Archive for the ‘crisis’ Category

Thailand’s Polical Turmoil Continues; King Fails To Appear

December 4, 2008

Thailand‘s revered king on Thursday failed to deliver his traditional birthday speech, dashing Thai hopes that the address would help resolve the country’s political paralysis and unify a divided nation.

King Bhumibol Adulyadej, who turns 81 on Friday, was unable to deliver the speech “because he was a little sick,” his son, Crown Prince Vajiralongkorn, told dignitaries gathered at the Dusit Palace to hear the king. The comments were broadcast live on radio.

By VIJAY JOSHI and AMBIKA AHUJA, Associated Press Writers

Thailand's King Bhumibol Adulyadaj  reviews the Royal Guards ... 
Thailand’s King Bhumibol Adulyadaj reviews the Royal Guards at the Royal Plaza Tuesday, Dec. 2, 2008, in Bangkok, Thailand. Thailand’s ailing king failed to deliver his traditional speech to the nation Thursday Dec. 4, 2008 on the eve of his 81st birthday because of ill health — a stunning development that is likely to deepen the country’s political paralysis.(AP Photo/David Longstreath)

While the king is known to be unwell, he was not expected to miss such an important occasion. The news came as a shock in this Southeast Asian nation of 63 million people, who revere the king as a selfless humanitarian. Many people wear yellow, the king’s color, once a week as a mark of respect and affection for the beloved monarch.

“The king has said to thank (you) for the wishes given out of loyalty. He wants to return the good wishes. He wants everyone to have strong mental and physical health to perform their duties for the public,” Vajiralongkorn said.

Many Thais were eagerly awaiting the king’s speech, hoping to receive guidance on how Thailand can resolve its political crisis triggered by an anti-government group whose members seized two main airports for a week.

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Asia stocks lackluster, China stimulus hopes wane

November 11, 2008

Most Asian stock markets retreated Tuesday after weakness on Wall Street, as concerns about the global economy sapped enthusiasm over China‘s nearly $600 billion package to boost growth.

Tokyo’s Nikkei 225 index was down 272.13 points, or 3 percent, to 8,809.30 as the yen strengthened against the dollar. In Hong Kong, the Hang Seng benchmark was 2.2 percent lower at 14,407.45 points.

Australia’s benchmark fell 3.6 percent. Markets in Singapore, South Korea and India also declined.

The Shanghai Composite index, up earlier in the session, fell 1.5 percent despite figures showing the country’s inflation rate eased further last month.


In this Feb. 16, 2008 file photo provided by China's Xinhua ...
In this Feb. 16, 2008 file photo provided by China’s Xinhua News Agency, workers prepare for construction of a new project Shanghai Center at the building site in Pudong District of Shanghai, east China. China’s economy is still growing at an enviable rate: It expanded 9 percent in the quarter ending Sept. 30, 2008. But that was the slowest in 5 years and down from 11.9 percent last year. Forecasts for next year range as low as 7.5 percent.(AP Photo/Xinhua, Niu Yixin, File)

Regional equities were up sharply Monday on hopes that China’s 4 trillion yuan ($586 billion) stimulus package, announced Sunday, would keep its economic growth from falling too fast and help fuel demand for exports from other Asian countries.

But the rally proved short lived amid fresh evidence of more economic troubles.

In the U.S., major electronics retailer Circuit City Stores Inc. filed for bankruptcy protection. Investors also speculated about the fate of General Motors Corp., Chrysler and Ford Motor Co. after the automakers met with lawmakers last week in hopes of securing financial help.

In Asia, Japan’s government reported the country’s current account surplus in September plunged almost 50 percent from a year earlier as export growth waned in the face of a global slowdown.

“It’s what I’d term a ‘fally:’ a rally based on fallacy,” Kirby Daley, senior strategist at Newedge Group in Hong Kong, said of Monday’s advance. “The fallacy being that the China stimulus package is the answer to all of Asia’s problems. While it will help and is a step in the right direction, it will not fully insulate Asia from feeling the impact of the global downturn.”

