BRUSSELS - EUROPEAN Union leaders said they have agreed to commit 7.2 billion euros (S$14.7 billion) over three years to an international global warming fund, a deal that should boost efforts to help poorer nations cope with climate change.
The offer, said French President Nicolas Sarkozy, 'puts Europe in a leadership role in Copenhagen'. All 27 members of the EU agreed on the figure after two days of difficult talks at a summit in Brussels.
The 'fast start' money of 2.4 billion euros a year until 2012 is part of a global annual fund of US$10 billion (S$13.9 billion) that rich nations are targeting as short-term help, until the new climate agreement kicks in.
'It is less expensive to protect the planet now than to repair it later,' said EU Commission chief Jose Manuel Barroso.
The pledge was praised by United Nations climate chief Yvo de Boer, who described it as a 'huge encouragement' to the talks unfolding in Copenhagen.
Europe's leaders hope to encourage more generosity through their own voluntary pledges, and had earlier proposed to make 100 billion euros available to poorer nations annually by 2020.
Source: straitstimes.com
Saturday, December 12, 2009
Greek Finance Problem affects EURO
The EU summit was grappling with a Greek financial crisis which threatens the euro and risks destabilising other economies.
Athens is already facing possible sanctions from Brussels for running a deficit way above the 3% maximum of GDP permitted under the eurozone stability rules.
But the true scale of the problem is worse than expected - at nearly 13%.
Greek government debt is also off the eurozone scale at well over 100% of GDP - compared with the maximum permitted debt ceiling of 60%.
Summit host Fredrik Reinfeldt, the Swedish prime minister, has put the issue on the Brussels summit agenda at the last moment, with German Chancellor Angela Merkel insisting that all EU leaders must "share responsibility" for the Greek situation.
But there was little sign of the hat being passed around the summit table for cash contributions towards a Greek bail-out.
"The economic situation in Greece is serious, for sure", said one EU official, "but it cannot be resolved by financial pledges at this summit. We already have mechanisms and targets in the eurozone for limiting public deficits and Government debt, and Greece is not the only country by a long way which has fallen significantly outside those margins."
Far from being bailed out, Greek prime minister George Papandreou might come under attack for his treasury's failure to reveal the scale of the crisis. Earlier this year the European Commission was caught unawares when it calculated a Greek deficit outside the 3% limit - but nothing like the 12.7% figure which was revealed when Athens issued a "revised projection".
Mr Karamanlis will tell his summit colleagues what his government said on Wednesday - that there will be drastic action to cut spending and restore stability. If not, the Commission could theoretically impose hefty financial penalties on the Greek government.
However, that is unlikely, as one Commission official suggested: "The problem we have faced in the past is that if you slap big fines on countries struggling with debt, you get accused of simply making matters worse."
Source: google.com
Athens is already facing possible sanctions from Brussels for running a deficit way above the 3% maximum of GDP permitted under the eurozone stability rules.
But the true scale of the problem is worse than expected - at nearly 13%.
Greek government debt is also off the eurozone scale at well over 100% of GDP - compared with the maximum permitted debt ceiling of 60%.
Summit host Fredrik Reinfeldt, the Swedish prime minister, has put the issue on the Brussels summit agenda at the last moment, with German Chancellor Angela Merkel insisting that all EU leaders must "share responsibility" for the Greek situation.
But there was little sign of the hat being passed around the summit table for cash contributions towards a Greek bail-out.
"The economic situation in Greece is serious, for sure", said one EU official, "but it cannot be resolved by financial pledges at this summit. We already have mechanisms and targets in the eurozone for limiting public deficits and Government debt, and Greece is not the only country by a long way which has fallen significantly outside those margins."
Far from being bailed out, Greek prime minister George Papandreou might come under attack for his treasury's failure to reveal the scale of the crisis. Earlier this year the European Commission was caught unawares when it calculated a Greek deficit outside the 3% limit - but nothing like the 12.7% figure which was revealed when Athens issued a "revised projection".
Mr Karamanlis will tell his summit colleagues what his government said on Wednesday - that there will be drastic action to cut spending and restore stability. If not, the Commission could theoretically impose hefty financial penalties on the Greek government.
However, that is unlikely, as one Commission official suggested: "The problem we have faced in the past is that if you slap big fines on countries struggling with debt, you get accused of simply making matters worse."
Source: google.com
Thursday, December 10, 2009
New Finance Minister will boast oil for Mexico
Mexican President Felipe Calderon’s decision to appoint Social Development Minister Ernesto Cordero as finance minister may hinder the government’s ability to cut its dependence on oil revenue because he lacks the experience to build support in Congress, according to Barclays Capital.
Cordero, 41, may struggle to persuade Congress to pass laws broadening Mexico’s tax base, Barclays analysts Roberto Melzi and Jimena Zuniga said. Fitch Ratings last month cut Mexico’s rating to BBB, the second-lowest investment grade, citing a need for fiscal changes. Standard & Poor’s may decide on whether to lower it this month.
Calderon yesterday named Cordero to replace Agustin Carstens, who in turn he nominated central bank chief.
“Cordero’s nomination may bode ill for the passage of reforms, as Carstens’s ability to build consensus behind the scenes will be hard to match,” Melzi said in a note to clients.
Calderon, half-way through a six-year term, is seeking to reduce Mexico’s dependence on oil funds, which account for about 40 percent of the budget, after Congress raised taxes this year less than the president wanted. Calderon’s National Action Party, known as PAN, holds 143 of the lower house’s 500 seats.
‘Not the Best Man’
“We believe Cordero is not the best man for the finance minister post: he is a PAN loyalist and will be a less effective negotiator with Congress,” Nick Chamie, head of emerging-market research at RBC Capital Markets, said yesterday.
The peso fell as much as 0.8 percent after Calderon announced his decision to replace Carstens. The currency erased its decline and rose 0.2 percent by the end of the day to 12.8941 per dollar.
The yield on Mexico’s benchmark bond fell one basis point, or 0.01 percentage pmoint, to 8.13 percent. The price of the 10 percent security due in December 2024 rose 0.10 centavo to 116.17 centavos per peso, according to Banco Santander SA.
“Markets would prefer Carstens stay as finance minister, as the next year will be very challenging in terms of budgetary and overall economic policy,” said Win Thin, senior currency strategist at Brown Brothers Harriman & Co. in New York. “Such a move is not a good one for the peso.”
Carstens led Mexico’s response to the global financial crisis in 2008 and efforts to win approval this year for the tax increases aimed at offsetting falling oil revenue. If ratified, he’ll guide policies amid inflationary pressures from those tax increases and an economy recovering from a recession.
Deputy Minister
Cordero, who earned a masters degree in economics from the University of Pennsylvania, was deputy finance minister for spending from December 2006 to January 2008, when he was named to his current post, according to the presidential Web site.
Before joining the finance ministry, he served in 2003 as deputy energy minister responsible for planning and technology development.
Cordero’s advantage in the post will be the personal relationship he has built with Calderon, Allyson Benton, a Latin America analyst with the Eurasia Group in New York, wrote in a report yesterday.
The new minister will have to contend with quickening inflation and a budget deficit forecast to grow to 2.75 percent of GDP in 2010, the widest since 1989, according to JPMorgan. The deficit was 2.1 percent of GDP in 2009. Latin America’s second-biggest economy is forecast to grow as much as 3.5 percent next year and may shrink 7 percent this year, outgoing Central Bank Governor Guillermo Ortiz said Dec. 2.
‘Accentuated Weaknesses’
“The global economic and financial crisis and falling oil production have accentuated weaknesses in the sovereign’s fiscal profile,” Fitch Ratings said in a Nov. 23 statement.
The central bank on Dec. 2 raised its inflation forecasts for 2010 and said that consumer prices may rise as much as 5.25 percent on an annual basis in the third and fourth quarters of 2010, exceeding policy makers’ 3 percent target.
Mexico spent $1.17 billion to buy oil hedges for 2010 to protect against lower-than-expected production and a decline in prices. Mexico purchased put options that give it the option, not the obligation, to sell its oil for $57 a barrel next year, the Finance Ministry said in a Dec. 8 statement.
Carstens, who was chief economist at the bank from 1994 to 1999, said yesterday that his mandate at the central bank will be to promote a stable currency. He said Dec. 8 in New York that S&P will probably decide against lowering the rating on Mexico.
The bank will raise its 4.5 percent key lending rate in May, according to the median forecast of economists in a survey released Nov. 19 by Citigroup Inc.’s Banamex unit. The bank paused in August, September and October after cutting borrowing costs by 3.75 percentage points during the first seven meetings of this year.
Source: bloomberg.com
Cordero, 41, may struggle to persuade Congress to pass laws broadening Mexico’s tax base, Barclays analysts Roberto Melzi and Jimena Zuniga said. Fitch Ratings last month cut Mexico’s rating to BBB, the second-lowest investment grade, citing a need for fiscal changes. Standard & Poor’s may decide on whether to lower it this month.
Calderon yesterday named Cordero to replace Agustin Carstens, who in turn he nominated central bank chief.
“Cordero’s nomination may bode ill for the passage of reforms, as Carstens’s ability to build consensus behind the scenes will be hard to match,” Melzi said in a note to clients.
Calderon, half-way through a six-year term, is seeking to reduce Mexico’s dependence on oil funds, which account for about 40 percent of the budget, after Congress raised taxes this year less than the president wanted. Calderon’s National Action Party, known as PAN, holds 143 of the lower house’s 500 seats.
‘Not the Best Man’
“We believe Cordero is not the best man for the finance minister post: he is a PAN loyalist and will be a less effective negotiator with Congress,” Nick Chamie, head of emerging-market research at RBC Capital Markets, said yesterday.
The peso fell as much as 0.8 percent after Calderon announced his decision to replace Carstens. The currency erased its decline and rose 0.2 percent by the end of the day to 12.8941 per dollar.
The yield on Mexico’s benchmark bond fell one basis point, or 0.01 percentage pmoint, to 8.13 percent. The price of the 10 percent security due in December 2024 rose 0.10 centavo to 116.17 centavos per peso, according to Banco Santander SA.
“Markets would prefer Carstens stay as finance minister, as the next year will be very challenging in terms of budgetary and overall economic policy,” said Win Thin, senior currency strategist at Brown Brothers Harriman & Co. in New York. “Such a move is not a good one for the peso.”
Carstens led Mexico’s response to the global financial crisis in 2008 and efforts to win approval this year for the tax increases aimed at offsetting falling oil revenue. If ratified, he’ll guide policies amid inflationary pressures from those tax increases and an economy recovering from a recession.
Deputy Minister
Cordero, who earned a masters degree in economics from the University of Pennsylvania, was deputy finance minister for spending from December 2006 to January 2008, when he was named to his current post, according to the presidential Web site.
Before joining the finance ministry, he served in 2003 as deputy energy minister responsible for planning and technology development.
Cordero’s advantage in the post will be the personal relationship he has built with Calderon, Allyson Benton, a Latin America analyst with the Eurasia Group in New York, wrote in a report yesterday.
The new minister will have to contend with quickening inflation and a budget deficit forecast to grow to 2.75 percent of GDP in 2010, the widest since 1989, according to JPMorgan. The deficit was 2.1 percent of GDP in 2009. Latin America’s second-biggest economy is forecast to grow as much as 3.5 percent next year and may shrink 7 percent this year, outgoing Central Bank Governor Guillermo Ortiz said Dec. 2.
‘Accentuated Weaknesses’
“The global economic and financial crisis and falling oil production have accentuated weaknesses in the sovereign’s fiscal profile,” Fitch Ratings said in a Nov. 23 statement.
The central bank on Dec. 2 raised its inflation forecasts for 2010 and said that consumer prices may rise as much as 5.25 percent on an annual basis in the third and fourth quarters of 2010, exceeding policy makers’ 3 percent target.
Mexico spent $1.17 billion to buy oil hedges for 2010 to protect against lower-than-expected production and a decline in prices. Mexico purchased put options that give it the option, not the obligation, to sell its oil for $57 a barrel next year, the Finance Ministry said in a Dec. 8 statement.
Carstens, who was chief economist at the bank from 1994 to 1999, said yesterday that his mandate at the central bank will be to promote a stable currency. He said Dec. 8 in New York that S&P will probably decide against lowering the rating on Mexico.
The bank will raise its 4.5 percent key lending rate in May, according to the median forecast of economists in a survey released Nov. 19 by Citigroup Inc.’s Banamex unit. The bank paused in August, September and October after cutting borrowing costs by 3.75 percentage points during the first seven meetings of this year.
Source: bloomberg.com
Tuesday, December 8, 2009
6 Months not enough to restructure Dubai Debt
Six months is too short to restructure the debt of Dubai World and the company could be forced to sell some of its overseas assets to reduce its debt mountain, Dubai's finance chief said this morning.
Abdulrahman al-Saleh, Dubai's finance minister, told Al Arabiya televison that the Dubai Government would support the state-controlled conglomerate “as an owner” in repaying $60 billion (£36.5 billion) in debts but that it would not sell off government assets.
Mr al-Saleh said that it was too early to discuss cash injections into Nakheel, the group’s property developer. The six-month period would focus on sorting out the debt of Dubai World, he said.
"The main goal of the restructuring of Dubai World is to ensure the continuation of its operation as a viable commercial entity. The question is the future of the company," UAE news sources quoted the finance minister as saying.
The Dubai Financial Market fell 6.5 per cent this morning to a five-month low. The index has fallen by 22 per cent since the group requested a six-month extension on its debt repayments two weeks ago.
Dubai World met its six main creditors, including four British-listed banks, on Monday to discuss its request to delay repayment of $26 billion but no deal has yet been announced.
Dubai World owns a 20 per cent stake in Cirque du Soleil, the Canadian circus, as well as other assets including P&O. the ferry operator; Barney's, the luxury retailer in New York, and the QE2 liner.
Source: timesonline.co.uk
Abdulrahman al-Saleh, Dubai's finance minister, told Al Arabiya televison that the Dubai Government would support the state-controlled conglomerate “as an owner” in repaying $60 billion (£36.5 billion) in debts but that it would not sell off government assets.
Mr al-Saleh said that it was too early to discuss cash injections into Nakheel, the group’s property developer. The six-month period would focus on sorting out the debt of Dubai World, he said.
"The main goal of the restructuring of Dubai World is to ensure the continuation of its operation as a viable commercial entity. The question is the future of the company," UAE news sources quoted the finance minister as saying.
The Dubai Financial Market fell 6.5 per cent this morning to a five-month low. The index has fallen by 22 per cent since the group requested a six-month extension on its debt repayments two weeks ago.
Dubai World met its six main creditors, including four British-listed banks, on Monday to discuss its request to delay repayment of $26 billion but no deal has yet been announced.
Dubai World owns a 20 per cent stake in Cirque du Soleil, the Canadian circus, as well as other assets including P&O. the ferry operator; Barney's, the luxury retailer in New York, and the QE2 liner.
Source: timesonline.co.uk
Disagreements about Finance in Copenhagen summit
Copenhagen, Denmark - As international delegates arrive at the United Nations climate summit today, developing-country negotiators are waiting for the industrialized world to clarify how much money will be on the table.
European Union leaders stated in October that the world's wealthy countries should provide €100 billion ($150 billion) each year by 2020 to help poorer countries transition to a low-carbon development path and adapt to the damages of climate change.
European, U.S., and Japanese negotiators are divided, however, on whether the money will come from new or existing aid budgets.
"The question is: should double-counting be allowed or not," said Saleemul Huq, a senior fellow with the International Institute for Environment and Development.
An EU negotiating text obtained by The Guardian this week reveals that the European Union plans to oppose any requirements that climate funds be additional to or separate from current development aid.
Developing-country leaders and United Nations officials are insisting that climate funds be additional to existing aid deals. If not, they say, health, environment, and security programs that are already under-financed may be compromised.
"There are real concerns that we might miss Millennium Development Goals because of the climate change agenda," said Roberto Bertollini, environment and health policy coordinator with the World Health Organization.
The European countries that support a separate climate fund, such as Denmark, the Netherlands, Norway, and Sweden, regularly meet the international target of 0.7 percent of gross domestic product committed to official development assistance.
Countries that struggle to meet their development-aid targets would prefer that aid programs be repackaged into new climate funds. France and Germany, for instance, committed less than 0.4 percent of their GDP to development aid in 2007, and both want existing aid to be allocated to climate.
Last month, United Kingdom Prime Minister Gordon Brown proposed a "Copenhagen launch fund" that would run from 2010-2012 and accumulate $22 billion by 2013. The funding would be split evenly between mitigation and adaptation activities. He did not state whether the funding would be additional to existing aid.
"The British contribution to the $10 billion figure would be roughly about £800 million [$1.3 billion] - for which we've already budgeted," Brown said at the Commonwealth heads of government meeting in Trinidad and Tobago.
The United States has included $1.2 billion of international climate aid in its 2010 budget. Legislation passed by the U.S. House of Representatives and currently being debated in the Senate would raise funds for international climate aid from the sale of emission permits as part of a cap-and-trade system.
John Kerry, chairman of the Senate Foreign Relations Committee, requested that President Barack Obama's administration increase funding for mitigation and adaptation aid in the 2011 budget.
"I urge you to include $3 billion in international climate finance in the fiscal year 2011 budget to support our short-term climate finance obligations and create the necessary glide path to enable our federal agencies to fully and effectively utilize the increased resources Congress will make available to them through climate change legislation," Kerry wrote on Tuesday in a letter to Secretary of State Hilary Clinton.
