If your credit card debt is escalating rapidly everyday and you're unsure how to pay-off your debts, then it's the perfect time to get a credit card debt management program. These programs offer you easy to implement plans which can be implemented by anybody to eliminate credit card debt and start to accumulate some money.
The following are the three methods by which you can pay-off your credit card debts -
1. Debt snowball method: It is the method where the debtor pays off the accounts with the smaller balances first proceeding to the larger ones later. The basic steps of this method are -
• Commit to pay the minimum balance on every debt. Analyze how much more you can pay to the smallest debt.
• Pay the smallest debt alongwith the extra amount to the smallest debt until it is paid off and proceed to the second smallest debt.
• Add the payment of your last debt alongwith the minimum payment of this debt and pay it to the second debt.
• Continue this process untill all your debts are paid off.
2. Debt avalanche method: It is the method where the debtor pays off the accounts with the
highest interest rates proceeding to the lowest rates. The basic steps of this method are -
• Commit to pay the minimum balance on every debt. If you've an emergency fund, try to add all your unused income after paying your expenses to this debt.
• Continue paying this way till the debt is paid off and then proceed to the next highest debt.
• Continue this process untill all your debts are paid off.
3. Debt snowflake method: This method is similar to the Snowball method. The only
addition is that you need to save small earnings and make a little extra payment, after
making the minimum payment to each account. You can earn extra money by doing extra
jobs, online business, etc.
In order to get out of debt, you can follow any of these three credit card debt management program mentioned above, after choosing the one that will suit you the best.
Thursday, April 29, 2010
Saturday, December 12, 2009
EU Pledges $15 Billion for Climate Change
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
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
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
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