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UP GOVT. TO AID DEVELOPERS IN NOIDA (India)

Posted by Gilmour Poincaree on January 22, 2009

22 Jan 2009, 1337 hrs IST

ET Bureau

PUBLISHED BY ‘ECONOMIC TIMES’ (India)

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PUBLISHED BY ‘ECONOMIC TIMES’ (India)

Posted in BANKING SYSTEMS, CEMENT, COMMERCE, COMMODITIES MARKET, CONSTRUCTION INDUSTRIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDIA, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, REAL ESTATE INDUSTRIES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, RESTRUCTURING OF PRIVATE COMPANIES, THE FLOW OF INVESTMENTS | Leave a Comment »

CHRYSLER WANTS $3B MORE IN BAILOUT AID – GM WON’T SEEK EXTRA BEYOND $13.4B – FORD DROPS LINE OF CREDIT IDEA (USA)

Posted by Gilmour Poincaree on January 13, 2009

Monday, January 12, 2009

by David Shepardson – Detroit News Washington Bureau

PUBLISHED BY ‘THE DETROIT NEWS’ (USA)

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE DETROIT NEWS’ (USA)

Posted in AUTOMOTIVE INDUSTRY, BANKING SYSTEM - USA, BANKRUPTCIES - USA, COMMERCE, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FINANCIAL SERVICES INDUSTRIES, INDUSTRIAL PRODUCTION - USA, INDUSTRIAL SUBSIDIES, INDUSTRIES - USA, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, RESTRUCTURING OF PRIVATE COMPANIES, STOCK MARKETS, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE WORK MARKET, USA | Leave a Comment »

NEW OIL POLICY ENVISAGES INCENTIVES FOR EXPLORATION – THE NEW PETROLEUM POLICY APPROVED BY THE ECONOMIC COORDINATION COMMITTEE (ECC) OF THE CABINET ON FRIDAY ENVISAGES AN INCREASE IN TAX EXEMPTIONS AND FISCAL INCENTIVES TO SPUR OIL AND GAS EXPLORATION AND A REDUCTION IN BUREAUCRATIC HURDLES IN THE AWARD OF CONTRACTS FOR EXPLORATION (Pakistan)

Posted by Gilmour Poincaree on January 11, 2009

by Dawn Staff Reporter

PUBLISHED BY ‘DAWN’ (Pakistan)

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PUBLISHED BY ‘DAWN’ (Pakistan)

Posted in BANKING SYSTEMS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY INDUSTRIES, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, MACROECONOMY, PAKISTAN, PETROL, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STATE TARIFFS, THE FLOW OF INVESTMENTS | Leave a Comment »

SILK WEAVERS SEEK GOVT HELP TO ARREST RISING COSTS (India)

Posted by Gilmour Poincaree on January 9, 2009

9 Jan 2009, 02:50 hrs IST

by Nandini Sivakumar – ET Bureau

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

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PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

Posted in BANKING SYSTEMS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, GARMENT INDUSTRIES, INDIA, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, RECESSION, TEXTILE INDUSTRIES, THE FLOW OF INVESTMENTS | Leave a Comment »

PEPCO TO GET 90 PER CENT OF KESC’S FEDERAL SUBSIDY (Pakistan)

Posted by Gilmour Poincaree on January 7, 2009

Tuesday, 06 Jan, 2009 – 09:15 AM

by Sher Baz Khan – PST

PUBLISHED BY ‘DAWN’ (Pakistan)

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PUBLISHED BY ‘DAWN’ (Pakistan)

Posted in BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, ENERGY INDUSTRIES, FINANCIAL CRISIS 2008/2009, FUELS, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, JUDICIARY SYSTEMS, PAKISTAN, RECESSION | Leave a Comment »

CRANE RENTAL RATES LOWERED TO GIVE CONSTRUCTION INDUSTRY A LIFT (Malaysia)

Posted by Gilmour Poincaree on January 2, 2009

Friday January 2, 2009

by K.C Law

PUBLISHED BY ‘THE STAR’ (Malaysia)

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PUBLISHED BY ‘THE STAR’ (Malaysia)

Posted in CONSTRUCTION INDUSTRIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FOREIGN WORK FORCE - LEGAL, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, MALAYSIA, NATIONAL WORK FORCES, RECESSION, THE FLOW OF INVESTMENTS, THE WORK MARKET, THE WORKERS | Leave a Comment »

MAJLIS PRIORITIZES ECONOMIC REFORM PLAN – THE MAJLIS HAS DECIDED TO MAKE THE NATIONAL ECONOMIC REFORM PLAN A SINGLE URGENCY ISSUE ON THE PARLIAMENT’S AGENDA (Iran)

Posted by Gilmour Poincaree on December 31, 2008

News Code : TTime- 185966 – Wednesday, December 31, 2008

Tehran Times Political Desk

PUBLISHED BY ‘THE TEHRAN TIMES’ (Iran)

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PUBLISHED BY ‘THE TEHRAN TIMES’ (Iran)

Posted in BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, IRAN, PUBLIC SECTOR AND STATE OWNED ENTERPRISES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, RESTRUCTURING OF THE PUBLIC SECTOR, STATE TARIFFS, THE FLOW OF INVESTMENTS | Leave a Comment »