Negotiators offered various proposals to raise new funds at the U.N. summit in Poznań, Poland last year. A Norwegian plan to generate revenue from auctioning national cap-and-trade permits received general support from industrialized nations. The negotiating bloc of least-developed countries suggested that airlines place a flat tax of $10-$15 on all international tickets. Mexico proposed a "World Climate Change Fund" that would collect money based on each country's unique situation of greenhouse gas emissions and economic growth.
Public and private funds have provided some $8 billion annually in recent years for developing countries to form low-carbon economies and $1 billion annually for adaptation programs. Estimates of how much money developing countries will need range from $140 billion to $675 billion each year for mitigation and $30 billion to $90 billion each year for adaptation, according to the World Bank.
Source: greenandsave.com
European Union leaders stated in October that the world's wealthy countries should provide €100 billion ($150 billion) each year by 2020 to help poorer countries transition to a low-carbon development path and adapt to the damages of climate change.
European, U.S., and Japanese negotiators are divided, however, on whether the money will come from new or existing aid budgets.
"The question is: should double-counting be allowed or not," said Saleemul Huq, a senior fellow with the International Institute for Environment and Development.
An EU negotiating text obtained by The Guardian this week reveals that the European Union plans to oppose any requirements that climate funds be additional to or separate from current development aid.
Developing-country leaders and United Nations officials are insisting that climate funds be additional to existing aid deals. If not, they say, health, environment, and security programs that are already under-financed may be compromised.
"There are real concerns that we might miss Millennium Development Goals because of the climate change agenda," said Roberto Bertollini, environment and health policy coordinator with the World Health Organization.
The European countries that support a separate climate fund, such as Denmark, the Netherlands, Norway, and Sweden, regularly meet the international target of 0.7 percent of gross domestic product committed to official development assistance.
Countries that struggle to meet their development-aid targets would prefer that aid programs be repackaged into new climate funds. France and Germany, for instance, committed less than 0.4 percent of their GDP to development aid in 2007, and both want existing aid to be allocated to climate.
Last month, United Kingdom Prime Minister Gordon Brown proposed a "Copenhagen launch fund" that would run from 2010-2012 and accumulate $22 billion by 2013. The funding would be split evenly between mitigation and adaptation activities. He did not state whether the funding would be additional to existing aid.
"The British contribution to the $10 billion figure would be roughly about £800 million [$1.3 billion] - for which we've already budgeted," Brown said at the Commonwealth heads of government meeting in Trinidad and Tobago.
The United States has included $1.2 billion of international climate aid in its 2010 budget. Legislation passed by the U.S. House of Representatives and currently being debated in the Senate would raise funds for international climate aid from the sale of emission permits as part of a cap-and-trade system.
John Kerry, chairman of the Senate Foreign Relations Committee, requested that President Barack Obama's administration increase funding for mitigation and adaptation aid in the 2011 budget.
"I urge you to include $3 billion in international climate finance in the fiscal year 2011 budget to support our short-term climate finance obligations and create the necessary glide path to enable our federal agencies to fully and effectively utilize the increased resources Congress will make available to them through climate change legislation," Kerry wrote on Tuesday in a letter to Secretary of State Hilary Clinton.
Negotiators offered various proposals to raise new funds at the U.N. summit in Poznań, Poland last year. A Norwegian plan to generate revenue from auctioning national cap-and-trade permits received general support from industrialized nations. The negotiating bloc of least-developed countries suggested that airlines place a flat tax of $10-$15 on all international tickets. Mexico proposed a "World Climate Change Fund" that would collect money based on each country's unique situation of greenhouse gas emissions and economic growth.
Public and private funds have provided some $8 billion annually in recent years for developing countries to form low-carbon economies and $1 billion annually for adaptation programs. Estimates of how much money developing countries will need range from $140 billion to $675 billion each year for mitigation and $30 billion to $90 billion each year for adaptation, according to the World Bank.
Source: greenandsave.com
Wednesday, December 2, 2009
UK Minister to EU - Leave London alone!!!
Britain's Finance Minister on Wednesday warned the European Union's new French finance chief not to interfere with the City of London.
Writing in the Times of London ahead of a meeting of EU finance ministers, Alistair Darling said it would be a "recipe for confusion" if institutions were supervised by the EU as well as national watchdogs and that Britain would not accept new laws that could lead to taxpayers picking up the bill for bailouts ordered by Brussels.
He said it was essential that national regulators like Britain's Financial Services Authority retained responsibility for supervising individual companies. He warned any change would drive financial services out of Europe.
"As Michel Barnier, the new EU Single Market Commissioner, takes over the reins of financial regulation, the stakes are high," he wrote. "Regulatory reform throughout the world is imperative, and Europe, home to the world's largest single market in financial services, has a particular responsibility.
"If we get it right, we have the potential to be the safest and strongest marketplace in the world, our regulatory framework a competitive advantage. Get it wrong and we risk losing business to less regulated jurisdictions. Nothing would be more self-defeating."
On Tuesday, French President Nicolas Sarkozy blamed the current financial crisis on a discredited Anglo-Saxon model, and that Barnier's appointment was a victory for European financial ideals.
"Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]?" he asked reporters.
"I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism," he said.
However, Barnier appeared to take the sting out of Sarkozy's comments in a radio interview Monday. "I know the importance of the City. I know the importance of this major financial center for growth in Britain and for all of Europe's economy," he told Europe 1 radio, in quotes carried by Britain's Telegraph.
"It's not my job to be nice or nasty. I have to work in Europe's interest to draw lessons from the crisis, including in the City's interest to support this financial center, as well as others including Frankfurt and Paris."
Darling added that London can not be judged in the same way as other European financial centers.
"It is too simplistic to argue that financial centers in Europe are just competing among themselves," he said.
"The reality is the real competition to Europe's financial centers comes from outside our borders. And that London, whether others like it or not, is New York's only rival as a truly global financial center."
Source: edition.cnn.com
Writing in the Times of London ahead of a meeting of EU finance ministers, Alistair Darling said it would be a "recipe for confusion" if institutions were supervised by the EU as well as national watchdogs and that Britain would not accept new laws that could lead to taxpayers picking up the bill for bailouts ordered by Brussels.
He said it was essential that national regulators like Britain's Financial Services Authority retained responsibility for supervising individual companies. He warned any change would drive financial services out of Europe.
"As Michel Barnier, the new EU Single Market Commissioner, takes over the reins of financial regulation, the stakes are high," he wrote. "Regulatory reform throughout the world is imperative, and Europe, home to the world's largest single market in financial services, has a particular responsibility.
"If we get it right, we have the potential to be the safest and strongest marketplace in the world, our regulatory framework a competitive advantage. Get it wrong and we risk losing business to less regulated jurisdictions. Nothing would be more self-defeating."
On Tuesday, French President Nicolas Sarkozy blamed the current financial crisis on a discredited Anglo-Saxon model, and that Barnier's appointment was a victory for European financial ideals.
"Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]?" he asked reporters.
"I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism," he said.
However, Barnier appeared to take the sting out of Sarkozy's comments in a radio interview Monday. "I know the importance of the City. I know the importance of this major financial center for growth in Britain and for all of Europe's economy," he told Europe 1 radio, in quotes carried by Britain's Telegraph.
"It's not my job to be nice or nasty. I have to work in Europe's interest to draw lessons from the crisis, including in the City's interest to support this financial center, as well as others including Frankfurt and Paris."
Darling added that London can not be judged in the same way as other European financial centers.
"It is too simplistic to argue that financial centers in Europe are just competing among themselves," he said.
"The reality is the real competition to Europe's financial centers comes from outside our borders. And that London, whether others like it or not, is New York's only rival as a truly global financial center."
Source: edition.cnn.com
Tuesday, December 1, 2009
$400m DBS exposure is in trouble in Dubai
The Singapore-based DBS Bank has said its total exposure to Dubai [ Images ] is around $1.28 billion and out of this only $400 million is to the troubled Dubai World, but the bank believes that the situation is manageable.
According to a bank statement released on Monday, a substantial portion of the $1.28 billion exposure is to Dubai government-owned companies operating in Asia that are sound, such as Labroy and South Beach, which is collateralised.
The bank further said that out of this, only $400 million is extended as a bilateral loan to Dubai World Finance, the financial services arm of the debt-ridden Dubai World.
"As of today, the only credit that is captured under the standstill notice is a $400 million bilateral loan to Dubai
World Finance which represents 0.2 percent of DBS' total balance sheet. The bank has no exposure to Nakheel (the troubled relaty arm of Dubai World). "DBS' exposure to the entire Middle East region accounts for around two percent of its balance sheet," the statement said.
DBS, one of the largest financial services groups in Asia with operations in 16 markets, is a well-capitalised bank with "AA-" and "Aa1" credit ratings.
Source: rediff.com
According to a bank statement released on Monday, a substantial portion of the $1.28 billion exposure is to Dubai government-owned companies operating in Asia that are sound, such as Labroy and South Beach, which is collateralised.
The bank further said that out of this, only $400 million is extended as a bilateral loan to Dubai World Finance, the financial services arm of the debt-ridden Dubai World.
"As of today, the only credit that is captured under the standstill notice is a $400 million bilateral loan to Dubai
World Finance which represents 0.2 percent of DBS' total balance sheet. The bank has no exposure to Nakheel (the troubled relaty arm of Dubai World). "DBS' exposure to the entire Middle East region accounts for around two percent of its balance sheet," the statement said.
DBS, one of the largest financial services groups in Asia with operations in 16 markets, is a well-capitalised bank with "AA-" and "Aa1" credit ratings.
Source: rediff.com
Monday, November 30, 2009
No guarantee on Dubai Worlds Debt
"Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct," Abdulrahman al-Saleh, director general of Dubai's department of finance, said on Dubai TV, according to Reuters.
Dubai World, the state-owned conglomerate behind the emirate's astonishing rise, triggered a collapse in world equity markets last week when it said it would delay repaying its debts, raising fears about the knock-on effects on the fragile global recovery.
It has run up debts of $59bn (£36bn) creating the emirate's "Palm Islands" and buying stakes in high-profile assets such as the London Stock Exchange and US department store Barneys.
The comments raised worries about how companies with exposure to Dubai World will fare in a restructuring without government help.
Earlier, stock exchanges in Dubai and Abu Dhabi suffered record one-day losses on fears over debt defaults, pushing London's FTSE 100 index lower in morning trading.
Dubai's index sank 7.3pc, its biggest one-day fall since October last year. Abu Dhabi's Securities Exchange endured the largest one-day loss in its history as it ended the session down 8.3pc.
London's index of Britain's 100 biggest companies fell 54 - or 1pc - to 5191 points at one stage. Trading in the FTSE 100 has been volatile with the index opening up before falling. Bourses in Germany and France following a similar pattern as London.
Investors remained jittery about the possible fallout for banks which have loaned money to the Gulf state. The biggest fallers were state-owned Royal Bank of Scotland and bailed-out Lloyds, down 5.8pc and 4.3pc respectively. Barclays and Standard Chartered also fell, with HSBC slightly up.
Tim Hughes, head of sales trading at IG Index, said: "Today’s move in London could equally just be put down to a normal pullback after Friday’s rise. We are likely to see a lack of direction ahead of the US open and a steady session on Wall Street should ensure that markets return to normality for the rest of the week."
Nakheel, the troubled "Palm Islands" developer at the heart of Dubai's debt crisis, today asked the exchanges to stop trading its bonds until it was in a position to provide further information about the restructuring exercise to which it is being forcefully submitted.
Authorities in the United Arab Emirates sought to reassure investors again yesterday when its central bank issued a statement promising to "stand behind" local and foreign banks operating in the country.
"Central Bank has issued a notice to the UAE banks and branches of foreign banks operating in the UAE, making available to them a special additional liquidity facility linked to their current accounts," it said. The facility would be at 50 points above the Emirates inter-bank offered rate.
The announcement calmed international fears about exposure to a new debt crisis from the problems afflicting Dubai World, a state-run holding company, and a consequent further credit crunch.
Earlier in Asia, the MSCI Asia Pacific Index climbed 3.3pc, with banks and South Korean conglomerate Samsung, whose engineering arm is responsible for some of Dubai's prestige high-rises, both doing well.
Nakheel said it wanted the exchanges to halt trading on its three major sukuks, or Islamic bonds, including the $3.5bn (32.1bn) sukuk due in two weeks' time that is at the centre of the liquidity problems of Dubai World, its parent company.
“Following the announcement on Wednesday 25 November from the Government of Dubai, Nakheel has today asked for all three of their listed sukuks to be suspended until it is in a position to fully inform the market,” it said in a statement to the exchange, Nasdaq Dubai.
Both emirates are rampant with speculation about terms and conditions for a bail-out of Dubai World, but negotiations seem to be continuing at a political level even as the chief restructuring officer, Aidan Birkett of Deloitte, starts going through the books.
At issue are not only unpaid debts but also a string of unfinished property developments across Dubai - and out into the sea.
Nakheel is fully owned by Dubai World and has no listing.
Another subsidiary, DP World, though, the ports operator which bought P&O three years ago, fell 15pc to 36.6 cents, even though it has been excluded from the restructuring exercise.
Other big losers in Dubai were property companies. Emaar, another state-run firm, the largest developer in the UAE and the name behind the world's tallest building, Burj Dubai, fell 9.9pc to 3.75 dirhams.
Like DP World, its credit ratings were cut after the Dubai government statement on Wednesday, which said Dubai World was seeking a standstill on its debt repayments while it restructured.
National Bank of Abu Dhabi, which bought into a new $5bn bond issuance by the Dubai government's financial support fund on Wednesday, fell 9.7pc to 12.1 dirhams.
Source: telegraph.co.uk
Dubai World, the state-owned conglomerate behind the emirate's astonishing rise, triggered a collapse in world equity markets last week when it said it would delay repaying its debts, raising fears about the knock-on effects on the fragile global recovery.
It has run up debts of $59bn (£36bn) creating the emirate's "Palm Islands" and buying stakes in high-profile assets such as the London Stock Exchange and US department store Barneys.
The comments raised worries about how companies with exposure to Dubai World will fare in a restructuring without government help.
Earlier, stock exchanges in Dubai and Abu Dhabi suffered record one-day losses on fears over debt defaults, pushing London's FTSE 100 index lower in morning trading.
Dubai's index sank 7.3pc, its biggest one-day fall since October last year. Abu Dhabi's Securities Exchange endured the largest one-day loss in its history as it ended the session down 8.3pc.
London's index of Britain's 100 biggest companies fell 54 - or 1pc - to 5191 points at one stage. Trading in the FTSE 100 has been volatile with the index opening up before falling. Bourses in Germany and France following a similar pattern as London.
Investors remained jittery about the possible fallout for banks which have loaned money to the Gulf state. The biggest fallers were state-owned Royal Bank of Scotland and bailed-out Lloyds, down 5.8pc and 4.3pc respectively. Barclays and Standard Chartered also fell, with HSBC slightly up.
Tim Hughes, head of sales trading at IG Index, said: "Today’s move in London could equally just be put down to a normal pullback after Friday’s rise. We are likely to see a lack of direction ahead of the US open and a steady session on Wall Street should ensure that markets return to normality for the rest of the week."
Nakheel, the troubled "Palm Islands" developer at the heart of Dubai's debt crisis, today asked the exchanges to stop trading its bonds until it was in a position to provide further information about the restructuring exercise to which it is being forcefully submitted.
Authorities in the United Arab Emirates sought to reassure investors again yesterday when its central bank issued a statement promising to "stand behind" local and foreign banks operating in the country.
"Central Bank has issued a notice to the UAE banks and branches of foreign banks operating in the UAE, making available to them a special additional liquidity facility linked to their current accounts," it said. The facility would be at 50 points above the Emirates inter-bank offered rate.
The announcement calmed international fears about exposure to a new debt crisis from the problems afflicting Dubai World, a state-run holding company, and a consequent further credit crunch.
Earlier in Asia, the MSCI Asia Pacific Index climbed 3.3pc, with banks and South Korean conglomerate Samsung, whose engineering arm is responsible for some of Dubai's prestige high-rises, both doing well.
Nakheel said it wanted the exchanges to halt trading on its three major sukuks, or Islamic bonds, including the $3.5bn (32.1bn) sukuk due in two weeks' time that is at the centre of the liquidity problems of Dubai World, its parent company.
“Following the announcement on Wednesday 25 November from the Government of Dubai, Nakheel has today asked for all three of their listed sukuks to be suspended until it is in a position to fully inform the market,” it said in a statement to the exchange, Nasdaq Dubai.
Both emirates are rampant with speculation about terms and conditions for a bail-out of Dubai World, but negotiations seem to be continuing at a political level even as the chief restructuring officer, Aidan Birkett of Deloitte, starts going through the books.
At issue are not only unpaid debts but also a string of unfinished property developments across Dubai - and out into the sea.
Nakheel is fully owned by Dubai World and has no listing.
Another subsidiary, DP World, though, the ports operator which bought P&O three years ago, fell 15pc to 36.6 cents, even though it has been excluded from the restructuring exercise.
Other big losers in Dubai were property companies. Emaar, another state-run firm, the largest developer in the UAE and the name behind the world's tallest building, Burj Dubai, fell 9.9pc to 3.75 dirhams.
Like DP World, its credit ratings were cut after the Dubai government statement on Wednesday, which said Dubai World was seeking a standstill on its debt repayments while it restructured.
National Bank of Abu Dhabi, which bought into a new $5bn bond issuance by the Dubai government's financial support fund on Wednesday, fell 9.7pc to 12.1 dirhams.
Source: telegraph.co.uk
Singapore Finance Ministry Launches 2010 Budget
SINGAPORE: The Ministry of Finance (MOF) is seeking public views on the initiatives that next year's government budget can include to enable sustained and inclusive growth for Singapore.
Launching its Budget 2010 Feedback Exercise on Monday, the ministry is also looking to engage the public on issues related to public spending.
