Banks begging for Bailouts Again Third times is a charm

UK plans new bank bailout measures

An earlier recapitalisation scheme has failed to restore confidence in UK’s banking sector Photo: AFP

Britain will unveil a package of measures in the next day or two to try to get banks to resume lending, Gordon Brown, the UK prime minister, has said.

It marks a second bailout of British banks, following the 37bn pound ($54.5bn, €41bn) recapitalisation scheme in October, which has largely failed to restore confidence in the banking sector.

Speaking in Egypt on Sunday, on the sidelines of a summit on the conflict in the Gaza Strip, Brown said: “We know the essential problem is the resumption of lending.”

The package is designed to “get lending moving in the economy” to help families and businesses hit by a freeze in the global credit markets, he said.

Government officials and bank chiefs have spent the weekend in talks to try to reach a deal.

A key part of the bailout will be a huge state insurance scheme to guarantee billions of pounds of banks’ bad assets, according to local media reports.

The Sunday Times newspaper said that among the measures, up to 100bn pounds of new lending could be guaranteed.

It said the taxpayer’s stake in banks like HBOS and Royal Bank of Scotland could rise further.

Brown’s remarks

“We have recapitalised the banks, we have injected money into the economy, at the same time we know that the essential problem that has been holding back banks internationally is the resumption of lending,” Brown said.

“That’s what we’re going to be doing tomorrow and that is what the package is about.

Brown said ‘what we want to do now is to get the resumption of lending’ Photo: AFP
“My first priority is hard-working families worried about whether they can get a mortgage, businesses who work hard every day. They need the banks to do the job they say they’re there for.”What we want to do now is to get the resumption of lending and you will see tomorrow there are measures taken that will ensure that banks and non-bank institutions are able to resume lending or expand lending and in some cases to start lending.

“What we want to do is see businesses get the money that they need to be able to create jobs and secure investment for the future.

“What I want to see is people who are mortgage holders having access to mortgages at prices they can afford.”

International exposure

The bailout announcement came a day after Brown told British banks that they must own up to the extent of their bad assets.

He said on Saturday in London that British banks’ exposure to international losses was the largest problem they faced and called for an internationally agreed solution.

“The international community has got to modernise and change and  reform and get to the roots of the problem that make us angry about  the way that the system is operating,” he said.

Shares in Royal Bank of Scotland and Barclays plunged on Friday after US giant Citigroup announced a $8.29bn fourth-quarter loss and Bank of America got a $20bn state bailout.

And recession is likely to become official in Britain this week when data is expected to show that the economy contracted for a second straight quarter in the final three months of 2008.

Source

Top U.S. banks post huge losses as Bank of America  gets aid Again

Jan 16, 2009

By Jonathan Stempel and Dan Wilchins

NEW YORK (Reuters) – The U.S. government extended $20 billion of new aid to Bank of America Corp hours before both the largest U.S. bank, and the country’s third largest, Citigroup, reported multibillion-dollar losses from the ongoing global credit crisis.

Bank of America posted its first quarterly loss in 17 years on the heels of the government’s midnight announcement that it would help the bank absorb its January 1 purchase of troubled brokerage Merrill Lynch & Co.

The U.S. Treasury will provide the new aid in exchange for preferred stock, and along with the Federal Reserve and Federal Deposit Insurance Corp, agreed to limit Bank of America’s potential losses on $118 billion in tainted assets.

Also scrambling to survive huge new losses triggered by the credit crunch was Citigroup, which unveiled plans to split in two and shed troubled assets.

The announcements came before a U.S. holiday weekend that ends on Tuesday when President-elect Barack Obama will be sworn in. Obama again said that even with a wide range of measures to pull the United States out of recession, the U.S. economy will likely worsen before it improves.

U.S. Treasury Secretary Henry Paulson, on his last full day in office, said a substantial portion of the second half of the government’s $700 billion financial rescue fund should be reserved for bank capital programs.

Top U.S. policy-makers said they are discussing setting up a government bank that would use federal funds to buy troubled assets from financial institutions to try to stem the crisis.

Paulson and FDIC Chairman Sheila Bair both said an “aggregator bank” was one of several ideas U.S. regulators had discussed.

The Treasury said it will lend Chrysler LLC’s finance arm $1.5 billion to help it make new car loans as part of a broader program to revive the U.S. auto industry.

The Treasury earlier extended a $4 billion loan to Chrysler for its automotive operations and had granted $13.4 billion in operating loans to General Motors Corp.

Shares in Bank of America and Citigroup rose in early trade after tumbling sharply on Thursday, as investors believe the government will not let the two banks fail.

But the size of the losses and need for fresh aid unsettled Wall Street. The two banks’ stocks fell and pulled down shares of their two large rivals, JPMorgan Chase & Co and Wells Fargo & Co.

“Now it’s clear that there could be more big banks coming back to the well, asking the government for money,” said Matt McCall, president of Penn Financial Group in Ridgewood, New Jersey. “When does this end and when do they say no? They just keep writing checks.”

Influential bond investor Bill Gross of Pacific Investment Management Co told Reuters that the worst harm to banks’ balance sheets may be over.

Fear of more bank losses spread to London, where shares in Barclays fell 25 percent and other bank stocks tumbled as worries about capital and write-downs resurfaced. Dealers said there was no single reason for their sharp slide.

After the market closed, Barclays reported it expects to report pre-tax year profit well ahead of analysts’ estimates of 5.3 billion pounds ($7.91 billion), and said it knows of no justification for the stock slide.

The Bank of England and Downing Street confirmed a meeting took place among Prime Minister Gordon Brown, the Bank of England governor, finance minister and securities regulator, but neither would comment on the talks.

British ministers aim to announce yet another bank lending package, a Treasury source told Reuters, while Ireland nationalized Anglo Irish Bank, its third-largest lender, to avoid a collapse.

Bank of America, Citigroup post huge losses

Citigroup, once the world’s largest bank, reported a fourth-quarter loss of $8.29 billion and recorded $28.3 billion of write-downs and credit losses. Over the past 15 months Citigroup has amassed $92 billion in losses and write-downs.

Bank of America reported a $1.79 billion quarterly loss, while losses at Merrill Lynch were a record $15.31 billion.

Citigroup stock fell more than 8.0 percent to a session low of $3.44 after Moody’s Investors Service said it may cut the bank’s credit rating.

Moody’s cut the credit ratings of Bank of America, whose shares tumbled 13.7 percent.

After the bell, Credit Suisse cut Citigroup’s price target and earnings outlook, and almost doubled its loss estimate for the bank in 2009 to 90 cents from 50 cents per share.

The news of massive new bank losses and more aid came after the U.S. Senate on Thursday cleared the release of the remaining $350 billion of emergency funds to tackle the crisis. The Bank of America aid will come from the first $350 billion package.

With economies and credit markets worldwide yet to respond to massive bailouts and deep interest rate cuts, Bank of Japan Governor Masaaki Shirakawa said financial conditions in the world’s second-biggest economy were tightening rapidly.

Conditions in France were also on the slide. The Bank of France estimated the French economy contracted sharply in the fourth quarter and its monthly survey of business managers showed they expect the downturn to deepen.

The euro zone trade balance swung from a surplus to a deficit in November as exports plunged twice as much as imports, data showed, underlining the fast pace at which the region’s economy was sliding deeper into recession.

