroughs.

Resist the gimmicks and wait for value

2008-09-15T04:19:00.000-07:00

By dan white

Monday September 15 2008

My partner and I have wanted to buy a house for many years but have never been able to afford the prices being charged by the builders.

Now with house prices falling, we are looking again at the possibility of buying our own home.

Recently we noticed that some developers have started offering interest-free loans to buyers.

How do these work and do they represent value for buyers?
Gerry

At least two developers, Ray Grehan's Glenkerrin Homes and Bernard McNamara, who is building a huge apartment complex at Elm Park close to St Vincent's Hospital, are now offering interest-free loans to home buyers.

Two weeks ago Grehan announced that his company would be offering purchasers interest-free loans of up to 15pc of the purchase price.

McNamara is understood to be offering buyers at Elm Park, where prices have already been cut by 20pc, loans of up to 30pc of the purchase price over five years.

Under the Glenkerrin scheme buyers can borrow the money interest-free for up to seven years.

However, at the end of seven years or when the house is sold, whichever comes first, the borrower has to repay Glenkerrin 15pc of the value of their home.

If the value of their home rises over the seven-year period they could find themselves paying back more than they borrowed, but if the value of their home falls they will have to repay less.

According to Grehan, with most banks now only willing to lend a maximum of 80pc of the value of a home, the interest-free loan means that buyers only have to come up with a deposit of 5pc of the purchase price when the interest-free loan is factored in.

While the benefits of these interest-free loans to the builders are obvious, they get to shift unsold houses and apartments and, if property prices rise over the next seven years, they stand to pocket a nice little gain, the benefits for homebuyers are less obvious.

Although house prices have now fallen by a cumulative 13pc since they started dropping in March 2007, they almost certainly have further to go.

What this means is that, while the offer of interest-free loans to homebuyers looks attractive at first glance, on closer inspection it can be seen that virtually all of the benefits go to the builder.

My advice to Gerry is to hang tough. With house prices having a lot further to fall, he would be a fool to buy now unless he absolutely has to.

Instead he should wait until housebuilders cut their prices to reflect the new reality in the marketplace instead of being seduced by gimmicks such as interest-free loans.

I was on holiday abroad recently and one of my bags was stolen while travelling from the airport to our apartment comple.

When I sought to reclaim the value of the items which had been stolen from my travel insurance policy, the insurance company demanded receipts.

As I had bought some of the stuff that was stolen months or even years ago and the receipts were long gone, I thought that this was terribly unfair. Is there anything I can do?

Georgina

The Financial Regulator has taken up the cause of travel insurance customers who feel they have been short-changed by insurers.

It is seeking to persuade insurers to drop the receipt requirement for low-value items and those which hadn't been purchased recently.

If Georgina can't get any joy from her insurer she should contact the Financial Regulator.

Oil's tumble set to lift Wall St at open

2008-09-02T06:26:00.000-07:00

NEW YORK (Reuters) - Stocks headed for a higher open on September's first trading day on Tuesday as oil prices slid sharply, easing concerns about the outlook for consumer and business spending.
Shares of airlines, retailers and big manufacturers are all expected to benefit from lower energy costs.

Technology and financial stocks are also poised to gain as investors pull money out of energy stocks and buy beaten-down sectors, according to analysts.

Shares of UAL Corp , parent of United Airlines, rose 17 percent before the bell, while retailer Target Corp's shares jumped 2.3 percent to $54.25.

The slide in oil prices came after a rally in the U.S. dollar and news that Hurricane Gustav had spared major Gulf oil facilities.

U.S. crude fell 6.9 percent to $107.50 a barrel.
"The rise in stock index futures is all related to oil and the strength in the U.S. dollar," said Matt McCall, president of Penn Financial Group based in Denver, Colorado.

"What I am going to be watching is the destruction of the commodities stocks today. What we've seen over the last two months is money coming out of energy into financials and technology."

S&P 500 futures rose 12.50 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 125 points and Nasdaq 100 futures gained 28.75 points.

Besides easing the toll of higher energy prices on the economy, lower oil prices will also buoy hopes of an easing inflationary pressures at a time when the U.S. Federal Reserve is working to revive growth by keeping interest rates low.

A sustained slide in shares of energy companies like Exxon Mobil , however, could be headwind for the broader market.

Shares of Exxon, a Dow component, were down 2.5 percent at $78.01 before the bell, but shares of UAL Corp, parent of United Airlines, rose 17 percent at $13. Among retailers, shares of Target, the No. 2 U.S. discounter behind Wal-Mart Stores , rose more than 2 percent to $54.25.