The feedback exercise runs till February 12 next year. The public can offer their views through the Budget 2010 website, via SMS at 9-Speak-Up (9-77325-87), mail, phone or fax.
The government's feedback unit REACH and the MOF will also have dialogue sessions in December and January.
To promote greater awareness of Singapore's budget and public financing issues among youths, two inter-school events – Budget Debate and Budget Quiz – will be conducted early next year.
Source: channelnewsasia.com
Launching its Budget 2010 Feedback Exercise on Monday, the ministry is also looking to engage the public on issues related to public spending.
The feedback exercise runs till February 12 next year. The public can offer their views through the Budget 2010 website, via SMS at 9-Speak-Up (9-77325-87), mail, phone or fax.
The government's feedback unit REACH and the MOF will also have dialogue sessions in December and January.
To promote greater awareness of Singapore's budget and public financing issues among youths, two inter-school events – Budget Debate and Budget Quiz – will be conducted early next year.
Source: channelnewsasia.com
Fianance Obstacle
Finance now threatens to become the main obstacle to securing a global climate deal at Copenhagen, writes the Guardian.
The Guardian has read confidential papers from the EU negotiating team indicating that the EU will not guarantee new additional funds to help developing countries to adapt to climate change.
Existing overseas aid might be channeled away from its original purpose to climate aid, and that would not be satisfactory for the developing countries, says Rob Bailey, Senior Policy Adviser of the NGO, Oxfam:
“No developing country will sign up to an agreement that could give them no extra money at all. The EU and other rich countries must provide new and additional finance, otherwise there will be no deal at all,” he says to the Guardian.
Developing countries want a minimum of 400 billion US dollars a year by 2020 for adaptation to climate change, the developed countries have proposed less than the half.
History shows that even though rich countries promise funding for climate adaptation it is not always going to happen. According to the Guardian, in 2001 the EU, Canada, Norway, Switzerland, Iceland and New Zealand promised 410 million dollars a year from 2005 to 2008 for that purpose. Barely 10 percent of the money has been delivered so far.
Source: cop15.dk
The Guardian has read confidential papers from the EU negotiating team indicating that the EU will not guarantee new additional funds to help developing countries to adapt to climate change.
Existing overseas aid might be channeled away from its original purpose to climate aid, and that would not be satisfactory for the developing countries, says Rob Bailey, Senior Policy Adviser of the NGO, Oxfam:
“No developing country will sign up to an agreement that could give them no extra money at all. The EU and other rich countries must provide new and additional finance, otherwise there will be no deal at all,” he says to the Guardian.
Developing countries want a minimum of 400 billion US dollars a year by 2020 for adaptation to climate change, the developed countries have proposed less than the half.
History shows that even though rich countries promise funding for climate adaptation it is not always going to happen. According to the Guardian, in 2001 the EU, Canada, Norway, Switzerland, Iceland and New Zealand promised 410 million dollars a year from 2005 to 2008 for that purpose. Barely 10 percent of the money has been delivered so far.
Source: cop15.dk
Korean Stocks in hot streak despite Dubai debt
SEOUL, Nov 30 (Reuters) - Stocks on the move on Monday include:
As of 0059 GMT, the main KOSPI was up 2.17 percent at 1,557.58 points.
The index opened up 1.52 percent at 1,547.65 points.
**WOORI FINANCE JUMPS AS DUBAI WORRIES EASE**
Shares in Woori Finance Holdings ( WF - news - people ) jumped on Monday as Dubai debt fears eased, boosting sentiment towards the financial holding company of Woori Bank, which has exposure to Dubai.
'The primary reasons for Woori's rebound is that it had tumbled the most on Friday among key banking issues, due to its Dubai exposure,' said Ku Yong-uk, a market analyst at Daewoo Securities.
'Stocks are recovering as earlier fears have eased a bit,' Ku added.
A Woori Bank spokesman said that the bank's direct exposure to Dubai was about $7.4 million.
Shares in Woori Finance rallied 7.52 percent as of 0110 GMT.
0110 GMT
(Reporting by Jungyoun Park; Editing by Jonathan Hopfner) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) Keywords: MARKETS KOREA HOT/
(jungyoun.park@thomsonreuters.com; +82 2 3704 5643; Reuters Messaging: jungyoun.park.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Neither the Subscriber nor Thomson Reuters warrants the completeness or accuracy of the Service or the suitability of the Service as a trading aid and neither accepts any liability for losses howsoever incurred. The content on this site, including news, quotes, data and other information, is provided by Thomson Reuters and its third party content providers for your personal information only, and neither Thomson Reuters nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.
Source: forbes.com
As of 0059 GMT, the main KOSPI was up 2.17 percent at 1,557.58 points.
The index opened up 1.52 percent at 1,547.65 points.
**WOORI FINANCE JUMPS AS DUBAI WORRIES EASE**
Shares in Woori Finance Holdings ( WF - news - people ) jumped on Monday as Dubai debt fears eased, boosting sentiment towards the financial holding company of Woori Bank, which has exposure to Dubai.
'The primary reasons for Woori's rebound is that it had tumbled the most on Friday among key banking issues, due to its Dubai exposure,' said Ku Yong-uk, a market analyst at Daewoo Securities.
'Stocks are recovering as earlier fears have eased a bit,' Ku added.
A Woori Bank spokesman said that the bank's direct exposure to Dubai was about $7.4 million.
Shares in Woori Finance rallied 7.52 percent as of 0110 GMT.
0110 GMT
(Reporting by Jungyoun Park; Editing by Jonathan Hopfner) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) Keywords: MARKETS KOREA HOT/
(jungyoun.park@thomsonreuters.com; +82 2 3704 5643; Reuters Messaging: jungyoun.park.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Neither the Subscriber nor Thomson Reuters warrants the completeness or accuracy of the Service or the suitability of the Service as a trading aid and neither accepts any liability for losses howsoever incurred. The content on this site, including news, quotes, data and other information, is provided by Thomson Reuters and its third party content providers for your personal information only, and neither Thomson Reuters nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.
Source: forbes.com
Thursday, November 26, 2009
Rising Yen harmful to Japanese economy - Finance Minister
TOKYO — The yen's sharp rise is harmful to Japan's export-led economy, the finance minister said Friday as the greenback traded around 85 yen, its lowest level since the mid-1990s.
Finance Minister Hirohisa Fujii did not signal Tokyo planned to immediately intervene in currency markets, something it last did in March 2004.
Fujii said the yen's rapid rise was one-sided and "harmful" to the economy and said the government was closely watching the currency fluctuations.
"We will take appropriate action toward disorderly movements," he said.
The dollar briefly dipped below 85 yen in early Asian trade, then bounced back and was changing hands at 85.88 yen in Tokyo at around 9:45 am (0045 GMT).
Fujii said Japan would have "discussion with the US and European financial authorities" as necessary, according to Jiji Press news agency.
Japan's economy is crawling out of a deep recession on rebounding exports but a stronger yen threatens the competitiveness of Japanese exporters.
Source: google.com
Finance Minister Hirohisa Fujii did not signal Tokyo planned to immediately intervene in currency markets, something it last did in March 2004.
Fujii said the yen's rapid rise was one-sided and "harmful" to the economy and said the government was closely watching the currency fluctuations.
"We will take appropriate action toward disorderly movements," he said.
The dollar briefly dipped below 85 yen in early Asian trade, then bounced back and was changing hands at 85.88 yen in Tokyo at around 9:45 am (0045 GMT).
Fujii said Japan would have "discussion with the US and European financial authorities" as necessary, according to Jiji Press news agency.
Japan's economy is crawling out of a deep recession on rebounding exports but a stronger yen threatens the competitiveness of Japanese exporters.
Source: google.com
Dubai's debts affects the country's recovery.
SEPTEMBER WAS an important month for Dubai, as schools reopened and the city started counting how many of its expatriates, stung by the global financial meltdown, had left.
To everyone’s surprise the classrooms were not empty and the exit was not as dramatic as expected.
For many residents, the city state might have been burdened by an $80 billion (€53.5 billion) debt mountain, but with a diversified economy and a more liberal culture than many of its neighbours, it remained the place to be.
The economic slowdown had even enhanced the lifestyle; it meant less traffic and fewer construction projects.
However negative the sentiment today, the rise of the emirate, and its claim to be the region’s business centre, had a convincing foundation.
Analysts pointed to lingering concerns about the real estate market but confidence was returning. Passenger numbers at the airport showed double-digit growth in the past five months and hotels had been busier, though occupancy rates remained down on last year.
“As the region’s only provider of world-class services, Dubai should . . . see export demand strengthen as activity strengthens elsewhere,” HSBC said in an October report.
But Wednesday’s announcement of a debt standstill at Dubai World, the government flagship property holding company, has raised questions about the city’s recovery.
Much of the optimistic business sentiment in recent months had rested on the assumption that Dubai was getting its house in order and would meet debt obligations. “While we have seen some improvement in the [United Arab Emirates’] confidence since mid-2009, rescheduling of Dubai World’s debt will provide a setback to sentiment,” said Monica Malik, economist at investment bank EFG-Hermes in Dubai.
Though she still expected to see a gradual improvement in Dubai’s economy over the next year, she added that, given “the high level of leverage by both individuals and corporates and exposure to the property sector, the UAE will have one of the weakest non-oil economic outlooks in the region”.
Dubai does not consolidate the finances of its various entities, and data is difficult to come by, a source of frustration for analysts. Statistics are often compiled for the whole UAE and not for Dubai alone.
According to a prospectus issued to investors last month, nominal gross domestic product (GDP) growth fell to 18 per cent in 2008 from 27.4 per cent the previous year. Many economists expect the UAE economy to have contracted this year.
It is the debt burden that has raised the most concern about Dubai’s future. After the heyday of borrowing, the government was, even before the crisis, trying to regroup companies under the leadership of the International Corporation of Dubai (ICD) to ensure it had a better handle on finances.
Dubai’s total debt of about $80 billion includes about $19 billion owed by the department of finance and ICD, as well as the $22 billion owed by Dubai World. Some $13 billion to $17 billion is thought to be due next year, and ratings agency Standard Poor’s estimates as much as $50 billion will have to be repaid by 2012.
That debt pile is the result of Dubai’s aggressive expansion in recent years. With much of the UAE’s oil wealth concentrated in Abu Dhabi, Dubai adopted an aggressive diversification strategy, developing trade, transport and tourism businesses, some of which, such as DP World, were then able to make their mark on the international stage.
By setting up a series of free zones, each dedicated to a specific sector, Dubai attracted foreign companies and established itself as the regional provider of services. Allowing foreigners to buy real estate in some of the gated communities brought more money into the economy.
In 2008 oil accounted for only 2 per cent of GDP, with wholesale and retail trade, real estate and business services making up much bigger shares.
But Dubai got carried away with its own success, with many projects in the fiercely competitive business environment financed with debt. With an over-ambitious ruler, Sheikh Mohammed bin Rashid, dreaming of bigger things and instituting a fiercely competitive business environment that encouraged his lieutenants to come up with new ideas and projects, many financed with debt, the emirate was heading for trouble.
Some of the biggest conglomerates created real estate and investment companies that competed with each other and then established subsidiaries that were also pushed into rivalry. As the real estate projects became more exuberant, the government lost track of the finances of entities it controlled. That the lines between the assets of the ruler and those of the government were blurred further confused the picture.
When the financial crisis hit, one of its first casualties was the realestate market. HSBC said in a recent report that the market lost 50 per cent of its value, compromising the quality of bank assets. – (Copyright The Financial Times Limited 2009).
Source: irishtimes.com
To everyone’s surprise the classrooms were not empty and the exit was not as dramatic as expected.
For many residents, the city state might have been burdened by an $80 billion (€53.5 billion) debt mountain, but with a diversified economy and a more liberal culture than many of its neighbours, it remained the place to be.
The economic slowdown had even enhanced the lifestyle; it meant less traffic and fewer construction projects.
However negative the sentiment today, the rise of the emirate, and its claim to be the region’s business centre, had a convincing foundation.
Analysts pointed to lingering concerns about the real estate market but confidence was returning. Passenger numbers at the airport showed double-digit growth in the past five months and hotels had been busier, though occupancy rates remained down on last year.
“As the region’s only provider of world-class services, Dubai should . . . see export demand strengthen as activity strengthens elsewhere,” HSBC said in an October report.
But Wednesday’s announcement of a debt standstill at Dubai World, the government flagship property holding company, has raised questions about the city’s recovery.
Much of the optimistic business sentiment in recent months had rested on the assumption that Dubai was getting its house in order and would meet debt obligations. “While we have seen some improvement in the [United Arab Emirates’] confidence since mid-2009, rescheduling of Dubai World’s debt will provide a setback to sentiment,” said Monica Malik, economist at investment bank EFG-Hermes in Dubai.
Though she still expected to see a gradual improvement in Dubai’s economy over the next year, she added that, given “the high level of leverage by both individuals and corporates and exposure to the property sector, the UAE will have one of the weakest non-oil economic outlooks in the region”.
Dubai does not consolidate the finances of its various entities, and data is difficult to come by, a source of frustration for analysts. Statistics are often compiled for the whole UAE and not for Dubai alone.
According to a prospectus issued to investors last month, nominal gross domestic product (GDP) growth fell to 18 per cent in 2008 from 27.4 per cent the previous year. Many economists expect the UAE economy to have contracted this year.
It is the debt burden that has raised the most concern about Dubai’s future. After the heyday of borrowing, the government was, even before the crisis, trying to regroup companies under the leadership of the International Corporation of Dubai (ICD) to ensure it had a better handle on finances.
Dubai’s total debt of about $80 billion includes about $19 billion owed by the department of finance and ICD, as well as the $22 billion owed by Dubai World. Some $13 billion to $17 billion is thought to be due next year, and ratings agency Standard Poor’s estimates as much as $50 billion will have to be repaid by 2012.
That debt pile is the result of Dubai’s aggressive expansion in recent years. With much of the UAE’s oil wealth concentrated in Abu Dhabi, Dubai adopted an aggressive diversification strategy, developing trade, transport and tourism businesses, some of which, such as DP World, were then able to make their mark on the international stage.
By setting up a series of free zones, each dedicated to a specific sector, Dubai attracted foreign companies and established itself as the regional provider of services. Allowing foreigners to buy real estate in some of the gated communities brought more money into the economy.
In 2008 oil accounted for only 2 per cent of GDP, with wholesale and retail trade, real estate and business services making up much bigger shares.
But Dubai got carried away with its own success, with many projects in the fiercely competitive business environment financed with debt. With an over-ambitious ruler, Sheikh Mohammed bin Rashid, dreaming of bigger things and instituting a fiercely competitive business environment that encouraged his lieutenants to come up with new ideas and projects, many financed with debt, the emirate was heading for trouble.
Some of the biggest conglomerates created real estate and investment companies that competed with each other and then established subsidiaries that were also pushed into rivalry. As the real estate projects became more exuberant, the government lost track of the finances of entities it controlled. That the lines between the assets of the ruler and those of the government were blurred further confused the picture.
When the financial crisis hit, one of its first casualties was the realestate market. HSBC said in a recent report that the market lost 50 per cent of its value, compromising the quality of bank assets. – (Copyright The Financial Times Limited 2009).
Source: irishtimes.com
Tuesday, November 24, 2009
Metal & Finance Sectors surge high in Hong Kong and China
Stocks in markets across Hong Kong and China recorded a substantial jump, especially in the metal and finance sectors, as the economies start showing signs of growth again. While metal prices were revived by the price of gold hitting an all time high, China's finance sector kicked up on the optimism that Beijing's easy monetary policies might just get extended till 2010.
A 0.92% jump was recorded by China's main stock index, taking it to the highest figure recorded in the past 3½ months, mainly on the back of carmakers, shares of who jumped high after Guangzhou Autoshow shared a much optimistic outlook for the sector.
Hong Kong's Hang Seng Index also closed 1.41%, or 315.55 points, higher, at 22,771.39 points. Despite this, the total turnover was recorded as HK$51.9 billion ($6.7 billion), the lowest since October 12 and down from Friday's HK$60.5 billion.
China, on the other hand, is definitely on the path to success. Experts are of the view that the country will achieve an 8.5% growth during the coming year, and there will be no major changes made to the lenient monetary policies currently followed.
topnews.com.sg
A 0.92% jump was recorded by China's main stock index, taking it to the highest figure recorded in the past 3½ months, mainly on the back of carmakers, shares of who jumped high after Guangzhou Autoshow shared a much optimistic outlook for the sector.
Hong Kong's Hang Seng Index also closed 1.41%, or 315.55 points, higher, at 22,771.39 points. Despite this, the total turnover was recorded as HK$51.9 billion ($6.7 billion), the lowest since October 12 and down from Friday's HK$60.5 billion.
China, on the other hand, is definitely on the path to success. Experts are of the view that the country will achieve an 8.5% growth during the coming year, and there will be no major changes made to the lenient monetary policies currently followed.
topnews.com.sg
IRAQ WAR INQUIRY - Puts Gordon Brown on the hot seat
As Chancellor of the Exchequer Gordon Brown was notorious for vanishing when the Government was in trouble - pushing a junior minister to take the flack in a TV studio or at the despatch box.
Such is his persistence in this regard that for some he calls to mind TS Eliot's poem: ‘Macavity's a Mystery Cat: he's called the Hidden Paw - / For he's the master criminal who can defy the Law. / He's the bafflement of Scotland Yard, the Flying Squad's despair: / For when they reach the scene of crime - Macavity's not there!’
I thought he would find ducking for cover rather harder since becoming Prime Minister but the practice has not been altogether abandoned. When he lost his nerve over calling an early election two years ago he developed a fondness for using the back entrance of Downing Street to avoid the media. He eventually left Andrew Marr to make the announcement that the election had been called off.
