Archive for the ‘financial’ Category

Pakistan: Near Economic Collapse and Besieged By Terrorists Now Must Deal With U.S., India

December 1, 2008

Indian accusations of a Pakistani hand in last week’s Mumbai massacre couldn’t have come at a worse time for the government in Islamabad: As a Taliban insurgency continues to simmer in the tribal areas along the Afghan border, clashes on Sunday between rival political groups in the southern metropolis of Karachi killed 13 people and wounded 70.

The country is on the verge of economic collapse, its desperate pleas for financial assistance from China and Saudi Arabia last month having been rebuffed, forcing Pakistan to accept loans from the International Monetary Fund – but those loans come with stern conditions limiting government spending, the implementation of which will risk inflaming further unrest. A suspected U.S. predator drone attack in the tribal areas on Saturday – one of dozens in recent months – has further alienated a population already suspicious of U.S. interference. Hardly surprising, then, that Pakistani leaders have reacted with alarm to politicians and the media in India pointing a finger at Pakistan-based terror groups over the Mumbai attack. Some foreign investigators have made similar claims, although not in any official capacity.

Most Pakistanis reacted with horror to news of the Mumbai killing spree starting Wednesday, having lived through equally devastating attacks on their own soil. But that initial sympathy quickly gave way to hostility as the focus of blame landed on Pakistan – a knee-jerk first reaction, rather than one based on any solid evidence. “It is a tragic incident, and we also felt bad about it as Pakistan is going through the same problem,” says Abdur Rashid, a 67-year-old retired government servant in Rawalpindi, near Islamabad. “But it was really unfortunate to see that even before the operation [to clear out the attackers] was finished, the Indian government stated that Pakistan is involved. It sounds that the entire incident was concocted to punish Pakistan.” See images of Mumbai after the siege….

Read the rest from MUZI:
http://dailynews.muzi.com/news/ll/english/10083894.shtml

Mumbai Violence Clouds India’s Economic Future

November 29, 2008

The terrorist siege in southern Mumbai, not far from its financial district, is likely to threaten India’s already murky economic future and thwart plans to transform the city into a regional financial center, economists and investors said.
.
By HEATHER TIMMONS and KEITH BRADSHER
The New York Times
.

India’s economy had already been slowing significantly, because of the global credit crunch and the rupee’s decline. The country’s leading stock market index, the Sensex, has been cut in half since January as foreign investors redirected billions of dollars out of the country. Real estate markets around the country are cooling off.

Now foreign investors and business executives, who fueled much of India’s blistering growth over the past three years, are expected to be even more cautious about investing in India, at least in the short run, analysts said. Local companies and executives, who have already put the brakes on growth projections, could revise them further.

“Of course there will be some setbacks” related to the attacks, said Hitesh Kuvelkar, associate director at First Global, a financial research firm. Even before the attacks, First Global predicted that India’s economic growth could slow to about 6 percent in 2009 and less than 4 percent in 2010.

An Indian soldier holds positions outside the Taj Mahal hotel ...
An Indian soldier holds positions outside the Taj Mahal hotel in Mumbai. Indian commandos have killed the last remaining gunmen in Mumbai’s Taj hotel to end a devastating attack by Islamic militants on India’s financial capital that left 195 dead, including 26 foreigners.(AFP/Sajjad Hussain)

The attacks, which left more than 150 people dead by Friday evening, made targets of foreigners, witnesses said. The heavily armed terrorists were able to bypass security at two of India’s most expensive hotels, and it has taken India’s military several days to quell the violence, raising questions about safety in even the most exclusive locations.

It may be some time before the hotels, the Taj Mahal Palace and Tower and the Oberoi, once regular haunts for executives, become deal-making hubs again. “I would not feel comfortable either staying in or going to meetings at the Taj or the Oberoi, at least in the near future,” said Joel Perlman, the president of Copal Partners, a research company.

Read the rest:
http://www.nytimes.com/2008/11/29/world/asia/29impact.html?_r=1&hp

Government-induced Economic Crisis Getting a Government-insured Resolution

November 28, 2008

There is a condign symmetry about this financial crisis. A government-induced crisis is getting a government-insured resolution.

The excesses of Freddie Mac and Fannie Mae are being mopped up by huge federal spending made all the more massive by all the reckless endeavors of the politicians, the regulators, and the financiers who frivoled with the intemperance of Freddie and Fannie.

Now President-elect Barack Obama has perhaps faced up to the mess. He has not shied away from bringing former Treasury Secretary Larry Summers onto his economic team as head of his National Economic Council.