Shares of Lehman Brothers Holdings Inc were up 7.2 percent at $17.24 before the bell after state-owned Korea Development Bank (KDB) confirmed on Tuesday it was in talks with Lehman over a possible joint investment in the U.S. bank with other Korean banks.

Tuesday's economic highlight is the August reading on the manufacturing sector, due at 10 a.m. (1400 GMT), by the Institute for Supply Management.

U.S. stocks tumbled on Friday, led lower by tech shares after computer maker Dell warned that companies worldwide are cutting back on technology spending.

(Editing by Kenneth Barry)

Thai economic growth falls to 5.3 pct: official data

2008-08-25T04:19:00.000-07:00

BANGKOK (AFP) — Thai economic growth dropped to 5.3 percent in the second quarter of 2008, official figures showed Monday, as political uncertainty, soaring inflation and weak domestic demand hit the kingdom.

The National Economic and Social Development Board said gross domestic product (GDP) growth at an annual rate was down from a revised 6.1 percent in the first quarter of the year.

The board's secretary general Amphon Kittiamphon said the decline was due to lower government spending and a slowdown in private sector investment.

Despite that, the board forecast the Thai economy would likely grow between 5.2 and 5.7 percent this year, up from its May projection of 4.5 and 5.5 percent.

"If the government pushes forward with its mega projects including infrastructure construction, as well as creating confidence among investors, our GDP in the last six months of this year is most likely to be no less than 5.2 percent," Amphon told reporters.

Volatile global oil prices have already prompted Thailand's central bank to lower its growth estimates for this year to 4.8-5.8 percent. The finance ministry had initially projected 6.0 percent.

Inflation soared to a 10-year-high of 9.2 percent in July due to high fuel and food prices. The Bank of Thailand has estimated that inflation will average 7.5 to 8.8 percent this year.

Analysts said the second quarter slowdown likely indicated the Bank of Thailand will hike interest rates just once more this year from the current level of 3.5 percent. Its rate-setting committee is due to meet on Wednesday.

"(These economic conditions) will limit central bank tightening," Standard Chartered economist Usara Wilaipich told Dow Jones Newswires.

"Therefore, we expect only one more 25-basis-point hike from the Bank of Thailand and this should be the last rate hike for the rest of this year."

The central bank and the finance ministry have reportedly been at loggerheads over the interest rate and how to handle the inflation surge.

The English-language Bangkok Post newspaper reported last week that revered King Bhumibol Adulyadej voiced support for central bank governor Tarisa Watanagase and praised her for steering the nation away from financial woes.

Thailand's government, which was formed in February, has been hit by street protests since May demanding the resignation of premier Samak Sundaravej.

Rumours of a coup circulated in May and June, and the general uncertainty has helped push the Thai stock market down nearly 18 percent since late May.

A World Bank survey last week said political turmoil had dimmed Thailand's appeal to investors, with more than 60 percent saying uncertainty over government policies had weakened the investment climate in 2007.

The art of high street haggling

2008-08-22T04:50:00.000-07:00

High Street stores are doing sizeable discounts for customers plucky enough to ask, according to recent reports. Is it time to put aside those British inhibitions in the face of the credit crunch and have a go at haggling? Margaret Ryan (above) puts on her best smile and hits the shops.

Many would not think twice about trying to knock down the price of a rug from a Moroccan market stall on holiday, but would the same resolve hold true in a UK department store on a rainy August morning?

I decide to put my bargaining skills to the test to seek a deal on a DVD recorder and a smart new pair of shoes for work.

With warnings of a recession looming and of consumers tightening their belts it seems like now might be as good a time as any for it be a buyers' market.

So putting aside my natural disinclination to haggle I bundle my two children in the car and, with rain threatening and my heart slightly racing, we are off to a shopping centre on the outskirts of London.

But before starting I need some tips on the best way to strike a deal.

There are bargains to be had if only the customer has the confidence to get them, according to one financial expert.

"Most high street retailers would much rather make 20% of something than 50% of nothing," says David Kuo, head of personal finance for the independent financial website The Motley Fool.

But tactics are key to succeeding in the haggling stakes, like finding a quiet time of day, preferably first thing in the morning, when the shop assistant will not be distracted by other customers.

Sales staff have more autonomy to negotiate on prices than customers might think, he says. However your approach counts.

"You have to ensure that you and the salesperson wins. You want to make the salesman your friend.

"The best bargain is where you pay less for something someone else has paid the full price for."

Do your homework first to find the right product and know how much it costs elsewhere in other stores, online and the rest of the world.

Luck tried

So armed with these shopping mantras I head for the electrical retailers.

I am unable to shake the feeling that asking for money off is still a little cheeky.