New U.S. economic data raised the possibility of deflation. The pace of U.S. inflation slowed to a half-century low last year and industrial output fell for the first time since 2002.

The reports suggested the economy could take longer to pull out of a downturn that is on track to be the longest and possibly deepest since World War Two.

(Additional reporting by Joseph Giannone and Ellis Mnyandu in New York and Patrick Rucker, David Lawder and Lucia Mutikani in Washington, Steve Slater and Dominic Lau in London, Jan Strupczewski in Brussels; Writing by Herbert Lash; Editing by Chizu Nomiyama)

Source

I guess we are going on this roller coaster ride again.

All Banks should be audited, by outside professionals and find out exactly where all the money they got i the first Bailout went.

Seems to me there is a whole lot of fraud happening or something else.

Every penny should be accounted for. Tax payers are paying for the Banks BS. Why should they. I am really wondering how long this BS will continue on for. It certainly is one way of sending people into a panic however.

Maybe they are just stealing, tax dollars to line their own pockets with or line someone else’s…….

This is all to fishy at this point in time. Could be they are creating crisis after crisis just to mess with everyone’s mind, so we all live in fear.

Create a crisis and well it has been done before many times.

Create a Crisis , fix the crisis, become a hero, a  savior whatever..

What a scam.

Whatever the case these banks need someone running them, that is honest and actually knows how to run a bank. The ones who run these ones begging for money again obviously can’t do the job. They aren’t worth rescuing either.Just because your big doesn’t make you worth saving.

Seems to me Banks should only be owned and operated, by people within their own country anyway. Bank owned by anyone from another country shouldn’t even be allowed.

So where has all the money  GONE?  Did they ever  look.

Unusually Large U.S. Weapons Shipment to Israel: Are the US and Israel Planning a Broader Middle East War?

The State of Israel: Since its Creation

Lots of posting on this subject in the Archives.

Indexed List of all Stories in Archives

Published in: on January 19, 2009 at 3:09 am  Comments Off on Banks begging for Bailouts Again Third times is a charm  
Tags: , , , , , , , , , ,

Bank billions at risk from Wall Street Fraud

December 15 2008

By Kelly Macnamara

Banks lined up today to reveal billions in potential losses as a result of alleged fraud by Wall Street investment manager Bernard Madoff.

The Royal Bank of Scotland – 58 per cent owned by the taxpayer – said £400 million was at risk in the hedge funds invested with 70-year-old Madoff, who was arrested last week after police said he admitted a £33 billion scheme to defraud investors.

Spanish bank Santander, which owns Abbey and the savings business of Bradford & Bingley, said its potential exposure was more than £2 billion, while HSBC could reportedly lose up to £668 million.

Nicola Horlick, who manages Bramdean Alternatives, which had 9 per cent of its funds invested with Madoff’s scheme, said the case raised serious questions about the regulatory system in the US.

She said it had been given a “clean bill of health” by the Securities and Exchange Commission.

“I think now it is very difficult for people to invest in things that are meant to be regulated in America because they have fallen down on the job,” she told the BBC Radio 4 Today programme.

“All through the credit crunch this has been apparent. This is the biggest financial scandal, probably, in the history of the markets.”

She said that, even if Bramdean Alternatives was forced to write off its entire investment in Madoff’s scheme, it would still only be down 4 per cent on the year while the stock market had fallen 35 per cent.

According to court documents, Madoff – a former chairman of New York’s Nasdaq stock exchange – told his employees that his operations were “all just one big lie” and “basically, a giant Ponzi scheme”.

A Ponzi scheme is a fraudulent investment vehicle which pays very high returns to existing investors paid for by money put into the scheme by newcomers.

Madoff’s arrest will raise questions about the effectiveness of regulatory authorities, which failed to notice the scam.

Hedge fund giant Man Group, said: “Based on information available to date, it appears that a systematic and comprehensive fraud may have been committed, evading a range of structural controls.”

The company, which said it had approximately 360 million US dollars (£239 million) of exposure, added that Madoff Securities was registered with the Securities and Exchange Commission (SEC), which monitors investment funds.

Madoff Securities was also a member of five self-regulatory organisations, including US independent securities regulator Finra and the Nasdaq.

The FBI said members of Madoff’s own family turned him in after he confessed his fraud to them.

A criminal complaint filed with a court in Manhattan said he told senior employees of his firm before his arrest that he had blown more than £33 billion with fraudulent financial moves.

The list of victims of the alleged fraud ranges from giant financial institutions to tiny local foundations.

Museums, hospitals, a Jewish youth charity in Boston and pensioners are all thought to be among the alleged victims.

Harvey Pitt, a former chairman of the SEC, said the fact that foundations and charities could lose out is the “real tragedy”.

“There were a lot of very sophisticated people who were duped, and that happens a great deal when you’ve had somebody decide to be unscrupulous,” he said.

Reports from Florida to Minnesota in the US included ordinary investors who gave Madoff their money. Some had been friends with him for decades, others were able to invest because they were a friend of a friend.

They told stories of losing everything from £26,500 to an entire nest egg worth well over £670,000.

Other financial institutions with potential exposure include Nomura, Japan’s largest securities company, which has £204 million invested with Madoff.

Switzerland’s Reichmuth & Co said the private bank had £218 million of exposure. It told investors that they “sincerely regret” being affected.

French bank BNP Paribas estimated its exposure Madoff’s fund could lead to £311 million in losses.

HSBC’s exposure could reach 1 billion US dollars (£668 million), according to the Financial Times.

The banking giant’s exposure is understood to have come from loans it made to clients, who invested around £500 million of their own funds in Madoff’s venture.

Under the typical terms of these deals, it is thought HSBC would be reimbursed before its clients if the US authorities recover any funds.

Madoff is on £6.6 million bail.

The assets of Bernard L Madoff Investment Securities were frozen last Friday in a deal with US government regulators and a receiver was appointed to manage the firm’s financial affairs.

Source

Victims of record $91bn fraud speak out

December15 2008

From a Jewish youth charity in Boston to major banks as far afield as Zurich, the list of investors who say they were duped in one of Wall Street’s biggest Ponzi schemes are streaming forward.

Around the world, investors who sunk cash into veteran Wall Street money manager Bernard Madoff’s investment pool spent the weekend calculating how much exposure they might have. The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors.

One thing was clear in the fallout from his arrest: The alleged victims span from the super rich, to pensioners and powerful financial institutions, to local charities. Some investors claim they’ve been wiped out, while others are still likely to come forward.

“There were a lot of very sophisticated people who were duped, and that happens a great deal when you’ve had somebody decide to be unscrupulous,” said Harvey Pitt, a former chairman of the Securities and Exchange Commission, a regulator in charge of monitoring investment funds like the one Madoff operated.

“It isn’t just the big investors,” he said. “There’s a lot of charitable and foundation money involved in this, which is the real tragedy.”

Charities across the country are expected to be directly affected by the collapse of Madoff’s investment fund. The assets of Bernard L. Madoff Investment Securities LLC were frozen Friday in a deal with federal regulators and a receiver was appointed to manage the firm’s financial affairs.

One of the largest financial scams to hit Wall Street has investors wondering if they’ll ever get their money back.

In Boston, the Robert I. Lappin Charitable Foundation, a charity that financed trips for Jewish youth to Israel, said on its website Sunday that the money for its operations was invested with Madoff.