By R. Emmett Tyrrell
The Washington Times

Mr. Summers was a proper critic of Freddie and Fannie, having noted this past summer that, “The illusions that the companies were doing virtuous work made it impossible to build a political case for serious regulation.” This virtuous work was extending mortgages to those who could not afford those mortgages. The toxic mortgages were then bundled in with healthy mortgages and sold around the world by Wall Street geniuses like some enormous chain letter whose day of reckoning came some months ago.

The endeavor was a fantasy that had to end badly and so it has. Yet at a certain level the constituent elements of the Democratic Party are given to fantasy and excess. Consider the most vocal critics of Mr. Summers. They are not bankers or economists. They are feminists, often feminist scientists, who forced him out of the presidency of Harvard for his recognition that women of genius are not as plentiful as men of genius in the sciences and math.

What he cited was a fact. Mr. Summers drew no invidious conclusions and offered no program that would limit the number of lady scientists. He just noted the data in a forum supposedly open to free discourse. Kaboom – the women of the fevered brow drove him from office. Remind me not to read a book aloud in Harvard Yard.

Read the rest:
http://www.washingtontimes.com/news/2008
/nov/28/recognizing-crisis/

Meltdown far from over, new mortgage crisis looms

November 27, 2008

The full scope of the housing meltdown isn’t clear and already there are ominous signs of a new crisis — one that could turn out the lights on malls, hotels and storefronts nationwide.

By MATT APUZZO, Associated Press Writer

Even as the holiday shopping season begins in full swing, the same events poisoning the housing market are now at work on commercial properties, and the bad news is trickling in. Malls from Michigan to Georgia are entering foreclosure.

Hotels in Tucson, Ariz., and Hilton Head, S.C., also are about to default on their mortgages.

That pace is expected to quicken. The number of late payments and defaults will double, if not triple, by the end of next year, according to analysts from Fitch Ratings Ltd., which evaluates companies’ credit.

“We’re probably in the first inning of the commercial mortgage problem,” said Scott Tross, a real estate lawyer with Herrick Feinstein in New Jersey.

That’s bad news for more than just property owners. When businesses go dark, employees lose jobs. Towns lose tax revenue. School budgets and social services feel the pinch.

Companies have survived plenty of downturns, but economists see this one playing out like never before. In the past, when businesses hit rough patches, owners negotiated with banks or refinanced their loans.

But many banks no longer hold the loans they made. Over the past decade, banks have increasingly bundled mortgages and sold them to investors. Pension funds, insurance companies, and hedge funds bought the seemingly safe securities and are now bracing for losses that could ripple through the financial system.

“It’s a toxic drug and nobody knows how bad it’s going to be,” said Paul Miller, an analyst with Friedman, Billings, Ramsey, who was among the first to sound alarm bells in the residential market.

Read the rest:
http://news.yahoo.com/s/ap/20081127/ap_on_bi_ge/melt
down_coming_soon;_ylt=Ao5Sg.24hesMbnCpBUd_uzes0NUE

Stocks Slump As Signs Point To Harder Times

November 20, 2008

Market closes below 8,000 on news of business price cuts, fewer home starts; Fed anticipates further economic slowdown next year.

By Neil Irwin and David Cho
The Washington Post

Businesses cut prices at a record rate and builders started fewer new homes last month than anytime on record, according to new government data, as the outlook for the economy continues to dim.

An investor watches a market board indicating the Chinese stock ... 
An investor watches a market board indicating the Chinese stock market index in a trading house in central Beijing.(David Gray/Reuters)

The data helped spur another terrible day for the stock market, as did a projection of more hard times ahead by leaders of the Federal Reserve. A serious recession now appears all but assured.

The stock market fell another 5 percent, as measured by the Dow Jones industrial average, which closed below 8,000 for the first time in this bear market. New-home starts in October were the lowest since at least 1959, when the government began keeping data. The consumer price index plummeted by the most since that series of monthly data was started in 1947, as the economy slowed so abruptly that companies had to slash prices to sell products.

And Federal Reserve leaders released projections indicating they expect the economy to worsen significantly in the coming year. The most pessimistic of 17 Fed officials expects joblessness to rise to 8 percent at the end of 2009, which would be the highest in a quarter-century.

“We’re in the deep portion of the economic trough,” said Richard Yamarone, chief economist of Argus Research, explaining yesterday’s market sell-off. “So you have to expect a certain degree of negative sentiment, you almost have to expect doom and gloom at this point.”

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/19
/AR2008111900943.html?hpid=topnews

Free Media? Russia Investigates Financial Crisis Reporting

November 19, 2008

Prosecutors are launching inquiries across Russia against media reporting on the financial crisis in a bid to stem growing concern about its impact, the Kommersant newspaper reported on Wednesday.

