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Sunday, April 26, 2009

IMF undecided over global recovery strategy

Sun, 26 Apr 2009 18:03:07 GMT | PressTV

The International Monetary Fund has failed to provide the blueprint for pushing global finance and governance toward healthy conditions.

There appears to be a deepening disagreement among finance ministers attending the IMF spring meeting on Sunday over how and when to abandon recession-busting policies by the world financial body.

The IMF's managing director, Dominique Strauss-Kahn

Ministers were also unable to finalize a USD 500b boost to the IMF's resources put forward earlier this month by the Group of 20 (G20) Summit in London. Dominique Strauss-Kahn, the IMF's managing director, said there were already differences among members over 'an exit strategy'. Strauss-Kahn said there was consensus about the need to borrow more during the crisis: "Some of us, including the IMF, are arguing that the stimulus is necessary, but at the same time, you need to have a view about what is going to happen in three years' or four years' time, and prepare the exit strategy from the stimulus.

Some blame the disagreement among finance ministers on the restructuring plan the United States has proposed for the IMF. The Europeans are especially resistant to such radical changes. Rejecting the call by the US treasury secretary Timothy Geithner to cut the number of IMF seats from 24 to 20, by 2012, Belgian finance minister Didier Reynders endorsed the current number of seats. "I think that for the moment the representation around the table is attractive.

The European countries are having to finance the Fund very strongly so we have to take into account the size of each country's participation in the Fund," Reynders noted.
The IMF warned this week that the world economy would contract this year for the first time since the World War II.

Tuesday, April 14, 2009

China’s stimulus package is hitting home

BEIJING, April 14  –  Wall Street Journal

China’s $585 billion government stimulus programme appears to be kicking in, new data suggest, raising the chances that the world’s third-largest economy may be turning a corner.

Chinese demand for raw materials, hard hit in past months, is showing signs of recovery. Crude-oil imports hit a one-year high in March, the government reported Friday. Steel mills in March imported record quantities of their key raw material, iron ore, in anticipation of a pickup in demand in coming months.

Banks have extended a stunning 4.58 trillion yuan, or about $670 billion, of new loans in the first three months of the year, according to data published Saturday – nearly as much as the 4.9 trillion yuan issued in all of 2008. And the stock market, which had been battered, is on the rise, with the Shanghai composite stock index gaining 2.8 per cent on Monday, pushing it to a 38 per cent increase for the year to date.

The signs augur well for the global economy. China has been one of the world’s most voracious consumers of raw materials. While its aggressive spending plan reflects the power of its state-dominated economy, there are signs that its thrifty consumers are starting to spend more.

Car sales hit a monthly record in March, according to figures issued Thursday, marking the third consecutive monthly rise. Housing sales in major cities have also picked up, with lower prices attracting buyers.

The optimistic outlook has spread to businesses. The National Bureau of Statistics said last week that its survey of managers’ confidence rose in the first quarter after plunging in the final quarter of 2008.

Overall, it appears that the state’s push has helped keep China from slipping into a downward spiral in which poor economic conditions and declining confidence feed off each other. The size of China’s stimulus, announced in November, gets some credit for that: Along with the US plan, it is one of the largest in the world. But the vestiges of China’s command economy have also proved useful.

“China is unusual in that it has this incredible capacity to mobilise all its institutions,” said Vikram Nehru, the World Bank’s chief economist for Asia. The government’s ability to direct bank lending and investment spending has meant its stimulus efforts have worked faster than many initially expected.

“There is now a growing degree of confidence that the stimulus package is having an impact,” he added.

Beijing’s programme still has considerable work to do, with new data also charting continued contraction in the country’s export sector. The global slump in demand has battered exporters, leading to millions of lost jobs.

Exports fell 17.1 per cent in March from a year earlier, after a 25.7 per cent decline in February, official data showed Friday, a reflection of China’s vulnerability to weak economies in the US and other export markets. That left a trade surplus of $18.56 billion for the month, far higher than February’s figure but less than half the levels recorded late last year.

That is also being reflected in slower accumulation of foreign exchange reserves. New data from the central bank, released Saturday, showed the dollar value of reserves fell in January and February before picking up in March. They ended the quarter at $1.9537 trillion, compared with $1.946 trillion at the end of December.

Analysts say swings in the currency market also affected the headline figure for the reserves, which are held in multiple currencies but reported in US dollars.

But the government is pushing cash through the economy, and the state investment programme is driving new infrastructure projects.

Funds budgeted for investments that started in the first two months of 2009 surged 88 per cent from a year earlier.

While improvement in China alone isn’t enough to reverse the global economic decline, it is still welcome news, given that China is one of the few major nations that is expanding.

Like China, the US government also has launched a significant fiscal stimulus, of $787 billion, the impact of which is only now beginning to show up in the economy as tax cuts swell worker paychecks.