“The money needed to fund the programs of the Lappin Foundation is gone,” it said. “The foundation staff has been terminated today.”

New Jersey Sen. Frank Lautenberg, one of the wealthiest members of the Senate, entrusted his family’s charitable foundation to Madoff. Lautenberg’s attorney, Michael Griffinger, said they weren’t yet sure the extent of the foundation’s losses, but that the bulk of its investments had been handled by Madoff.

Lautenberg’s foundation handed out more than $765,000 to at least 100 recipients in 2006, according to the most recent listing on Guidestar, which tracks charitable organization filings.

The foundation helps support a variety of religious, educational, civic and arts organizations in New Jersey and elsewhere, and its contributions range from a gift of than $300,000 to the United Jewish Communities of MetroWest New Jersey to a $2,000 donation to a children’s program at the Hackensack Medical Center.

Reports from Florida to Minnesota included profiles of ordinary investors who gave Madoff their money. Some had been friends with him for decades, others were able to invest because they were a friend of a friend. They told stories of losing everything from $40,000 to an entire nest egg worth well over $1 million.

They join a list of more powerful investors that have come forward, all worried about the extent of their losses. The roster of names include Philadelphia Eagles owner Norman Braman, New York Mets owner Fred Wilpon and J. Ezra Merkin, the chairman of GMAC Financial Services, among others.

Beyond US hedge funds, more corporate names disclosed exposure to Madoff. Late Sunday, some of Europe’s biggest banks acknowledged they, too, were exposed to Madoff’s investment fund.

Switzerland’s Reichmuth & Co. said the private bank has $327 million at risk. It told investors that they “sincerely regret” being affected.

Other banks such as Spain’s Grupo Santander SA, Europe’s second-largest banking consortium, and France’s BNP Paribas are also left with billions of dollars in exposure, according to media reports. Both banks could not immediately be reached for comment.

Source


Cameron calls for probe into financial crisis

By Daniel Bentley

December 15 2008

Cameron has challenged Gordon Brown to call an immediate general election
David Cameron accused Gordon Brown of a “failure of moral leadership”

David Cameron called today for a thorough investigation into the causes of the financial crisis, insisting that City executives should be prosecuted for any criminal wrongdoing.

Pledging a “day of reckoning” for those behind the turmoil, the Tory leader said rooting out the culprits was essential to restore confidence in the financial services sector.

He also accused Gordon Brown of a “failure of moral leadership” for not urging the authorities to probe scandals in the City.

In a speech at Thomson Reuters in Canary Wharf, home of thousands of City workers, Mr Cameron said the rich and well-connected should not be protected from the law.

While claiming the Government was most to blame for the financial crisis, he said Labour’s “economic policy mistakes” were compounded by “irresponsible” behaviour in the City.

He went on: “Doctors who behave irresponsibly get struck off. Bankers who behave irresponsibly should face professional consequences.

“And, for sure, if anyone is found to have behaved criminally they must be prosecuted.

“Of course, this requires clear evidence of wrongdoing. But that doesn’t mean we should sit on our hands and say it’s all a failure of regulation.”

The Conservative leader said there was evidence of mortgage fraud, “possible” insider trading and other misconduct investigated but not prosecuted by the Financial Services Authority.

“To send out the right message about our country’s values to help stop this crisis from happening again and to help restore the City of London’s reputation I believe it is now vital that investigations are vigorously pursued to their appropriate conclusion,” he went on.

“And the fact that the Prime Minister has not been urging our authorities to pursue financial wrongdoing, like in America, is in my view a failure of moral leadership.”

Mr Cameron said there was a lack of will in Britain to see justice done “at the highest level”, either from the Government or the FSA.

“The FSA and the Serious Fraud Office should be following up every lead, investigating every suspect transaction,” he said.

“And the Government should be urging them on, because we need to make it 100% clear – those who break the law should face prosecution.”

In the US, large financial institutions were being investigated by the FBI and the Securities and Exchange Commission, the Tory leader said.

“We all know there was poor decision-making and some reckless activity in the City of London,” he added.

“But we do not know if there was wrongdoing and the nature of any wrongdoing, because we haven’t examined the issue thoroughly in the way the Americans are doing.”

He called for a bigger levy on the City to pay for the “best possible staff” for the FSA, which in turn had to force firms to hold more capital to offset high risks.

Mr Cameron added that the City would not recover from the financial crisis unless it regained confidence, and that meant holding those responsible to account.

“In the good times, some people working in the financial services industry paid themselves vast financial rewards – salaries and bonuses beyond the comprehension of most of us,” he said.

“Now, when it’s all gone wrong, they have been bailed out by the taxpayer.

“Nurses and cleaners and teachers and many millions of others, working in every part of our economy, they will foot this multibillion-pound bill.

“Well, on behalf of the taxpayer, on behalf of the nurse on £20,000 a year, on behalf of the cleaner on the minimum wage, on behalf of working families worrying this Christmas like never before about what next year will bring, I say it is fair and reasonable that those responsible are held to account for their behaviour and that we show clearly that, in this country, there is not one rule for the rich and a different rule for everybody else.”

He said that more than a million people who work in the financial services industry had had their names blackened by the crisis.

“It’s in their interests too that we make sure we root out any wrongdoing that may have happened, whoever is involved, however high or well-connected they may be,” Mr Cameron added.

Source

An investigation what an after thought.

That would have been my first thought.

Did being part of the EU protect them from the Financial Crisis

Turmoil Spurs US Plant Closures, EU Layoffs At ArcelorMittal

December 10th, 2008

By Alex MacDonald

In a sign of the severity of the economic downturn, ArcelorMittal (MT), the world’s largest steelmaker, announced plans to close two U.S. steel processing plants and lay off several hundred workers in the European Union.

ArcelorMittal plans to close its finished steel processing plant in Lackawanna, N.Y., by the end of April and plans to close its finished steel processing plant in Hennepin, Ill., sometime in the future, although no date was disclosed. The two closures will result in 545 job losses, 260 of which are located at the N.Y. plant and 285 of which are located at the Illinois plant.

Meanwhile, ArcelorMittal rolled out voluntary redundancy programs in Europe over the past week or so that would eliminate 3,550 mostly white-collar jobs through voluntary layoffs. The company is eyeing 6,000 job cuts in Europe out of 9,000 job cuts globally.

The closures and layoffs are in line with the company’s plans to cut 35% of its global steel production capacity during the fourth quarter and saving $1 billion annually by cutting 3% of its global workforce.

Both steel plants supply the auto market, where demand has slumped so dramatically that the U.S.’s three largest car manufacturers are now seeking federal government funds to avert bankruptcy.

The closures are part of ArcelorMittal’s global restructuring program to weather the economic downturn.

The decision to close ArcelorMittal Lackawanna was “purely an economic business decision based on the extraordinary economic conditions we face today,” the company said in a statement.

The Lackawanna plant has inherent disadvantages due to its location that lead to higher costs, longer customer lead times, and higher inventory levels than other ArcelorMittal finishing facilities in the US, the company said.

Meanwhile, at Hennepin, “the company had to make the tough decision to close the…facility, consolidate operations and move production to other ArcelorMittal facilities in the U.S.” in order to remain competitive.

ArcelorMittal now has announced plans to lay off 19% of its U.S. salaried workforce of 15,543 people and has announced more than half of its planned job cuts in Europe.