PREMIER SAYS GOVERNMENT WILL HELP AILING INDUSTRIES – LENDING A HAND: LIU CHAO-SHIUAN SAID THE GOVERNMENT WILL ASK COMPANIES TO MAKE PLEDGES OF HIGHER ENERGY EFFICIENCY AND TO SET CAPS FOR CARBON DIOXIDE EMISSIONS (Formosa – Taiwan)

Posted by Gilmour Poincaree on December 31, 2008

Wednesday, Dec 31, 2008

by Shih HsIu-chuan – Staff Reporter

PUBLISHED BY ‘THE TAIPEI TIMES’ (Formosa – Taiwan)

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PUBLISHED BY ‘THE TAIPEI TIMES’ (Formosa – Taiwan)

Posted in BANKING SYSTEMS, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, ENERGY INDUSTRIES, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FINANCIAL SERVICES INDUSTRIES, FORMOSA - TAIWAN, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, MACROECONOMY, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, RESTRUCTURING OF PRIVATE COMPANIES, STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

DBP KEEN ON LOANS FOR RENEWABLE ENERGY (Philippines)

Posted by Gilmour Poincaree on December 27, 2008

Friday, December 26,2008

by Euan Paulo C. Añonuevo

PUBLISHED BY ‘THE MANILA TIMES’ (Philippines)

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PUBLISHED BY ‘THE MANILA TIMES’ (Philippines)

Posted in AEOLIC, BIOMASS, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ELECTRIC / ELECTRONIC INDUSTRIES, ENERGY, ENERGY INDUSTRIES, ENVIRONMENT, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, HYDROELECTRIC ENERGY, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, PHILIPPINES, RECESSION, THE FLOW OF INVESTMENTS, UNITED KINGDOM | Leave a Comment »

CHINA MULLS INCENTIVES TO SCRAP OLD CARS

Posted by Gilmour Poincaree on December 27, 2008

10:50:00 12/27/2008

Agence France-Presse

PUBLISHED BY ‘THE PHILIPPINE DAILY INQUIRER’ (Philippines)

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PUBLISHED BY ‘THE PHILIPPINE DAILY INQUIRER’ (Philippines)

Posted in CHINA, ECONOMIC CONJUNCTURE, ECONOMY, ENVIRONMENT, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, MACROECONOMY, RECESSION, RECYCLING INDUSTRIES, THE FLOW OF INVESTMENTS | 1 Comment »

SANTA CLAUS BAILOUT HEARINGS

Posted by Gilmour Poincaree on December 26, 2008

 

 

C-SPAN – Coverage of Santa Claus asking Congress for a financial bailout of the North Pole – Present Giving Industry. If they dont approve his aid package, Christmas may be ruined.

Posted in AUTOMOTIVE INDUSTRY, BANKING SYSTEM - USA, BANKRUPTCIES - USA, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, HOUSING CRISIS - USA, INDUSTRIAL PRODUCTION - USA, INDUSTRIAL SUBSIDIES, INDUSTRIES - USA, NATIONAL DEBT - USA, RECESSION, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, TRADE DEFICIT - USA, USA | Leave a Comment »

ANATEL LANÇARÁ EM 2009 PLANO DE CELULAR PARA BAIXA RENDA – Superintendente disse que a nova Oi e a Claro já se comprometeram a ofertar o plano (Brazil)

Posted by Gilmour Poincaree on December 21, 2008

19/12/2008 – 21h10min

CLIC RBS

PUBLISHED BY ‘ZERO HORA’ (Brazil)

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PUBLISHED BY ‘ZERO HORA’ (Brazil)

Posted in A INDÚSTRIA DA COMUNICAÇÃO, BRASIL, COMBATE À DESIGUALDADE E À EXCLUSÃO - BRASIL, COMMUNICATION INDUSTRIES, ECONOMIA - BRASIL, ECONOMIC CONJUNCTURE, ECONOMY, EXPANSÃO ECONÔMICA, EXPANSÃO INDUSTRIAL, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDÚSTRIA DE ELETRO-ELETRÔNICOS, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, O MERCADO IMPORTADOR, RECESSION, TELEFONIA - FIXA E MÓVEL | Leave a Comment »

A TRUCK-ULENT DETROIT

Posted by Gilmour Poincaree on December 15, 2008

December 15, 2008

by Andrew Main, Business Editor – The Australian

PUBLISHED BY ‘THE AUSTRALIAN’

WERE you surprised on Friday to learn the $21 billion bailout of the US motor industry had been held up by the US Senate?

Me neither, any more than when we then learned that President George W.Bush subsequently said he was prepared to keep GM and Chrysler going at least until the end of the year.

But independent of how the rescue operation does end up being structured, it’s worth saying that the Republicans’ reluctance to throw money at Detroit deserves a fair bit more sympathy than the last time US legislators jacked up on a global issue, over the initial $US700 billion ($1.06 trillion) TARP bad debt rescue package.

In simple terms, why should the US taxpayer rescue an industry that has been fighting tooth and nail for decades not to move into the 21st century?

The main ostensible issues are about bringing down disproportionately high pay for Big Three car workers, but what’s just as important — particularly to president-elect Barack Obama — is modernising the products dramatically.

