"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
Monday, November 30, 2009
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
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