In a Sony Centre I make my move with the make, model and price of a DVD recorder I have seen on a competitor's website. I am not even off the starting blocks before I'm told that it has been discontinued.

But all is not lost as instead the sales assistant offers me the latest version, already marked down £40 from the original ticket price of £279.99.

Without too much further persuasion on my part - a simple request of "can you do any better than that?" - he offers me another £20 off.

Buoyed by this success I decide to keep my powder dry and see if I can get an even better price elsewhere. I try my luck at John Lewis, which stocks the same model of DVD recorder. The first rule of haggling is broken, though, as the audio visual section is full of pensioners and I have to wait my turn to catch the eye of the salesman. But I am ready to negotiate.

The sales assistant is polite but firm saying that the price quoted is not open to negotiation. When I point out that I have seen the same model cheaper in a nearby store he agrees to match the lower ticket price, if this can be verified. But he will not stretch to taking off the further £20.

A spokeswoman for John Lewis later tells me the store does on occasion lower prices if a product has previously been on display or if it is not in perfect condition.

And she confirms their pricing policy remains "never knowingly undersold" whereby it checks its prices against national and local competitors and reduces a price if it finds one lower in the market.

After two shop visits I already have the promise of two discounts on the marked price - not bad going so far.

In another store, Hi-Fi Care, I see a cheaper, £120, model of DVD recorder, and am immediately offered £20 off just by asking for a discount. But offering cash makes no odds.

Pay the price

Now I switch tack and see if the same applies to shoe shopping. In an Office shoe store the sales assistant moves from saying they do not offer discounts unless there is a mark on the item to my being given 10% off a £55 non-sale pair of shoes.

Here it is a bit harder work to convince the friendly sales assistant that I like the shoes but they are a bit too expensive. Maybe she takes pity on me having two children in tow or maybe she just wants me to go away. Either way she eventually drops the price.

I do not try to get a discount at Selfridges in London but I would like to know the flagship store's view on the subject.

A press officer is keen to say there is no room for haggling.

"You pay the price on the ticket. Any department store would tell you that. Otherwise there would be anarchy."

There are some stores where responding to haggling is still "not done", agrees Neil Saunders, consulting director for Verdict Research, which publishes retail analysis.

But he believes there are deals to be done in this buyers' market, especially on more expensive items like furniture and electrical goods, where the profit margin is better and where sales have been hit hard.

"Consumers can smell blood and think 'let's see what I can get'."

While Mr Saunders still believes haggling does not come naturally to the British in high street stores, he does think it will become more prevalent.

"It is not going to happen in all stores and for all products but it is going to happen more."

"Haggling is about being determined, " he says, "It is a game of brinkmanship and sometimes you have to be prepared to walk away."

As my two children begin to lose patience with shopping, I decide now is the time for me to walk away before I spend more - even at discounted prices.

Sports Ministry announces award of Rs. 50 lakhs to Abhinav Bindra

2008-08-19T05:56:00.000-07:00

New Delhi, Aug 19 (ANI): The Sports Ministry has announced a prize money of Rs. 50 lakhs to Abhinav Bindra, for his gold medal in the Beijing Olympics 2008, under the scheme of special award to medal winners in International Sports events.
Coming in the back drop of Bindras medal winning performance, Dr. M.S. Gill, Sports Minister, spoke to Finance Minister P. Chidambaram and Prime Minister Dr. Manmohan Singh for enhancing the prize money from Rs. 30 lakhs to 50 lakhs, for gold medallists in the Olympics.
Dr. Gill said that the enhanced prize money will help in better performance of Indian sports persons in the Olympics.
The Ministry also increased the prize money of silver and bronze medals. (ANI)

Blog on and use web pages to drive up sales opportunities

2008-08-11T16:40:00.000-07:00

By Richard Tyler, Enterprise Editor

"There's a tremendous under-served need in the marketplace to enable small businesses to use the web as a sales and marketing environment," says Ivan Croxford, head of BT's own response to this need called Tradespace.

Given the current economic slowdown and that marketing is often the first expense to be cut when firms face a financial pinch, here is a snapshot of some free services being used by firms on the internet.

DIY tools

Blogs: post information about yourself, your business or anything related to your industry. Readers can comment, subscribe to your posts, or forward them to others. To begin, download software from popular websites such as Wordpress.com and Blogger.com.

Twitter.com is a free micro-blogging site you can update using a desktop computer or via a mobile phone.

Blogs work best when updated regularly and many business blogs fail on this count, limiting updates to new product launches or events. Twitter makes it easier to update your blog with short comments.