In the same way that George Bush senior notoriously announced at the Earth Summit in 1992 that “the American way of life is not negotiable”, the Detroit giants have been behaving for decades like the eccentric Corporal Klinger in the film and television series M.A.S.H.

In one episode Klinger spray-painted himself gold, dressed up as the Statue of Liberty and wrapped himself in the Stars and Stripes in a bid to be sent home from the Korean war as being mentally unstable. It didn’t work.

The big Detroit carmakers have been doing pretty much the same thing, building a perception in motorists’ minds that if they’re not driving something huge and locally made, then they’re letting the nation down. Cue old newsreel shots of American-made trucks helping to win World War II — over 50,000 6×6 trucks and 4WD jeeps went to help Stalin’s Russia, for instance.

But there’s a much more subtle game that’s been played for years by Detroit’s lobbyists in Washington: tax breaks for big vehicles.

Back in the 1970s, which is ironically when the first oil price shock occurred, the US income tax code was altered to give a break to small farmers and self-employed workers who needed a truck for work. Because there was a luxury car tax in place, now long gone, there was an immediate write-off allowable for any truck with a maximum gross weight of more than 6000 pounds (2720kg). The weight limit was set deliberately high to stop cheating by car manufacturers, since the only car you would find in the US that heavy is the President’s armoured limousine. That scale of vehicle is right at the top end of 4WD sizes in Australia.

The tax break got more generous as the years went by, not less, so that by 2003 you could get a year of purchase tax write-off of up to $US100,000, plus there was something called a “bonus deduction”; that climbed from 30 per cent to 50 per cent, and on top of that the whole cost of the vehicle could be written off over a generous five years.

It’s not quite a case of buyers being paid to own the giant SUV trucks, but it came close. Congress did a minor backflip in 2004 with the passage of the American Jobs Creation Act (honestly), cutting back the maximum initial write-off to $US25,000 but keeping the other two generous elements of the scheme. There’s other skulduggery in the cupboard, not least the fact that way back in the late 1970s light trucks and 4WDs were exempted from the legislative moves to improve US-made vehicles’ fuel consumption, and the fact that around 2005 the tax break for hybrid vehicles was pushed down (below $US2000) rather than up.

There’s also a strong piece of automotive folklore that Toyota fast-forwarded development of its Prius hybrid car because Washington had given Detroit a billion-dollar subsidy to get serious about hybrids. The chastened Detroit chiefs who last month got a huge shellacking for flying their corporate jets to Washington did make sure on their next visit that their industry’s most fuel-efficient new models were readily available for the politicians to look at, but the new models are clearly only just emerging from the development stage, unlike the Prius.

Obama has taken the view that there should be significant strings attached to any loan deal, most specifically requiring cars that are dramatically more environmentally friendly. Any economist will tell you, meanwhile, that the global capacity for car manufacturing has increased well past demand in recent years, mostly because of new factories in China and India, which invites the question of whether the US needs a car industry at all.

But one look at the unemployment, and thus electoral, consequences of a total Detroit shutdown will tell you that a compromise has to be on the way. Not if, but when.

But when it does come, the US legislators would be well advised to fix the tax rules to encourage more environmentally friendly vehicles. The industry likes to say it takes four years to develop a new model, yet there’s a fair chance that those new models have been designed already but not put on the production line. The makers certainly don’t have four years to play with — and maybe not even four months.

The most disgraceful canard of the lot from the Detroit spin industry has been that GM, Ford and Chrysler were building vehicles that US drivers wanted to buy. Looked at another way, the drivers wanted big SUVs because the tax laws had been fixed to favour them, plus of course the manufacturers enjoyed higher profit margins from making bigger easy-to-make trucks. Let’s not even speculate on who pushed for those tax breaks in the first place.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE AUSTRALIAN’

Posted in AUTOMOTIVE INDUSTRY, BANKING SYSTEM - USA, BANKRUPTCIES - USA, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, CONSUMERS AND PSYCHOLOGICAL FACTORS, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDUSTRIAL PRODUCTION - USA, INDUSTRIAL SUBSIDIES, INDUSTRIES - USA, MACROECONOMY, NATIONAL WORK FORCES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE WORK MARKET, THE WORKERS, USA | Leave a Comment »

THE BIG THREE AT THE CONGRESS

Posted by Gilmour Poincaree on December 5, 2008

December 5, 2008

by Fred Hubner

PUBLISHED BY ‘FROM SCRATCH NEWSWIRE’ (USA)

CHARGE BY by Fred Hubner – 05-12-2008 – © Copyright 2008 – All Rights Reserved

PUBLISHED BY ‘FROM SCRATCH NEWSWIRE’ (USA)

Posted in AUTOMOTIVE INDUSTRY, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, HOUSING CRISIS - USA, INDUSTRIAL PRODUCTION - USA, INDUSTRIAL SUBSIDIES, INDUSTRIES - USA, NATIONAL WORK FORCES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE WORK MARKET, THE WORKERS, USA, USA HUMOR | Leave a Comment »

ALL STAKEHOLDERS BEING INVOLVED IN PLANNING: TARIN (Pakistan)

Posted by Gilmour Poincaree on December 3, 2008

December 03, 2008 Wednesday Zilhaj 4, 1429

PUBLISHED BY ‘DAWN’ (Pakistan)

By Our Staff Reporter

KARACHI, Dec Finance Adviser Shaukat Tarin 2: Finance Adviser Shaukat Tarin said on Tuesday that the government was operating on a modern concept of associating all stakeholders in planning and implementation and also a periodic review of how the plans were being implemented.

