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SKOREA, CHINA, JAPAN SHOW UNITY AT FIRST SUMMIT

Posted by Gilmour Poincaree on December 14, 2008

Published: Dec 13, 2008 06:00 AM – Modified: Dec 13, 2008 07:06 AM

by Eric Talmadge – Associated Press Writer

PUBLISHED BY ‘THE NEWS&OBSERVER’ (USA)

FUKUOKA, Japan – The leaders of Japan, China and South Korea said Saturday that Asia must be the engine of growth to counter Japan's Prime Minister Taro Aso, center, delivers a speech as Lee Myung-bak, South Korea's president, sitting right, Wen Jiabao, China's premier, sitting left, isten at the start of dinner after their meeting at the Kyushu National Museum in Dazaifu, southern Japan, on Saturday, December 13, 2008. (AP Photo/Tomohiro Ohsumi, POOL)global financial turmoil and vowed to rev up their economies with infrastructure projects and bolster domestic demand.

Tokyo and Seoul also criticized North Korea for stalling denuclearization talks.

The Asian nations – which together make up 75 percent of the east Asian economy – were holding their first-ever three-way summit, with Japanese Prime Minister Taro Aso, South Korean President Lee Myung-bak and Chinese Premier Wen Jiabao attending.

The global financial slowdown was atop their agenda.

“The current financial crisis continues to spread,” Wen said at a joint news conference. “We are important economic players in Asia and the world, and we must strive to respond to this once-in-a-century crisis.”

In a joint statement, the leaders said they believed Asia must be a center of growth to counter the sliding world economy. They said they would push domestic demand and infrastructure projects while refraining from raising new barriers to investment or trade over the next 12 months.

“The three leaders shared the view that efforts need to be strengthened to minimize the negative impacts that the current financial turmoil could have on the world economy,” the statement said. “Asian countries are expected to play a role as the center of world economic growth.”

Meeting ahead of the summit, Aso and Lee welcomed a deal reached the night before to increase a bilateral currency swap arrangement to the equivalent of $20 billion. The Bank of Korea also announced a deal with the People’s Bank of China worth about $26 billion.

“This is very meaningful,” Lee said of the currency swap arrangement. “We translated cooperation into action.”

Swaps generally entail one central bank borrowing a currency from another and offering an equivalent amount of its own as collateral.

Seoul has seen its own currency reserves dwindle and feared that without the swap arrangements it could suffer a foreign exchange crisis because of the global financial turmoil. The South Korean won has declined 32 percent this year amid record selling of South Korean stocks by foreign investors.

Aso and Lee also criticized North Korea for its lack of cooperation at nuclear disarmament talks and stressed the importance of continuing to push together for progress.

Four days of negotiations in Beijing ended in stalemate Thursday with North Korea refusing to put into writing any commitments on inspection, making it impossible to move forward on a disarmament-for-aid agreement reached last year.

“We have made progress but it has been slow,” Lee said. “We must have patience and hope.”

The three leaders said they planned to make the trilateral summit an annual event and strengthen ties through increased political and cultural exchanges.

“Politically and economically, we have a very significant presence in the region,” Aso said. “We should have had this kind of a summit sooner.”

Though their countries are often at odds over the legacy of Japan’s militarist past, solidarity was the word of the day.

Officials said the summit was intended to be a show of unity in the face of the global economic downturn and was an important step toward better relations overall between the three neighbors.

Left off the table was lingering animosity over Japan’s pre-1945 colonization of Korea and its often brutal aggression on the Asian mainland in the first half of the last century. Such issues have frequently flared up in the past and continue to be a thorn in relations.

Japanese officials said it was “significant” that the three countries were putting such issues behind them and trying to approach the summit with a more forward-looking stance.

Other sensitive issues remain, however.

In a meeting with Wen, Aso expressed concern over the entry of Chinese vessels earlier this week into waters Tokyo claims near disputed southern islands known as the Senkaku in Japanese and the Diaoyu in Chinese.

Japan lodged a protest with Beijing on Monday after the ships spent nine hours near the islands, which are claimed by Japan, China and Taiwan.

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PUBLISHED BY ‘THE NEWS&OBSERVER’ (USA)

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Posted in ASIA, BANKING SYSTEMS, CENTRAL BANKS, CHINA, COMMERCE, CURRENCIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FOREIGN POLICIES, INTERNATIONAL RELATIONS, JAPAN, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, SOUTH KOREA, THE FLOW OF INVESTMENTS | Leave a Comment »

AUSTRALIA BRINGS FORWARD A$500 MILLION GREEN ENERGY FUND

Posted by Gilmour Poincaree on December 14, 2008

December 14, 2008

Editing by Anshuman Daga

PUBLISHED BY ‘SCIENTIFIC AMERICAN’

SYDNEY (Reuters) – Australian Prime Minister Kevin Rudd called for a “solar revolution” on Sunday as he unveiled plans to bring forward a A$500 million (US$329 million) fund to promote renewable energy in a bid to stimulate the economy.

Speaking just a day before a key announcement on Australia’s greenhouse gas emissions targets, Rudd said the fund’s timescale would be brought forward from the original six-year plan to the next 18 months.

“It’s good for jobs. It’s good for stimulus. It’s good for acting on climate change,” Rudd said of the move. “It’s time for Australia to begin a solar revolution, a renewable energy revolution and we’ve got to fund it for the future.”