The United Steelworkers union and other relevant stakeholders were notified about the plant closures and job layoffs. They are now negotiating with the Luxembourg-based company to arrive at a compromise.

Jim Robinson, the director of USW’s District 7 said the union was aware that ArcelorMittal faced operational issues at the two plants but was surprised by the company’s decision to close the plants.

“They called us before they announced but we did not know this specifically” beforehand, he said.

Robinson dismissed views that ArcelorMittal has underinvested in the plants. “I don’t think the issue is lack of investment over time, I think it’s an issue of the company’s overall strategy.” He declined to elaborate further.

ArcelorMittal is one of many steelmakers globally that have announced production cuts and layoffs. U.S. Steel Corporation (X), the world’s tenth-largest steelmaker by volume, announced last week it would temporarily idle an iron ore mining facility and two steel works. The move will affect 3,500 employees.

Corus, Europe’s second largest steelmaker by volume and the European arm of India-based Tata Steel Ltd (500470.BY) has cut production by 30% and has shed about 500 jobs from the U.K.

In Europe, ArcelorMittal is seeking voluntary redundancies equal to 1,400 jobs in France, 800 in Belgium, 750 in Germany, and 600 in Spain. Most of them are white collar jobs. ArcelorMittal’s American depositary shares recently traded up 8.9% to $25.99 on the New York Stock Exchange.

Company Web site: http://www.arcelormittal.com

Source

EU businesses expect 1 million job losses in 2009

Brussels – European Union businesses called Monday for a cut in interest rates amid predictions that the bloc’s economic slowdown could lead to more than 1 million jobs being lost in 2009.

BusinessEurope, which groups national business federations from 34 European countries, also called on governments to ensure a continued flow of credit and to approve structural reforms aimed at improving the continent’s competitiveness.

According to its latest Economic Outlook, EU gross domestic product (GDP) is predicted to grow by just 0.4 per cent in 2009, compared to 1.4 per cent this year, with exports, imports and private consumption levels all slowing.

Unemployment is predicted to increase from 7 per cent to 7.8 per cent, with the loss of 1.1 million jobs, compared to a net job creation of more than 2 million in 2008.

“The most fundamental preoccupation of the business community is obviously the way in which the impact of the financial market turmoil will play out,” the paper said.

“Even though a fully-fledged credit crunch has not yet appeared in Europe, uncertainty about the impact for companies and consumer markets has increased tremendously.”

Source

SEMI Europe calls for investment to avoid mass job losses in semiconductor industry

December 10 2008

During the third SEMI Brussels forum, SEMI Europe declared that the decline in the European semiconductor industry could potentially put half a million European jobs at risk. SEMI Europe presented its White Paper to EU officials and urgently appealed for the EU and national policymakers to invest to support the European semiconductor industry citing the industries importance to the health and global competitiveness of the EU economy.

The equipment/materials producers and the semiconductor device manufacturers contribute around €29 billion to the EU economy and provide around 215,000 jobs. The European semiconductor industry is also a significant contributor to the GDP in EU countries such as France, Germany, Ireland, the Netherlands and the UK.

“If semiconductor manufacturers leave Europe, indigenous equipment & materials producers will face an uncertain future”, said Franz Richter, Chairman of the SEMI European Advisory Board. “The current economic crisis and rising unemployment underscore the urgent need to safeguard jobs in the European semiconductor industry. Supporting a robust and competitive semiconductor industry in Europe is critical to keeping jobs in Europe across all industries and supporting key European economies.”

The decline of the market share even during the increase in total volumes sold reflects that manufacturing is changing and moving away from Europe because of the unfavourable global level playing field conditions. The European equipment and materials manufacturers that supply the semiconductor industry with machinery and parts are for the most part small or medium-sized European businesses that heavily rely on the future European semiconductor industry to guarantee their own future and the 105,000 jobs they embody.

Further information on the Brussels forum is available here.

Source

Spanish auto sector highly exposed to global crisis

December 11 2008

By Robert Hetz

MADRID,

Spain’s car industry, which became Europe’s third largest, thanks to a cheap workforce, has lost cost advantage and could shrink as companies slash costs at foreign plants and save politically-sensitive jobs at home.

As executives at multinational manufacturers weigh up Spain’s ageing factories, relatively high wage costs and weak competitiveness against their own domestic markets and cheaper alternatives, the country’s plants are clear targets as the credit crunch saps demand all over the world.

“The big decisions are being taken abroad, not here, and managers in London, Paris and Detroit prefer to close a plant here and not in their home market,” said the director of one Spanish parts plant, who asked not to be named.

Unlike Germany, France or Italy, Spain’s auto industry has no nationally-owned car maker and little control over decisions on the future of its 18 foreign-owned plants, which employ around 70,000 people.

And unlike the case of Britain, Spain’s plants are older and less productive, and the country lacks a more skilled workforce or much tradition of home-grown research and development.

Global car makers, also including Peugeot, Opel and Volkswagen, built most of their Spanish plants in the 1970s when Spain was a low-cost backwater, well placed to serve Northern European markets.

Since the 70s, Spain has lost its price advantage as living standards have caught up with the European average. In 2007, per capita income overtook that of Italy. At the same time, new competitors have emerged as low-cost manufacturing centres.

Spain’s auto-sector salaries averaged 22.83 euros ($29.64) an hour last year, above the European average and around three times the 6.93 euros in Poland and 8.83 euros in the Czech Republic, Europe’s new manufacturing hubs, alongside North Africa.

NORTH AFRICA PASSES SPAIN FOR RENAULT

Renault plans to make 200,000 cars at its plants in North Africa in 2010 and double that within a couple of years, overtaking production from its Spanish operations.

The global credit crunch has hurt demand for new cars across Europe, with new car registrations in November falling 36.8 percent in the UK, 18 percent in Germany, 30 percent in Italy and 50 percent in Spain.

With some 84 percent of cars built in Spanish plants for export, manufacturers are finding fewer financial or political reasons for remaining in the country as international competition rises.

Spanish plants are ideal candidates for the inevitable cuts across Europe, head of Ford Espana Jose Manuel Machado said, as salaries rise and productivity fails to rise at a similar rate.

Machado’s comments came before the U.S. company announced production cuts of 120,000 units at its Almussafes plant in Valencia, and the temporary layoff of 5,200 workers.

Job cuts are expected from most of the major manufacturers, with more than 60 filings listing potential layoffs by private companies made to the government, which may affect up to 40,000 workers, Spain’s main union UGT said.

As Spain’s unemployment rate soars to the highest in the European Union and the economy nears recession, the government is keen to keep the industry, which accounts for around 5 percent of gross domestic product, in the country.

Spain has earmarked 800 million euros for the sector as part of measures worth a total of around 50 billion euros to stimulate the economy.

But this aid may not be enough.

“It’s a good gesture from the government, but obviously the amount of money is insufficient. It would be less than 80 million euros per manufacturer,” said Jose Antonio Bueno of consultancy Europraxis.

The sharp fall in new car sales in Spain has also affected the manufacturers’ showrooms and spare parts centres throughout the country.

Concessions for new and second-hand cars and garages employ around 278,000 people in Spain, and 16,000 of those jobs are at risk, the association for the sector, Ganvam, estimates.