US consumers – their retirement accounts and home values depressed – are showing a reluctance to spend as readily as they usually do. Car sales in the US, in contrast to the records being set in China, are extremely low. Spending on infrastructure is taking awhile to kick in, despite talk of “shovel-ready projects.”

Weaknesses in US banks and, even more, the near-paralysis of the important market for securitised credit, remain major impediments to renewed economic growth.

China needs support from demand in the rest of the world to sustain a recovery. Without that, it is still unclear whether China’s economic engine, having been jump-started by government investment, can keep running in a higher gear.

Export manufacturing remains the primary employer of China’s 140 million rural migrant workers. About 20 million of them are unemployed, and if the export crunch continues for several more months, that could exhaust their meagre savings.

Key to the effectiveness of China’s stimulus plan so far has been a race by local governments to spend the money.

After November’s stimulus programme gave them the go-ahead, authorities in the northern city of Harbin started expanding their port in March. The provincial government is trying to launch even more ambitious port works by October.

“Thanks to the stimulus plan, our proposed projects get a lot of support from the central government,” one official in Harbin said.

In central China, state-owned Henan Coal & Chemical Industry Group started work on 15 expansion projects on April 1, declaring its planned spending of 22.4 billion yuan a response to the government’s call to maintain 8 per cent growth this year.

That kind of reaction is partly why many analysts expect first-quarter economic data – to be released this week – to show activity picking up relative to the fourth quarter of 2008, even if headline growth rates remain very low by Chinese standards. The World Bank expects China’s economy to expand 6.5 per cent this year.

“I think it’s fair to say the economy has bottomed. But bottoming is not recovery,” said Ben Simpfendorfer, an economist at Royal Bank of Scotland.

Among the reasons for economists’ caution before calling a recovery is that China has had at least one false dawn in recent months. In early anticipation of stimulus-related orders, domestic steelmakers started ramping up production in December and January, helping to push up prices and freight rates.

But the anticipated demand didn’t materialise, and steel prices have been mostly falling since February.

The stimulus gets credit, at least, for stemming panic. Peter Li, chief financial officer of HLS Systems International Inc., a Beijing-based maker of industrial automation products, says he is getting orders from railroad projects as part of the stimulus plan.

“People are not in as much of a rush to sell inventory. They don’t expect prices to go down,” Li said. “The biggest impact of the stimulus plan so far is really on the psychological level.” 

Sunday, April 12, 2009

Credit Suisse starts shutting US offshore accounts

Reuters pic

ZURICH, April 12 — Reuters

Swiss bank Credit Suisse has started closing down the offshore accounts of US clients who have not declared the money to the US authorities, a newspaper reported today.

The Sonntagszeitung newspaper said the bank had about 2,500-5,000 US clients with undeclared offshore accounts worth about 3 billion Swiss francs (RM27.9 billion), without citing its sources.

The paper said Credit Suisse had started parting company with its US offshore clients, giving them the option of moving their accounts to its CS Private Advisors subsidiary, which would report the accounts to the US tax authorities, or writing them a check.

It quoted an unnamed Credit Suisse manager as saying the bank was only applying the new “zero tolerance” policy in individual cases for now but was considering a more general withdrawal from the US offshore business.

Credit Suisse was not immediately available for comment on the article. Sonntagszeitung quoted a spokesman as declining to confirm the report, but noting the tougher approach of foreign authorities on offshore wealth management in recent times.

“CS sticks to all valid rules and regulations in various countries,” a spokesman told the newspaper.

The move comes after rival UBS said last year it would stop offering offshore services to US citizens after US authorities alleged that the Swiss bank has helped rich Americans hide money away from the taxman in Swiss accounts.

A newspaper reported earlier this year that Credit Suisse was writing to its US clients holding Swiss accounts asking them to sign a form that would reveal them to US tax authorities.

Thursday, April 9, 2009

Indonesia 2008- Bali Island, Gili and Java Island

Trip in Indonesia .
-Bali Island
-Gili Island
-Lombok Island
-Java Island in the city Yogyakarta also name Jogjakarta

ING: Ringgit to decline 4.5% after by-elections

April 08, 2009 - The Ringgit may weaken by as much as 4.5 percent after Pakatan Rakyat won two out of three by-elections yesterday night, according the ING Group.

Sunday, April 5, 2009

Too big to fail? Nationalize

April 05, 2009 - Leo Panitch: Can G20 avert crisis Pt2

35,000 UK firms to go bankrupt in 2009

Sun, 05 Apr 2009 05:28:54 GMT | PressTV

At least 35,000 firms and 125,000 people are expected to go bankrupt in Britain this year, an insolvency expert group has predicted.

Begbies Traynor, a UK-based Corporate Rescue, Restructuring and Personal Insolvency company, has forecast that 35,000 firms -- 95 firms a day -- will go bankrupt this year, the Sunday Times reported.

Nick Hood at Begbies said the number could rise to 40,000 by the end of the year.

"The rate is accelerating - on a bad day we could see 20 businesses going under a day," he told the paper.

The figure would be 18 percent higher than the previous peak during the 1991 recession in Britain.