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Happy hours and cheap alcohol should be banned, say Brit MPs

November 10, 2008

Alcohol and drug use have become more than a problem in Britain.  Some say there is now a crisis….

By Richard Edwards, Crime Correspondent
The Telegraph, London
A damning Home Affairs Select Committee report said that alcohol-related disorder was placing a “heavy burden” on police and diverting officers from fighting serious crime.

Police chiefs blame the Government’s decision to relax licensing laws, drinks promotions in pubs and clubs, and the cheap availability of alcohol in supermarkets and off licences, it said.

The report also criticised Whitehall-imposed targets for distorting police priorities, leading them to focus on “trivial misdemeanours” and meaning that forces across the country were “hitting their targets but missing the point”.

Opposition leaders said that the findings exposed the Government’s “reckless” approach to 24-hour drinking laws and a top down target-driven agenda that has proved “an expensive disaster”.

The report, “Policing in the 21st century”, unveiled the strain that alcohol-related violence had put on police resources.

In Devon and Cornwall, Chief Constable Stephen Otter said there has been a “fairly significant increase in the proportion of violent crime where we can be absolutely sure there is an alcohol-related aspect” in the past four years.

The committee called for a ban on selling alcohol as a loss leader and the setting of a minimum price for all drinks.

Chairman Keith Vaz said: “We cannot have on one hand a world of alcohol promotions for profit that fuels surges of crime and disorder, and on the other the police diverting all their resources to cope with it.”

The report cited research that found 45 per cent of victims of violence described their assailant as being under the influence of alcohol.

There has also been an increase in trouble in suburban areas, because people are drinking locally at weekends, where pubs now stay open later, rather than paying the cab fare and entry fees of pubs in town centres.

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Credit Rating Downgrade Likely for Pakistan, Sri Lanka, Vietnam in Crisis

November 10, 2008

Pakistan, Sri Lanka and Vietnam are the Asian countries most at risk of a credit-rating downgrade as the global economy heads into a recession and funds become scarcer, said Standard & Poor’s.

“Pakistan is the weakest, followed by Sri Lanka, then Vietnam,” said Elena Okorotchenko, head of Asian sovereign ratings at S&P. “Pakistan faces severe pressure from the external side, the fiscal side, the monetary side, economic growth and politics. There are five angles in which we analyze a country’s ratings and Pakistan is negative on all counts.”

Foreign investors are exiting Asia’s emerging markets as they seek less-risky returns amid the worst financial crisis since the Great Depression. That’s making it more difficult for nations in the region to pay for imports and is shrinking their foreign reserves.

By Patricia Lui, Bloomberg

A foreign currency bank clerk works next to bundles of banknotes ...

“No country is immune from the global turmoil,” Okorotchenko said in a Nov. 5 interview in Singapore. “Asia is facing this crisis in a far stronger position than 10 years ago. But even countries with very strong fundamentals are facing fund pull-outs as investors de-leveraging have no regard for fundamentals.”

Pakistan’s credit rating was cut by S&P on Oct. 6 to CCC+, or seven levels below investment grade, on concern it won’t be able to pay its $3 billion debt servicing costs due in the coming year. It approached the International Monetary Fund last month for a bailout package after its foreign reserves shrunk to $3.71 billion on Oct. 25 from $14.2 billion a year ago.

Funding difficulties are the biggest threat to Sri Lanka’s ratings, Okorotchenko said. S&P rates Sri Lanka’s long-term foreign currency debt at B+ with negative outlook.

Funding Concerns

“Sri Lanka is facing funding concerns with rising short- term commercial debt while expectations of efforts to bring down fiscal deficits have proved incorrect,” she said. “I cannot know at this stage if they will go to the IMF but they will definitely need to think of their funding sources.”

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Investors cheer China’s stimulus package

November 10, 2008

Investors welcomed China‘s multibillion dollar stimulus package but analysts said Monday that Beijing must ensure companies get access to more credit to sustain its effectiveness.