Rudd made the announcement at the Queensland town of Windorah, where a new solar energy plant is expected to produce around 360,000 kilowatt hours of electricity per year and provide the town’s daytime power needs.

The prime minister said A$100 million would be released by June 30 next year, with the remaining A$400 million to be released in the following 12 months.

The only condition, he said in an accompanying statement, was “availability of suitable demonstration projects.” Guidelines would be released early in 2009, the statement said.

The Renewable Energy Fund, which also includes work on biofuels development and geothermal drilling, was set up to help cut the cost of developing technologies that might play a key role in energy supply and security over the next few decades.

The fund was an election commitment by the ruling Labor party in last year’s election, in which Rudd defeated conservative predecessor John Howard. During the campaign Rudd set a target that 20 percent of Australia’s energy should be from renewable sources by 2020.

A key ‘white paper’ policy document is due on Monday setting out Australia’s official targets for emissions cuts and plans for carbon trading. Australia is widely expected to adopt a target of a 10 percent cut from 2000 levels by 2020.

Although Rudd has been applauded by environmentalists for his decision for Australia to join the Kyoto protocol, they also say Canberra’s actions on reducing greenhouse gas emissions have so far been inadequate.

The statement follows a UN climate change conference in Poland, seen as preparation for a major one in Copenhagen next year.

(A$1=US$0.66)

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PUBLISHED BY ‘SCIENTIFIC AMERICAN’

Posted in AGRICULTURE, AUSTRALIA, BIOFUELS, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, ENERGY INDUSTRIES, ENVIRONMENT, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, MACROECONOMY, RECESSION, THE FLOW OF INVESTMENTS | Leave a Comment »

WHO’S THE WISE GUY WHO THREW THE HAMMER ?!!!

Posted by Gilmour Poincaree on December 14, 2008

December 14 2008

by Fred Hubner

PUBLISHED BY ‘FROM SCRATCH NEWSWIRE’

CHARGE BY by Fred Hubner – Posted 14-12-2008 – © Copyright 2008 – All Rights Reserved

PUBLISHED BY ‘FROM SCRATCH NEWSWIRE’ (USA)

Posted in ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, USA, USA HUMOR | Leave a Comment »

IS INDIA STILL IN RECESSION ?

Posted by Gilmour Poincaree on December 14, 2008

December 13 2008

by Sri Vikas

PUBLISHED BY ‘FIGHTING DREAMER’

If you Google this topic you are going to get numerous answers with some mind boggling stats to tell you that India is into recession or slowly moving into it.
I am going to tell you a different opinion altogether! I don’t believe even for one second that India is into recession. In fact I will take the “audacity of hope” as my tool to declare that India wont even go close to recession.
You may argue back saying , “dude! don’t you read newspapers or watch news ? did you not check the IIP stats? The numbers are negative man! Our sensex has taken a complete nose-dive. People are loosing their jobs left-right and center. and you still think India is not into recession or moving into it?” ..

I stick by what I just said .You see, India is having a spill over effect of a global recession. And it is that spill over effect that is causing these job loss spree. But compared to our western counterparts Indian companies are not giving out the pink slips in droves. No Sir!

Tell you why …

First , India is not a globalized economy. That is , India is not completely globalized like European countries, Japan and China.

Second , India was already facing a huge inflation problem when the sub-prime crisis (which triggered the global meltdown) started . By the way, Indian lending laws are so stringent and fundamentally strong that , our country cannot just go into sub-prime like crisis at all. We Indians are firm believers in saving money and spending in thrift. So dont worry.. India wont go into a sub prime crisis.

Finally, India’s growth story is not due to any external factors . nay.. India’s growth story is completely domestic driven. The so called middle class income expansion is not just coming from IT and ITES services (which is prone to global imbalances) alone. India is a huge growth engine moving forward in all factors. Our business honchos, policy makers made sure that India and its currency stays as much immune from global currencies as possible.That is why , India is not seeing an companies going bankrupt. How else would you explain ICICI, HDFC and other banks flourishing so well when banks from other parts of the global are going bankrupt? come on .. tell me .. why ?

So how can we explain the negative stats of IIP . Just for the perspective. Our numbers are like  -0.4% as compared to 12.2% last year. This is primary because of decline in exports and fear factor among Indians.Did you know that in theory a recession in the rich world should hurt India less than other emerging markets: exports amount to only about 22% of India’s GDP, against 37% of China’s.

Read the real story of numbers here : Negative show: Industrial output contracts in October.  Read the complete article please.

China is making massive money from it exports like hell because they make goods a rock bottom prices due to availability of cheap labour.

Allow me to explain…

Let us take the example of a manufacturing firm of foreign origin/ or even Indian origin which produces 2000units of its products. 100o units for exports and the other 1000 units for domestic consumption. The company shall be termed X. Let us focus on export units – 1000 nos . Due to the global financial problem people in the other side of the globe don’t have enough money to buy the  products of the company X which they usually do.This would mean the products earmarked for shipments remain unsold in warehouses thereby increasing the inventory. Now, the companies get money only after the products are shipped to the other side and bought by consumers. The money/income thus received is then used to pay for the labour involved, raw materials, profits taken and then a huge chunk is put back into the company to produce more of such products for exports again.

Are you with me ?