The Labour MP Sion Simon once said that Brown ‘is a man often judged by his absences’, adding that: ‘At times of more personal controversy - such as the frequently embarrassing escapades of his spin doctor Mr Charlie Whelan and his eventual sacking by Tony Blair - Brown disappears equally silkily into the sand.’
Despite being author of a book on courage this character flaw has been retained by Brown. Today we read that he will not give evidence to Sir John Chilcot's inquiry into the Iraq War.
The purpose of the Inquiry is to see what lessons could be learnt from the conflict - a theme that even its more ardent supporters would surely concede offers some scope. Naturally Tony Blair is expected to be asked some challenging questions. But one would also have thought that the current Prime Minister would have something to contribute.
He is a busy man but surely such an important matter would make it worth finding the time to take part. Brown was a supporter of Britain's participation in the conflict. But this is evidently not a matter he wants to remind people of in the run up to the General Election.
There is also a more particular reason why he should be giving evidence. Wars have a cost in treasure as well as blood. We could never have gone into the Iraq war if Brown, as the Chancellor of the Exchequer, had not agreed to finance it.
Before the war he set aside £1 billion for the cost of it. In fact the bill has been much higher. The cost of the war itself in 2003 was £1.3 billion and there has been another billion a year spent since then on maintaining the British military presence in that country. The cost last year had actually risen sharply to £1.9 billion.
Yet despite that huge total there were some pretty scandalous economies. Troops were sent to Iraq without boots or hats fit for the desert. Leaked documents that have just emerged include the comment from Lieutenant Col Dunn of the Royal Engineers that some soldiers ‘only had five rounds of ammunition each and only enough body armour for those in the front and rear vehicles’.
Then Lt Col John Power of the Royal Electrical and Mechanical Engineers commented on the supply chain chaos: ‘I know for a fact that there was one container full of skis in the desert.’ Ptarmigan, the main longer-distance radio, 'tended to drop out at around noon because of the heat' leaving soldiers in the midst of combat resorting to their mobile phones.
How many of the British soldiers killed in Iraq, such as Sgt Steven Roberts, would still be alive if there had not been shortages of the proper Enhanced Combat Body Armour? Before Sgt Roberts died he kept an audio diary, which his widow Samantha released, where he called supplies ‘a joke.’
The Government response to equipment shortages is to deny the problem exists - rather than take serious action to deal with it. In this respect it seems very few ‘lessons have been learned.’
Of course as the Prime Minister this is now ultimately Gordon Brown's responsibility. But as the Chancellor of the Exchequer he should have made it his business that there was enough money to do the job and that the considerable sums provided were effectively spent. Let him come before the inquiry and tell us what responsibility he took in this matter.
dailymail.co.uk
Such is his persistence in this regard that for some he calls to mind TS Eliot's poem: ‘Macavity's a Mystery Cat: he's called the Hidden Paw - / For he's the master criminal who can defy the Law. / He's the bafflement of Scotland Yard, the Flying Squad's despair: / For when they reach the scene of crime - Macavity's not there!’
I thought he would find ducking for cover rather harder since becoming Prime Minister but the practice has not been altogether abandoned. When he lost his nerve over calling an early election two years ago he developed a fondness for using the back entrance of Downing Street to avoid the media. He eventually left Andrew Marr to make the announcement that the election had been called off.
The Labour MP Sion Simon once said that Brown ‘is a man often judged by his absences’, adding that: ‘At times of more personal controversy - such as the frequently embarrassing escapades of his spin doctor Mr Charlie Whelan and his eventual sacking by Tony Blair - Brown disappears equally silkily into the sand.’
Despite being author of a book on courage this character flaw has been retained by Brown. Today we read that he will not give evidence to Sir John Chilcot's inquiry into the Iraq War.
The purpose of the Inquiry is to see what lessons could be learnt from the conflict - a theme that even its more ardent supporters would surely concede offers some scope. Naturally Tony Blair is expected to be asked some challenging questions. But one would also have thought that the current Prime Minister would have something to contribute.
He is a busy man but surely such an important matter would make it worth finding the time to take part. Brown was a supporter of Britain's participation in the conflict. But this is evidently not a matter he wants to remind people of in the run up to the General Election.
There is also a more particular reason why he should be giving evidence. Wars have a cost in treasure as well as blood. We could never have gone into the Iraq war if Brown, as the Chancellor of the Exchequer, had not agreed to finance it.
Before the war he set aside £1 billion for the cost of it. In fact the bill has been much higher. The cost of the war itself in 2003 was £1.3 billion and there has been another billion a year spent since then on maintaining the British military presence in that country. The cost last year had actually risen sharply to £1.9 billion.
Yet despite that huge total there were some pretty scandalous economies. Troops were sent to Iraq without boots or hats fit for the desert. Leaked documents that have just emerged include the comment from Lieutenant Col Dunn of the Royal Engineers that some soldiers ‘only had five rounds of ammunition each and only enough body armour for those in the front and rear vehicles’.
Then Lt Col John Power of the Royal Electrical and Mechanical Engineers commented on the supply chain chaos: ‘I know for a fact that there was one container full of skis in the desert.’ Ptarmigan, the main longer-distance radio, 'tended to drop out at around noon because of the heat' leaving soldiers in the midst of combat resorting to their mobile phones.
How many of the British soldiers killed in Iraq, such as Sgt Steven Roberts, would still be alive if there had not been shortages of the proper Enhanced Combat Body Armour? Before Sgt Roberts died he kept an audio diary, which his widow Samantha released, where he called supplies ‘a joke.’
The Government response to equipment shortages is to deny the problem exists - rather than take serious action to deal with it. In this respect it seems very few ‘lessons have been learned.’
Of course as the Prime Minister this is now ultimately Gordon Brown's responsibility. But as the Chancellor of the Exchequer he should have made it his business that there was enough money to do the job and that the considerable sums provided were effectively spent. Let him come before the inquiry and tell us what responsibility he took in this matter.
dailymail.co.uk
Monday, November 23, 2009
Finance Minister criticises against Banks
The NI finance minister has criticised the local banks, saying they must increase lending to viable local businesses at reasonable terms.
Sammy Wilson was speaking after a meeting of a Stormont group which brings together representatives from the local financial sector.
He said he had told the bankers that without "reasonable lending practices" the recession will be prolonged.
He said he had heard reports of banks refusing to lend to small firms.
He added that he had "impressed upon the banks" their responsibilities in this area.
Mr Wilson also expressed concern over the relatively low take up of UK government and European Investment Bank schemes designed to increase business lending.
'Bad bank'
He said the schemes are mainly designed to help the type of small and medium local business which are currently struggling through the current economic downturn.
He has asked the local banks to improve the promotion of these initiatives
Mr Wilson said he had also used the meeting to update the group on the latest developments relating to the Irish government's proposed "bad bank", the National Asset Management Agency (Nama).
Nama is expected to take control of about 4.8bn euros of property-related assets in Northern Ireland, as part of the scheme to remove toxic loans from the balance sheets of Dublin-based banks.
Mr Wilson told members that Northern Ireland would have a direct input to the Nama process.
Source: bbc.co.uk
Sammy Wilson was speaking after a meeting of a Stormont group which brings together representatives from the local financial sector.
He said he had told the bankers that without "reasonable lending practices" the recession will be prolonged.
He said he had heard reports of banks refusing to lend to small firms.
He added that he had "impressed upon the banks" their responsibilities in this area.
Mr Wilson also expressed concern over the relatively low take up of UK government and European Investment Bank schemes designed to increase business lending.
'Bad bank'
He said the schemes are mainly designed to help the type of small and medium local business which are currently struggling through the current economic downturn.
He has asked the local banks to improve the promotion of these initiatives
Mr Wilson said he had also used the meeting to update the group on the latest developments relating to the Irish government's proposed "bad bank", the National Asset Management Agency (Nama).
Nama is expected to take control of about 4.8bn euros of property-related assets in Northern Ireland, as part of the scheme to remove toxic loans from the balance sheets of Dublin-based banks.
Mr Wilson told members that Northern Ireland would have a direct input to the Nama process.
Source: bbc.co.uk
People's United expanding equiptment finance
By Linda Shen
Nov. 23 (Bloomberg) -- People’s United Financial Inc., the Connecticut lender that had $2.5 billion earmarked for acquisitions, agreed to buy Financial Federal Corp. for $738 million in cash and stock to expand in equipment financing.
People’s United will pay Financial Federal shareholders $11.27 in cash and one share of People’s United common stock, Bridgeport-based People’s United said in a statement today. Based on closing prices on the Nasdaq Stock Market Nov. 20, the offer was worth $27.74 a share, 35 percent higher than Financial Federal’s closing price last week.
People’s United Chief Executive Officer Philip Sherringham said in July he was considering acquisition candidates with assets of $200 million to $400 million from Maine to Washington, D.C. Sherringham kept the bank profitable as borrowers lost jobs and foreclosures rose to a record last year.
Financial Federal, People’s United’s first purchase since its 2007 acquisition of Chittenden Corp., “provides a valuable complement to our existing business lines,” Sherringham said in the statement. “This transaction offers opportunities for People’s United to grow our highly profitable equipment- financing business with established, experienced staff in new markets throughout the country.”
People’s United gained 65 cents, or 4 percent, in composite trading at 9:41 a.m., while Financial Federal surged a record 37 percent to $28.05, the highest price since October 12, 2007.
Earnings Effect
The purchase of New York-based Financial Federal is expected to be “significantly accretive” to operating earnings in 2010 and to have a “slight positive effect” on the bank’s capital levels, People’s United said. The bank said in a regulatory filing that it would add 25 percent to operating earnings “based on consensus estimates.”
The acquisition is expected to close during the first quarter of 2010 and includes a termination fee of $26 million. The deal may also increase People’s United’s tangible common equity to 19 percent from 18.6 percent, the bank said.
Morgan Stanley advised People’s United on the deal, and its legal counsel was Simpson, Thacher & Bartlett LLP. Keefe, Bruyette & Woods advised Financial Federal and Covington & Burlington LLP acted as legal counsel.
Source: bloomberg.com
Nov. 23 (Bloomberg) -- People’s United Financial Inc., the Connecticut lender that had $2.5 billion earmarked for acquisitions, agreed to buy Financial Federal Corp. for $738 million in cash and stock to expand in equipment financing.
People’s United will pay Financial Federal shareholders $11.27 in cash and one share of People’s United common stock, Bridgeport-based People’s United said in a statement today. Based on closing prices on the Nasdaq Stock Market Nov. 20, the offer was worth $27.74 a share, 35 percent higher than Financial Federal’s closing price last week.
People’s United Chief Executive Officer Philip Sherringham said in July he was considering acquisition candidates with assets of $200 million to $400 million from Maine to Washington, D.C. Sherringham kept the bank profitable as borrowers lost jobs and foreclosures rose to a record last year.
Financial Federal, People’s United’s first purchase since its 2007 acquisition of Chittenden Corp., “provides a valuable complement to our existing business lines,” Sherringham said in the statement. “This transaction offers opportunities for People’s United to grow our highly profitable equipment- financing business with established, experienced staff in new markets throughout the country.”
People’s United gained 65 cents, or 4 percent, in composite trading at 9:41 a.m., while Financial Federal surged a record 37 percent to $28.05, the highest price since October 12, 2007.
Earnings Effect
The purchase of New York-based Financial Federal is expected to be “significantly accretive” to operating earnings in 2010 and to have a “slight positive effect” on the bank’s capital levels, People’s United said. The bank said in a regulatory filing that it would add 25 percent to operating earnings “based on consensus estimates.”
The acquisition is expected to close during the first quarter of 2010 and includes a termination fee of $26 million. The deal may also increase People’s United’s tangible common equity to 19 percent from 18.6 percent, the bank said.
Morgan Stanley advised People’s United on the deal, and its legal counsel was Simpson, Thacher & Bartlett LLP. Keefe, Bruyette & Woods advised Financial Federal and Covington & Burlington LLP acted as legal counsel.
Source: bloomberg.com
Finance Ministry raising borrowing limit by S$70b using govt securities
SINGAPORE: The Finance Ministry plans to raise its borrowing limit by S$70 billion to S$320 billion by issuing government securities. The current borrowing limit is S$250 billion.
Moving a motion on the Government Securities Amendment Bill, Second Finance Minister Lim Hwee Hua said there are about S$234 billion worth of securities outstanding as at October 31.
These will reach about S$320 billion in the next five years.
This is due to the expected increase in CPF Board members' balances as a result of policy changes such as the CPF LIFE scheme and the increase in Minimum Sum, to build up members' retirement savings as well as higher CPF interest payments and the corresponding interest compounding effect.
Mrs Lim said: "Three-quarters of the outstanding government securities are expected to be used to absorb these higher members' balances.
"The remainder would be for the Monetary Authority of Singapore to grow the issuance of Singapore Government Securities so as to continue to enhance the efficiency and liquidity of Singapore's debt capital markets." - CNA/vm
Source: channelnewsasia.com
Moving a motion on the Government Securities Amendment Bill, Second Finance Minister Lim Hwee Hua said there are about S$234 billion worth of securities outstanding as at October 31.
These will reach about S$320 billion in the next five years.
This is due to the expected increase in CPF Board members' balances as a result of policy changes such as the CPF LIFE scheme and the increase in Minimum Sum, to build up members' retirement savings as well as higher CPF interest payments and the corresponding interest compounding effect.
Mrs Lim said: "Three-quarters of the outstanding government securities are expected to be used to absorb these higher members' balances.
"The remainder would be for the Monetary Authority of Singapore to grow the issuance of Singapore Government Securities so as to continue to enhance the efficiency and liquidity of Singapore's debt capital markets." - CNA/vm
Source: channelnewsasia.com
Saturday, November 21, 2009
Financing Afghanistan War?
BOSTON — The last time America had to borrow money to finance a war was during the Revolution and a cash-strapped Continental Congress took loans from France to fund a surge against the British.
That worked out pretty well.
But it’s hard to feel the spirit of 1776 in President Obama’s journey to China. He went as a representative of a borrowing nation to its primary lender amid a call for yet another costly military surge in the Long War that is escalating in Afghanistan even if it is hopefully winding down in Iraq.
As the president completes his journey to Asia, he returns to Washington to face what is the most consequential foreign policy decision of his presidency, a decision that this administration has not yet fully thought through.
That is whether to heed the counsel of his top commander in Afghanistan, General Stanley McChrystal, and call for a surge of 40,000 more troops in Afghanistan.
Obama is said to also be pondering a middle ground of calling up somewhere between 10,000 and 30,000 more troops.
Or, and this is shaping up as a long shot, he and his team of rivals in the Pentagon and the State Department could decide to rebuff McChrystal. In this scenario, Obama would refocus the mission but still hold to the general counterinsurgency plan that he originally spelled out in March and which increased U.S. troops by 21,000 to a total U.S. presence of 68,000 troops. That surge was just completed this fall.
From my experience talking with counterinsurgency experts and meeting with U.S. and coalition counterinsurgency leaders and trainers in Afghanistan over the summer, I am hoping Obama chooses to hold to the existing troops level. I am hoping he does that while refocusing his original plan to be more targeted on counterterrorism than the wider goal of classic counterinsurgency against the Taliban. He should stick to his guns and hold at the troop levels he has and make the troops who are there better and more effective and provided with better equipment and intelligence assets to get the job done. As I said in an earlier column, less is more right now in Afghanistan.
Every empire in history has regretted an escalation in Afghanistan and it is hard to see how America would be any different.
I do not envy the president and his team in making a very difficult and costly decision at a very hard time economically in America. Few presidents in history have had to face so many fateful decisions in their first year in the White House.
But despite all the pondering the president has given to whether to increase troops, it seems he has given far too little consideration to the overall cost of escalating the war and how it will undercut his ability to fund the ambitious domestic policy agenda he has set out from bank bailouts to health care reform.
With all the debt piling up, it seems to me there is a clear connection between his trip to China and these war costs in Afghanistan.
If you think about it, the hundreds of billions we borrow from China every year will go at least in part to fund the enormous cost of an escalation of troops in Afghanistan, a cost — in terms of lives and treasure.
The war in Iraq will end up costing this country more than 2 trillion dollars, according to the conservative projections of Linda Bilmes, an economist at the Harvard's Kennedy School of Government. The cost is higher still if you include interest on the debt, interest which will in a large measure be paid to China.
Bilmes has worked closely with the Nobel Prize-winning economist Joseph Stiglitz to do the long math on the wars in Iraq and Afghanistan, to factor in not just the military budget and the interest on the debt but also the extraordinary high cost on every level of soldiers who are wounded physically and mentally by war.
Bilmes is credited with highlighting the failure of the administration of President George W. Bush to give an accurate cost assessment of a war that escalated several hundred times beyond the original projection of just $50 billion to $60 billion made by the Pentagon at the start of the war in 2003. She’s been proven right and she’s worried that the Obama administration may be fatefully making another miscalculation on the cost of war in Afghanistan.
And we’ve hit a profound turning point in Afghanistan. In this new budget year, which started Oct. 1, for the first time, the war in Afghanistan will cost Americans more than the war in Iraq.
And, as Bilmes points out, fighting in Afghanistan is more costly than it is in Iraq because of the terrain and the difficulty in supplying troops and evacuating the wounded. She estimates that Afghanistan is as much as 1.6 times more expensive per soldier than Iraq.
“While this administration has brought great military expertise to thinking this through, there needs to be a greater focus on the cost. How are we going to pay for this? People are still not looking at the long term costs,” said Bilmes.
And so as the President stares out the window of Air Force One pondering the dark skies in the long journey back to Washington, one can only hope that he has thought through the extraordinary cost — on every level — of calling for an escalation of troops in Afghanistan.