“Modern management concepts are being introduced in government,” the adviser said while inaugurating the 11th Management Association of Pakistan (MAP) Convention 2008 here.

He said the government faced a challenge of unprecedented nature and was almost in an “act or die” situation when it was voted into power.

“The government accepted the challenge and acted to overcome the crisis,” he informed the audience while recalling that the fiscal deficit at one time last fiscal year had touched almost 10 per cent level.

It ended at 7.5 per cent fiscal deficit and 8.4 per cent current account deficit.

He added that when the government took over, the world had come under impact of an unprecedented global financial crisis and Pakistan’s access to international finance market was also blocked.

The government took tough decisions of cutting down heavily on energy subsidies to contain expenditure budget and narrow down budgetary imbalance and reduce dependence on State Bank of Pakistan borrowing.

“The rupee-dollar parity had gone up from Rs62 to Rs84 and foreign exchange reserves had dropped down to a level where these were sufficient for hardly few weeks import when I took over as adviser,” he recalled.

“We went to International Monetary Fund with our home-grown strategy to stabilise the economy in the short- and long-term,” he said.

Mr Tarin raised a question before his audience as to why Pakistan confronts an economic crisis after every decade.

His own answer to this question was to prepare a long-term plan with consultation of stakeholders and then a periodical review.

It is in context of this concept, he said, the Planning Commission is being given a new shape by brining all stakeholders — intellectuals, all relevant government agencies and private sector — at one table to prepare a strategy.

He said the nine-point agenda on which the government was working was a consensus strategy. It would be reviewed quarterly by a body headed by the prime minister.

The nine-point agenda takes care of budgetary and current account imbalance, raising tax-to-GDP ratio to 15 per cent in next five years, provision of safety nets for the poor that include direct government intervention in the form of Benazir Income Support Programme, protecting budgetary allocations for education and health, promotion of productive sector agriculture and industry.

He said the trade and industry were fragmented and needed consolidation which was being taken up.

He blamed all previous governments of ignoring agriculture which has brought down its productive capacity.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘DAWN’ (Pakistan)

Posted in AGRICULTURE, BANKING SYSTEMS, CENTRAL BANKS, CURRENCIES, DOLLAR (USA), ECONOMIC CONJUNCTURE, ECONOMY, FARMING SUBSIDIES, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, IMF, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, PAKISTAN, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

CHEATING THE POOR (Philippines)

Posted by Gilmour Poincaree on November 22, 2008

First Posted 02:45:00 11/22/2008

Editorial

Philippine Daily Inquirer

On Nov. 18, the National Food Authority (NFA) published an innocuous-looking notice in the CHEATING THE POORpapers: “In reference to our previous announcement we would like to remind the public that effective December 1, 2008, the sale of highly subsidized NFA rice at P18.25 per kilogram will be limited to those holders of Family Access Card (FAC) in NCR and Rice Allocation Ledger (RAL) at the provincial level as validated by the Department of Social Welfare and Development.”

Behind that notice is a story of incompetence, inefficiency and buck-passing, and of officialdom being blind to what the public could clearly see all along: their leaders and fellow citizens subverting the system for personal advantage.

When the government admitted that there was a rice crisis, it also announced that it would pour billions of pesos into providing subsidized rice for the poor and that it would institute rationing to ensure that everyone would get at least something. What followed was a stampede, as queues formed and government’s perennially creaky infrastructure groaned under the weight of public panic and official promises.

Observers began to notice that the queues forming had a curious human composition. People who weren’t residents of the area would appear in them. There seemed to be roving bands of entrepreneurial folk—whole families at a time—queuing up to then resell their subsidized rice to middle-class types who wanted to save on rice for their household help or company employees. We won’t even go into the whispered allegations of importers profiting from the emergency purchases decreed by President Gloria Macapagal-Arroyo, or the politicians who found sorting out the confusing queuing going on to be a good way to allocate patronage.

The emergency purchase and distribution of rice was funded by the expanded value-added tax. But as the crisis atmosphere concerning rice, then oil, has dissipated, to be replaced by growing concern over the global financial crisis, it seems that the government threw good money after bad, with nothing to show for it as far as rice is concerned.

Social Welfare Secretary Esperanza Cabral, who has had her fair share of having otherwise rational pro-poor programs altered beyond recognition by the President’s obsession with political patronage above all else, admitted recently that what the World Bank said in a report was true: Only a third of the rice bought in great quantities and at great cost, for resale at subsidized prices for the poor (families with five members, and a monthly income of P5,000), found its way into the hands of the poor. As much as 41 percent of the subsidized rice, on the other hand, found its way into non-poor households, which, as we’ve pointed out, was widely noticed and commented on during the rice crisis. The two wealthiest sectors of society, according to the same World Bank study, consumed 16 percent of the NFA’s subsidized rice—again something conspicuous during the rice crisis, when chauffeurs waited for the entrepreneurial beneficiaries to sell their rations to the drivers’ bosses.