"It feels much worse than the 1990s - there are much fewer options to rescue businesses today. In the past you could go to another bank or small-business owners could re-mortgage and use equity from their homes - today that is next to impossible," Hood added.

British Finance Minister Alistair Darling told the Sunday Times that the UK was far deeper in recession than the government expected and that the country was unlikely to return to economic growth until the end of the year.

The International Monetary Fund (IMF) predicted in January that British gross domestic product (GDP) will contract 2.8 percent in 2009.

Begbies also predicted that as many as 125,000 people will also go bankrupt in 2009 -- equivalent to 342 people a day. The figure amounts to the highest number of personal bankruptcies since 2006, when 107,000 people went bankrupt.

Consultancy firm Hay Group also predicted on Sunday that more than 600,000 people will lose their jobs in Britain this year.

Based on a survey of 140 of the top 1,000 firms, the group said nine in ten firms plan operational cuts in 2009-10 and that a fifth of the companies plan a big restructuring of their businesses in response to the recession.

Unemployment in the UK rose to above two million in the three months ending January for the first time since 1997 as a result of the global financial crisis taking its toll on the country's economy.

UK ecomically worst in Europe

The devalued Prime Minister of a devalued Government:
Daniel Hannan MEP: European Parliament speech of 26/03/09
Daniel Hannan is a Conservative MEP for the South East of England and author of The Plan: Twelve Months to Renew Britain.

Can G20 avert the crisis?

Leo Panitch: G20 trying to patch up the 'old world order'

The financial crisis and the real economy

Leo Panitch: The death of the US trade union and Great Society have left the real economy vulnerable

Obama should save the banks, not the bankers Pt.4

Tom Ferguson: Obama's plan "recipe for disaster, if the US reflates and the rest of the world doesn't

G20 leaving 'sheep' in 'wolf' care, says Morales

Sat, 04 Apr 2009 00:40:04 GMT | PressTV

Bolivian President Evo Morales

Bolivian President Evo Morales has slammed the G20 summit's decision to inject USD 750 billion to the International Monetary Fund (IMF).

Morales said that countries at the root of the crisis cannot solve the problem, or in his words: "the wolf cannot keep the flock," a reference to the injection of more than 1,000 billion dollars through the IMF and the World Bank to fight the global crisis.

"It's like giving money to the wolves, or to entrust the care of the flock: the wolf is not going to keep the sheep, it will devour them," Morales told the foreign press in La Paz, commenting on the decisions G20 in London to tackle the crisis.

"It is not possible that the countries of capitalism, which has caused the financial crisis, are now the same from where comes the solution," said the Socialist leader, adding that few countries are at the origin of this financial crisis, but '180 (Countries) must cope'.

"As long as we do not touch the structural points of capitalism, it will be difficult to resolve the financial crisis," said Morales about the G20. "If we want to solve economic problems, we must first end the free market, then the speculative capitalism."

Morales remarks echoed those of the Venezuelan President Hugo Chavez, who said earlier in the day that the G20 nations' plan to spend more than a trillion dollars would strengthen "one of the great guilty ones behind the crisis: the International Monetary Fund."

"It's impossible that capitalism can regulate the monster that is the world financial system... Capitalism needs to go down. It has to end," Chavez said during a visit to Tehran on Friday.

Bolivia is experiencing the beginning of economic deceleration with 5 percent growth at best in 2009, against 6.5 percent in 2008.

Friday, April 3, 2009

US jobless rate jumps to 25-year high

Fri, 03 Apr 2009 16:12:31 GMT

Over 5.1 million jobs have been lost since the beginning of recession in 2008

Unemployment rate in the US has reached its highest level in 25 years, after 663,000 jobs were lost in March, official figures show.

The Bureau of Labor Statistics reported on Friday that the jobless rate spiked to 8.5 percent in March from February's figure of 8.1%.

The figure, however, is less than the 741,000 jobs lost in January -- which now stands as the biggest monthly drop in 59 years.

This means that 5.1 million jobs have now been lost since the beginning of the financial downturn in 2008, over 2 million of them in the past three months alone.

The unemployment rate roughly lined up with economists' forecasts of a loss of 658,000 jobs in March, according to a survey by

The job losses were felt throughout all areas of the economy including the manufacturing and construction sectors, business and professional services industries as well as the government.

Employers have also cut back the number of working hours, as the average hourly work week fell to 33.2 hours, lowest in record since 1964.

The number of people forced to work part-time, but who would prefer to get a full-time job, also climbed 423,000 to nine million.

The sharp and continuing increase in unemployment suggests that job losses are likely to keep increasing for the rest of this year and into 2010.

G20 split on financial downturn

April 03, 2009 - Leaders of the 20 world's most powerful countries meet in London to find a way out of the current global financial crisis and help prevent future crises. Will the G20 reach a unified stand on how to kickstart the ailing global economy?


November 24, 2007 - Travel to the only city in the world that straddles two continents.

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