Source: globalpost.com
That worked out pretty well.
But it’s hard to feel the spirit of 1776 in President Obama’s journey to China. He went as a representative of a borrowing nation to its primary lender amid a call for yet another costly military surge in the Long War that is escalating in Afghanistan even if it is hopefully winding down in Iraq.
As the president completes his journey to Asia, he returns to Washington to face what is the most consequential foreign policy decision of his presidency, a decision that this administration has not yet fully thought through.
That is whether to heed the counsel of his top commander in Afghanistan, General Stanley McChrystal, and call for a surge of 40,000 more troops in Afghanistan.
Obama is said to also be pondering a middle ground of calling up somewhere between 10,000 and 30,000 more troops.
Or, and this is shaping up as a long shot, he and his team of rivals in the Pentagon and the State Department could decide to rebuff McChrystal. In this scenario, Obama would refocus the mission but still hold to the general counterinsurgency plan that he originally spelled out in March and which increased U.S. troops by 21,000 to a total U.S. presence of 68,000 troops. That surge was just completed this fall.
From my experience talking with counterinsurgency experts and meeting with U.S. and coalition counterinsurgency leaders and trainers in Afghanistan over the summer, I am hoping Obama chooses to hold to the existing troops level. I am hoping he does that while refocusing his original plan to be more targeted on counterterrorism than the wider goal of classic counterinsurgency against the Taliban. He should stick to his guns and hold at the troop levels he has and make the troops who are there better and more effective and provided with better equipment and intelligence assets to get the job done. As I said in an earlier column, less is more right now in Afghanistan.
Every empire in history has regretted an escalation in Afghanistan and it is hard to see how America would be any different.
I do not envy the president and his team in making a very difficult and costly decision at a very hard time economically in America. Few presidents in history have had to face so many fateful decisions in their first year in the White House.
But despite all the pondering the president has given to whether to increase troops, it seems he has given far too little consideration to the overall cost of escalating the war and how it will undercut his ability to fund the ambitious domestic policy agenda he has set out from bank bailouts to health care reform.
With all the debt piling up, it seems to me there is a clear connection between his trip to China and these war costs in Afghanistan.
If you think about it, the hundreds of billions we borrow from China every year will go at least in part to fund the enormous cost of an escalation of troops in Afghanistan, a cost — in terms of lives and treasure.
The war in Iraq will end up costing this country more than 2 trillion dollars, according to the conservative projections of Linda Bilmes, an economist at the Harvard's Kennedy School of Government. The cost is higher still if you include interest on the debt, interest which will in a large measure be paid to China.
Bilmes has worked closely with the Nobel Prize-winning economist Joseph Stiglitz to do the long math on the wars in Iraq and Afghanistan, to factor in not just the military budget and the interest on the debt but also the extraordinary high cost on every level of soldiers who are wounded physically and mentally by war.
Bilmes is credited with highlighting the failure of the administration of President George W. Bush to give an accurate cost assessment of a war that escalated several hundred times beyond the original projection of just $50 billion to $60 billion made by the Pentagon at the start of the war in 2003. She’s been proven right and she’s worried that the Obama administration may be fatefully making another miscalculation on the cost of war in Afghanistan.
And we’ve hit a profound turning point in Afghanistan. In this new budget year, which started Oct. 1, for the first time, the war in Afghanistan will cost Americans more than the war in Iraq.
And, as Bilmes points out, fighting in Afghanistan is more costly than it is in Iraq because of the terrain and the difficulty in supplying troops and evacuating the wounded. She estimates that Afghanistan is as much as 1.6 times more expensive per soldier than Iraq.
“While this administration has brought great military expertise to thinking this through, there needs to be a greater focus on the cost. How are we going to pay for this? People are still not looking at the long term costs,” said Bilmes.
And so as the President stares out the window of Air Force One pondering the dark skies in the long journey back to Washington, one can only hope that he has thought through the extraordinary cost — on every level — of calling for an escalation of troops in Afghanistan.
Source: globalpost.com
Proposal - Code of Conduct for Credit and Debit Card Companies
OTTAWA — Finance Minister Jim Flaherty is proposing a code of conduct for credit-and debit-card companies that he says will "level the playing field" for consumers and small businesses alike - but not before the Christmas shopping season.
The code, intended to promote fair business practices and ensure merchants and consumers clearly understand the costs and benefits of credit and debit cards, won't be finalized before early next year.
It aims to provide merchants with more pricing flexibility so consumers can choose the best payment option, Flaherty said, and it would allow merchants to choose which payment options they accept.
"The proposed code is based on ongoing discussions with merchant and consumer associations, debit-and credit-card networks, payment processors and credit-card issuers across Canada," Flaherty said Thursday.
"The proposed code would encourage choice and competition in the credit and debit market for the benefit of consumers and merchants. It would help ensure accountability and prevent unfair practices."
The new code doesn't deal with one of the major complaints by consumers over the years - that general credit-card interest rates are far above the level of normal borrowing costs and do not drop very much even in a period of low interest rates. The card companies say these rates are needed to recoup losses on many credit-card accounts.
However, Flaherty's proposed changes could help retailers and merchants, who have long complained about the high cost of card-processing fees. The Retail Council of Canada estimates credit-card fees cost merchants about $4.5 billion a year. Critics argue that such charges wind up in the cost of goods and services sold to consumers.
The Liberal Opposition said the voluntary code of conduct misses the mark after the government relegated the issue to the backburner for 11 months. Now Flaherty has told consumers and the industry they would have wait another 60 days, it said.
"There is a clear imbalance between the negotiating position of the card networks and merchants," said Liberal finance critic John McCallum.
"I remain very skeptical that two months from now these consultations are going to lead to a levelling of that playing field. Simply asking everyone to place nice where there are billions of dollars at stake is not a solution."
The changes come as competition is heating up in the payment processing industry as reports say Visa and Mastercard are poised to enter the Canadian debit-card market. That a market is currently dominated by the Interac Association, a network owned by the big banks and other financial companies that connects Canada's automated bank machines and point-of-sale debit-card terminals.
Critics say the entry of such giant players could raise debit-card processing fees for consumers and businesses, but the card companies say it would bring more technological innovation and choice.
Flaherty is putting the draft proposal out for input from stakeholders over the next 60 days and he said he expects the code will be made final early in the New Year.
Among other elements of the code:
-It would require credit-and debit-card companies to give merchants at least 90-days' notice of changes to transaction fees.
-It would allow merchants to cancel contracts with card issuers without penalty after notification of fee changes.
"We have been consulting on this for some months and these are not simple issues relating to debit and credit cards," Flaherty said.
"They're very important issues for consumers in Canada; they're very important issues for business in Canada - particularly small merchants as we go into the Christmas shopping season."
He said the government will make final revisions and additions to the code based on the feedback it receives, "then quickly move to bring the code into force as soon as possible early in the new year."
MasterCard said it plans on "actively participating" in the consultation process.
"Today's announcement and the code should resolve a commercial dispute for which the global retail lobby operating in Canada has sought government intervention over private negotiation," Mastercard president Kevin Stanton said in a statement.
"A code issued by the minister of finance must be taken seriously and establishes a de facto standard of conduct."
Stanton said MasterCard will pay particular attention to how the proposed code "could alter the competitive landscape" and pledged it would "take measures to safeguard its continued ability to deliver value and innovation to all stakeholders."
Visa Canada said it's encouraged that Ottawa supports transparency and choice in payments, "as Visa believes that these are fundamental to a well functioning economy."
It said it's also encouraged that the code applies to all payment networks equally.
"However, we believe choice of payments should be balanced between merchants and consumers and are disappointed that the code would allow merchants to supersede consumer choice at the point of sale," the company said.
"Merchants can and should decide whether they want to accept Visa Debit cards and merchants are free today to steer customers to the merchant's preferred choice of payment. But Visa believes that merchants should ultimately honour the consumer's choice."
The Canadian Federation of Independent Grocers called the new guidelines "a very positive step" that will help small businesses in Canada.
"Over the last two years, retailers across the country have been hammered by unrelenting fee increases, a lack of transparency and agreements forced on retailers that abused the dominant position of the credit-card companies in Canada," said John F.T. Scott, federation president and CEO.
"In particular, many small-and medium-size retailers simply do not have the clout to deal with credit card giants and payment processors."
Added Scott: "Just this week, our members had brought forward examples of new terms being imposed on retailers by payment processors that are frighteningly similar to the 'negative option' issue that landed the cable companies in hot water a few years ago."
Source: google.com
The code, intended to promote fair business practices and ensure merchants and consumers clearly understand the costs and benefits of credit and debit cards, won't be finalized before early next year.
It aims to provide merchants with more pricing flexibility so consumers can choose the best payment option, Flaherty said, and it would allow merchants to choose which payment options they accept.
"The proposed code is based on ongoing discussions with merchant and consumer associations, debit-and credit-card networks, payment processors and credit-card issuers across Canada," Flaherty said Thursday.
"The proposed code would encourage choice and competition in the credit and debit market for the benefit of consumers and merchants. It would help ensure accountability and prevent unfair practices."
The new code doesn't deal with one of the major complaints by consumers over the years - that general credit-card interest rates are far above the level of normal borrowing costs and do not drop very much even in a period of low interest rates. The card companies say these rates are needed to recoup losses on many credit-card accounts.
However, Flaherty's proposed changes could help retailers and merchants, who have long complained about the high cost of card-processing fees. The Retail Council of Canada estimates credit-card fees cost merchants about $4.5 billion a year. Critics argue that such charges wind up in the cost of goods and services sold to consumers.
The Liberal Opposition said the voluntary code of conduct misses the mark after the government relegated the issue to the backburner for 11 months. Now Flaherty has told consumers and the industry they would have wait another 60 days, it said.
"There is a clear imbalance between the negotiating position of the card networks and merchants," said Liberal finance critic John McCallum.
"I remain very skeptical that two months from now these consultations are going to lead to a levelling of that playing field. Simply asking everyone to place nice where there are billions of dollars at stake is not a solution."
The changes come as competition is heating up in the payment processing industry as reports say Visa and Mastercard are poised to enter the Canadian debit-card market. That a market is currently dominated by the Interac Association, a network owned by the big banks and other financial companies that connects Canada's automated bank machines and point-of-sale debit-card terminals.
Critics say the entry of such giant players could raise debit-card processing fees for consumers and businesses, but the card companies say it would bring more technological innovation and choice.
Flaherty is putting the draft proposal out for input from stakeholders over the next 60 days and he said he expects the code will be made final early in the New Year.
Among other elements of the code:
-It would require credit-and debit-card companies to give merchants at least 90-days' notice of changes to transaction fees.
-It would allow merchants to cancel contracts with card issuers without penalty after notification of fee changes.
"We have been consulting on this for some months and these are not simple issues relating to debit and credit cards," Flaherty said.
"They're very important issues for consumers in Canada; they're very important issues for business in Canada - particularly small merchants as we go into the Christmas shopping season."
He said the government will make final revisions and additions to the code based on the feedback it receives, "then quickly move to bring the code into force as soon as possible early in the new year."
MasterCard said it plans on "actively participating" in the consultation process.
"Today's announcement and the code should resolve a commercial dispute for which the global retail lobby operating in Canada has sought government intervention over private negotiation," Mastercard president Kevin Stanton said in a statement.
"A code issued by the minister of finance must be taken seriously and establishes a de facto standard of conduct."
Stanton said MasterCard will pay particular attention to how the proposed code "could alter the competitive landscape" and pledged it would "take measures to safeguard its continued ability to deliver value and innovation to all stakeholders."
Visa Canada said it's encouraged that Ottawa supports transparency and choice in payments, "as Visa believes that these are fundamental to a well functioning economy."
It said it's also encouraged that the code applies to all payment networks equally.
"However, we believe choice of payments should be balanced between merchants and consumers and are disappointed that the code would allow merchants to supersede consumer choice at the point of sale," the company said.
"Merchants can and should decide whether they want to accept Visa Debit cards and merchants are free today to steer customers to the merchant's preferred choice of payment. But Visa believes that merchants should ultimately honour the consumer's choice."
The Canadian Federation of Independent Grocers called the new guidelines "a very positive step" that will help small businesses in Canada.
"Over the last two years, retailers across the country have been hammered by unrelenting fee increases, a lack of transparency and agreements forced on retailers that abused the dominant position of the credit-card companies in Canada," said John F.T. Scott, federation president and CEO.
"In particular, many small-and medium-size retailers simply do not have the clout to deal with credit card giants and payment processors."
Added Scott: "Just this week, our members had brought forward examples of new terms being imposed on retailers by payment processors that are frighteningly similar to the 'negative option' issue that landed the cable companies in hot water a few years ago."
Source: google.com
The nightmare for Finance Minister
A stunning reversal of fortune is one way of describing the predicament Finance Minister Rod Gantefoer finds himself in halfway through the fiscal year that began with so much promise.
Even Gantefoer admitted that the elephant in the room -- the finance ministry's projected potash revenue of $1.9 billion -- was something that he worried about from Day One.
"I said when I tabled the budget that the one thing that was going to keep me awake was potash," Gantefoer told reporters. "I didn't think it would end up turning into a bit of a nightmare."
A nightmare is another way of describing the sickening feeling of seeing $1.9 billion in projected revenues plummet by two-thirds to $638 million in the first quarter, then plunge another 83 per cent to $109 million by mid-term.
A sickening slide also describes what happened to the finance ministry's projected potash production, which fell 62 per cent to 4.4 million tonnes, the lowest level in 37 years.
The ministry's miscalculation on potash shaved two percentage points off the province's projected economic growth of 2.1 per cent in the 2009-10 budget. Economic growth is now expected to come in at negative 2.9 per cent -- a full five-percentage-point drop from the budget projection.
For its part, the NDP Opposition called Gantefoer's gaffe "the biggest example of fiscal incompetence in the history of Saskatchewan.'' In absolute dollar terms, it may be.
From a projected deficit of $25 million (on a summary basis, which includes Crown corporations), the ministry is now forecasting a deficit of $1.05 billion in 2009-10 -- an unbudgeted $1-billlion shortfall.
NDP finance critic Trent Wotherspoon lays the blame for the province's current fiscal and economic problems clearly at the feet of Gantefoer and the Saskatchewan Party government. "This is a problem of the Wall government's own making,'' Wotherspoon said, citing "irresponsible revenue projections,'' equity stripping in the Crowns and "out of-control'' government spending.
So are Gantefoer and the Sask. Party government entirely to blame for the mess they find themselves in? With the benefit of hindsight, it goes without saying that the budget's economic and fiscal projections were far too rosy.
The more important question is: Were there signs that those projections were too optimistic even before the budget went to the printers?
Certainly, private economic forecasters were already signalling that the budget's economic projections were unrealistic.
According to the budget, the average of eight private sector forecasts was one-per-cent economic growth in 2009. And two of those forecasts had since been lowered (RBC from 2.8 per cent in January to 0.9 per cent and Scotiabank 0.6 per cent zero per cent, which would have lowered the average to 0.66 per cent).
Yet, contrary to previous practice, the finance ministry projected economic growth of 2.1 per cent -- more than twice the average of the private sector forecasts.
That's largely because they believed that potash prices and production would remain on par or higher than 2008 levels.
For example, the budget projected potash prices to average $550 US per tonne in 2009, $100 US higher than 2008, while potash production was projected to remain unchanged at 10 million tonnes. Instead, potash prices came in about $100 US per tonne lower than last year and production about 60-per-cent lower.
At the time, then-NDP finance critic Harry Van Mulligen warned production cuts announced by potash companies could easily derail the budget's revenue and economic projections.
"Bottom line,'' Van Mulligen said, "shaky economic and revenue assumptions, plus runaway spending, equals a potential fiscal trainwreck.''
As it turns out, Van Mulligen was remarkably prescient, unlike his counterpart in the government benches.
While Gantefoer can be excused for not forecasting the unprecedented cutbacks in potash production, he stands guilty as charged for failing to moderate his overly optimistic budget projections, despite the mounting evidence to the contrary.
Source: leaderpost.com
Even Gantefoer admitted that the elephant in the room -- the finance ministry's projected potash revenue of $1.9 billion -- was something that he worried about from Day One.
"I said when I tabled the budget that the one thing that was going to keep me awake was potash," Gantefoer told reporters. "I didn't think it would end up turning into a bit of a nightmare."
A nightmare is another way of describing the sickening feeling of seeing $1.9 billion in projected revenues plummet by two-thirds to $638 million in the first quarter, then plunge another 83 per cent to $109 million by mid-term.
A sickening slide also describes what happened to the finance ministry's projected potash production, which fell 62 per cent to 4.4 million tonnes, the lowest level in 37 years.
The ministry's miscalculation on potash shaved two percentage points off the province's projected economic growth of 2.1 per cent in the 2009-10 budget. Economic growth is now expected to come in at negative 2.9 per cent -- a full five-percentage-point drop from the budget projection.
For its part, the NDP Opposition called Gantefoer's gaffe "the biggest example of fiscal incompetence in the history of Saskatchewan.'' In absolute dollar terms, it may be.
From a projected deficit of $25 million (on a summary basis, which includes Crown corporations), the ministry is now forecasting a deficit of $1.05 billion in 2009-10 -- an unbudgeted $1-billlion shortfall.
NDP finance critic Trent Wotherspoon lays the blame for the province's current fiscal and economic problems clearly at the feet of Gantefoer and the Saskatchewan Party government. "This is a problem of the Wall government's own making,'' Wotherspoon said, citing "irresponsible revenue projections,'' equity stripping in the Crowns and "out of-control'' government spending.