Everyone, we believe, will welcome both Cabral’s admission that something is wrong (studies to look at the organizational flaws, bureaucratic inefficiency and mismanagement of our government agencies represent a worthy and useful thing to do, and not just “destabilization”) and the NFA’s efforts to fix matters by refocusing on validating the identities of those who want subsidized rice. But this is a government that has periodically engaged in trying to map the population without, it seems, ever accomplishing the task in a manner that actually works.

The flaws in the system point to two real problems: the way the national government finds even well-intentioned programs swamped by the sheer logistics required by such programs, and the way local governments, which are supposed to be an increasingly independent partner and not just a servant of the national government, end up thinking only of patronage and short-term political gain, and not the common good. The end result is billions wasted, public confidence further reduced, and the poorest of the poor getting the short end of the stick.

Copyright 2008 Philippine Daily Inquirer. All rights reserved.

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PUBLISHED BY ‘THE DAILY INQUIRER’ (Philippines)

Posted in AGRICULTURE, CORRUPTION, CRIMINAL ACTIVITIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, INDUSTRIAL SUBSIDIES, INFLATION, INTERNATIONAL, PHILIPPINES, RECESSION | Leave a Comment »

WHO WILL FINANCE AMERICA’S DEFICIT?

Posted by Gilmour Poincaree on November 17, 2008

 

Nov 13, 2008

by David P Goldman

The United States government needs to borrow US$1 trillion a year, before a new stimulus package, or handouts for the auto industry, or healthcare reform, or a dozen other spending programs promised by the incoming administration of president-elect Barack Obama. Where will the Treasury find the money?

A bizarre jump in the US Treasury’s real cost of borrowing points to severe market disruption if the Treasury deficit continues to rise. It appears that the Treasury market is also a victim of global de-leveraging. The new administration has far less budgetary flexibility that it seems to think. In 1981, under comparable circumstances, Ronald Reagan had far greater room to maneuver. I conclude that the new administration is virtually powerless to prevent marked deterioration of the US economy.

A comparison of Obamanonomics and Reaganomics is instructive. Even in the unlikely event that the Obama administration were to adopt Reagan-style incentives to risk-taking and investment, the effect of such incentives would be weaker and slower to take effect than in 1981-1984.

Exhibit 1: Inflation-indexed 10-year Treasury (TIPS) yield vs 10-year breakeven inflation. Inflation-indexed 10-year Treasury (TIPS) yield vs 10-year breakeven inflation.

As shown in Exhibit 1, the yield of the 10-year inflation-indexed Treasury (TIPS) tripled from 1% to 3% between June and October 2008. Nominal Treasury yields fell slightly, because the inflation-expectations component of Treasury yields (the difference between ordinary 10-year Treasury notes and inflation-indexed TIPS) collapsed, from 250 basis points to less than 100 basis points.

The jump in TIPS yields should ring alarm bells. It is not only that inflation-indexed Treasury yields never have risen so fast and so far since their introduction in 1997. What is most bizarre is that the movement in “real” Treasury yields is not only massive, but in the wrong direction. Both economic theory and all past experience tell us that when economic activity falls, “real” yields also should fall.

Exhibit 2 below shows that 10-year TIPS, or “real” Treasury yields have moved in the same direction as equity market returns. The inflation-adjusted Treasury bond yield is a rough proxy for real long-term interest rates (it is only a proxy because the consumer price index – or CPI – is not necessarily a good measure of inflation). Real rates are supposed to reflect growth expectations; higher growth means higher returns to financial assets, including bonds. TIPS yields are plotted against 12-month returns to the S&P 500. The two lines move together except during the past few weeks, when they take sharply opposed directions.

Exhibit 2: TIPS yields triple while S&P 500 crashes. TIPS yields triple while S&P 500 crashes.

How weird the behavior of TIPS yields has been during the past few months is made even clearer by Exhibit 3, below. We observe that TIPS yields and S&P 500 returns lined up neatly between 2004 and 2008, and suddenly moved in the opposite direction.

 

 

 

 

 

 

Exhibit 3: Scatter plot of TIPS Yields vs 12-month S&P 500 returns, January 2004 through October Scatter plot of TIPS Yields vs 12-month S&P 500 returns, January 2004 through October 20082008.

Just when we should have expected “real” Treasury yields to collapse along with equity market returns, they spiked upwards, and by the largest margin on record. Evidently something has changed, and changed drastically. One component of Treasury yields, expected inflation, has collapsed, and the “real” component has jumped.

There is no question as to why the expected-inflation component has fallen, for it has done so along with the S&P 500 and the main commodity price index (the Constant Maturity Commodities Index published by UBS and Bloomberg). This relationship is shown in Exhibit 4 below.

Exhibit 4: 10-year breakeven inflation, Constant Maturity Commodity Price Index and S&P 500, 10-year breakeven inflation, Constant Maturity Commodity Price Index and S&P 500, February 1, 2008 to November 6, 2008 (normalized).February 1, 2008 to November 6, 2008 (normalized).

Equity, commodity and Treasury bond markets all are registering a deflationary crash in precisely the same way. That seems clear enough. The dog that barked, but shouldn’t have, is the “real” component of Treasury yields.