Good.. So , when there is no money to re invest , obviously the company wont be able to produce any more goods. Also, the manufacturers will be cautious to use the reserve surplus to manufacture more goods because the economic outlook is bleak.  Eventually and in the long run when there is no enough money to pay, people are shown the door.

Meanwhile, even if we Indians have enough money to spend , we will suddenly check the global scenario and a friend will advice to his colleague , “damn, see US and Europe is into recessions, people are losing jobs.. and that India guy who studied in IIT and such a rich fellow . He killed his family and committed suicide cos of bad debts. Maybe we should be careful now . If  such big big countries can have problems ..how soon do you think we will get into trouble like that . Let us be careful now, yaar! Who knows when we will lose our jobs? Let us save now . We can spend when time are good . ”

Wife will advice her husband , ” listen, don’t buy too much from the stores , ok? We will manage . I saw TV news about the finance problem. And i heard from my mom that her friend’s son lost his job . Did you check the share market points today ? It was down and in red for the whole day , yesterday. We have enough for next 2 days . Just buy little “, and for the first time she will use the word budget … ” Let us have a budget from next month, ok ? ” … Sensex, Budget are words which are new to her dictionary..

Mom will catuion her son/daughter ( who  just joined a firm fresh out of college) , ” Listen, don’t go out too much with friends and waste your salary on movies , clothes or jewellery. Manage with what you have. and beta .. don’t resign or jump jobs. When you get the first salary. Give half to me, I will put in your savings. Don’t buy that bike now. Intrest rates are high . Buy it after 6 months “…

The panic button is on and the story goes on …

Media will use the panic to give you more sensational news from abroad and get you more worried.. It is cyclic..

We start saving a lot more than we should. Hence,money gets stagnated .

When you don’t buy stuff how are you going to give money back to the manufactures to produce more? If they dont have enough to produce, how are they going to pay your salary? When they don’t have enough money to pay your salary ,cos of no work getting done , why do you expect them to pay you for nothing and not ask you to leave?

Simple right?

So, as you see .. the story is we get sentimental and extra cautious when we hear the news around us .

Don’t do that ..!

Check not the news .. check the real facts . Check real information released by the government and listen to well known business industry leaders.

The India Finance Ministry with RBI under the leadership of Dr Manmohan Singh and Deputy Planning Commissioner Montek singh Ahluwalia is doing a good job. The steps taken as of now ( with two stimulus package and petrol price reduction) is showing signs . Inflation has come down. The full impact is yet to be seen. A third stimulus package is on the cards. So relax.. Our policy makers are much better than our counterparts in other parts of the world.

India is having spill over effect. Not a recession. True , our economy has slowed down. From an extremely robust GDP growth of 8-9% we now predict 6% . But that would still make our country one of the fastest growing economy in the world. Only India from the so called BRIC (Brazil,Russia,India,China) nations is faring well compared to others.

But remember in economics and finance, as in other aspects of life the rule still holds water – What goes down should come up. And what comes up , should definitely go down” . Be it Sensex, economy, failure, success, happiness, sadness, love, hatred ..  You can just play the game of the gods..

As one great poet cum dramatist so aptly put ” the world is stage …. “

I realize this is a very long post. Might be boring for some. But I have tried to put facts and my thoughts in a very simple way. I am no economist and will gladly accpet that I am wrong if proved so ..

I welcome your suggestions and ask those who read to spread the word around if you see merit in my opinions.

Also, check this article,China and India : Suddenly vulnerable , from Economist on what they think about the effects of global recession on India and China.

 

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘FIGHTING DREAMER’

Posted in BANKING SYSTEMS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDIA, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, MACROECONOMY, NATIONAL WORK FORCES, RECESSION, RUPEE (India), THE FLOW OF INVESTMENTS, THE WORK MARKET, THE WORKERS | Leave a Comment »

FINAL PROPOSALS EMERGE TO MODIFY US ENDANGERED SPECIES ACT (USA)

Posted by Gilmour Poincaree on December 14, 2008

December 13 2008

by Nick Snow – Washington Editor

PUBLISHED BY ‘OIL&GAS JOURNAL’

WASHINGTON, DC, Dec. 13 – The US Interior and Commerce departments reported Dec. 11 final proposed changes to the Endangered Species Act, which Interior Secretary Dirk A. Kempthorne said were not as extensive as originally planned.

“The rule strengthens the regulations so the government can focus on protecting endangered species as it strives to rebuild the American economy,” Kempthorne said. “[It] has been revised since it was proposed in August because the public made suggestions we could use to improve it,” he said. The proposed changes are scheduled to appear in the Dec. 12 Federal Register.

“What we are doing is clarifying the threshold for consultation to occur. If science cannot draw a direct causal link between an action and an effect on a listed species, as is currently the case for global processes like climate change, than consultation under the ESA is not necessary,” Kempthorne maintained.

Congressional critics and environmental organizations immediately criticized the proposal. “The Bush administration appears to be determined to use every last minute in office to wreak as much havoc as possible on our nation,” said Edward J. Markey (D-Mass.), chairman of the House Select Committee on Energy Independence and Global Warming. “Today’s announcement that they will be removing fish and wildlife experts from key decisions to protect the safety of iconic animals like the polar bear from global warming’s effects is absurd and a recipe for disaster,” Markey said.