So are Gantefoer and the Sask. Party government entirely to blame for the mess they find themselves in? With the benefit of hindsight, it goes without saying that the budget's economic and fiscal projections were far too rosy.
The more important question is: Were there signs that those projections were too optimistic even before the budget went to the printers?
Certainly, private economic forecasters were already signalling that the budget's economic projections were unrealistic.
According to the budget, the average of eight private sector forecasts was one-per-cent economic growth in 2009. And two of those forecasts had since been lowered (RBC from 2.8 per cent in January to 0.9 per cent and Scotiabank 0.6 per cent zero per cent, which would have lowered the average to 0.66 per cent).
Yet, contrary to previous practice, the finance ministry projected economic growth of 2.1 per cent -- more than twice the average of the private sector forecasts.
That's largely because they believed that potash prices and production would remain on par or higher than 2008 levels.
For example, the budget projected potash prices to average $550 US per tonne in 2009, $100 US higher than 2008, while potash production was projected to remain unchanged at 10 million tonnes. Instead, potash prices came in about $100 US per tonne lower than last year and production about 60-per-cent lower.
At the time, then-NDP finance critic Harry Van Mulligen warned production cuts announced by potash companies could easily derail the budget's revenue and economic projections.
"Bottom line,'' Van Mulligen said, "shaky economic and revenue assumptions, plus runaway spending, equals a potential fiscal trainwreck.''
As it turns out, Van Mulligen was remarkably prescient, unlike his counterpart in the government benches.
While Gantefoer can be excused for not forecasting the unprecedented cutbacks in potash production, he stands guilty as charged for failing to moderate his overly optimistic budget projections, despite the mounting evidence to the contrary.
Source: leaderpost.com
7 finance meeting will be hosted at Iqaluit
The capital of Nunavut will host a major meeting of G7 finance ministers and central bank governors in February, federal officials announced Wednesday.
The Iqaluit meeting, slated for Feb. 5-6, will be the first of a series of important finance meetings to be held in Canada in 2010, Finance Minister Jim Flaherty told reporters in Ottawa.
It will be followed by the G8 and G20 leaders' summits to be held in June.
Flaherty said the G7 colleagues he spoke to in Italy last summer all expressed interest in travelling to Canada's Far North for the February meeting.
"We have to limit the size of the delegations so that we can use Iqaluit, but I'm really looking forward to showing my colleagues from around the world the beauty of the Canadian Arctic in February," he said.
"It's spectacularly pristine and gorgeous. And yes, it's very cold."
Flaherty was joined by Health Minister Leona Aglukkaq, the Conservative MP for Nunavut, at Wednesday's announcement.
The meeting will include discussion on actions to strengthen the global economy, ways of following through on financial sector reforms, and ways to strengthen international financial institutions.
G7 members include Canada, the United States, Britain, France and Germany, Italy and Japan.
Flaherty, who last visited Iqaluit with Prime Minister Stephen Harper in August, acknowledged that his counterparts from countries such as France, Japan and Italy may be shocked by Canada's cold winter conditions, especially in the Far North.
"I promised I would get them big coats and dress them properly," he said.
Flaherty said he is also not fazed by the possibility that a February blizzard could affect travel to and from the Nunavut captial.
"I've been stuck in a blizzard in Toronto in February," he remarked. "I mean, this is Canada, after all."
Source: cbc.ca
The Iqaluit meeting, slated for Feb. 5-6, will be the first of a series of important finance meetings to be held in Canada in 2010, Finance Minister Jim Flaherty told reporters in Ottawa.
It will be followed by the G8 and G20 leaders' summits to be held in June.
Flaherty said the G7 colleagues he spoke to in Italy last summer all expressed interest in travelling to Canada's Far North for the February meeting.
"We have to limit the size of the delegations so that we can use Iqaluit, but I'm really looking forward to showing my colleagues from around the world the beauty of the Canadian Arctic in February," he said.
"It's spectacularly pristine and gorgeous. And yes, it's very cold."
Flaherty was joined by Health Minister Leona Aglukkaq, the Conservative MP for Nunavut, at Wednesday's announcement.
The meeting will include discussion on actions to strengthen the global economy, ways of following through on financial sector reforms, and ways to strengthen international financial institutions.
G7 members include Canada, the United States, Britain, France and Germany, Italy and Japan.
Flaherty, who last visited Iqaluit with Prime Minister Stephen Harper in August, acknowledged that his counterparts from countries such as France, Japan and Italy may be shocked by Canada's cold winter conditions, especially in the Far North.
"I promised I would get them big coats and dress them properly," he said.
Flaherty said he is also not fazed by the possibility that a February blizzard could affect travel to and from the Nunavut captial.
"I've been stuck in a blizzard in Toronto in February," he remarked. "I mean, this is Canada, after all."
Source: cbc.ca
Thursday, August 6, 2009
Tenn. finance head says state faces more cuts
NASHVILLE, Tenn. -- Tennessee Finance Commissioner Dave Goetz said Wednesday that continued poor sales tax revenue means state departments will likely have to make more cuts.
Goetz told the state legislative Fiscal Review Committee that the state is experiencing the "fourth month in a row of double-digit sales tax losses." Sales taxes are about 60 percent of the state's money.
As a result, the commissioner said state departments won't be receiving $56.1 million that had been appropriated in the governor's budget. Reception of the money was contingent on whether the state met certain budget expectations for this year, but Goetz said projections have been complicated by the sales tax losses.
However, if the economy should take a turn for the better and revenue improves, Goetz said state departments could receive the money.
"If the economy comes back ... these funds don't have to be withheld," he said. "But we won't know that for a long time."
State Sen. Bill Ketron, a Murfreesboro Republican and chairman of the Fiscal Review Committee, said he agrees with releasing the funds if the economic climate improves, but warns state departments should be careful in their spending because cuts are still expected next year.
"When it comes back to them, I think they need to be very conservative ... in knowing that there are going to be possibly more cuts," Ketron said.
Goetz said state officials are currently reviewing departments' plans on how they intend to operate on the budgets they've been allotted. He said much of the savings are through not filling vacancies, and that Tennesseans will likely be affected by "responsiveness in agencies because of the vacancies."
"It's the nature of where we are," he said. "Our employees are stepping up and doing the best they can, but it may take a little longer to get some things done."
The agency hit hardest by withholding funding is TennCare, the state's expanded Medicaid program. It was to receive $20 million, but Goetz said services provided by the program shouldn't be affected because it still has millions of dollars in "reserves to fall back on."
Last month, Goetz sent out a memo to all state agency heads urging them to manage responsibly.
For instance, they were asked to limit in-state travel, and out-of-travel was to be for "emergency or mandatory situations only."
Source: forbes.com
Goetz told the state legislative Fiscal Review Committee that the state is experiencing the "fourth month in a row of double-digit sales tax losses." Sales taxes are about 60 percent of the state's money.
As a result, the commissioner said state departments won't be receiving $56.1 million that had been appropriated in the governor's budget. Reception of the money was contingent on whether the state met certain budget expectations for this year, but Goetz said projections have been complicated by the sales tax losses.
However, if the economy should take a turn for the better and revenue improves, Goetz said state departments could receive the money.
"If the economy comes back ... these funds don't have to be withheld," he said. "But we won't know that for a long time."
State Sen. Bill Ketron, a Murfreesboro Republican and chairman of the Fiscal Review Committee, said he agrees with releasing the funds if the economic climate improves, but warns state departments should be careful in their spending because cuts are still expected next year.
"When it comes back to them, I think they need to be very conservative ... in knowing that there are going to be possibly more cuts," Ketron said.
Goetz said state officials are currently reviewing departments' plans on how they intend to operate on the budgets they've been allotted. He said much of the savings are through not filling vacancies, and that Tennesseans will likely be affected by "responsiveness in agencies because of the vacancies."
"It's the nature of where we are," he said. "Our employees are stepping up and doing the best they can, but it may take a little longer to get some things done."
The agency hit hardest by withholding funding is TennCare, the state's expanded Medicaid program. It was to receive $20 million, but Goetz said services provided by the program shouldn't be affected because it still has millions of dollars in "reserves to fall back on."
Last month, Goetz sent out a memo to all state agency heads urging them to manage responsibly.
For instance, they were asked to limit in-state travel, and out-of-travel was to be for "emergency or mandatory situations only."
Source: forbes.com
Shriram Finance joins hands with small players, beats slowdown
Three years ago, Deepak Dugar of Mahaveer Finance India, a Chennai-based private financier of light commercial vehicles (LCVs), had about 1,000 customers but not enough funds to service them. Today, his customer count has more than doubled to about 2,500, and funding problems are more or less a thing of the past.
Dugar gives credit to their franchise tie-up with Shriram Transport Finance for the buoyancy in business. “Earlier, funds were a major problem since banks were the only avenue and we had strict limits. So, then we couldn’t service more than 800-1,000 customers. The partnership with Shriram has helped double our business and improve profitability,” he says.
Shriram Transport Finance is one of the few organised financiers of used commercial vehicles in the country. According to its Managing Director R Sridhar, tie-ups with small private financiers are beneficial to both sides as cash-strapped small players get access to funds, while Shriram Transport gets the opportunity to tap local customer networks.
Besides Dugar, Shriram Finance has tied up with about 500 other private financiers across the country. Now, almost 10 per cent of Shriram Transport Finance’s loans flow through this channel and the firm is keen on growing its network. As part of the arrangement, the smaller partner is responsible for acquiring customers, collecting payments and pitching in with about 10-20 per cent of the loan amount. The remaining part of the loan is extended by Shriram Transport Finance. Profits or loss above the minimum internal rate of return (IRR) is shared 50:50.
Sridhar claims that innovative business models and the firm’s niche focus have helped Shriram Finance tide over the downturn that pulled down annual sales of new commercial vehicles by 29 per cent in 2008-09. Bankers corroborate Sridhar’s claim by saying that the new commercial vehicle financing industry has seen a drop of 30-35 per cent since the beginning of the year. Players such as IndusInd Bank say the year-on-year growth in their portfolios has been only 10-15 per cent. The country’s largest private lender, ICICI Bank, has shrunk its commercial vehicle loanbook by about 10 per cent in the June quarter on a sequential basis.
The country’s largest lender, State Bank of India, says unlike heavy commercial vehicles, demand for finance of LCVs has improved, driven by rural areas.
Since Shriram Finance has a strong network in rural India, the company stands to gain. It’s so because financing of pre-owned commercial vehicles rests mostly in the hands of private financiers. Banks consider this category of loans high-risk, because the owners are mini-truck operators who drive their own vehicles. Such vehicles usually ply short distances of less than 200 km and are used to transfer essential commodities.
However, 90 per cent of loans disbursed by Shriram Finance, which has assets worth Rs 24,274.87 crore as of June 30, 2009, are to this segment, which has proved relatively resilient to the slowdown.
For Shriram Finance, although the pace of growth in operating income has slowed to 23 per cent in the June 2009 quarter from 74 per cent a year ago, it is still a respectable percentage given the present economic environment. It has also managed to maintain a net interest margin, or the percentage difference between interest earned on loans and that paid on funds, of 6.5 per cent in the June quarter and restricted non-performing assets (NPAs) to 2.2 per cent of total advances. This is despite having an incremental cost of funds of 10.5 per cent—significantly higher than that for banks, which have access to low-cost retail deposits.
Shriram Transport Finance is able to maintain such strong margins because loans in the used commercial vehicles segment are issued at interest rates in the range of 18-24 per cent, while the coupon for new commercial vehicles is lower at 15-16 per cent. Pricing pressure from competition is not an issue because the only other players in this segment are private financiers, who lend at rates as high as 30 per cent.
However, Sridhar says the firm’s objective is not necessarily to increase margins, but to bring down the cost of financing for his customers.
“We lend to a segment which has no banking habits and no one else in the organised sector is willing to lend to them because they are considered extremely risky. We encourage our customers to become bankable and upgrade to new vehicles so that they can access cheaper financing from banks,” he says.
Source: business-standard.com
Dugar gives credit to their franchise tie-up with Shriram Transport Finance for the buoyancy in business. “Earlier, funds were a major problem since banks were the only avenue and we had strict limits. So, then we couldn’t service more than 800-1,000 customers. The partnership with Shriram has helped double our business and improve profitability,” he says.
Shriram Transport Finance is one of the few organised financiers of used commercial vehicles in the country. According to its Managing Director R Sridhar, tie-ups with small private financiers are beneficial to both sides as cash-strapped small players get access to funds, while Shriram Transport gets the opportunity to tap local customer networks.
Besides Dugar, Shriram Finance has tied up with about 500 other private financiers across the country. Now, almost 10 per cent of Shriram Transport Finance’s loans flow through this channel and the firm is keen on growing its network. As part of the arrangement, the smaller partner is responsible for acquiring customers, collecting payments and pitching in with about 10-20 per cent of the loan amount. The remaining part of the loan is extended by Shriram Transport Finance. Profits or loss above the minimum internal rate of return (IRR) is shared 50:50.
Sridhar claims that innovative business models and the firm’s niche focus have helped Shriram Finance tide over the downturn that pulled down annual sales of new commercial vehicles by 29 per cent in 2008-09. Bankers corroborate Sridhar’s claim by saying that the new commercial vehicle financing industry has seen a drop of 30-35 per cent since the beginning of the year. Players such as IndusInd Bank say the year-on-year growth in their portfolios has been only 10-15 per cent. The country’s largest private lender, ICICI Bank, has shrunk its commercial vehicle loanbook by about 10 per cent in the June quarter on a sequential basis.
The country’s largest lender, State Bank of India, says unlike heavy commercial vehicles, demand for finance of LCVs has improved, driven by rural areas.
Since Shriram Finance has a strong network in rural India, the company stands to gain. It’s so because financing of pre-owned commercial vehicles rests mostly in the hands of private financiers. Banks consider this category of loans high-risk, because the owners are mini-truck operators who drive their own vehicles. Such vehicles usually ply short distances of less than 200 km and are used to transfer essential commodities.
However, 90 per cent of loans disbursed by Shriram Finance, which has assets worth Rs 24,274.87 crore as of June 30, 2009, are to this segment, which has proved relatively resilient to the slowdown.
For Shriram Finance, although the pace of growth in operating income has slowed to 23 per cent in the June 2009 quarter from 74 per cent a year ago, it is still a respectable percentage given the present economic environment. It has also managed to maintain a net interest margin, or the percentage difference between interest earned on loans and that paid on funds, of 6.5 per cent in the June quarter and restricted non-performing assets (NPAs) to 2.2 per cent of total advances. This is despite having an incremental cost of funds of 10.5 per cent—significantly higher than that for banks, which have access to low-cost retail deposits.
Shriram Transport Finance is able to maintain such strong margins because loans in the used commercial vehicles segment are issued at interest rates in the range of 18-24 per cent, while the coupon for new commercial vehicles is lower at 15-16 per cent. Pricing pressure from competition is not an issue because the only other players in this segment are private financiers, who lend at rates as high as 30 per cent.
However, Sridhar says the firm’s objective is not necessarily to increase margins, but to bring down the cost of financing for his customers.
“We lend to a segment which has no banking habits and no one else in the organised sector is willing to lend to them because they are considered extremely risky. We encourage our customers to become bankable and upgrade to new vehicles so that they can access cheaper financing from banks,” he says.
Source: business-standard.com
UPDATE 1-Romanian finance min sure IMF will OK deficit hike
BUCHAREST, Aug 5 (Reuters) - Romania's Finance Minister said on Wednesday he was 'convinced' the International Monetary Fund will allow the country to run a bigger budget deficit this year, as the economy could contract by up to 8.5 percent.
'In 2009, the deficit could reach 7 percent of GDP,' Gheorghe Pogea was quoted as saying by state news agency Agerpres, referring to the country's gross domestic product.
An IMF mission is in Bucharest until Aug. 10, reviewing the European Union member's progress in meeting conditions attached to a 20 billion euro aid deal secured in March.
The deal set a 2009 budget shortfall of 4.6 percent of GDP based on a forecast for the economy to shrink 4.1 percent.
Conditions have deteriorated sharply since the deal was agreed, however, as the global financial crisis slashed both demand and lending, and the contraction is now seen more than doubling.
'The global recession ... will lead to an economic contraction that may reach 8 to 8.5 percent, and the first impact will be a drop in public revenues,' Pogea told reporters after a meeting of the center-left government.
'As a result, we will discuss with the IMF about raising the deficit, and I am firmly convinced that they will accept, but at the same time, we must certainly enforce structural reforms that will ensure budget balance.'
This week, the IMF's mission chief said the Fund will be flexible with Bucharest. However, the government must enforce deep reforms of its public administration, which employs about a third of Romania's total workforce of around 5 million people and is seen as bloated and largely inefficient.
On Wednesday, Prime Minister Emil Boc said the cabinet will thin out the state sector by cutting or merging state agencies, which will lead to a little more than 9,000 job losses.
He also said Romania will stick to its calendar for IMF-prescribed public sector reforms. A single wage bill should be approved in October, while pension reform should occur by December at the latest.
'These are laws that will shake the Romanian public system to its core,' Boc said.
Source: forbes.com
'In 2009, the deficit could reach 7 percent of GDP,' Gheorghe Pogea was quoted as saying by state news agency Agerpres, referring to the country's gross domestic product.
An IMF mission is in Bucharest until Aug. 10, reviewing the European Union member's progress in meeting conditions attached to a 20 billion euro aid deal secured in March.
The deal set a 2009 budget shortfall of 4.6 percent of GDP based on a forecast for the economy to shrink 4.1 percent.
Conditions have deteriorated sharply since the deal was agreed, however, as the global financial crisis slashed both demand and lending, and the contraction is now seen more than doubling.