"People reach out for information, help and advice using Twitter. It's a free and relatively easy w ay of keeping in touch with people during the day," says leading blogger Oli Barrett. Business owners using Twitter can "broadcast" comments and then engage in a one-to-one exchange with anyone who replies.

Top tip: "Don't think out loud," says Mr Barrett. Remember that once on the internet the comment is there forever.

All-in-one packages

Several websites provide a free platform that businesses can use to promote themselves using a wide array of tools, from blogs to pictures and video messages. BT's Tradespace.co.uk, launched last year, already has 165,000 members.

It gives users a basic free package of a web page, with a blog, audio, photo and video hosting. Firms looking to do more with customers and make more use of the site face monthly charges. All the web pages benefit from BT's spending on search engine optimisation.

"We are spending a lot of time taking out the technical complexity of using these tools," says Ivan Croxford, head of Tradespace. He says up to 50pc of small businesses do not have websites and while they can begin trading on sites such as eBay or Amazon, he says there are rules to learn.

Tradespace, in contrast, has few barriers - firms make of it what they will. The main thrust of the site is to encourage "social commerce", with several thousand groups already active discussing issues.

Ning.com is a free website hosting service that enables individuals to form online discussion groups about any topic. The site has caught on because it is easy to use and the pages can be customised. Free to set up, Ning charges if someone wants to remove the Ning name and promotions from their page to brand it as their own. It also charges more to remove the adverts that appear on the pages and for extra hosting space.

Facebook.com allows businesses to create free "Pages", rather than its more familiar "Profile" pages, which are used by millions to keep in touch with their friends. Firms can then update the page with new information and attract followers, or "fans", who receive the firm's updates in their own profiles. Firms can also pay to send ads to their fans and their fans' friends.

Internet directories

Traditional directories have moved online, like Yell.com. New free sites feature highly on natural searches: www.Brownbook.net and www.bizwiki.co.uk are fast-growing business directories with self-edited listings and customer reviews.

Managing your profile

With new sites launching virtually daily, one challenge facing business owners is managing the different ways the business communicates to its audience online. Some sites now enable you to integrate information posted to one in another. For instance, companies can integrate information updates from other social media sites such as Twitter into their Facebook page.

Mr Barrett says: "By making a simple join, when I publish on my Wordpress blog it appears within seconds on my personal blog and then within minutes it appears on my Facebook profile. It's about efficiency. I can share something and do not have to repeat myself eight different times."

Monitor online profiles

Working out what customers, suppliers and peers are writing about you online is tricky. Searching for the firm name on Google and Yahoo! is a start. More sophisticated sites are also setting up. Mr Barrett's current favourite is addictomatic.com. "It's a way of seeing at the touch of a button what is being published across multiple platforms," he says.

Create goodwill online

Leading blogger Oli Barrett, left, rates a company blog as one of the most effective means of online advertising.

"By having online conversations about what you are passionate about, people will be drawn to it," he says.

"It’s a great way of creating goodwill towards your business," says Mr Barrett.

"Business owners could see it as an opportunity to share the latest news about their company or be seen as a leader in their industry, sharing their thoughts. It could be just that they could be seen to be spotting emerging trends and cool new things, drawing people’s attention to them.

"It is a huge opportunity to explore and share the human side of your business."

Iran in new oil money move to dodge sanctions: report

2008-08-09T03:59:00.001-07:00

TEHRAN (AFP) — Iran's government has ordered the state oil company to deposit oil revenues only in selected banks in a bid to dodge toughening sanctions over its nuclear drive, local media reported on Saturday.

The state-run National Iranian Oil Company (NIOC) had been free to choose where to deposit the tens of billions of dollars Iran receives annually in earnings from its crude oil exports.

But a new government directive said the NIOC could now deposit the foreign currency only in foreign banks previously selected by the central bank.

"NIOC is from now on obliged to deposit 100 percent of crude oil export income in foreign bank accounts that are chosen by the Central Bank of Iran," state television quoted the new government directive as saying.

The order did not say on which criteria the foreign banks would be selected.

But EU governments have pressured European financial institutions to cut their business with Iran as a way of pressuring the Islamic republic in the standoff over its controversial nuclear programme.

The West also wants Asian banks to loosen their traditionally close ties with Iran.

"This decision was made after the expansion of new rounds of sanctions against Iran so that Iran's assets are not blocked in foreign banks," the Sarmayeh newspaper quoted a source in oil ministry as saying.

"Many foreign banks... and even some Chinese banks have cut their financial operations with Iran and these (restrictions) increase day by day," the source said.

The European Union and the United States have also imposed restrictions on the activities of Iran's largest banks. These unilateral sanctions are running parallel to the three sets of sanctions agreed by the UN Security Council.