“It’s not censorship. We’re just checking how reliable the information is,” a press official from the prosecutor general’s office was quoted as saying.

The official gave the example of unreliable reports about a bankruptcy causing a run on deposits from a bank in the Far Eastern port of Vladivostok.

AFP

File picture shows a vendor arranging newspapers at her stand ... 
File picture shows a vendor arranging newspapers at her stand in Moscow. Prosecutors are launching inquiries across Russia against media reporting on the financial crisis in a bid to stem growing concern about its impact, the Kommersant newspaper reported on Wednesday.(AFP/File)

Regional prosecutors have been ordered to check local media “in connection with measures taken by the Russian government to improve the situation in the financial sector and other sectors of the economy,” Kommersant said.

Investigators in Sverdlovsk, a key industrial region in the Ural mountains, are checking local media for attempts “to destabilise the situation in the region,” a spokeswoman for the local prosecutor’s office was quoted as saying.

“If we establish that the law has been violated, there could be disciplinary measures against the guilty, including criminal punishment,” she said.

Read the rest:
http://news.yahoo.com/s/afp/20081119/bs_afp/finance
economyrussiamediacrime_081119081653

Fighting the Financial Crisis, One Challenge at a Time

November 18, 2008

WE are going through a financial crisis more severe and unpredictable than any in our lifetimes. We have seen the failures, or the equivalent of failures, of Bear Stearns, IndyMac, Lehman Brothers, Washington Mutual, Wachovia, Fannie Mae, Freddie Mac and the American International Group. Each of these failures would be tremendously consequential in its own right. But we faced them in succession, as our financial system seized up and severely damaged the economy.

By Henry M. Paulson, Jr.
Treasury Secretary
Op-Ed, The New York Times

Treasury Secretary Henry Paulson addresses a gathering of corporate ...
Treasury Secretary Henry Paulson addresses a gathering of corporate CEOs, Monday, Nov. 17, 2008. (AP Photo/J. Scott Applewhite)

By September, the government faced a systemwide crisis. After months of making the most of the authority we already had, we asked Congress for a comprehensive rescue package so we could stabilize our financial system and minimize further damage to our economy.

By the time the legislation had passed on Oct. 3, the global market crisis was so broad and so severe that we needed to move quickly and take powerful steps to stabilize our financial system and to get credit flowing again. Our initial intent was to strengthen the banking system by purchasing illiquid mortgages and mortgage-related securities. But the severity and magnitude of the situation had worsened to such an extent that an asset purchase program would not be effective enough, quickly enough. Therefore, exercising the authority granted by Congress in this legislation, we quickly deployed a $250 billion capital injection program, fully anticipating we would follow that with a program for buying troubled assets.

There is no playbook for responding to turmoil we have never faced. We adjusted our strategy to reflect the facts of a severe market crisis, always keeping focused on our goal: to stabilize a financial system that is integral to the everyday lives of all Americans. By mid-October, our actions, in combination with the Federal Deposit Insurance Corporation’s guarantee of certain debt issued by financial institutions, helped us to accomplish the first major priority, which was to immediately stabilize the financial system.

Read the rest:
http://www.nytimes.com/2008/11/18/opinion
/18paulson.html?_r=1

Russia’s high-tech sector reels

November 17, 2008

After the first round of layoffs, the staff members of MeshNetics filtered in as usual, taking their positions inside powder-blue cubicles and making the ritual run to the cafeteria for coffee. On one level, they felt relief: The cuts had been made, and they were all still here. It made them especially glad to see one another.

But there were thoughts they kept to themselves. It was hard not to stare at the vacant desks, the stray objects one programmer described as the “signs of lost people.” On the wall, a flat-screen monitor with the caption “MeshNetics Confidential” flashed snapshots from the summer, when this start-up company seemed to have harnessed the best ambitions of a new Russia. Now, anxiety was disturbing the employees’ sleep. The smokers were smoking more often.

Above: The main office of MeshNetics in Moscow, which produces wireless networking systems and is facing a money crunch. (James Hill for The New York Times)

By Ellen Barry
International Herald Tribune

The tale of this young company, which produces innovative wireless networking systems, offers a glimpse of how the financial crisis has swept through Russia’s budding entrepreneurial culture and crashed like cold water onto young workers who had come to see the boom times as normal.

Last month, as Russia’s stock market swooned and the credit crunch took hold around the world, Russian companies spooked by memories of previous bank collapses scrambled to protect what cash they had. Venture capital dried up virtually overnight, including at MeshNetics’ parent company.