The answer to the mystery of tripled real Treasury yields is to be found in the collapse of leverage in the global financial system. Indirectly, the rapid expansion of leverage in the global banking system contributed to demand for Treasuries. When de-leveraging commenced in August, an important component of demand for Treasuries declined sharply. That is bad news for Washington, but even worse news is that it will continue to decline sharply, just when Washington most requires global support for the US government debt market.

Global leverage indirectly increased demand for Treasuries in three principal ways:

1. It fed the boom in raw materials prices, increasing demand for Treasuries on the part of central banks as well as financial institutions in commodity-producing countries.

2. It pushed up the value of emerging market currencies, prompting emerging market central banks to intervene in foreign exchange markets by purchasing dollars which then were invested in Treasuries.

3. It contributed to the rise in global equity prices, which prompted investors to diversify their portfolios and purchase safer assets including Treasuries.

The carry trade, in which investors borrow low-interest currencies (dollars or yen) and buy high-interest emerging market currencies, created demand for Treasuries by funneling money into emerging markets that ended up as dollar reserves in their central banks.

Exhibit 5: Net foreign purchases of US Treasury securities, 12-month rolling total. Net foreign purchases of US Treasury securities, 12-month rolling total.

At the peak of demand for US government securities, net foreign purchases of Treasuries came to $400 billion per year, according to the Treasury’s TIC data base (Exhibit 5). Who were the buyers? The Treasury data offers some answers.

 

 

 

 

Exhibit 6: Foreign holdings of US Treasury securities as of August 2008 (US$ billions): total holdings, year-on-year % change, and year-on-year absolute change.

total holdings, year-on-year % change, and year-on-year absolute change.

We observe that the biggest increase came from offshore banking centers (the UK, Switzerland, Luxembourg, and Caribbean banking centers). This tells us little because anyone may transact through such centers. “Other emerging markets”, notably Brazil and other commodity producers, were the second-largest contributor, followed by Japan and the oil exporters.

Private purchases of Treasuries are larger than official flows in recent years, as shown in Exhibit 7:

Exhibit 7: Private vs official net purchases of US Treasury securities. Private vs official net purchases of US Treasury securities.

As noted, private purchases of US Treasuries seem to scale to global wealth. We observe a fairly close relationship between global equity market capitalization (as measured by the MSCI World Index) and private purchases of US Treasuries, as in Exhibit 8.

 

 

 

 

 

Exhibit 8: Private net purchases of US Treasuries scale to MSCI World Index, 1988-2008. Private net purchases of US Treasuries scale to MSCI World Index, 1988-2008.

An exception occurred during the peak of the US equity boom of the late 1990s, when Treasury purchases fell off at the peak of the boom. Evidently this exception reflected the general euphoria of the time and investor preference for riskier assets. We do not have Treasury data past August, and it well may be the case that a similar exception will emerge during the second half of 2008, as foreign investors increase their net purchases of Treasuries while stock markets crash, and for a symmetrically opposite reason. Investors may prefer safer assets.

We cannot directly estimate the impact of de-leveraging on the Treasury market, but it seems clear that the explosion of leverage during the past five years had a profound, if temporary, impact on the world market’s demand for US government securities. As a rough gauge of the growth of global leverage, we observe that between 2003 and 2008, US banks’ claims on foreigners nearly tripled from $1.2 trillion to $3 trillion.

Exhibit 9: American banks’ claims on foreigners. American banks' claims on foreigners.

We can observe in the movement of market prices, though, a close relationship between the breakdown of the carry trade and the rise in real Treasury yields. Withdrawal of leverage from the system forced market participants to liquidate carry trade positions, that is, to unwind short positions in Japanese yen, and to liquidate long positions in carry trade currencies such as the Brazilian real, Turkish lira, South African rand, Australian dollar and so forth. I use the parity of the Brazilian real to Japanese yen as a rough proxy of demand for carry trade. As Exhibit 10 below makes clear, the collapse of the carry trade (the fall of the Brazilian real against the yen) closely tracks the rise in 10-year TIPS yields. The visual relationship is confirmed by econometric analysis.

Exhibit 10: Inflation-indexed (TIPS) Treasury yield vs Brazilian real/yen parity. Inflation-indexed (TIPS) Treasury yield vs Brazilian real/yen parity.

The Treasury market benefited from the explosion of bank leverage during the past 10 years, as emerging market central banks became the most important new buyers of US government securities. De-leveraging and the collapse of commodity markets combine to destroy global demand for Treasuries, limiting the US government’s capacity to borrow from overseas sources.

Other major holders of US Treasury securities are likely to wish to reduce their holdings rather than to increase them. China’s accumulation of foreign reserves represented “rainy day” savings for the nation, and the severity of the present crisis shows how well-advised China was to accumulate a large volume of reserves. China has announced plans to spend the equivalent of 20% of gross domestic product in a stimulus program which is likely to increase the country’s demand for foreign capital goods.

China’s trade surplus is likely to diminish sharply, both due to falling export demand and import growth arising from the stimulus package. Chinese reserves are likely to cease growing and may even decline as a result. Oil-producing countries, moreover, may have to spend reserves in order to maintain import levels as a result of the collapse of oil prices.