“Four years ago we sold two or three cars a day, but now its not even two a week,” said Adela Benito, who has worked in a Madrid-based Renault showroom for 20 years. (Reporting by Robert Hetz; Additional reporting by Tomas Gonzalez; Writing by Paul Day; Editing by Rupert Winchester)

Source

Swedes want government bailout for Volvo

In a new survey just released, 68 percent of Swedes want to see the Swedish government bail out its beleaguered carmaker Volvo. Although Volvo is owned by US carmaker Ford, Swedes would like its government to temporarily take control of the nation’s iconic firm, as many residents fear Volvo may disappear entirely from Sweden in the near future.

The Local newspaper reports that support for government intervention is piling in from all sides of the political arena. Some 65 percent of those polled who support the bailout side with one of the governing Alliance parties, and 73 percent of all left bloc voters approve of a government bailout.

Peter Larsson of the Swedish Association of Graduate Engineers points out that Volvo’s current crisis is not minor. “One thing is certain, there are no dollars on their way over the Atlantic,” Larsson said, referring to the massive problems currently faced by the “Big Three” US carmakers – Ford, Chrysler, and (Saab-owner) General Motors.

Rolf Wolff, dean of the school of business at Gothenburg University, told The Local: “If Volvo Cars disappears as a base for industrial knowledge and skills, then Sweden will never again be a part of the auto industry. All the knowledge and skills would be lost, and with it all future associated development potential would be gone.”

Maud Olofsson, Sweden’s minister of trade and industry, has expressed doubts whether the government would be able to better manage Volvo than the car firm itself. For now, the issue has been placed on the political back burner, but the crisis at Volvo and Ford goes on.

Source

This is just the tip of the iceburg.  Seems no one is safe from the Financial Crisis. Not even EU members.

There are 27 member of the European Union.

austria 1. Austria
belgium 2. Belgium
UK 3. UK
denmark 4. Denmark
germany 5. Germany
greece 6. Greece
ireland 7. Ireland
spain 8. Spain
italy 9. Italy
luxembourg 10. Luxembourg
netherlands 11. Netherlands
portugal 12. Portugal
finland 13. Finland
france 14. France
sweden 15. Sweden
cyprus 16. Cyprus
czech 17. Czech Republic
estonia 18. Estonia
hungary 19. Hungary
latvia 20. Latvia
lithuania 21. Lithuania
malta 22. Malta
poland 23. Poland
slovakia 24. Slovakia
slovenia 25. Slovenia
bulgaria 26. Bulgaria
romania 27. Romania

EU members and when they joined.

1952 Belgium, France, Germany, Italy, Luxembourg, Netherlands

1973 Denmark, Ireland, United Kingdom

1981 Greece

1986 Portugal, Spain

1995 Austria, Finland, Sweden

2004 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia

2007 Bulgaria, Romania

Source

Hungary’s Letter of Intent to the IMF

World Bank lends to Bulgaria to tackle poverty, jobless

Latvia mulling IMF loan as crisis sweeps Nordic region

EU, Iceland, Canada Suffering Fall Out, Caused By US Crisis

Europeans Angry at their Money being Used for Bailouts

The £2trillion question for British economy

Europe catches America’s financial disease

How Britain’s banks will never be the same again

Economist, deregulation and loose fiscal policies lead to Meltdown

World Leaders Must Roll Back Radical WTO Financial Service Deregulation

Ryanair to appeal EU’s ‘corrupt’ support of Alitalia takeover

Ashley Mote Revealing European Union Corruption

The EU budget is necessarily corrupt

EU leaders tear up rules of Eurozone

Starting to remind me of the Corruption in the US where the Crisis started.

Latin Americas Private Pension Funds in Doubt

By Marcela Valente

November 26 2008

BUENOS AIRES

Pension funds in Latin America have suffered sometimes drastic losses as a result of the global financial crisis. Argentina decided to nationalise its private pension funds, and in Chile, Colombia and Mexico there are voices urgently calling for reforms.

Many of the private sector pension plans, created mainly in the 1990s under the influence of neoliberal, free-market reforms and structural adjustment policies, followed the model adopted in 1981 by the dictatorship of Augusto Pinochet (1973-1990) in Chile.

In 1993, Argentina adapted the model, without eliminating the parallel public system, which allowed workers to choose either one. But on Nov. 20, the Argentine parliament eliminated the private pension funds, which were in a state of collapse.

It is not yet clear how the financial crisis will affect private pension funds in Bolivia, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Mexico, Peru and Uruguay.

According to the International Association of Latin American Pension Fund Supervisors (AIOS), the 10 Latin American countries that make up the association had 76 million pension fund affiliates as of late 2007, but only 32 million — 37 percent of the economically active population — made regular payments.

The largest number of members of private pension plans — 39 million — were in Mexico. This was followed by 9.5 million in Argentina (who will now go into the public social security system), and by Chile and Colombia, with around eight million each.

The AIOS reported that in late 2007, private pension funds in the region held 275 billion dollars, equivalent to 16 percent of the 10 member countries’ GDP.

“We are going to keep a close eye on what happens in Chile, the pioneer of the model,” said Jorge D’Angelo, chairman of the Inter-American Conference on Social Security’s (CISS) commission on the elderly. “We’ll have to see how bad the crisis gets, and whether Chile will be able to weather the storm,” he told IPS.

In Chile, which has the highest proportion of retirees in private pension plans in the region, the average monthly pension stands at 264 dollars, just over the minimum monthly wage. In the rest of the countries, pensioners draw even more meagre amounts. In Chile, the Central Unitaria de Trabajadores (CUT) central trade union and citizen, social and political groups are demanding alternatives to the private pension funds. CUT is calling for a public social security system based on the principle of solidarity.

Senator Alejandro Navarro, who recently left the co-governing Socialist Party, is pushing for the creation of a public administrator of individual retirement accounts.

Between Oct. 31, 2007 and Oct. 31, 2008, Chile’s private pension fund assets shrank from 94.3 to 69.1 billion dollars.

In 2002, the private pension administrators created five different funds, classified as A, B, C, D and E, ranging from high to low risk, for workers to choose from. So far this year, profit margins have shrunk by 40.9 percent in the A funds, 30.1 percent in the B funds, and 18.6 percent in the C funds, to mention the sharpest falls.

And since the creation of Chile’s multi-fund system in 2002, returns have ranged between 2.8 and 4.2 percent, depending on the level of risk exposure. But if measured since 1981, returns have averaged 8.8 percent

“The worries of workers are logical and understandable,” Fabio Bertranou, a Chilean expert on social security with the International Labour Organisation (ILO), told IPS. “The value of the funds has shrunk due to the sharp drop in the value of their financial assets.”

Chile accounts for 35 percent of the region’s private pension fund assets that are invested in equities abroad.

“It is difficult to predict how long it will take for the value of the assets to rally,” admitted Bertranou. “We have to issue a call for reflection and reassess how individual retirement savings accounts work during times of crisis, in order to take the necessary precautions. There isn’t a great deal of experience in the matter.”

Early this year, the Chilean government passed a new law that created a system built on three pillars: a pay-as-you-go guaranteed minimum pension funded with help from the government, a solidarity system, and voluntary individual savings.

The most notable aspect was the creation of the “basic solidarity pension” and the “solidarity pension contribution” for the poorest of the poor.

That reform “has taken a fundamental step towards the creation of a mixed social security system. The incorporation of the solidarity pension component will give workers, especially low-income workers, a more secure future,” said Bertranou.