A man walks past buildings on the city skyline in Shanghai, ... 
A man walks past buildings on the city skyline in Shanghai, China, Tuesday Oct. 21, 2008. In the foreground is the Shanghai World Financial Center, and at left the Jinmao Tower. China’s economy expanded by just 9 percent in the third quarter, its most sluggish pace in five years.(AP Photo/Greg Baker)

Stock markets in Japan, Hong Kong and mainland China soared following Sunday’s announcement of the 4 trillion yuan, or $586 billion, package as China joined moves by governments around the world to cushion the blow of the global slowdown.

By JOE McDONALD, AP Business Writer

The package calls for higher government spending on roads, airports and other infrastructure and bigger subsidies to the poor and farmers. It promises more lending for rural projects, smaller companies and consumers but gives no details.

The plan represents another drastic step away from lending curbs and other anti-inflation measures that Beijing imposed over the past three years but has been rolling back since mid-2008 as government alarm about slowing economic growth mounts.

“It is clear that aggressive fiscal stimulus is necessary to jump start the economy at a time of sharply deteriorating outlook and sentiment,” said UBS Securities economist Tao Wang in a report to clients.

Still, “given the importance of bank financing in China … increasing bank lending would be critical to sustain corporate investment needs,” he said.

The plan follows an unexpectedly sharp slowdown in economic growth that has raised the prospect of job losses and unrest. China’s economic growth fell to 9 percent in the third quarter, its lowest level in five years, and analysts expect export growth to fall as low as zero in coming months as global demand weakens.

British Prime Minister Gordon Brown welcomed China’s move and said he looked forward to discussion of coordinating policy at a Washington meeting this week of leaders from the Group of 20 major economies. Chinese President Hu Jintao is due to attend.

Also Monday, the government said China’s wholesale inflation eased in October, which gives authorities more leeway to stimulate the economy without the threat that they might ignite new price rises. Producer prices rose 6.6 percent in October from the year-earlier period, down from August’s 12-year high of 10.1 percent.

Alarmed at falling growth, the government switched its official goal in mid-2008 from a single focus on fighting inflation to a dual target of ensuring fast economic expansion while also containing price rises. It has cut interest rates three times in recent weeks and lifted limits on how much each Chinese bank can lend.

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Euphoria of Obama’s Election Victory Fades Fast: Markets Down 10%; Toyota Says Auto Crisis “Unprecedented”

November 6, 2008

Toyota Motor slashed its profit forecast Thursday, warning the global auto industry faces an “unprecedented” crisis as Asian stocks tumbled on fears the US is sinking deeper towards recession.

The Japanese giant became the latest automaker to reveal plunging profits due to the financial crisis, following on the heels of BMW, Nissan and Honda.

From Breitbart

The headquarters of German luxury carmaker BMW are pictured ... 

Toyota , vying with General Motors for the title of the world’s top automaker, cut its annual profit forecast by more than half after a terrible year so far.

It now expects a 68 percent plunge in net profit to 550 billion yen (5.6 billion dollars) — the first drop in nine years.

“The financial crisis is negatively impacting the real economy worldwide, and the automotive markets, especially in developed countries, are contracting rapidly,” Toyota executive vice president Mitsuo Kinoshita said.

“This is an unprecedented situation.”

Elsewhere in the transport sector, European aircraft manufacturer Airbus warned it expects a sharp reduction in new orders in 2009 as the global economy slows.

Airbus A380.jpg

Amid the gloomy news, Asian stock markets fell heavily. Japan’s Nikkei stock index plunged 6.53 percent even before the Toyota warning, which came after the close of trade.

The drop wiped out gains seen a day earlier on hopes that US president-elect Barack Obama will get to work on fixing the world’s largest economy in the face of the worst financial crisis in decades.

“Now that the event is over, investors are sobering up and looking at the economic gloom,” said Mizuho Investors Securities broker Masatoshi Sato.