'The global recession ... will lead to an economic contraction that may reach 8 to 8.5 percent, and the first impact will be a drop in public revenues,' Pogea told reporters after a meeting of the center-left government.
'As a result, we will discuss with the IMF about raising the deficit, and I am firmly convinced that they will accept, but at the same time, we must certainly enforce structural reforms that will ensure budget balance.'
This week, the IMF's mission chief said the Fund will be flexible with Bucharest. However, the government must enforce deep reforms of its public administration, which employs about a third of Romania's total workforce of around 5 million people and is seen as bloated and largely inefficient.
On Wednesday, Prime Minister Emil Boc said the cabinet will thin out the state sector by cutting or merging state agencies, which will lead to a little more than 9,000 job losses.
He also said Romania will stick to its calendar for IMF-prescribed public sector reforms. A single wage bill should be approved in October, while pension reform should occur by December at the latest.
'These are laws that will shake the Romanian public system to its core,' Boc said.
Source: forbes.com
How suite it is to be Council Finance chief
When times are tough, most people forget about remodeling. If the carpeting has holes and the paint is peeling, they live with it.
Not Chicago's most powerful alderman. Finance Committee Chairman Edward M. Burke (14th) is freshening up his third-floor suite at City Hall.
New carpeting is being installed to eliminate the need to cover holes with duct tape. Walls are being re-painted. A "small number" of chairs and cubicles are being replaced.
Acting General Services Commissioner Mark Maloney offered no cost estimate on the Finance Committee project.
"I was not aware that we were doing any work down there," he said.
Finance Committee spokesman Donal Quinlan also provided no budget. But he insisted that the touch-up was justified -- even after an early '90s remodeling that created a giant conference room in the suite.
"The Finance Committee was last re-carpeted in 1993-94. We have at least seven areas of carpeting that are torn. Many of them are patched over with wide, unsightly silver duct tape so people don't trip," Quinlan said, after taking a reporter on a tour of the office suite.
"See all these spots -- these taped wide areas. . . . And as you can see, some stains just won't come out."
No matter what the cost, the touch-up comes at the worst possible time from a public relations standpoint. Most of Chicago's unionized employees have been forced to take unpaid days off and make other cost-cutting concessions.
Source: suntimes.com
Not Chicago's most powerful alderman. Finance Committee Chairman Edward M. Burke (14th) is freshening up his third-floor suite at City Hall.
New carpeting is being installed to eliminate the need to cover holes with duct tape. Walls are being re-painted. A "small number" of chairs and cubicles are being replaced.
Acting General Services Commissioner Mark Maloney offered no cost estimate on the Finance Committee project.
"I was not aware that we were doing any work down there," he said.
Finance Committee spokesman Donal Quinlan also provided no budget. But he insisted that the touch-up was justified -- even after an early '90s remodeling that created a giant conference room in the suite.
"The Finance Committee was last re-carpeted in 1993-94. We have at least seven areas of carpeting that are torn. Many of them are patched over with wide, unsightly silver duct tape so people don't trip," Quinlan said, after taking a reporter on a tour of the office suite.
"See all these spots -- these taped wide areas. . . . And as you can see, some stains just won't come out."
No matter what the cost, the touch-up comes at the worst possible time from a public relations standpoint. Most of Chicago's unionized employees have been forced to take unpaid days off and make other cost-cutting concessions.
Source: suntimes.com
Move on nonperforming state firms put on hold amid economic crisis
THE GOVERNMENT is not inclined to abolish any state-run firm while the country is reeling from an economic slowdown, since this would lead to job losses, the Finance department said.
"None. None for now. Because of the crisis, we cannot close any corporation," Finance Undersecretary Jeremias N. Paul said in a chance interview last Tuesday.
Mr. Paul, who heads the department’s corporate affairs group, claimed that they are already undertaking reforms to improve the management of government-owned companies.
Separately, Finance Secretary Margarito B. Teves said timing should be considered in deciding whether a state entity should be shuttered, given that the government is trying to preserve jobs to mitigate the impact of the global downturn.
Least cost
The Finance chief, however, maintained that in the long-run, the operation of state-owned firms should not be burdensome to taxpayers.
"In terms of what needs to be done over the long-term, we still go by the principle that we have to maintain GOCCs (government owned and controlled corporations) at the least cost possible to taxpayers," Mr. Teves said.
He added that the abolition of GOCCs may take time as this would have to undergo the usual process of legislating new measures.
"Abolition would require congressional approval since these GOCCs were created by Congress," Mr. Teves said.
The government aim is to make GOCCs financially independent.
For now, however, it is continuously providing them funding support to enable them to invest in areas that are not usually attractive to the private sector like rural electrification and socialized housing.
Earlier, Manila-based multilateral lender Asian Development Bank (ADB) scored the government for its supposed failure to reduce bleeding state firms, noting that some of these are suffering from weak institutional and regulatory frameworks.
ADB also urged the government to dissolve nonperforming corporations or to privatize them to ensure that these are not eating much funds from the government coffers.
Mr. Teves had previously said that his department will assess the performance of state-owned firms to see if they should be retained or deactivated.
He said he will not hesitate to recommend to Congress the closure of firms that pose burden to the public, whose taxes are being used to support their operations.
Subsidies double
Last month, the Finance Department reported that subsidies disbursed to state-run firms in the first half almost doubled from last year.
This, as the government also spent on infrastructure and social services to help prod private consumption and other economic activity amid the global slump that is not expected to ease until later next year.
Funds released to GOCCs and government financial institutions (GFIs) totaled P6.98 billion in the first six months, up by 90% from P3.67 billion last year.
On a month-on-month basis, subsidies extended to GOCCs and GFIs reached P1.95 billion in June, more than double the P942 million disbursed in May.
The top recipients of national government funds as of June were the National Housing Authority (P2.37 billion), National Home Mortgage Finance Corp. (P900 million), National Irrigation Administration (P892 million), National Electrification Administration (P509 million) and Philippine National Railways (P349 million). Other top recipients were the Philippine Coconut Authority (P322 million), Philippine Rice Research Institute (P210 million), National Livelihood Development Corp. (P200 million), the National Kidney Transplant Institute (P143 million), the Cultural Center of the Philippines (P128 million), the Philippine Children’s Medical Center (P126 million) and the Philippine Heart Center (P120 million). — Alexis Douglas B. Romero
Source: bworldonline.com
"None. None for now. Because of the crisis, we cannot close any corporation," Finance Undersecretary Jeremias N. Paul said in a chance interview last Tuesday.
Mr. Paul, who heads the department’s corporate affairs group, claimed that they are already undertaking reforms to improve the management of government-owned companies.
Separately, Finance Secretary Margarito B. Teves said timing should be considered in deciding whether a state entity should be shuttered, given that the government is trying to preserve jobs to mitigate the impact of the global downturn.
Least cost
The Finance chief, however, maintained that in the long-run, the operation of state-owned firms should not be burdensome to taxpayers.
"In terms of what needs to be done over the long-term, we still go by the principle that we have to maintain GOCCs (government owned and controlled corporations) at the least cost possible to taxpayers," Mr. Teves said.
He added that the abolition of GOCCs may take time as this would have to undergo the usual process of legislating new measures.
"Abolition would require congressional approval since these GOCCs were created by Congress," Mr. Teves said.
The government aim is to make GOCCs financially independent.
For now, however, it is continuously providing them funding support to enable them to invest in areas that are not usually attractive to the private sector like rural electrification and socialized housing.
Earlier, Manila-based multilateral lender Asian Development Bank (ADB) scored the government for its supposed failure to reduce bleeding state firms, noting that some of these are suffering from weak institutional and regulatory frameworks.
ADB also urged the government to dissolve nonperforming corporations or to privatize them to ensure that these are not eating much funds from the government coffers.
Mr. Teves had previously said that his department will assess the performance of state-owned firms to see if they should be retained or deactivated.
He said he will not hesitate to recommend to Congress the closure of firms that pose burden to the public, whose taxes are being used to support their operations.
Subsidies double
Last month, the Finance Department reported that subsidies disbursed to state-run firms in the first half almost doubled from last year.
This, as the government also spent on infrastructure and social services to help prod private consumption and other economic activity amid the global slump that is not expected to ease until later next year.
Funds released to GOCCs and government financial institutions (GFIs) totaled P6.98 billion in the first six months, up by 90% from P3.67 billion last year.
On a month-on-month basis, subsidies extended to GOCCs and GFIs reached P1.95 billion in June, more than double the P942 million disbursed in May.
The top recipients of national government funds as of June were the National Housing Authority (P2.37 billion), National Home Mortgage Finance Corp. (P900 million), National Irrigation Administration (P892 million), National Electrification Administration (P509 million) and Philippine National Railways (P349 million). Other top recipients were the Philippine Coconut Authority (P322 million), Philippine Rice Research Institute (P210 million), National Livelihood Development Corp. (P200 million), the National Kidney Transplant Institute (P143 million), the Cultural Center of the Philippines (P128 million), the Philippine Children’s Medical Center (P126 million) and the Philippine Heart Center (P120 million). — Alexis Douglas B. Romero
Source: bworldonline.com
Thursday, July 30, 2009
Housing Finance Bank gets sh50b
THE Government plans to inject sh50b in the Housing Finance Bank. The housing state minister, Michael Werikhe, said the move was aimed at enabling more people to access credit and to promote development.
The boost follows sh40b that the bank had previously received from the Government.
Addressing journalists at the Media Centre in Kampala on Wednesday, Werikhe said over two million people lack housing units.
There is a deficiency of over 100,000 housing units in Kampala, he said, adding that the Government would address the problem.
The minister said they had established a housing policy and would pass other laws that guide the real estate development and housing constructions.
He explained that the Government was lobbying banks to provide mortgages to the public at affordable rates and other long-term loan facilities for development.
Werikhe noted that there were several slams in the country, but a slam upgrading strategy would be launched in October to facilitate the development of proper houses.
He said the construction sector, which is experiencing a boom had played a key role to socio-economic development and has been growing at 13% per annum.
Werikhe said the ministry had computerised the Kampala, Wakiso and Mpigi land registries to check forgeries of titles and would extend the programme countrywide.
He also announced the opening of the 7th annual construction exhibition and seminar at the Lugogo show grounds in Kampala that started yesterday.
The principal housing officer, Dane Khayangayanga, said the money they had received was generated from sales of the ministry’s houses.
Source: newvision.co.ug
The boost follows sh40b that the bank had previously received from the Government.
Addressing journalists at the Media Centre in Kampala on Wednesday, Werikhe said over two million people lack housing units.
There is a deficiency of over 100,000 housing units in Kampala, he said, adding that the Government would address the problem.
The minister said they had established a housing policy and would pass other laws that guide the real estate development and housing constructions.
He explained that the Government was lobbying banks to provide mortgages to the public at affordable rates and other long-term loan facilities for development.
Werikhe noted that there were several slams in the country, but a slam upgrading strategy would be launched in October to facilitate the development of proper houses.
He said the construction sector, which is experiencing a boom had played a key role to socio-economic development and has been growing at 13% per annum.
Werikhe said the ministry had computerised the Kampala, Wakiso and Mpigi land registries to check forgeries of titles and would extend the programme countrywide.
He also announced the opening of the 7th annual construction exhibition and seminar at the Lugogo show grounds in Kampala that started yesterday.
The principal housing officer, Dane Khayangayanga, said the money they had received was generated from sales of the ministry’s houses.
Source: newvision.co.ug
L&T Finance not looking at equity listing for now
L&T Finance Ltd (LTF), a non-banking finance company, is not looking at a listing of its equity shares for now, its Chairman, Mr Y.M. Deosthalee, has said.
The company may go in for a series of non-convertible debenture (NCD) issuances in the coming months after it establishes and creates liquidity in the proposed NCD instrument slated to hit the market in mid-August. Promoted by engineering major Larsen & Toubro in 1994, LTF is a wholly-owned subsidiary of L&T Capital Holdings Ltd (a subsidiary company of L&T).
Two days ago, LTF announced that it proposes to raise at least Rs 500 crore through NCDs, which are to be listed on the National Stock Exchange (NSE).
“This (NCD) is one option we want to make sure is available to us and use it from time to time after creating liquidity in existing NCD instrument through listing. We do understand that investors see a good opportunity in our equity story. But we are not ready (for listing) as yet. We have some homework to do,” Mr Deosthalee said here on Thursday. He was responding to a question on whether LTF intends to list its shares in the coming days. Mr Deosthalee said there were other options for price discovery that could always be explored by LTF.
Although the coupon rate for the proposed NCD instrument was yet to be finalised, Mr Deosthalee indicated that the rate will be higher than the yield of the 10-year G-sec paper. He also said that the NCD will have tenures of 5, 7, or 10 years.
“Our intent is to come up with a long-term instrument for the debt market. Through the NCDs we are also creating additional source of funding for the company. The idea is to make L&T finance a household name. We are also creating a market for NBFCs for retail funding,” he said.
Mr Deosthalee also said that LTF’s decision to come up with an NCD issue did not mean that the company would stop borrowing from banks and mutual funds.
On the possibility of merger with L&T Infrastructure Finance, he said that L&T Finance was not averse to any such move, but added that no decision has been taken on this front.
Asked about interest rates, Mr Deosthalee said that interest rates would remain stable for next few months. “After November or December, there is every likelihood of it going up. Now there is ample liquidity and credit needs of corporates have not gone up. I don’t think interest rates will come down in the near future.”
Source: thehindubusinessline.com
The company may go in for a series of non-convertible debenture (NCD) issuances in the coming months after it establishes and creates liquidity in the proposed NCD instrument slated to hit the market in mid-August. Promoted by engineering major Larsen & Toubro in 1994, LTF is a wholly-owned subsidiary of L&T Capital Holdings Ltd (a subsidiary company of L&T).
Two days ago, LTF announced that it proposes to raise at least Rs 500 crore through NCDs, which are to be listed on the National Stock Exchange (NSE).
“This (NCD) is one option we want to make sure is available to us and use it from time to time after creating liquidity in existing NCD instrument through listing. We do understand that investors see a good opportunity in our equity story. But we are not ready (for listing) as yet. We have some homework to do,” Mr Deosthalee said here on Thursday. He was responding to a question on whether LTF intends to list its shares in the coming days. Mr Deosthalee said there were other options for price discovery that could always be explored by LTF.
Although the coupon rate for the proposed NCD instrument was yet to be finalised, Mr Deosthalee indicated that the rate will be higher than the yield of the 10-year G-sec paper. He also said that the NCD will have tenures of 5, 7, or 10 years.
“Our intent is to come up with a long-term instrument for the debt market. Through the NCDs we are also creating additional source of funding for the company. The idea is to make L&T finance a household name. We are also creating a market for NBFCs for retail funding,” he said.
Mr Deosthalee also said that LTF’s decision to come up with an NCD issue did not mean that the company would stop borrowing from banks and mutual funds.
On the possibility of merger with L&T Infrastructure Finance, he said that L&T Finance was not averse to any such move, but added that no decision has been taken on this front.
Asked about interest rates, Mr Deosthalee said that interest rates would remain stable for next few months. “After November or December, there is every likelihood of it going up. Now there is ample liquidity and credit needs of corporates have not gone up. I don’t think interest rates will come down in the near future.”
Source: thehindubusinessline.com
Finance Committee negotiations stall
After being “on the edge of a deal” earlier this week, the Senate Finance Committee has stalled in its health care negotiations, and Senate Majority Leader Harry Reid is no longer promising that the committee will finish its work before the August recess.
Reid would only say he was “cautiously optimistic” that the committee would vote on a bill before the summer break begins next Friday. But in another blow to President Barack Obama’s attempt to move a bill through Congress by the recess, there were signs Thursday that Senate Democrats would not meet the latest deadline.
A morning negotiation session between the three Republicans and three Democrats did not happen as expected, and no further group meetings have been scheduled – an unusual break from the daily talks that have been ongoing for weeks. Finance Chairman Max Baucus (D-Mont.) spoke individually with senators, but there was confusion among Democratic and Republican staff as all sides tried to figure out where the talks stood.
Republicans, meanwhile, emphasized for the second consecutive day that the bipartisan group was not ready to reach an agreement.
“We're trying to do some really crazy stuff on a really short time frame," Sen. Mike Enzi (R-Wyo.), a member of the Finance committee, said Thursday.
The three Republicans on the Senate Finance Committee are under increasing pressure from their leadership not to cut a deal anytime soon, according to sources, and that message has been delivered frequently in recent weeks.
Baucus wanted to show progress on the negotiations before the August recess, either by announcing a deal or releasing the framework of a bill. He presented the senators Thursday with options for moving the process forward, sources said.
But Republicans decided that they did not want to operate on the Democratic timeline, GOP aides said. Despite the uptick in criticism from Enzi and Sen. Chuck Grassley (R-Iowa), there were no plans for them to leave the negotiations, aides said, but there is a desire to slow down the process.
"The Democrats' rush to produce a bill outline before recess was based more on political needs than policy progress," a GOP aide said, who spoke on the condition of anonymity to discuss strategy.
Grassley told National Public Radio Wednesday morning that the bipartisan group was "on the edge" of a deal by the weekend — an assessment he has walked back since then.
Source: politico.com
Reid would only say he was “cautiously optimistic” that the committee would vote on a bill before the summer break begins next Friday. But in another blow to President Barack Obama’s attempt to move a bill through Congress by the recess, there were signs Thursday that Senate Democrats would not meet the latest deadline.
A morning negotiation session between the three Republicans and three Democrats did not happen as expected, and no further group meetings have been scheduled – an unusual break from the daily talks that have been ongoing for weeks. Finance Chairman Max Baucus (D-Mont.) spoke individually with senators, but there was confusion among Democratic and Republican staff as all sides tried to figure out where the talks stood.