In his view, “the decline in the value of pension funds is not the only problem. It is also necessary to address the drop in occupational coverage that will result from the economic slowdown, and the subsequent fall in income and job creation and stability.”

Uruguay’s system, unique in Latin America, seems to be the one least affected by the crisis so far.

Under the mixed or multi-pillar system, contributions and benefits are linked to both a state-managed pay-as-you-go system and privately managed individual retirement accounts. Workers contribute to each, depending on where they fall within a salary level band, and receive two pensions when they retire, with the exception of those who earn less than 715 dollars a month, who are not required to pay into an individual savings account.

Alongside the mandatory individual capitalisation system, the public sector maintains a basic minimum pension under the pay-as-you-go regime.

In the quarter that ended in September, private pension funds went down 2.6 percent, due to the drop in value of the debt bonds in which most of their assets are invested. But since the system began to operate in 1996, returns have ranged between nine and 11 percent, depending on the currency in which they are measured.

Nearly 38 percent of workers paying into private retirement accounts in Uruguay chose an administrator that is run by three state banks. By law, the pension fund administrators can only invest a limited amount of their assets abroad.

Pension fund returns depend partly on where the assets are invested. In some countries, a majority have been placed in equities in foreign companies that are now in crisis, while others are invested in public bonds, whose drop in value varies from country to country.

“In Argentina, the debate had become abstract, because the decline in the value of private funds was so steep that when beneficiaries were ready to retire, the state had to step in to help pay their pensions, since their savings were too small,” said D’Angelo.

According to the superintendency of private pension fund administrators (AFJPs) in Argentina, only 3.6 million of the 9.5 million members of the private system were actually making payments. And of the six million workers still affiliated with the public social security system, only two million were contributing.

In October, total AFJP assets plunged 17 percent with respect to the previous month. And the returns over the last year have reflected a loss of 25.4 percent — compared to an average annual profitability rate of 6.6 percent.

Given that situation, the government of Cristina Fernández proposed the creation of an integrated pensions system and the elimination of the private funds. Within less than a month, the new law made it through both houses of Congress, approved by the legislators of the governing Justicialista (Peronist) Party and some opposition lawmakers.

The drop in the value of the funds has also been drastic in Mexico, whose current pension system began to operate in 1996. According to the national commission of the retirement savings system, between May and October, the value of the individual retirement accounts of 39 million workers fell by 3.36 billion dollars.

The national union of social security workers is demanding that the Mexican Congress review the laws on private pension funds and intervene so that limits are set on the proportion of assets that can be put into high-risk equities abroad.

People in Colombia, where reforms incorporating a private pension system went into effect in 1994, are worried too. According to the Colombian association of pension fund administrators, losses climbed to more than 94 million dollars in the first six months of the year.

“We are much worse off than they are in Argentina,” Saúl Peña, president of the union of Colombia’s Social Security Institute workers, told IPS. “Our problems are more serious because of the low level of wages, the labour instability and the low profitability.”

There are currently 12,000 retirees in Colombia’s private pension system, and nearly all of them now draw a monthly pension equivalent to the minimum wage, he said. “The only thing that can be done now is to wait and see whether we will recover in the long-term, maybe in 2009, or 2010. It’s chance, it’s a gamble,” he said.

* With additional reporting from Daniela Estrada in Santiago and Helda Martínez in Bogotá.

Source

The Financial System Implodes: The 10 Worst Corporations of 2008

November 22 2008

The System Implodes: The 10 Worst Corporations of 2008

by Robert Weissman

2008 marks the 20th anniversary of Multinational Monitor’s annual list of the 10 Worst Corporations of the year.

In the 20 years that we’ve published our annual list, we’ve covered corporate villains, scoundrels, criminals and miscreants. We’ve reported on some really bad stuff — from Exxon’s Valdez spill to Union Carbide and Dow’s effort to avoid responsibility for the Bhopal disaster; from oil companies coddling dictators (including Chevron and CNPC, both profiled this year) to a bank (Riggs) providing financial services for Chilean dictator Augusto Pinochet; from oil and auto companies threatening the future of the planet by blocking efforts to address climate change to duplicitous tobacco companies marketing cigarettes around the world by associating their product with images of freedom, sports, youthful energy and good health.

But we’ve never had a year like 2008.

The financial crisis first gripping Wall Street and now spreading rapidly throughout the world is, in many ways, emblematic of the worst of the corporate-dominated political and economic system that we aim to expose with our annual 10 Worst list. Here is how.

Improper political influence: Corporations dominate the policy-making process, from city councils to global institutions like the World Trade Organization. Over the last 30 years, and especially in the last decade, Wall Street interests leveraged their political power to remove many of the regulations that had restricted their activities. There are at least a dozen separate and significant examples of this, including the Financial Services Modernization Act of 1999, which permitted the merger of banks and investment banks. In a form of corporate civil disobedience, Citibank and Travelers Group merged in 1998 — a move that was illegal at the time, but for which they were given a two-year forbearance — on the assumption that they would be able to force a change in the relevant law. They did, with the help of just-retired (at the time) Treasury Secretary Robert Rubin, who went on to an executive position at the newly created Citigroup.

Deregulation and non-enforcement: Non-enforcement of rules against predatory lending helped the housing bubble balloon. While some regulators had sought to exert authority over financial derivatives, they were stopped by finance-friendly figures in the Clinton administration and Congress — enabling the creation of the credit default swap market. Even Alan Greenspan concedes that that market — worth $55 trillion in what is called notional value — is imploding in significant part because it was not regulated.

Short-term thinking: It was obvious to anyone who cared to look at historical trends that the United States was experiencing a housing bubble. Many in the financial sector seemed to have convinced themselves that there was no bubble. But others must have been more clear-eyed. In any case, all the Wall Street players had an incentive not to pay attention to the bubble. They were making stratospheric annual bonuses based on annual results. Even if they were certain the bubble would pop sometime in the future, they had every incentive to keep making money on the upside.

Financialization: Profits in the financial sector were more than 35 percent of overall U.S. corporate profits in each year from 2005 to 2007, according to data from the Bureau of Economic Analysis. Instead of serving the real economy, the financial sector was taking over the real economy.

Profit over social use: Relatedly, the corporate-driven economy was being driven by what could make a profit, rather than what would serve a social purpose. Although Wall Street hucksters offered elaborate rationalizations for why exotic financial derivatives, private equity takeovers of firms, securitization and other so-called financial innovations helped improve economic efficiency, by and large these financial schemes served no socially useful purpose.

Externalized costs: Worse, the financial schemes didn’t just create money for Wall Street movers and shakers and their investors. They made money at the expense of others. The costs of these schemes were foisted onto workers who lost jobs at firms gutted by private equity operators, unpayable loans acquired by homeowners who bought into a bubble market (often made worse by unconscionable lending terms), and now the public.

What is most revealing about the financial meltdown and economic crisis, however, is that it illustrates that corporations — if left to their own worst instincts — will destroy themselves and the system that nurtures them. It is rare that this lesson is so graphically illustrated. It is one the world must quickly learn, if we are to avoid the most serious existential threat we have yet faced: climate change.

Of course, the rest of the corporate sector was not on good behavior during 2008 either, and we do not want them to escape justified scrutiny. In keeping with our tradition of highlighting diverse forms of corporate wrongdoing, we include only one financial company on the 10 Worst list. Here, presented in alphabetical order, are the 10 Worst Corporations of 2008.