Andrew Wetzler, director of the Natural Resources Defense Council’s endangered species program, commented, “This administration has rejected anything with a whiff of science, so before skulking out the back door they are going after rules that require [US] Fish and Wildlife Service scientists to prevent harm to our last wild animals and places. Despite today’s feel-good statements, we remain convinced that these changes are illegal. We will look at the final language when it is published tomorrow, but I think we will see them in court.”

Scope of exceptions

But Kempthorne noted that federal agencies would be required to follow existing consultation procedures except in specific, limited instances where a proposed action is not expected to have adverse impacts on any member of an ESA-listed species and would satisfy one of the following conditions: It must be wholly beneficial, have no effect on a listed species or its critical habitat, have effects which could not be measured or detected in a manner that permits meaningful evaluation, or it must be the result of global processes that can not be reliably predicted or measured on the scale of the species’ current range.

Agencies still would be able to voluntarily engage in the consultation process, the secretary emphasized. He said the final proposed regulations contain fewer opportunities for agencies to proceed without consultation than what was originally envisioned.

Nothing in the proposals requires that a federal agency bypass consultation, nor does it preclude any federal agency from seeking the expertise of the Fish and Wildlife Service and the National Marine Fisheries Service or from taking advantage of expertise that may be available from state and local agencies, universities, nongovernment organizations, or other sources, according to Kempthorne.

Any federal agency may avail itself of expertise offered by FWS and NMFS in exactly the same manner as under current regulations if it determines it has any limitations to make determinations under the ESA or believes that it does not have the scientific expertise to make an accurate assessment of a project’s impacts on listed species and critical habitat, he said.

Moreover, nothing in the proposals relieves an agency of its responsibilities to ensure that listed species are not harmed during completion of a federal action, regardless of whether consultation occurs or not, Kempthorne said. In cases where an action agency determines that consultation is not required and harm to a listed species results, full civil and criminal penalties, as laid out by other sections of the ESA, remain in effect, he indicated.

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PUBLISHED BY ‘OIL&GAS JOURNAL’

Posted in COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, ENERGY, ENVIRONMENT, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, INDUSTRIAL PRODUCTION, INDUSTRIAL PRODUCTION - USA, INDUSTRIES, INDUSTRIES - USA, PETROL, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, USA | Leave a Comment »

POOR NATIONS TO GET FUNDS TO FIGHT CLIMATE CHANGE

Posted by Gilmour Poincaree on December 14, 2008

Saturday December 13 2008

by Arthur Max – Associated Press Writer (Associated Press writers Geir Moulson, Vanessa Gera and Ryan Lucas contributed to this report)

PUBLISHED BY ‘THE GUARDIAN’ (UK)

POZNAN, Poland (AP) – Negotiators at a U.N. climate conference broke through red tape and freed up millions of dollars Friday to help poor countries adapt to increasingly severe droughts, floods and other effects of global warming.

“This could be the one thing to come out of Poznan,” said Kit Vaughan of WWF-Britain.

The decision in the final hours of the two-week conference could begin to release some $60 million (euro45 million) within months, according to delegates and environmentalists following the closed-door talks.

“This is an important step,” said delegate Mozaharul Alam of Bangladesh.

Alam said ministers and senior delegates from dozens of countries decided to give a blocked fund’s governing board the authority to directly disburse money to developing countries for projects to reduce greenhouse gases.

Until now, the U.N.-backed Adaptation Fund board could not operate because its board had no right to approve and sign those contracts.

The fund is derived from a 2 percent levy on offset investments that industrial nations make on green projects in the developing world. The negotiators have been discussing other ways to ramp up the fund into the billions.

The agreement was one of the few concrete goals the delegates set for Poznan when the talks began Dec. 1. Delegations from nearly 190 countries are negotiating a new climate change pact, to be completed next December in the Danish capital of Copenhagen, that would succeed the Kyoto Protocol when it expires in 2012.

Former U.S. Vice President Al Gore, who shared last year’s Nobel peace prize for raising awareness of climate change, urged the conference to stay focused on the task of reducing global carbon emissions that have already begun to change the conditions of life on Earth.

Winning cheers and ovations, Gore called on heads of state to convene several climate change summits over the next 12 months to spur on the talks ahead of the crucial meeting in Copenhagen.

This challenge “affects the survival of human civilization,” Gore said.

“We cannot negotiate with the facts, we cannot negotiate with the truth about our situation, we cannot negotiate with the consequences of unrestrained dumping of 70 million tons of global warming pollution into the thin shell of atmosphere surrounding our planet every 24 hours,” he said.

Environmentalists have complained that the Poznan conference was hamstrung by delays and low ambitions.

“There is still time to rescue the minimum acceptable outcome from Poland, but we need to ensure that in 2009 we hit the ground running,” said Julie-Anne Richards of Oxfam, a British-based humanitarian agency.

The conference “could have been much more robust,” said Gustavo Silva-Chavez, of the Environmental Defense Fund based in New York.

The conference marks the midway point in a two-year negotiating process begun last year in Bali, Indonesia, to reach a new treaty in December 2009.

Ministers and top officials from 145 countries concluded in a round table discussion late Thursday that the negotiations over the next year should produce an ambitious agreement that can be ratified by all countries.

Still, progress has been slowed as negotiators wait for the new and more climate-friendly government of President-elect Barack Obama to take over from the outgoing Bush administration.

U.S. Senator John Kerry, who is in line for chairmanship of the powerful Foreign Relations Committee, told The Associated Press that a new draft treaty should be possible even if the U.S. does not impose mandatory limits on greenhouse gases before the next pivotal climate conference.