Oil exports are by far the biggest foreign currency winner for OPEC's second largest exporter.

Thanks to record oil prices, Iran pocketed 29.5 billion dollars in the first four months of the current calendar year which began on March 20.

In June, media reported Iran has been shifting tens of billions of dollars from European banks to other institutions, fearing that further sanctions would affect its access to investments. Iran rejected the reports.

Oil prices and climate change fuel green gold rush

2008-07-28T05:11:00.000-07:00

Modern day prospectors are embarking on a "green gold rush" to invest in renewable energy in the face of rising oil prices and climate change.

Fossil fuel prices, rising temperatures, the support of world governments and energy security concerns drove a record-setting year of renewable energy investment in 2007, according to a UN Environment Programme (UNEP) report.

Achim Steiner, head of UNEP and UN under-secretary general, said: "Just as thousands were drawn to California and the Klondike in the late 1800s, the green energy gold rush is attracting legions of modern day prospectors in all parts of the globe.

"With world temperatures and fossil fuel prices climbing higher, it is increasingly obvious to the public and investors alike that the transition to a low-carbon society is both a global imperative and an inevitability.

"This is attracting an enormous inflow of capital, talent and technology.

"What is unfolding is nothing less than a fundamental transformation of the world's energy infrastructure."

More than US $148bn of new money was ploughed into the global sustainable energy sector last year - up 60% from 2006.

The startling picture was unveiled in Global Trends in Sustainable Energy Investment, a report by UK-based firm New Energy Finance for UNEP's Sustainable Energy Finance Initiative.

Wind energy drew the most investment last year with US $50.2bn but solar power grew most quickly attracting some US $28.6bn.

The report said the sector is also bouncing back in the second quarter of 2008 after being "subdued" by the credit crunch.

The sustainable energy sector has to "grow strongly" to meet targets for greenhouse gas reduction, renewable and efficiency increases, but there is huge scope for growth, the report adds.

Total 2007 sustainable energy transaction volume was US $204.9bn and is predicted to reach more than US $600bn a year from 2020.

Michael Liebreich, report co-author and chief executive officer of New Energy Finance, which provides information to investors in renewable energy, described 2007 as a "a banner year for the clean energy industry".

Europe saw most of the new money, followed by America, but China, India and Brazil's share together has almost doubled since 2004.

Africa, however, continues to lag behind other regions in the investment stakes.

David Gibbs

Ex-lawyer no believer in taxman

2008-07-22T05:36:00.000-07:00

Depression on the way: Newmarket man
By: Amanda Persico, Staff Writer

Come each April 1, John Gorman shakes his head and throws away the brown envelope marked Revenue Canada. He has only filed his federal taxes twice since 1980.

“I’m anything but part of the system,” he said. “We were trained to pay taxes. The taxman is illegal.”

The former Newmarket lawyer broke away from the conventional tax sentiment. He put his dislike of the government taking from his pocket and posted them for all Canadians to read.

“Everyone is sucked in,” he said. “About 99 per cent have no idea about what’s going on.”

Mr. Gorman created the Marvel-like CAPtain Canada, decorated in red and white superhero getup and cape.

He uses historical data and legal logic to fight the evil powers of the taxman. After the First World War, the federal government asked to use the provincial right to impose a direct tax on citizens because the war debt was so huge. The government promised to stop income taxes after the debt was paid, Mr. Gorman said.

“Collecting income tax by the federal government is not legislated,” he said. “Everyone’s paying a voluntary tax.”

His website is a collection of anti-tax articles and financial predictions, some of which have already taken place.

In 1983, when he was canvassing on behalf of farmers, he wrote his future predictions for the world market. He said there would be a war with many parties in the Middle East.

After a few years, a depression would hit North America that would be worse than the Great Depression of the 1930s. But his prediction was off by two years.

The war in the Middle East would start in 2000, he said.

“But it’s happening. The wars in Afghanistan and Iraq,” he said.

“And just look at the housing market in the States. They’re walking us into a depression.”

By “they” he means the government and the banks through the collection of taxes and interest rates.

Mr. Gorman suggests selling your home, if you owe more than 75 per cent in mortgage, stock up on food and water and start to buy small denominations of gold and silver.

The deepest part of the depression, he predicts, will hit before 2010. But, more importantly, stay close to friends and family.

“I want to be here to help my kids and grandkids through the Depression,” he said.

Celgene Corporation to Announce Second Quarter 2008 Results

2008-07-18T04:39:00.000-07:00

SUMMIT, N.J.--(BUSINESS WIRE)--Celgene Corporation (NASDAQ: CELG) senior management will host a conference call and live audio webcast on Thursday, July 24, 2008 at 9:00am EDT to discuss the company’s second quarter financial and operational results. The webcast will be available in the investor relations section of the company's website at www.celgene.com.