Foreign net purchases of US Treasury securities peaked at a $400 billion annual rate, and will fall sharply from this level. Domestic resources to purchase Treasury securities, moreover, are thin. When Ronald Reagan took office, America’s personal savings rate was 10%; today it is around 0%, although it has spiked up in recent months. Disposable income in the US now stands at slightly under $11 trillion. If the US returned to the personal saving rate of 1981, individuals would save $1 trillion a year, enough to fund the Treasury deficit, assuming that all net new portfolio investment flowed into Treasury securities. Nothing, though, would be left over for investment in anything else.

One way to gauge how onerous the Treasury’s borrowing requirements appear compared with available savings is to take the ratio of government borrowing to gross private savings, as in Exhibit 11 below.

Exhibit 11: Federal budget deficit as a % of gross private savings. Federal budget deficit as a % of gross private savings.

We observe that in 1981, the deficit stood at around 15% of gross private savings, and reached 30% at the worst. The deficit already has reached 50% of gross private savings, before the new administration has had the opportunity to increase spending.

In 1981, moreover, the United States was in current account surplus, and foreign purchases of Treasury securities were a very small factor in the financing of the government deficit. Today, the current account deficit (and the corresponding capital account surplus) is almost 6% of GDP.

It is far from clear from whom, and on what terms, the US Treasury will obtain $1 trillion a year, or even more, to finance its deficit. The overseas well has run dry, and domestic financing of the deficit would require a drastic increase in the savings rate at the expense of spending, or outright monetization of the debt by the Federal Reserve.

One way to increase the government savings rate, of course, is to increase taxes, but that is an unlikely course of action during a severe recession.

Monetization of debt remains a possibility, and to some extent would only continue the current trend. Total Federal Reserve Bank credit outstanding has more than doubled in the year to November 6, 2008, rising by $1.2 trillion to $2.06 trillion. This reflects loans, securities purchases, and related actions by the Fed to bail out the financial system. If the deflation persists, the Federal Reserve may be compelled to purchase US government debt.

Another possibility is that risk appetite among investors at home and abroad will continue to fall, inducing a portfolio shift towards Treasury securities. In this case “crowding out” will occur through risk-preference. It will not be so much that competing borrowers are crowded out of the lending market, but that investors will stampede away from risk. In this scenario, even a very low federal funds rate will not help to restore economic activity.

The point of lowering the risk-free rate is to push investors towards riskier assets. In a normal business cycle, falling output leads to lower yields on low-risk bonds, which in turn encourages investors to add risk to their portfolios by investing in businesses. If the safest of all investments, namely US Treasuries, suddenly offer much higher real yields, comparable to the boom years of the late 1990s, why should investors take risk?

In any of these scenarios, the result of global de-leveraging is dire: the more the US government tries to bail out businesses and households, the more bailing out the economy will need. The Bush administration’s response to the financial crisis, and the likely content of the Obama administration’s economic program, will deepen and prolong the economic downturn.

It is not generally remembered that the premise of the Reagan administration’s tax cuts was Robert Mundell’s work on the optimal level of government debt. Mundell, who won the Nobel Prize in 1991 for his work on international economics, observed that an increase in government debt might represent an improvement in market efficiency, if it corresponded to an increase in incomes. That might occur if a reduction in taxes caused an increase in the deficit, while stimulating economic growth. In that case, Mundell argued, a tax cut would increase efficiency if the additional revenues arising from the growth effect were larger than the interest on the bonds issued to cover the ensuing deficit.

In 1981, Ronald Reagan had a very different starting point:

1. The personal savings rate stood at 10%.

2. The current account was in surplus.

3. The top marginal tax rate was 70%.

The capacity of the US and the world to finance an increase in the federal deficit was much greater, and the incentives arising from reducing the top marginal tax rate from 70% to 40% were much greater than any incentives that might be envisioned from tax cuts from the present level.

Even the best-designed economic policy would be hard-put to provide growth incentives without a substantial increase in the savings rate and a corresponding reduction of consumption, implying a very sharp economic contraction. If the Treasury tries to spend its way out of recession, the results are likely to be very disappointing.

David P Goldman was global head of fixed-income research for Banc of America Securities and global head of credit strategy at Credit Suisse.

(Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved.

 

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RECHAZO EUROPEO PARA EXTRAER DE LOS AHORROS DE SU PRESUPUESTO UN FONDO PARA AYUDAR A LOS AGRICULTORES DE PAÍSES POBRES – Los países de la Unión Europea han rechazado extraer de los ahorros de su presupuesto agrícola un fondo de mil millones de euros para ayudar a los agricultores de países pobres, por lo que ahora deben buscar otra vía para poder hacer realidad dicha donación.

Posted by Gilmour Poincaree on November 11, 2008

11/11/2008

EFE – Aunque los Estados comunitarios apoyan la idea de aumentar los apoyos a la producción agrícola de los países en desarrollo, dentro de la UE no hay el acuerdo suficiente para que esa ayuda proceda del dinero ahorrado de la Política Agrícola Común (PAC), tal y como propuso Bruselas.

Según ha declarado hoy la secretaria de Estado española de Cooperación Internacional, Soraya Rodríguez, “no ha sido posible encontrar un consenso” y finalmente los países se inclinan por conceder los mil millones de euros a los agricultores en el tercer mundo “por otras vías”.