“I think Copenhagen should produce a treaty fundamentally geared to reductions of emissions,” Kerry said.

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PUBLISHED BY ‘THE GUARDIAN’ (UK)

Posted in AGRICULTURE, BANKING SYSTEMS, ECONOMIC CONJUNCTURE, ECONOMY, ENVIRONMENT, EUROPE, FINANCIAL CRISIS 2008/2009, FOREIGN POLICIES, FOREIGN POLICIES - USA, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL RELATIONS, RECESSION, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE UNITED NATIONS, USA | Leave a Comment »

SLIGHT IMPROVEMENT IN COTTON TRADING (Pakistan)

Posted by Gilmour Poincaree on December 14, 2008

December 14, 2008 Sunday Zilhaj 15, 1429

By Our Staff Reporter

PUBLISHED BY ‘DAWN’ (Pakistan)

KARACHI, Dec 13: Trading activity on the cotton market showed a slight improvement on Saturday as a section of the spinners resumed covering operations against their forward sales of textiles.

There was, however, a slight change in the ruling prices as compared to pre-Eid holiday trading sessions owing to absence of leading ginners from the active market for no apparent reasons, floor brokers said.

Although official spot rates were revised downward by Rs50 per maund at Rs2,900, in physical trading, most of the deals were quality-based, they added.

While lint from the central Sindh cotton belt was available around Rs2,700 per maund, fine varieties in the Punjab cotton belt were traded at an average rate of Rs2,900 per maund.

Textile sources said export outlook appears to be a bit bearish because of the prevailing recession in the US and the European markets, and the higher local prices are taking away our competitive edge in our traditional export outlets.

The other destabilising factor on the export front was highly erratic price movements on the New York cotton future market, which had a negative impact on the world cotton trade, they said.

As a result, our traditional partners were not inclined to sign forward import deals for a long period and prefer short-term shipment options, they added.

After last couple of sessions sustained run-up, New York cotton futures on Friday came in for speculative selling and were quoted lower by 1.03 and 0.67 cents per lb at 43.43 and 44.12 for both the ruling March and the forward May contracts, respectively.

The following were some of the deals in rupees per maund in the ready section late on Saturday evening:

SINDH TYPE: 200 bales, each Mirpurkhas and Hala at Rs2,700.

PUNJAB VARIETY: 2,500 bales, DG Khan, 200 bales, Alipur and 100 bales, Bahawalnagar at Rs2,900.

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PUBLISHED BY ‘DAWN’ (Pakistan)

Posted in AGRICULTURE, COMMODITIES MARKET, COTTON, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, INTERNATIONAL, PAKISTAN, RECESSION | Leave a Comment »

WORLD BANK PLAN BLAMED FOR FOOD CRISIS

Posted by Gilmour Poincaree on December 14, 2008

December 14, 2008

by Alison Fitzgerald and Helen Murphy

PUBLISHED BY ‘BUSINESS REPORT’ (South Africa)

The silo, which once held thousands of tons of beans and cereals, is now empty. It was abandoned in 1991 after the bank told Salvadoran leaders to privatise grain storage, import staples such as maize and rice, and export cash crops including cocoa, coffee and palm oil.

Outside, at a food stand propped against a tower wall, price increases for grains have whittled business down to 16 customers a day from 80.

“It is a monument to the mess we are in,” says stall owner Rosa Chavez.

About 40 million people joined the ranks of the undernourished this year, the Food and Agriculture Organisation (FAO) of the UN said this week, bringing the estimate of the world’s hungry to 963 million of its 6.8 billion people.

In addition to natural causes, the recipe for famine included corrupt governments and companies that profited on misery. Another ingredient was the World Bank’s free market policies, which have brought poor nations like El Salvador into global grain markets, where prices surged.

Jeffrey Sachs, the director of the Earth Institute, said: “The World Bank made one basic blunder, which is to think that markets would solve problems of such severe circumstances. But history has shown you need to help people to get above the survival threshold before the markets can start functioning.”

Created in 1944, the World Bank spent much of its first 35 years dispensing low-interest loans, grants and advice to poor countries with an eye toward promoting self-reliance.

In 1980, the bank’s executives began attaching conditions to loans that required “structural adjustments” in the recipients’ economies.

The mandates were designed to get poor countries to cut import tariffs, reduce the government’s role in enterprises such as agriculture and promote cultivation of export crops to attract foreign currency.

The philosophy, known now as the Washington Consensus, assumed that importing basic grains would be inexpensive and that poor farmers could earn more producing exports.

Food prices had fallen for years and few economists thought that would change, said Mark Cackler, the manager of the bank’s agriculture and rural development department.

Then in 2007 and the first half of 2008, an index of 60 food commodity prices compiled by the FAO rose 82 percent. Costs have since eased, but were still 20 percent higher on November 1 than at the end of 2006.

The spike hit hard in countries that that took structural adjustment loans, like El Salvador. Its central bank said the sum total of loans was “not available”, but the agriculture ministry did give a gauge of their effects. The country was an exporter of rice 20 years ago; now it imports more than 75 percent of its needs.

Consistently wrong

East Timor’s president, Jose Ramos-Horta, said the World Bank gave “consistently wrong advice”. The 1996 Nobel peace prize winner added: “It is their advice – that buying externally is cheaper than producing – that has resulted in this.”