Celgene Corporation, headquartered in Summit, New Jersey, is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of novel therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. For more information, please visit the company's website at www.celgene.com.

This release contains certain forward-looking statements which involve known and unknown risks, delays, uncertainties and other factors not under the Company's control, which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include results of current or pending research and development activities, actions by the FDA and other regulatory authorities, and those factors detailed in the Company's filings with the Securities and Exchange Commission such as 10K, 10Q and 8K reports.

United Way sidewalk ads quickly removed

2008-07-01T15:46:00.000-07:00

In an effort to cut through the advertising clutter, the Greater Twin Cities United Way officials adopted a unique marketing approach Monday – adorning the sidewalk outside their downtown Minneapolis offices with nine “Live United” images.

Oops. After learning that such images violate a Minneapolis ordinance against promotions on a variety of public property or surfaces, the T-shirt-shaped graphics were quickly removed Tuesday morning.

The graphics, which resemble footprints entering the Twin Cities United Way’s offices, were intended to promote the mid-July kickoff for the venerable charity’s giving drive, which urges donors to give, advocate and volunteer.

“We thought it would be kind of a fun thing. We’re not out to break the law,” Marsha Pitts-Phillips, public relations manager for the United Way, told Finance and Commerce on Tuesday.

Pitts-Phillips explained that United Way didn’t know the marketing was against the law and expressed frustration with the charity’s inability to get a response from Minneapolis city officials.

Minneapolis ad agency Campbell Mithun is creating conventional media advertising for the 2008 campaign firm. Another Minneapolis firm, Haworth Marketing + Media, is placing media for annual funding drive’s ad campaign.

Advertisement The annual drive is a major focus for the local United Way, which raised $89.5 million in 2007, up $3 million from 2006.

As far as sidewalk advertising goes, many ad agencies eager to find surfaces where a marketing image can be absorbed by a consumer ask Minneapolis officials about sidewalk or public surface advertising.

In 2006, a planned sidewalk campaign of 120 chalked-sidewalk signs promoting “Hoopla Hour” at NBA City sports bar and grill was canceled after city officials spotted the ads.

Systemic wars of the third millennium

2008-06-26T04:49:00.000-07:00

THE STORY

Just about a few days ago, an appealing news appeared on the Internet. It regarded the deployment of a new generation of unmanned combat drones on a real battlefield.
We are not talking about aerial drones, here we are talking about ground soldier-drones, the real stuff we were all waiting for. Well, sort of.
The news is about the decision of the US Military to deploy more of the same combat drones who were already deployed, experimentally, on the Iraqi territory.
Three units, to be precise.
Are those artificial soldiers anything new? Not really.
If you followed Zone-H in the past years, we gave an extensive coverage of the US Future Combat System military program. We even crafted a speech at Defcon hacker conference a few years ago as well as we produced an episode of our comics based on the F.C.S. concept (Hero-Z - ep. 2: War Games).
The equation in which cyber-military programs and hackers are strictly related was demonstrated by the fact that during our speech on F.C.S., the front row of the Alexis Park Hotel's conference room was packed with green suits.
At that time, the F.C.S. was a multi-billionaire US military program that was initiated by the US Government under which the way US went at war should have been totally re-designed.
Traditional warfare? Bye bye. Welcome the new concept of a hyper hi-tech army, where aerial, naval, terrestrial drones are connected with the troops thanks to a super-network, based on a mix of satellite and ground microwaves telecommunication system.
All data managed by a militarized Linux version, developed by the Berkeley University.
What happened to the F.C.S., the daring project managed by US Boeing Industries and having a cloud of specialized sub-contractors? Initially went over-budget, then re-funded. Later on on some news papers it appeared the news that the project was stopped, now it's re-appearing again or at least, excerpts of it...
NETWORKING AND PHILOSOPHY