AIG: Money for Nothing

There’s surely no one party responsible for the ongoing global financial crisis.

But if you had to pick a single responsible corporation, there’s a very strong case to make for American International Group (AIG).

In September, the Federal Reserve poured $85 billion into the distressed global financial services company. It followed up with $38 billion in October.

The government drove a hard bargain for its support. It allocated its billions to the company as high-interest loans; it demanded just short of an 80 percent share of the company in exchange for the loans; and it insisted on the firing of the company’s CEO (even though he had only been on the job for three months).

Why did AIG — primarily an insurance company powerhouse, with more than 100,000 employees around the world and $1 trillion in assets — require more than $100 billion ($100 billion!) in government funds? The company’s traditional insurance business continues to go strong, but its gigantic exposure to the world of “credit default swaps” left it teetering on the edge of bankruptcy. Government officials then intervened, because they feared that an AIG bankruptcy would crash the world’s financial system.

Credit default swaps are effectively a kind of insurance policy on debt securities. Companies contracted with AIG to provide insurance on a wide range of securities. The insurance policy provided that, if a bond didn’t pay, AIG would make up the loss.

AIG’s eventual problem was rooted in its entering a very risky business but treating it as safe. First, AIG Financial Products, the small London-based unit handling credit default swaps, decided to insure “collateralized debt obligations” (CDOs). CDOs are pools of mortgage loans, but often only a portion of the underlying loans — perhaps involving the most risky part of each loan. Ratings agencies graded many of these CDOs as highest quality, though subsequent events would show these ratings to have been profoundly flawed. Based on the blue-chip ratings, AIG treated its insurance on the CDOs as low risk. Then, because AIG was highly rated, it did not have to post collateral.

Through credit default swaps, AIG was basically collecting insurance premiums and assuming it would never pay out on a failure — let alone a collapse of the entire market it was insuring. It was a scheme that couldn’t be beat: money for nothing.

In September, the New York Times’ Gretchen Morgenson reported on the operations of AIG’s small London unit, and the profile of its former chief, Joseph Cassano. In 2007, the Times reported, Cassano “described the credit default swaps as almost a sure thing.” “It is hard to get this message across, but these are very much handpicked,” he said in a call with analysts.

“It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions,” he said.

Cassano assured investors that AIG’s operations were nearly fail safe. Following earlier accounting problems, the company’s risk management was stellar, he said: “That’s a committee that I sit on, along with many of the senior managers at AIG, and we look at a whole variety of transactions that come in to make sure that they are maintaining the quality that we need to. And so I think the things that have been put in at our level and the things that have been put in at the parent level will ensure that there won’t be any of those kinds of mistakes again.”

Cassano turned out to be spectacularly wrong. The credit default swaps were not a sure thing. AIG somehow did not notice that the United States was experiencing a housing bubble, and that it was essentially insuring that the bubble would not pop. It made an ill-formed judgment that positive credit ratings meant CDOs were high quality — even when the underlying mortgages were of poor quality.

But before the bubble popped, Cassano’s operation was minting money. It wasn’t hard work, since AIG Financial Products was taking in premiums in exchange for nothing. In 2005, the unit’s profit margin was 83 percent, according to the Times. By 2007, its credit default swap portfolio was more than $500 billion.

Then things started to go bad. Suddenly, AIG had to start paying out on some of the securities it had insured. As it started recording losses, its credit default swap contracts require that it begin putting up more and more collateral. AIG found it couldn’t raise enough money fast enough — over the course of a weekend in September, the amount of money AIG owed shot up from $20 billion to more than $80 billion.

With no private creditors stepping forward, it fell to the government to provide the needed capital or let AIG enter bankruptcy. Top federal officials deemed bankruptcy too high a risk to the overall financial system.

After the bailout, it emerged that AIG did not even know all of the CDOs it had ensured.

In September, less than a week after the bailout was announced, the Orange County Register reported on a posh retreat for company executives and insurance agents at the exclusive St. Regis Resort in Monarch Beach, California. Rooms at the resort can cost over $1,000 per night.

After the House of Representatives Oversight and Government Reform Committee highlighted the retreat, AIG explained that the retreat was primarily for well-performing independent insurance agents. Only 10 of the 100 participants were from AIG (and they from a successful AIG subsidiary), the company said, and the event was planned long in advance of the federal bailout. In an apology letter to Treasury Secretary Henry Paulson, CEO Edward Liddy wrote that AIG now faces very different challenges, and “that we owe our employees and the American public new standards and approaches.”

New standards and approaches, indeed.

Cargill: Food Profiteers

The world’s food system is broken.
Or, more accurately, the giant food companies and their allies in the U.S. and other rich country governments, and at the International Monetary Fund and World Bank, broke it.

Thirty years ago, most developing countries produced enough food to feed themselves [CHECK]. Now, 70 percent are net food importers.

Thirty years ago, most developing countries had in place mechanisms aimed at maintaining a relatively constant price for food commodities. Tariffs on imports protected local farmers from fluctuations in global food prices. Government-run grain purchasing boards paid above-market prices for farm goods when prices were low, and required farmers to sell below-market when prices were high. The idea was to give farmers some certainty over price, and to keep food affordable for consumers. Governments also provided a wide set of support services for farmers, giving them advice on new crop and growing technologies and, in some countries, helping set up cooperative structures.

This was not a perfect system by any means, but it looks pretty good in retrospect.

Over the last three decades, the system was completely abandoned, in country after country. It was replaced by a multinational-dominated, globally integrated food system, in which the World Bank and other institutions coerced countries into opening their markets to cheap food imports from rich countries and re-orienting their agricultural systems to grow food for rich consumers abroad. Proponents said the new system was a “free market” approach, but in reality it traded one set of government interventions for another — a new set of rules that gave enhanced power to a handful of global grain trading companies like Cargill and Archer Daniels Midland, as well as to seed and fertilizer corporations.

“For this food regime to work,” Raj Patel, author of Stuffed and Starved, told the U.S. House Financial Services Committee at a May hearing, “existing marketing boards and support structures needed to be dismantled. In a range of countries, this meant that the state bodies that had been supported and built by the World Bank were dismantled by the World Bank. The rationale behind the dismantling of these institutions was to clear the path for private sector involvement in these sectors, on the understanding that the private sector would be more efficient and less wasteful than the public sector.”

“The result of these interventions and conditions,” explained Patel, “was to accelerate the decline of developing country agriculture. One of the most striking consequences of liberalization has been the phenomenon of ‘import surges.’ These happen when tariffs on cheaper, and often subsidized, agricultural products are lowered, and a host country is then flooded with those goods. There is often a corresponding decline in domestic production. In Senegal, for example, tariff reduction led to an import surge in tomato paste, with a 15-fold increase in imports, and a halving of domestic production. Similar stories might be told of Chile, which saw a three-fold surge in imports of vegetable oil, and a halving of domestic production. In Ghana in 1998, local rice production accounted for over 80 percent of domestic consumption. By 2003, that figure was less than 20 percent.”

The decline of developing country agriculture means that developing countries are dependent on the vagaries of the global market. When prices spike — as they did in late 2007 and through the beginning of 2008 — countries and poor consumers are at the mercy of the global market and the giant trading companies that dominate it. In the first quarter of 2008, the price of rice in Asia doubled, and commodity prices overall rose 40 percent. People in rich countries felt this pinch, but the problem was much more severe in the developing world. Not only do consumers in poor countries have less money, they spend a much higher proportion of their household budget on food — often half or more — and they buy much less processed food, so commodity increases affect them much more directly. In poor countries, higher prices don’t just pinch, they mean people go hungry. Food riots broke out around the world in early 2008.