Current and former World Bank officials say small countries hurt their own agriculture industries by suppressing prices, taxing farms, inflating exchange rates and favouring urban development. They reject the assertion that structural adjustment loans hurt self-sufficiency.

World Bank spokesperson Geetanjali Chopra said the institution did not agree that “this crisis was caused by these policies. This crisis was caused by much more than underinvestment in agriculture.”

Still, FAO data show imports of basic grains climbed in nations such as Honduras and Ghana after they eliminated agricultural subsidies, sold off grain stores or cut tariffs to get World Bank loans in the 1990s.

In Honduras, 23 000 rice farmers went bankrupt after the government cut import duties, according to human rights group Oxfam International. Honduran farms now supply 17 percent of the domestic demand for rice, down from 90 percent before.

In Ghana, the World Bank required a tariff reduction on rice to 20 percent from 100 percent. Imports tripled, said Raj Patel, a scholar at the University of California.

Uma Lele, a World Bank economist between 1971 and 2005, said the free market policies were a sharp turn from the bank’s earlier efforts to develop poor countries’ agriculture and self-reliance.

Former bank president Robert McNamara introduced the structural adjustment concept in 1979 as he urged rich nations to open their markets to poor countries’ exports.

“Developing countries will need to carry out structural adjustments favouring their export sector,” he said in a speech in Manila.

Pierre Landell-Mills, a bank economist at the time, said officials were frustrated that their farming investment through the 1970s was not paying off, especially in Africa.

The “preferred solution”, he said, was to dismantle state marketing boards, shrink governments and remove barriers to entrepreneurship.

McNamara approved the first three structural adjustment loans in 1980. By 1985 they made up more than a quarter of the World Bank’s total lending, according to Kyle Peters, its country services director.

Free market principles were on the rise in the US and the UK, the bank’s major funders. Alden Clausen, appointed by the US to succeed McNamara in 1981, was sure “you could fight poverty better if you get the policies of a country right. I loved structural adjustment loans, and I made a lot of them,” he said.

As these loans grew, the portion of the World Bank’s lending devoted to agriculture fell, to 8 percent in 2000 from 30 percent in 1980. Last year, farm-related loans made up 12 percent of its $24.7 billion book.

“One of the reasons we have problems today is because of the cuts in agriculture,” said Montague Yudelman, the director of the bank’s agriculture unit under McNamara. “If they’d made a continuously high level of investment, we’d have been in much better shape.”

By the late 1980s critics began saying the bank was fostering poverty and dependence.

In 1995, just 30 days into his tenure as bank president, James Wolfensohn promised changes. In a meeting with 12 non-profit organisations, he heard their argument that 15 years of adjustment lending had wiped out small farmers in Africa, Latin America and Asia.

A different way

“I am looking for a different way of doing business,” Wolfensohn, who led the bank until 2005, told them.

The bank’s commitment to free-market principles didn’t waver.

In 2000, as a condition for a $6.8 million agriculture loan in East Timor, the bank demanded that state-funded agricultural service centres be privatised and rejected money for a public grain silo, according to Tim Anderson, a political economy lecturer at the University of Sydney.

In 2001 several non-profit groups released a report saying the policies “have undermined the viability of small farms, weakened food security and damaged the environment”.

In August 2004, James Adams, the World Bank’s head of operations policy, declared the end of structural adjustments, saying the bank had “abandoned the prescriptive character of the old policy”.

The next year, the bank demanded that Niger privatise its irrigation systems, according to a report by non-profit coalition Eurodad. The condition “has seriously damaging effects on poor farmers’ access to a precious resource”, says the 2007 report. The group found economic policy conditions were attached to 71 percent of loans and grants.

In this year’s World Development Report, the bank acknowledges that limiting state participation in agriculture has hurt small farmers.

Bank president Robert Zoellick has promised to double agriculture spending while touting free trade as a solution to rising food prices.

Poor countries remain sceptical. In world trade talks in Geneva in July they insisted on their right to raise tariffs to protect domestic agriculture, stalling the negotiations.

El Salvador, meanwhile, has invested about $240 million in agriculture since 2004. Agriculture minister Mario Salaverria said: “The World Bank had a very short-term vision. It could not have been more wrong.”

His country must regain self-sufficiency, he said. “We can stop using our cars because of price increases, but we cannot stop eating.”

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PUBLISHED BY ‘BUSINESS REPORT’ (South Africa)

Posted in AGRICULTURE, BANKING SYSTEMS, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FOOD PRODUCTION (human), GRAINS, INTERNATIONAL, RECESSION, THE FLOW OF INVESTMENTS, WORLD BANK | Leave a Comment »

FUND FRAUD HITS BIG NAMES – MADOFF’S CLIENTS INCLUDED METS OWNER, GMAC CHAIRMAN, COUNTRY-CLUB RECRUITS (USA)

Posted by Gilmour Poincaree on December 14, 2008

DECEMBER 13, 2008

by Robert Frank, Peter Lattman, Dione Searcey and Aaron Lucchetti – Matthew Futterman, Jenny Strasburg, David Enrich, and Craig Karmin contributed to this article.

PUBLISHED BY ‘THE WALL STREET JOURNAL’ (USA)

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New potential victims emerged of Wall Street veteran Bernard Madoff’s alleged giant Ponzi scheme, with international banks, hedge funds and wealthy private investors among those sorting out what could amount to tens of billions of dollars in losses.