As explained by the US DoD, the drones deployed experimentally on the Iraqi territory are limited in power and autonomy.Originally the concept was to have fully autonomous A.I. driven drones, a special team of F.C.S. subcontractors was hired to develop the necessary technology in terms of visual recognition, artificial intelligence and networking.Did they succeed? As we expected, apparently not completely. Yet.
In fact, the newly deployed ground combat drones are mere extensions of the body of a remotely located human operator.
There were too many concerns among US Military in terms of rendering the drone fully autonomous by implementing the current status of A.I. technology developed so far by the F.C.S. subcontractors.
To put it simple, they didn't want to rely on the drone's A.I. fearing of US troops casualties due to friendly fire. Loosing US soldiers lives because the drone would shoot at the wrong target is something unacceptable from the political and public opinion point of view.
Concerns that Chinese Military authorities might not have, we'll talk later about that.
At this point, the question from the hacker's point of view should be: how the combat drone is connected to the remotely located operator? Is it by digital or analogue signaling? Is it through a dedicated or through a standard protocol?
Here we have to speculate, but we'll try to do it wisely.
Analogue or digital controlling? A combat drone which needs to rely on a complete remote controlling operator has to transmit/receive the following data:
- Audiovisual, the remote operator has the need to rely on a high definition video stream in order to shoot at the right target. Sure, to minimize the risk of shooting against friendly troops US Military declared they employed "special security solutions" such limiting the ground zone in which the drone is fire-ready and avoiding that the shooting turrets could turn toward friendly troops. These "special security solutions" are obviously candies specially crafted for US media and public opinion, nobody here believe they can be any effective.
- Telemetry, you don't want to loose control of your systems because you weren't capable to foresee the incoming failures: electric status, engine status, heat status, tire status, gearbox status, ammo status, network status, fuel status.
- Blue Force Tracking system capability, google for it ;)
In this view we can presume they are already relying on a sort of remote digital controlling system.
Cleared that, the next question is: proprietary or standard protocol for such digital controlling system? A proprietary protocol *might* be in place at the current status of the project, but in view of future implementation of the drones in the US combat grid, we can presume that they will adopt a sort of TCP-IP enhanced protocol, standard within the whole US combat grid. Especially because they have big expectations from meshed military telecommunication grids.
And that's bad.

HACKER'S AND SYSTEMIC WARS
Whenever you have a super military power such US, which is investing a lot of resources (financial, human, political, technological) into improving their war performances, you always end up with a sort of systemic war. Sun Tzu understood it hundreds of years ago, why shouldn't you?
An hypothetical war between two super powers such China and US would end up in a war between systems. Hackers here might come in handy.
Vice-versa, an hypothetical war between a super power and a poor country would end up in a sort of asymmetric warfare, having the super power deploying systems on the battlefield and its poor opponent finding that once again, hackers might come in handy. It would be easier to try to take over (read: hack) your opponent hi-tech warfare systems rather than trying to defy them by traditional war means, make sense?
Don't be surprised should you discover that nations are already spying each other trying to catch information on their opponents as well as friends' warfare technology. You are too smart to be such naive, aren't you?

Regardless, here we have one of the first drone operators, Sgt. Santiago Tordillos, distributing bonus hacker candies during one of the demonstrations given to the press:

"The thing is not shooting on its own. You've got to have these," he said, waving a set of small, silvery keys, which fit into a lock on the Talon's briefcase-sized controller. A single switch causes the robot to reboot and return to safe mode.

Thanks a lot, Sgt. Tordillos. I guess marines should attend some basic security courses as well, beside the traditional combat training.

NATIONS STEREOTYPES AND REALITY RANTS

Currently there are only a bunch of nations potentially in possession of the necessary skills to develop an alternative hi-tech war program to the US's F.C.S. You can count them on the fingers of your hands, let's see which ones and let's speculate on their real power and drive.

U.K : They have a decent technology background but they are not that much innovative. Try to remember, when was the last time you bought some high tech hardware designed and produced in Charles and Camilla's land? Beside, they still have to solve the issue of driving on the wrong side. Thankfully they are not completely traditionalist. While they still enjoy watching jurassic/weird sports such cricket and Ascot horse races, guys such Sir Richard Branson are already managing to shoot civilians into space bringing them back to earth safe and sound. But Sir Richard Branson seems to be interested only in technology applicable to the civilian world and not to military technology. Is he?

Germany: they are still fighting with their post Hitler heritage, which was heavily influencing (on the negative side) every single step they decided to take into the development of any kind of new war technology in the last 70 years. Beside that, think about their top-notch car stereo technology. Companies such Blaupunkt and Decker are supplying, since ages, car manufacturers such Mercedes with stunning, reliable, indestructible technology ...designed in the 70's.

France: they are certainly in possession of the necessary skills to manage huge hi-tech projects in direct competition with US's similar projects. Think about the Airbus consortium, in direct competition with US's Boeing. They also possess good military and telecommunication technology (France aerospace, Sagem etc). They even have the chauvinist drive which is a must, should you decide to develop something non US-centric. But... it might be easier for them to spy on their neighbor's technology rather than developing their own one, considering the immense budget that is needed to develop something like the F.C.S. from scratch. Call it post-Echelon self-defence habit.