Seoul ended with a loss of 7.6 percent while Sydney shed 4.3 percent. Hong Kong shares were down 6.4 percent at midday.

The sharp falls came after the Dow Jones index slid 5.05 percent on Wall Street on Wednesday as investors braced for a gloomy economic ride after the euphoria of Obama’s election victory faded.

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China says economic growth will slow amid turmoil

October 19, 2008

BEIJING – China said Sunday its economy can weather the effects of the global financial turmoil, but growth will decline as the expansion of business profits and public revenues slows.

The State Council said in a statement at the end of an executive meeting led by Premier Wen Jiabao that the turmoil and economic instability will have a “gradual” effect on the country.

It said China’s economic growth will slow along with corporate profits and public revenues, and as capital markets continue to fluctuate.

“Unfavorable international factors and the serious natural disasters at home have not changed the basic growth situation of our country’s economy,” said the statement posted on a government Web site. “Our country’s economic growth has the ability and vigor to resist risks.”

The country was hit by two major natural disasters this year — a winter storm just before February’s Lunar New Year that left scores dead and hundreds of thousands stranded during the country’s busiest travel period, and a magnitude 7.9 earthquake in May that left nearly 90,000 people dead or missing.

China must “adopt flexible and cautious macroeconomic policies” to maintain stable growth, the statement said.

The council said that in the fourth quarter, China should focus on developing the rural economy, while striving to control inflation.

The government should also help local small and medium enterprises to grow by encouraging financial institutions to provide more loans to them, the statement said.

China faces difficulties including high energy costs and inflation, but officials say the country has growth potential despite the global uncertainties because of its large labor pool, vast domestic market and the increasing competitiveness of its companies.

Economists have cut China’s growth forecasts to as low as 9 percent for the year, down from last year’s 11.9 percent. That would be the highest rate for any major country, but the country’s leaders want to keep growth robust to reduce poverty and avoid job losses that could fuel political tensions.


China’s economy showing cracks amid global crisis

October 19, 2008

China‘s strong economy appeared to put the nation on the global high ground when the financial tsunami first struck last month, but as the storm continues to rage, that position is looking less sure.

After five years of annual double digit economic growth, and with more than 1.9 trillion dollars in foreign reserves as well as a closed financial system that protected it from toxic US assets, China seemed insulated from the crisis.

Containers are seen at a terminal overlooking Victoria Harbour ... 
Containers are seen at a terminal overlooking Victoria Harbour in Hong Kong in September. China’s strong economy appeared to put the nation on the global high ground when the financial tsunami first struck last month, but as the storm continues to rage, that position is looking less sure.(AFP/File/Mike Clarke)

by D’Arcy Doran, AFP

But with thousands of workers already being laid off as exports shrink, the property market slowing and the stock market low on confidence, the world’s fourth biggest economy is clearly starting to hurt amid the global downturn .

“People are starting to see the pain, that is in business and also in the labour market. It’s not as easy to get a job as it was a few months ago,” Beijing-based World Bank economist Louis Kuijs told AFP.

“The bigger the economic crisis — the recession in the US and in Europe — the more it will be felt in China,” he said.

China’s leaders, for their part, have said the country’s best strategy is to keep the economy growing.

“If a large country of 1.3 billion people can keep up stable and relatively fast economic growth, that’s a big contribution to the world,” Premier Wen Jiabao said.

On Monday, China will release its third quarter gross domestic product figure.

China’s GDP growth is expected to shrink to 9.1 percent in the third quarter from 10.1 percent in the second, according to a forecast by Goldman Sachs.

If accurate, it would mark the first time China’s quarterly GDP growth has fallen below 10 percent since the end of 2005.

But a fall in the third quarter figure would mostly reflect government policies to moderate growth, Goldman Sachs said, not the US crisis.

Morgan Stanley predicts full-year GDP growth will shrink to 9.8 percent and to 8.2 percent in 2009 — still above Beijing’s official 8.0 target.