New York Mets owner Fred Wilpon, GMAC LLC Chairman J. Ezra Merkin and former Philadelphia Eagles owner Norman Braman were among the dozens of seemingly sophisticated investors who placed money on what could prove to be history’s largest financial scam.

Giant French bank BNP Paribas, Tokyo-based Nomura Holdings Inc. and Neue Privat Bank in Zurich are also exposed, according to people familiar with the matter.

And at least three funds of hedge funds – which raise money from investors and farm it out to hedge funds – may have significant losses. Fairfield Greenwich Group and Tremont Capital Management of New York placed hundreds of millions of their investors’ dollars into funds overseen by Mr. Madoff. On Friday, Maxam Capital Management LLC reported a combined loss of $280 million on funds they had invested with Mr. Madoff.

“I’m wiped out,” said Sandra Manzke, Maxam’s founder and chairman. The Darien, Conn., fund of hedge funds will have to close as a result of the losses, she said.

Mr. Madoff, the founder and primary owner of Bernard L. Madoff Investment Securities LLC in New York, was arrested and charged Thursday. Prosecutors allege that the 70-year-old Mr. Madoff hid losses, paying certain investors returns using principal he received from other investors. Prosecutors and regulators have yet to determine how much has been lost, or the amount in assets still held by Mr. Madoff’s business.

The alleged fraud has “swept up some of the most prominent and wealthy Americans, along with many people who thought they were embarking on a comfortable retirement and have now been left destitute,” says Brad Friedman, a lawyer at Milberg LLP, which with Seeger Weiss LLP represents more than 30 investors with losses they believe could total more than $1 billion.

In criminal and civil complaints, Mr. Madoff is quoted as saying the losses could amount to $50 billion.

“This is a real tragedy,” Mr. Madoff’s attorney, Ike Sorkin, said Friday. “We’re going to fight through these events and do what we can to minimize the loss.”

Details emerged Friday of how Mr. Madoff ran the alleged scam, fostering a veneer of exclusivity and creating an A-list of investors that became his most powerful marketing tool. From New York and Florida to Minnesota and Texas, the money manager became an insider’s choice among well-heeled investors seeking steady returns. By hiring unofficial agents, tapping into elite country clubs and creating “invitation only” policies for investors, he recruited a steady stream of new clients.

During golf-course and cocktail-party banter, Mr. Madoff’s name frequently surfaced as a money manager who could consistently deliver high returns. Older, Jewish investors called Mr. Madoff ” ‘the Jewish bond,’ ” says Ken Phillips, head of a Boulder, Colo., investment firm. “It paid 8% to 12%, every year, no matter what.”

As his reputation grew, Mr. Madoff gained the trust of prominent businessmen, including ex-Eagles owner Mr. Braman, who owns a chain of Florida auto dealers. A voicemail message left with Mr. Braman’s office was not immediately returned.

Mets owner Mr. Wilpon, who also owns real-estate investor Sterling Equities, often raved about Mr. Madoff’s investment prowess and invested tens of millions of dollars of both his own money and the team’s with his company, say financiers who have worked with him. Mr. Madoff handled investments for the Judy & Fred Wilpon Family Foundation, which distributed about $1 million a year in 2005 and 2006 to charities, according to its most recent federal tax returns.

Mets spokesman Jay Horowitz declined to comment Friday. Mr. Wilpon’s Sterling Equities said in a statement: “We are shocked by recent events and, like all investors, will continue to monitor the situation.”

Mr. Merkin, the chairman of former General Motors Corp. financing arm GMAC, is also a money manager at Ascot Partners LLC in New York. Ascot, which had $1.8 billion under management as of Sept. 30, had substantially all of its assets invested with Mr. Madoff, according to a letter to Mr. Merkin sent to clients Thursday night. Mr. Merkin said as one of the largest investors in Ascot, he believed he had personally “suffered major losses from this catastrophe.”

Mr. Merkin could not be reached for comment.

Mr. Madoff tapped social networks in Dallas, Chicago, Boston and Minneapolis. In Minnesota, he attracted investors from Hillcrest Golf Club of St. Paul and Oak Ridge Country Club in Hopkins, investors say. One of them estimated that investors from the two clubs may have invested more than $100 million combined.

One of the largest clusters of Madoff investors was in Florida, where losses could be substantial. Mr. Madoff relied on a network of friends, family and business colleagues to attract investors. According to investors and agents, some of these agents were paid commissions for harvesting investors. Others had separate, lucrative business relationships with Mr. Madoff.

“If you were eating lunch at the club or golfing, everyone was always talking about how Madoff was making them all this money,” one investor says. “Everyone wanted to sign up.”

Jeff Fischer, a top divorce attorney in Palm Beach, says many of his clients were also Mr. Madoff’s clients. “Every big divorce that came through my office had portfolio positions with Madoff,” he says.

Two of his investors said that among his clients, Mr. Madoff was considered a money-management legend; they would joke that if Mr. Madoff was a fraud, he’d take down half the world with him.

Richard Spring, a Boca Raton resident and former securities analyst, says he had about $11 million – or 95% of his net worth – invested with Mr. Madoff. “That’s how much I believed in him,” Mr. Spring said.

Mr. Spring said he was also one of the unofficial agents who connected Mr. Madoff with dozens of investors, from a teacher who put in $50,000 to entrepreneurs and executives who would put in millions. Mr. Spring said Mr. Madoff didn’t want people to put in large amounts right away. “Bernie would tell me, ‘Let them start small, and if they’re happy the first year or two, they can put it more.'”