Italy: among the G8, they are good in developing engine/mechanical technology, they have huge innovative capabilities, they are even good in researching into (but not developing) cyber technologies but historically they are always fighting with their tendency to serve half baked pies. Sorry, pizzas. Italy it's the country that decided to develop nuclear plants, then they stopped the construction half on the way through because it was "dangerous" (post Chernobyl foes that Italy's not-so-much-post-communist politicians sold well to get green votes) finding themselves in the need to buy the missing energy from the French nuclear plants, located a few meters away from the Italian borders. Beside, their huge national debt isn't allowing them even to buy new tires to replace those worn-out ones equipping their 60 years old military trucks. Damn, they have such a good potential, if only they weren't Italians...

Arab countries: they are very rich thanks to the oil, but they possess zero technology, totally relying on western technology even for the extraction of their own oil. Beside, they seem to prefer to use their money to buy expensive German luxury cars with their Blaupunkt and Decker 70's car stereo technology, rather than investing it in long term social, industrial and engineering development plans. Dubai? An even less meaningful Las vegas that still have to prove it has a sense.

Japan: "they have the best technology but they are only good in copying it from westerns, improving it in terms of quality, size, price and efficiency", this is a bullshit stereotype coming from the 70s. The truth is that now they developed some excellent innovative skills and in terms of Artificial Intelligence r&d they could teach to the rest of the world. Unfortunately they once did have the money, not anymore thanks to a wise US currency war. Over the time they became very much US dependent from the market and cultural point of view and they will never, ever dare to develop such war technology, preferring to invest their robotic efforts in developing those gorgeously looking, sexually attracting fembots we all would love to marry with.

Russia: they had ugly, shitty war technology that was always working well and on which Europeans still rely to send their people to space. Have you ever seen the Baikonur space launch facility? Its technology it's coming from the 60s, but it's still alive and kicking well. Jokes apart, nowadays Russian men are too busy in making money and their gorgeous women in finding exotic ways to spend it rather than thinking of taking over the world with systemic wars. They just prefer to buy it out, Abramovich docet.

China: They do have the money, they even possess the vast majority of US foreign debt. They have excellent war technology and development capability. They are extremely good in creating and managing huge, sorry HUGE projects. They have the chauvinist and practical drive to be the best in the world. They can decide to move a whole city and their inhabitants should it be necessary to use the same land plot to build a new mega-factory or a new Olympic facility.
They absolutely haven't any innovative capability (but they had it a thousand years ago). Nonetheless:
- they have the money to buy brilliant westerns minds (think about Hawey industries) to solve their lack of innovative skills.
- they are prone to spy and steal our technology, not giving a shit about what the rest of the world is thinking about it. RIIAA's plans over there, seriously? To buy counterfeited copies of Hollywood movies at a very cheap price to be sold later as original in US.
Last but not least China has already invaded our territory by selling us the core technology of the electronic system on which westerns are basing entirely their own lives and economy. God knows what kind of "unsolicited embedded hardware" (yes, we can be diplomatic as well, our last report opened up some issues between Italian secret services and Chinese diplomats) our made in China systems are already implementing.

HOLLYWOOD AND GAMING INDUSTRY

Have you seen the latest Die Hard movie? If not, you should. The plot is nice, a psychopathic terrorist plans to take over the US national critical infrastructures asking for a ransom. And he does it, shutting down critical system after critical system by means of commissioning to smart programmers and hackers small pieces of work that only once put together might serve the purpose of the plot.
Beside the kung-fu and the explosions, I was very much impressed by the accuracy adopted by the movie script when representing such scenario. It's evident they used some skilled advisor during the movie production in order to make it looking plausible.
I must admit it, I was jealous. I wish such advisor was me.
Sticking to the topic, days ago, I managed to finish the so much acclaimed Metal Gear Solid 4 video-game. Okay, I' m 41, so what? I still indulge myself in playing silly video-games from time to time.
Wait a minute, did I say silly? I must apologize with Hideo Kojima, the Metal Gear Solid saga producer and mastermind.
While I find Kojima's in-game videos too much long and boring (some cut scenes are 45 minutes long...) the plot of the last Metal Gear Solid videogame is very much appealing. In a nutshell, it's all about a hi-tech war system, similar to F.C.S. that it's taken over by third parties. Soldiers gets paralyzed and systems get compromised. Hacker's stuff, once again.
Remember George Orwell's 1982 and the big brother? Now we have it, no doubts. Today we are experiencing something that 30 years ago was forecasted in a movie.
The question is how long should we wait to experience what has been brilliantly forecasted in Die Hard 4 and Metal Gears Solid 4 (from the general public perspective, as here we all know it already)