La Comisión Europea (CE) planteó crear un fondo de mil millones, provenientes del dinero ahorrado de la PAC en 2008 y 2009, con el fin de ayudar a los agricultores de países en desarrollo, por ejemplo a la compra de semillas o fertilizantes: este año se extraerían 750 millones y el próximo, 250 millones de euros.

En este sentido, Rodríguez ha señalado que las instituciones de la UE buscan sacar ese dinero de otros capítulos del presupuesto comunitario y que esa propuesta se tratará en el Consejo de ministros de Economía y Finanzas de la UE (Ecofin).

España “apoyó la propuesta de la CE (para transferir ahorros de la PAC) tanto en el Consejo de ministros de Desarrollo como en el de Agricultura y lamentamos que no haya salido”, ha señalado Rodríguez, al término de un Consejo de ministros de Desarrollo de la UE.

La secretaria de Cooperación ha afirmado que “ahora la UE tiene que dar una respuesta satisfactoria” y dar esa ayuda de emergencia, porque se comprometió en foros internacionales como la ONU o con el anuncio por parte del presidente de la CE, José Manuel Durao Barroso en el Consejo Europeo de junio.

Ante estas dificultades, el fondo de mil millones para ayudar a los agricultores de los países en desarrollo no valdrá para la cosecha 2008-2009 y ahora se trata de que se haga realidad para la campaña 2009-2010.

Los ministros de Desarrollo de la UE han aprobado hoy un documento de conclusiones en la que reafirman su “preocupación” por la crisis alimentaria mundial e insisten en su voluntad de ayudar a los países más afectados por sus consecuencias.

Rodríguez ha remarcado que los efectos de la crisis en 2009 “están por venir y es necesario mantener los compromisos para evitar hambrunas y situaciones de necesidad” en lugar de esperar a tener que recurrir a conferencias de donantes para buscar después soluciones de emergencia.

Según otras fuentes comunitarias, la presidencia francesa de turno de la UE baraja extraer los mil millones o una parte de apartados del presupuesto relacionados con Asuntos Exteriores o reservas de urgencia; también estudia que en lugar de otorgarse en dos años se concedan en tres.

Otra dificultad que ha dificultado que salga adelante el traspaso de fondos de la PAC a los países pobres ha sido el rechazo en la comisión de Presupuestos del Parlamento Europeo.

El Consejo de ministros de la UE y la Eurocámara tratarán de encontrar una vía para que se haga efectiva la ayuda en la reunión que celebrarán el día 21 con el objetivo de consensuar el presupuesto europeo del año que viene.

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FARMERS ASSAIL IMF TERMS FOR LOAN (Pakistan)

Posted by Gilmour Poincaree on November 3, 2008

November 03, 2008 – Monday

Bureau Report

HYDERABAD, Nov 2: The Sindh Abadgar Board has rejected the government proposal for obtaining $5 billion loan from the International Monetary Fund and cautioned that if the government does not change its decision it would be tantamount to signing the death warrant of the national economy.

The board leaders said at a meeting held on Saturday under its chairman Abdul Majeed Nizamani that the IMF always targeted agriculture sector and the fund was more likely to impose condition to end subsidy for agriculture sector.

The meeting pointed out that the IMF loan would be extremely dangerous for the national economy and political stability of the country and demanded that the president and prime minister bring the matter before the National Assembly.

The meeting advised the government to make efforts to obtain $1.5 billion from China by mortgaging shares of government corporations and $800 million reimbursement from the United States under the coalition support fund for war on terror.

The meeting warned that if the government fell into the IMF trap and withdrew subsidy on agriculture, it would have to spend more money on importing food items.

The meeting resolved to make the “Grow More Wheat” campaign a success and demanded that the government make all the purchasing centres for wheat functional in Umerkot, Mirpurkhas, Badin and other areas where wheat was harvested earlier.

The meeting said that keeping in view 35 per cent shortage of water in the system, Irsa should be asked to ensure supply of 11.7 million acre foot water of Sindh’s share.

The meeting stressed the need for safeguarding wheat from the smugglers and disclosing the names of “30 respectable people” involved in the grain’s smuggling as disclosed by the prime minister himself on the floor of the assembly.

The meeting said that sugarcane growers were switching over to other crops largely due to government’s helplessness before PSMA over the past 10 years, which was very dangerous for sugar industry. The sugar mills must start crushing season according to government notification, the meeting demanded.

SCA: The Sindh Chamber of Agriculture warned on Sunday that delay in start of crushing season would seriously affect wheat cultivation and lead to wheat crisis in the coming months.

The senior vice-president of the chamber, Mir Murad Ali Khan Talpur, said at the chamber’s meeting that the government had fixed price of cotton at Rs1,900 per maund but the growers were being forced to sell their produce at Rs400 to Rs500 per maund.

The chamber’s general secretary, Akhund Ghulam Mohammad Siddiqui, complained that open blackmarketing of urea fertiliser had inflicted huge losses on the growers.

Sain Bux Rind said that Pasco’s failure to establish purchase centres for rice had created an opportunity for the rice traders to fleece growers. The government had fixed purchase of Irri-6 at Rs900 per maund but the growers were forced to sell their produce at Rs500 per maund, he said.

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