Mr. Spring says he never was paid a commission, but he received fees from a small investment-research firm that counted Mr. Madoff as a client; he declined to say how much he received. He said investors would always come to him asking to invest with Mr. Madoff. “I never solicited anyone,” he says.

Mr. Spring says he never detected signs of impropriety with Mr. Madoff’s investing, but he concedes that he may receive some blame from some investors. “I can understand where people who lost money are looking for a scapegoat,” he says. “I’m heartbroken that so many people have been hurt so badly.”

Mr. Madoff’s main go-between in Palm Beach was Robert Jaffe, say several investors. Mr. Jaffe is the son-in-law of Carl Shapiro, the founder and former chairman of apparel company Kay Windsor Inc. and an early investor and close friend of Mr. Madoff’s. Mr. Jaffe, a philanthropist in Palm Beach, attracted many investors from the Palm Beach Country Club in Palm Beach, Fla.

A spokeswoman for Mr. Jaffe’s family said several family members were investors with Mr. Madoff and were “significantly adversely impacted” by recent events. There are no indications that Mr. Jaffe or Mr. Spring are implicated in the alleged fraud. Mr. Jaffe didn’t return messages yesterday.

Other investors stand to lose through their investments with the likes of Fairfield Greenwich Group and Tremont Capital Management, funds of hedge funds that invested their cash with Mr. Madoff.

“Needless to say, our level of anger and dismay over the apparent betrayal by Mr. Madoff and his organization of his 14-year relationship with Tremont is immeasurable,” Tremont told clients in a letter Friday.

Fairfield Greenwich said in a statement late Friday that it is trying to assess the extent of potential losses. The firm said that on Nov. 1, it had $7.5 billion in investments connected to Mr. Madoff’s firm, slightly more than half of its total assets. Founding partner Jeffrey Tucker said the firm had no indication of any potential wrongdoing. “We are shocked an appalled by this news,” he said.

Ms. Manzke, 60, of Maxam Capital Management, said she met Mr. Madoff through investors in the mid-1980s and introduced him to Tremont, where she was then chief executive. That introduction led to Tremont’s decision to market Mr. Madoff as a money manager to its own investors, she adds.

In November, she says, Maxam asked to pull $30 million from Mr. Madoff, and he returned the money.

“He was a low-key guy,” Ms. Manzke says. “He would say, ‘Look, I’m a market-maker, and I don’t want anyone to know I’m running money.’ It was always for select people. He was always closed, he wasn’t taking new money.”

Several European investors were also apparent victims. Bramdean Alternatives in the U.K. said it had more than 9% of its portfolio invested in Madoff funds. Geneva-based Banque Benedict Hentsch, a white-glove private bank, said it is exposed for $47.5 million.

BNP Paribas’s exposure, the extent of which is not clear, may stem from BNP’s lending relationship with a fund of funds that was a big Madoff client, said people familiar with the matter. A BNP spokeswoman declined to comment.

Nomura and Neue Privat Bank, meanwhile, together marketed access to Fairfield Sentry Ltd., a fund overseen by Mr. Madoff and sold through Fairfield Greenwich. The shares offered by Neue Privat and Nomura were leveraged three times — meaning $3 of borrowed money was added to every $1 of capital invested in order to magnify returns, greatly increasing the potential losses for those investors.

A Nomura spokesman declined to comment. A message left with Neue Privat was not returned.

The federal complaints against Mr. Madoff allege his fraudulent activities came through a secretive private wealth-management wing of Bernard L. Madoff Investment Securities, the investment firm he founded in 1960. On Wall Street, his company was perhaps better known for its operations in market-making — the business of serving as a middleman between buyers and sellers — and proprietary trading.

Through those higher-profile parts of his operation, Mr. Madoff was a pioneer in trading New York Stock Exchange shares away from the exchange. He is a past chairman of the board of directors of the Nasdaq Stock Market as well as a member of the board of governors of the National Association of Securities Dealers and a member of numerous committees of the organization, according to his firm’s Web site.

Mr. Madoff owns a home in Roslyn, N.Y., records show, and an elaborate beachfront home and grounds in Montauk on Long Island.

Mr. Madoff and his wife live in an apartment building on Manhattan’s Upper East Side where property records list individual apartments valued at more than $5 million. One property database estimated the 2008 market value of Mr. Madoff’s two-floor unit to be roughly $9 million. For years he has served as president of the building’s co-op board, according to a tenant.

Tenants say he appeared down-to-earth, friendly and always greeted everyone by their first name.

Colleagues of Mr. Madoff said he was fair to those he dealt with and generous to charities including the Special Olympics. Mr. Madoff treated employees well and loved to take friends and colleagues on his 55-foot fishing boat, called Bull, said Frank Christensen, a retired New York Stock Exchange broker. “I really think very highly of him,” said Mr. Christensen. “People make mistakes.”

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PUBLISHED BY ‘THE WALL STREET JOURNAL’ (USA)

Posted in BANKING SYSTEM - USA, BANKING SYSTEMS, BANKRUPTCIES - USA, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FINANCIAL SERVICES INDUSTRIES, HOUSING CRISIS - USA, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE FLOW OF INVESTMENTS, USA | Leave a Comment »