At MeshNetics, a gingerly layoff was followed by a second cut, and a third. By late October, the options had dwindled: it had to find a new source of capital or suspend operations. “It’s going to be tough letting go of this period of growth,” Ilya Bagrak, the company’s software product manager, said last month. He was still in shock from the experience of firing one of his employees hours after they had shared their morning coffee.

Read the rest:
http://www.iht.com/articles/2008/11/17/europe/17russia.php

At G-20, China Did Not Commit Bailout Funds Despite Huge Reserves

November 16, 2008

China got what it wanted in Washington’s financial summit — a promise of a bigger role for developing countries in global finance — but gave no sign Sunday whether it will respond by using any of its $1.9 trillion in reserves in a bailout fund.

By JOE McDONALD, AP Business Writer

China has been pushing for developing countries generally — and itself specifically — to have more influence at the International Monetary Fund and other global bodies. Analysts say that might be Beijing’s price to give in to foreign appeals to dip into its reserves and contribute money toward an IMF emergency loan fund for struggling countries.

The Washington summit was an “important and positive” step toward “the reform of the international financial structure,” foreign ministry spokesman Qin Gang said in a statement. It made no mention of possible bailout contributions, and a man who answered the phone at the ministry press office said he had no information.

Leaders from 21 nations, including China, and four international organizations attended the emergency two-day summit intended to address the financial crisis sweeping the globe.

Summit participants vowed Saturday at the conclusion of the two-day conference to cooperate more closely, keep a sharper eye out for potential problems and give bigger roles to fast-rising nations. But the leaders avoided many of the harder details leaving them to be worked out before their next summit, after President George W. Bush is gone and President-elect Barack Obama is in the White House.

China says it will cooperate with the IMF but Chinese officials say its most important role will be to preserve global growth by keeping its own economy healthy. Beijing announced a 4 trillion yuan ($586 billion) stimulus package last week, at a time of slowing economic growth and fears that falling exports could lead to layoffs and factory closures.

“China’s economic power is growing, so China could contribute and help ease the financial crisis,” said Wu Jinglian, a prominent economist and Cabinet adviser. “But the first priority is to keep our own economy growing. That will benefit every country in the world.”

A woman cooks while her husband playing computer games inside ...
A woman cooks while her husband playing computer games inside the prefabricated temporary housing in Yingxiu, Sichuan Province in China Nov. 8, 2008. Six months after the worst quake to hit China in three decades, the future remains uncertain for many survivors. Jobs are hard to come by, and government aid payments are about to end. Many people are still in temporary housing. China’s leaders have called reconstruction a priority. Last week, the government announced plans to pump $146 billion into the effort over the next three years. Some 120 billion yuan ($17.5 billion) will be spent on ensuring schools, hospitals and other public facilities are built to higher standards.(AP Photo/Andy Wong)

Read the rest:
http://news.yahoo.com/s/ap/20081116/ap_on_re_as/as_asia_meltdown_summit_1

Top Republican senators oppose automaker bailout

November 16, 2008

Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit automakers, calling the U.S. industry a “dinosaur” whose “day of reckoning” is coming. Their opposition raises serious doubts about whether the plan will pass in this week’s postelection session.

Democratic leaders want to use $25 billion of the $700 billion financial industry bailout to help General Motors Corp., Ford Motor Co. and Chrysler LLC.

By Stephen Ohlemacher, Associated Press Writer

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry’s demise.
Richard Shelby
Senator Shelby

“Companies fail every day and others take their place. I think this is a road we should not go down,” said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

General Motors headquarters is seen October 26, 2008 in Detroit, ... 
General Motors headquarters is seen October 26, 2008 in Detroit, Michigan. Picture taken October 26, 2008.(Rebecca Cook/Reuters)

“They’re not building the right products,” he said. “They’ve got good workers but I don’t believe they’ve got good management. They don’t innovate. They’re a dinosaur in a sense.”

Added Kyl, the Senate’s second-ranking Republican: “Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning.”

House Speaker Nancy Pelosi, D-Calif., said over the weekend that the House would provide aid to the ailing industry, though she did not put a price on her plan.

“The House is ready to do it,” said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. “There’s no downside to trying.”
Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd were among the congressional Democrats negotiating the bailout settlement on Sunday. (Joseph Silverman/The Washington Times)

Above: Ready to bail, from L to R: Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd. Photo by Joseph Silverman

Read the rest:
http://news.yahoo.com/s/ap/20081116/ap_on_go
_co/auto_bailout;_ylt=AmAt77VLR57r0Uq41kBoeYWs0NUE