However, if property markets melt down across the country, the economy could see a hard landing with GDP growing less than seven percent, Morgan Stanley said. Its economists estimate there is about a one in four chance of that.

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London’s FTSE 100 falls sharply on recession fears

October 16, 2008

Shares prices in FTSE 100 in London opened down sharply as fears of recession gripped markets worldwide.

By Alistair Osborne and Edmund Conway
The Telegraph (UK)

With Japanese shares suffering their biggest loss in two decades, investors were in no mood to hold stocks and within minutes of the start the FTSE 100 index of leading shares fell 236 points – or 5.8pc – to 3840.

Miners, travel companies and retailers were among the biggest fallers as markets focussed on an economic slowdown. TUI Travel slid 18.8pc, platinum miner Lonmin 17pc and plumbing group Wolseley 13pc.

Markets have been spooked the effect of a slowdown on trade as America reported worse-than-expected US retail sales, unemployment rocketed in Britain and increasing evidence of falling demand from China’s once booming economy.

Tokyo’s Nikkei 225 index plunged 11.41pc to close at 8458, as growing fears of a global recession hammered world markets.

South Korea, whose export-driven economy is in crisis, with the won in freefall and Standard & Poor’s saying it might cut credit ratings for the country’s leading banks, saw the Kospi index fall 9.4pc in the afternoon, heading for its worst day ever.

Hong Kong’s Hang Seng index was down 7.6pc, with mainland Chinese firms exposed to falling commodity prices worst hit. Australia’s benchmark S&P/ASX 200 fell 6.7pc and New Zealand’s NZX-50 4.8pc to 2,765, its lowest level since September 2004.

Sentiment is grim. “Don’t stand in front of the freight train,” said Sonray Capital Markets chief economist Clifford Bennett in Tokyo. “This is clearly a panic with further to go. The equity market game has fundamentally changed.”

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China vows stable growth in face of global turmoil

October 12, 2008

BEIJING (Reuters) – China will maintain flexible and prudent macro-economic policies and seek to expand domestic demand in the face of a grim international economic environment, the country’s ruling Communist Party said on Sunday.

A meeting of the Party’s Central Committee warned that the global economy was slowing, threatening to dent Chinese growth, and said the country would be turning to home markets to cushion the fallout.

In this photo released by China's Xinhua News Agency, all nine ...
In this photo released by China’s Xinhua News Agency, all nine members of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, including President Hu Jintao, center, and Premier Wen Jiabao, fourth left, attend the third Plenary Session of the 17th CPC Central Committee on Sunday, Oct. 12, 2008 in Beijing. China’s ruling Communist Party said Sunday it aims to double the income of the country’s farmers in two decades amid efforts to boost domestic demand to counter the effects of the faltering global economy. The move is part of an agricultural reform and development plan approved by the party’s Central Committee at the end of a four-day meeting, the official Xinhua News Agency said. From left are, Zhou Yongkang, Li Keqiang, Li Changchun, Wen, Hu, Wu Bangguo, Jia Qinglin, Xi Jinping and He Guoqiang.(AP Photo/Xinhua, Li Xueren)

“There are also some pronounced contradictions and problems in domestic economic activity. We must enhance our sense of peril and actively respond to challenges,” according to a communique issued after the meeting by the official Xinhua news agency.

At the same time, it said the party’s top leaders had stressed that the overall state of the Chinese economy was good.

Growth had remained quite fast, and the financial sector was operating in a stable, healthy way.

“The fundamental conditions of our country’s economic development have not changed,” the communique said.

Thanks to capital controls and an underdeveloped, inward-looking banking system, China has been largely sheltered from the global credit crisis.

But economists and policy makers are braced for second-round effects as slowing exports hit manufacturers and cause loans on the books of the nation’s banks to turn sour.

“The most important thing is to handle our country’s own affairs well,” the communique said.

It said the government would “maintain economic stability, financial stability, and stability of the capital markets … continuing to encourage economic and social development that is both healthy and rapid.”

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