Republicans, meanwhile, emphasized for the second consecutive day that the bipartisan group was not ready to reach an agreement.
“We're trying to do some really crazy stuff on a really short time frame," Sen. Mike Enzi (R-Wyo.), a member of the Finance committee, said Thursday.
The three Republicans on the Senate Finance Committee are under increasing pressure from their leadership not to cut a deal anytime soon, according to sources, and that message has been delivered frequently in recent weeks.
Baucus wanted to show progress on the negotiations before the August recess, either by announcing a deal or releasing the framework of a bill. He presented the senators Thursday with options for moving the process forward, sources said.
But Republicans decided that they did not want to operate on the Democratic timeline, GOP aides said. Despite the uptick in criticism from Enzi and Sen. Chuck Grassley (R-Iowa), there were no plans for them to leave the negotiations, aides said, but there is a desire to slow down the process.
"The Democrats' rush to produce a bill outline before recess was based more on political needs than policy progress," a GOP aide said, who spoke on the condition of anonymity to discuss strategy.
Grassley told National Public Radio Wednesday morning that the bipartisan group was "on the edge" of a deal by the weekend — an assessment he has walked back since then.
Source: politico.com
Tuesday, July 28, 2009
Pearson's shares soar after it beats expectations
Pearson, the international media group, has shrugged off a dire advertising market to post half-year profits ahead of expectations, driven by a robust performance at its international education business.
Shares in Pearson, which owns Penguin books, soared by 73p to 679p yesterday, making it the FTSE 100's biggest riser, after said it expected full-year adjusted earnings per share to be "at or above" the 2008 level of 57.7p a share.
While underlying profit growth at FT Publishing, which includes the Financial Times, tumbled by 40 per cent, the group's education business – its main profit driver – traded ahead of expectations, delivering 5 per cent sales growth at constant currency over the half-year.
The group has substantially shifted its reliance away from advertising to focus on education and services, such as professional examination testing, and Pearson's chief executive, Dame Marjorie Scardino, struck up upbeat tone yesterday. She said: "The transformation we've been pursuing for a decade – from 'publishing' company to content, technology and services company – is paying off." She added: "Market conditions are tough and may stay that way; but we are confident that we will perform well this year and next."
For the half-year to the end of June, Pearson's pre-tax profits rose by 13 per cent to £62m. The group makes the bulk of its profits in the second half of the year, driven by spending on educational materials, as schools and universities start their new year. Over the six-month period, the group's international education division delivered underlying sales growth up 10 per cent to £446m.
Robin Freestone, finance director at Pearson, said that in North America the group was benefiting from the tough economy, particularly in the US, which is pushing more people back to college and university. North American education division grew sales by 1 per cent at constant exchange rates to £943m. Mr Freestone cited the "strength of our higher education business of selling books and digital products into US universities and colleges. You are seeing more students of 18 years old going to, or back to, college because of the tough job market."
Alex DeGroote, analyst at Panmure Gordon, said: "Ordinarily, H2 performance is most meaningful to full-year outcome due to the phasing of the education school year. Against a tough backdrop, however, Pearson talks of a 'stronger business performance offsetting negative currency impact'."
However, in the UK, underlying sales at FT Publishing, which includes the FT newspaper, tumbled by 40 per cent to £14m, hit by the fall in advertising in the financial and corporate sectors.
Mr Freestone said the global advertising market was down by between 20 and 40 per cent. He added: "The market is well down, but we are doing better than the market decline. Print advertising is bad, but online advertising is strong."
Pearson's group revenues were flat at £2.4bn, but adjusted operating profit jumped by 21 per cent to £158m. Pearson said it did not expect the advertising cycle to turn "any time soon", but said it expected its products to remain in demand and its subscription businesses to remain resilient.
The group has benefited from raising the cover price of the FT from £1 to £2 over the past two years. But the FT's circulation globally fell by 6 per cent to 421,429 over the half-year, as the financial crisis took its toll.
Source: independent.co.uk
Shares in Pearson, which owns Penguin books, soared by 73p to 679p yesterday, making it the FTSE 100's biggest riser, after said it expected full-year adjusted earnings per share to be "at or above" the 2008 level of 57.7p a share.
While underlying profit growth at FT Publishing, which includes the Financial Times, tumbled by 40 per cent, the group's education business – its main profit driver – traded ahead of expectations, delivering 5 per cent sales growth at constant currency over the half-year.
The group has substantially shifted its reliance away from advertising to focus on education and services, such as professional examination testing, and Pearson's chief executive, Dame Marjorie Scardino, struck up upbeat tone yesterday. She said: "The transformation we've been pursuing for a decade – from 'publishing' company to content, technology and services company – is paying off." She added: "Market conditions are tough and may stay that way; but we are confident that we will perform well this year and next."
For the half-year to the end of June, Pearson's pre-tax profits rose by 13 per cent to £62m. The group makes the bulk of its profits in the second half of the year, driven by spending on educational materials, as schools and universities start their new year. Over the six-month period, the group's international education division delivered underlying sales growth up 10 per cent to £446m.
Robin Freestone, finance director at Pearson, said that in North America the group was benefiting from the tough economy, particularly in the US, which is pushing more people back to college and university. North American education division grew sales by 1 per cent at constant exchange rates to £943m. Mr Freestone cited the "strength of our higher education business of selling books and digital products into US universities and colleges. You are seeing more students of 18 years old going to, or back to, college because of the tough job market."
Alex DeGroote, analyst at Panmure Gordon, said: "Ordinarily, H2 performance is most meaningful to full-year outcome due to the phasing of the education school year. Against a tough backdrop, however, Pearson talks of a 'stronger business performance offsetting negative currency impact'."
However, in the UK, underlying sales at FT Publishing, which includes the FT newspaper, tumbled by 40 per cent to £14m, hit by the fall in advertising in the financial and corporate sectors.
Mr Freestone said the global advertising market was down by between 20 and 40 per cent. He added: "The market is well down, but we are doing better than the market decline. Print advertising is bad, but online advertising is strong."
Pearson's group revenues were flat at £2.4bn, but adjusted operating profit jumped by 21 per cent to £158m. Pearson said it did not expect the advertising cycle to turn "any time soon", but said it expected its products to remain in demand and its subscription businesses to remain resilient.
The group has benefited from raising the cover price of the FT from £1 to £2 over the past two years. But the FT's circulation globally fell by 6 per cent to 421,429 over the half-year, as the financial crisis took its toll.
Source: independent.co.uk
Looking to use online tools to save? There are several with which you might click
Technology has revolutionized the way many Americans manage money. With a click of a mouse or right from our smartphones, we can get a complete picture of our finances and recommendations for our money.
The sheer multitude of choices, however, can be overwhelming. I did a Google search for “personal finance software’’ and got 25 million results; for personal finance blogs, 50 million.
And no software, no matter how sophisticated, is a substitute for a qualified professional adviser. Fraud and incompetence lurk online, and many “educational’’ sites are simply trying to sell you something.
With those caveats in mind, it can be fun and enlightening to search for innovative financial websites and tools.
Worthy of note is www.mint.com, a free and secure site where you can set up an anonymous virtual account by entering brief information about your bank, investment, and credit card accounts, plus any home loans.
The site can be quite useful to people who are technology-oriented and have little time or disposition to keep track of their money.
Mint.com connects with more than 7,000 financial institutions, so chances are it includes yours. It can pull up your complete financial information in one place. You get weekly e-mails summarizing your spending, savings, and investments, plus alerts if, for example, a credit card bill is due or your bank balance is low.
A survey found 90 percent of Mint.com users have changed their spending patterns based on something they learned from the site.
Also highly useful is www.MoneyAisle.com, another free, automated site where more than 100 federally insured banks compete for your money. You enter the amount you have available for a certificate of deposit or high-yield savings account, and banks bid to offer the highest interest rate. You are not obligated to accept any bid.
Another site that helps people save and earn competitive rates is www.SmartyPig.com, which I can describe as a combined piggy bank/federally insured high-yielding online savings account. When you open an account, you establish a personal savings goal. You say how much money you want to save by when, and SmartyPig suggests an amount to deposit each month, automatically deducted from a checking or other account. To keep your SmartyPig account open, you must make this monthly contribution until you reach your goal.
You can make additional contributions at any time and invite family and friends to help you save by going online and adding to your account gifts for birthdays or other occasions. And you can place your SmartyPig widget on your Facebook or MySpace page to give all friends the opportunity to cheer you on toward your goal - and to contribute.
Source: boston.com
The sheer multitude of choices, however, can be overwhelming. I did a Google search for “personal finance software’’ and got 25 million results; for personal finance blogs, 50 million.
And no software, no matter how sophisticated, is a substitute for a qualified professional adviser. Fraud and incompetence lurk online, and many “educational’’ sites are simply trying to sell you something.
With those caveats in mind, it can be fun and enlightening to search for innovative financial websites and tools.
Worthy of note is www.mint.com, a free and secure site where you can set up an anonymous virtual account by entering brief information about your bank, investment, and credit card accounts, plus any home loans.
The site can be quite useful to people who are technology-oriented and have little time or disposition to keep track of their money.
Mint.com connects with more than 7,000 financial institutions, so chances are it includes yours. It can pull up your complete financial information in one place. You get weekly e-mails summarizing your spending, savings, and investments, plus alerts if, for example, a credit card bill is due or your bank balance is low.
A survey found 90 percent of Mint.com users have changed their spending patterns based on something they learned from the site.
Also highly useful is www.MoneyAisle.com, another free, automated site where more than 100 federally insured banks compete for your money. You enter the amount you have available for a certificate of deposit or high-yield savings account, and banks bid to offer the highest interest rate. You are not obligated to accept any bid.
Another site that helps people save and earn competitive rates is www.SmartyPig.com, which I can describe as a combined piggy bank/federally insured high-yielding online savings account. When you open an account, you establish a personal savings goal. You say how much money you want to save by when, and SmartyPig suggests an amount to deposit each month, automatically deducted from a checking or other account. To keep your SmartyPig account open, you must make this monthly contribution until you reach your goal.
You can make additional contributions at any time and invite family and friends to help you save by going online and adding to your account gifts for birthdays or other occasions. And you can place your SmartyPig widget on your Facebook or MySpace page to give all friends the opportunity to cheer you on toward your goal - and to contribute.
Source: boston.com
Wells Fargo Introduces Online Same Day Payments
Wells Fargo & Company (NYSE:WFC) today announced the nationwide availability of its newest online bill pay feature, which allows customers to make "just in time” online bill payments to merchants, such as utility, auto finance and mortgage companies. The service helps customers avoid missing payments or making late payments.
According to Javelin Strategy & Research, nearly three out of four consumers initiated expedited payments last year and use is expected to continue to rise in the next five years.
"The launch of same day payments further highlights Wells Fargo’s commitment to listening to our customers and continued leadership and innovation in the online space,” said Adam Vancini, senior vice president of Wells Fargo Internet Services Group. "Our customers continue to discover the convenience and speed of paying bills electronically; the expedited payments service is an additional online bill pay option.”
Currently Wells Fargo offers same day payment options for a fee with a select group of payees; additional payees continue to be added on an ongoing basis. Wells Fargo teamed up with Western Union for the service.
"Western Union is pleased to join an industry leader like Wells Fargo to provide expedited bill payment,” said Ranjana Clark, executive vice president, Global Payments and Global Strategy. "Through its Global Payment Services division, Western Union is an expert in connecting consumers with billers. We understand that under current economic circumstances, consumers are managing their budgets more closely than ever and are looking for options that allow them to pay bills quickly, conveniently and without incurring costly late charges.”
Wells Fargo integrates customers’ bill pay data with optional online tools, such as its online budgeting tool My Spending Report with Budget Watch and archiving service Wells Fargo vSafeSM.
Wells Fargo’s bill pay service presents bills online for nearly 460 merchants, lenders and other billers.
Wells Fargo’s online and mobile bill pay alerts give customers more control by notifying them when bills arrive, if a bill didn’t arrive, when a bill is due, when a payment is sent, among other notifications.
With Wells Fargo Mobile, bill pay customers can schedule payments and pay bills with their mobile device while waiting in line, on a break, or anywhere else they want to access the mobile web or WF.com.
About Wells Fargo Online & Mobile Banking
Wells Fargo is a leading provider of online and mobile financial services for individual consumers, small and middle market businesses and large corporations with a full range of banking, money movement, investing, asset management and other financial and risk management products. Wells Fargo launched its personal computer banking service in 1989 and was the first bank to offer Internet banking through wellsfargo.com in May 1995. Since January 2009, Wells Fargo has been named the No. 1 Consumer Internet Bank in the United States by Global Finance Magazine, ranked the No. 1 website out of 68 leading U.S. corporations' websites for technology innovation by the Brookings Institution and was awarded two Monarch Innovation Awards by Barlow Research for online services for small business, including Foreign Exchange Online and My Spending Report with Budget Watch.
About Wells Fargo & Company
Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.
Source: newsticker.welt.de
According to Javelin Strategy & Research, nearly three out of four consumers initiated expedited payments last year and use is expected to continue to rise in the next five years.
"The launch of same day payments further highlights Wells Fargo’s commitment to listening to our customers and continued leadership and innovation in the online space,” said Adam Vancini, senior vice president of Wells Fargo Internet Services Group. "Our customers continue to discover the convenience and speed of paying bills electronically; the expedited payments service is an additional online bill pay option.”
Currently Wells Fargo offers same day payment options for a fee with a select group of payees; additional payees continue to be added on an ongoing basis. Wells Fargo teamed up with Western Union for the service.
"Western Union is pleased to join an industry leader like Wells Fargo to provide expedited bill payment,” said Ranjana Clark, executive vice president, Global Payments and Global Strategy. "Through its Global Payment Services division, Western Union is an expert in connecting consumers with billers. We understand that under current economic circumstances, consumers are managing their budgets more closely than ever and are looking for options that allow them to pay bills quickly, conveniently and without incurring costly late charges.”
Wells Fargo integrates customers’ bill pay data with optional online tools, such as its online budgeting tool My Spending Report with Budget Watch and archiving service Wells Fargo vSafeSM.
Wells Fargo’s bill pay service presents bills online for nearly 460 merchants, lenders and other billers.
Wells Fargo’s online and mobile bill pay alerts give customers more control by notifying them when bills arrive, if a bill didn’t arrive, when a bill is due, when a payment is sent, among other notifications.
With Wells Fargo Mobile, bill pay customers can schedule payments and pay bills with their mobile device while waiting in line, on a break, or anywhere else they want to access the mobile web or WF.com.
About Wells Fargo Online & Mobile Banking
Wells Fargo is a leading provider of online and mobile financial services for individual consumers, small and middle market businesses and large corporations with a full range of banking, money movement, investing, asset management and other financial and risk management products. Wells Fargo launched its personal computer banking service in 1989 and was the first bank to offer Internet banking through wellsfargo.com in May 1995. Since January 2009, Wells Fargo has been named the No. 1 Consumer Internet Bank in the United States by Global Finance Magazine, ranked the No. 1 website out of 68 leading U.S. corporations' websites for technology innovation by the Brookings Institution and was awarded two Monarch Innovation Awards by Barlow Research for online services for small business, including Foreign Exchange Online and My Spending Report with Budget Watch.
About Wells Fargo & Company
Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.
Source: newsticker.welt.de
Online Car Loans Available Through Low Car Loan Interest Rate
We all love to shop online as its ease because it’s easy and simple to buy no matter whatever the thing is, including big purchases such as automobiles. Simply going to EBay Automotive will provide you thousands of choices, which offers you cheap car loans with low interest rates. Knowing of the average auto loan rates in the USA make certain that you can be no way be covered in debt though trying to keep up by the rates of interest on your car loan. Evaluating car loan rates would most certainly give you the idea while dealing with car loans.
Out here in the “actual world”, there are lot of credit organizations such as auto finance companies, banks, and car lenders where you can apply for a car loan. Searching for the best car loan and comparing different interest rates means you need to spend a lot of time. And it’s too not easy to go from one bank to the next in search of low interest car loan. It takes a lot of time to evaluate the various offers and alternatives “out there”. The only way out is to apply for an online car loan.
Online Car Loans made simple
If you’re looking for online car loans, the procedure is quite easy and it saves you money as well as time. In addition, you can compare the rate of interest of different banks as well as finance companies. It’s possible to save some money by applying for “free applications”. Normally, online auto loan rates are lower as compared to the loan rates offered by traditional car dealers or finance companies. Online car loans are approved very fast. Some loans are approved within an hour. While applying for online auto loans you won’t find any hidden fees, any bad credit frauds, and penalties. Once your online auto loan is approved, you will receive a check from the loan company. It’s like, you apply for a car loan today and can drive off in your brand new car tomorrow.
Source: nurido.at
Out here in the “actual world”, there are lot of credit organizations such as auto finance companies, banks, and car lenders where you can apply for a car loan. Searching for the best car loan and comparing different interest rates means you need to spend a lot of time. And it’s too not easy to go from one bank to the next in search of low interest car loan. It takes a lot of time to evaluate the various offers and alternatives “out there”. The only way out is to apply for an online car loan.
Online Car Loans made simple
If you’re looking for online car loans, the procedure is quite easy and it saves you money as well as time. In addition, you can compare the rate of interest of different banks as well as finance companies. It’s possible to save some money by applying for “free applications”. Normally, online auto loan rates are lower as compared to the loan rates offered by traditional car dealers or finance companies. Online car loans are approved very fast. Some loans are approved within an hour. While applying for online auto loans you won’t find any hidden fees, any bad credit frauds, and penalties. Once your online auto loan is approved, you will receive a check from the loan company. It’s like, you apply for a car loan today and can drive off in your brand new car tomorrow.
Source: nurido.at
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