But not everyone was feeling pain. For Cargill, spiking prices was an opportunity to get rich. In the second quarter of 2008, the company reported profits of more than $1 billion, with profits from continuing operations soaring 18 percent from the previous year. Cargill’s 2007 profits totaled more than $2.3 billion, up more than a third from 2006.

In a competitive market, would a grain-trading middleman make super-profits? Or would rising prices crimp the middleman’s profit margin?

Well, the global grain trade is not competitive.

In an August speech, Cargill CEO Greg Page posed the question, “So, isn’t Cargill exploiting the food situation to make money?” Here is how he responded:

“I would give you four pieces of information about why our earnings have gone up dramatically.

  1. The demand for food has gone up. The demand for our facilities has gone up, and we are running virtually all of our facilities worldwide at total capacity. As we utilize our capacity more effectively, clearly we do better.
  2. Fertilizer prices rose, and we are owners of a large fertilizer company. That has been the single largest factor in Cargill’s earnings.
  3. The volatility in the grain industry — much of it created by governments — was an opportunity for a trading company like Cargill to make money.
  4. Finally, in this era of high prices, Cargill over the last two years has invested $15.5 billion additional dollars into the world food system. Some was to carry all these high-priced inventories. We also wanted to be sure that we were there for farmers who needed the working capital to operate in this much more expensive environment. Clearly, our owners expected some return on that $15.5 billion. Cargill had an opportunity to make more money in this environment, and I think that is something that we need to be very forthright about.”

OK, Mr. Page, that’s all very interesting. The question was, “So, isn’t Cargill exploiting the food situation to make money?” It sounds like your answer is, “yes.”

Chevron: “We can’t let little countries screw around with big companies”

The world has witnessed a stunning consolidation of the multinational oil companies over the last decade.

One of the big winners was Chevron. It swallowed up Texaco and Unocal, among others. It was happy to absorb their revenue streams. It has been less willing to take responsibility for ecological and human rights abuses perpetrated by these companies.

One of the inherited legacies from Chevron’s 2001 acquisition of Texaco is litigation in Ecuador over the company’s alleged decimation of the Ecuadorian Amazon over a 20-year period of operation. In 1993, 30,000 indigenous Ecuadorians filed a class action suit in U.S. courts, alleging that Texaco had poisoned the land where they live and the waterways on which they rely, allowing billions of gallons of oil to spill and leaving hundreds of waste pits unlined and uncovered. They sought billions in compensation for the harm to their land and livelihood, and for alleged health harms. The Ecuadorians and their lawyers filed the case in U.S. courts because U.S. courts have more capacity to handle complex litigation, and procedures (including jury trials) that offer plaintiffs a better chance to challenge big corporations. Texaco, and later Chevron, deployed massive legal resources to defeat the lawsuit. Ultimately, a Chevron legal maneuver prevailed: At Chevron’s instigation, U.S. courts held that the case should be litigated in Ecuador, closer to where the alleged harms occurred.

Having argued vociferously that Ecuadorian courts were fair and impartial, Chevron is now unhappy with how the litigation has proceeded in that country. So unhappy, in fact, that it is lobbying the Office of the U.S. Trade Representative to impose trade sanctions on Ecuador if the Ecuadorian government does not make the case go away.

“We can’t let little countries screw around with big companies like this — companies that have made big investments around the world,” a Chevron lobbyist said to Newsweek in August. (Chevron subsequently stated that “the comments attributed to an unnamed lobbyist working for Chevron do not reflect our company’s views regarding the Ecuador case. They were not approved by the company and will not be tolerated.”)

Chevron is worried because a court-appointed special master found in March that the company was liable to plaintiffs for between $7 billion and $16 billion. The special master has made other findings that Chevron’s clean-up operations in Ecuador have been inadequate.

Another of Chevron’s inherited legacies is the Yadana natural gas pipeline in Burma, operated by a consortium in which Unocal was one of the lead partners. Human rights organizations have documented that the Yadana pipeline was constructed with forced labor, and associated with brutal human rights abuses by the Burmese military.

EarthRights International, a human rights group with offices in Washington, D.C. and Bangkok, has carefully tracked human rights abuses connected to the Yadana pipeline, and led a successful lawsuit against Unocal/Chevron. In an April 2008 report, the group states that “Chevron and its consortium partners continue to rely on the Burmese army for pipeline security, and those forces continue to conscript thousands of villagers for forced labor, and to commit torture, rape, murder and other serious abuses in the course of their operations.”

Money from the Yadana pipeline plays a crucial role in enabling the Burmese junta to maintain its grip on power. EarthRights International estimates the pipeline funneled roughly $1 billion to the military regime in 2007. The group also notes that, in late 2007, when the Burmese military violently suppressed political protests led by Buddhist monks, Chevron sat idly by.

Chevron has trouble in the United States, as well. In September, Earl Devaney, the inspector general for the Department of Interior, released an explosive report documenting “a culture of ethical failure” and a “culture of substance abuse and promiscuity” in the U.S. government program handling oil lease contracts on U.S. government lands and property. Government employees, Devaney found, accepted a stream of small gifts and favors from oil company representatives, and maintained sexual relations with them. (In one memorable passage, the inspector general report states that “sexual relationships with prohibited sources cannot, by definition, be arms-length.”) The report showed that Chevron had conferred the largest number of gifts on federal employees. It also complained that Chevron refused to cooperate with the investigation, a claim Chevron subsequently disputed.

Constellation Energy: Nuclear Operators

Although it is too dangerous, too expensive and too centralized to make sense as an energy source, nuclear power won’t go away, thanks to equipment makers and utilities that find ways to make the public pay and pay.

Case in point: Constellation Energy Group, the operator of the Calvert Cliffs nuclear plant in Maryland. When Maryland deregulated its electricity market in 1999, Constellation — like other energy generators in other states — was able to cut a deal to recover its “stranded costs” and nuclear decommissioning fees. The idea was that competition would bring multiple suppliers into the market, and these new competitors would have an unfair advantage over old-time monopoly suppliers. Those former monopolists, the argument went, had built expensive nuclear reactors with the approval of state regulators, and it would be unfair if they could not charge consumers to recover their costs. It would also be unfair, according to this line of reasoning, if the former monopolists were unable to recover the costs of decommissioning nuclear facilities.

In Maryland, the “stranded cost” deal gave Constellation (through its affiliate Baltimore Gas & Electric, BGE) the right to charge ratepayers $975 million in 1993 dollars (almost $1.5 billion in present dollars).

Deregulation meant that Constellation’s energy generating assets — including its nuclear facility at Calvert Cliffs — were free from price regulation. As a result, instead of costing Constellation, Calvert Cliffs’ market value increased.

Deregulation also meant that, after an agreed-upon freeze period, BGE was free to raise its rates as it chose. In 2006, it announced a 72 percent rate increase. For residential consumers, this meant they would pay an average of $743 more per year for electricity.

The sudden price hike sparked a rebellion. The Maryland legislature passed a law requiring BGE to credit consumers $386 million over a 10-year period. At the time, Constellation was very pleased with the deal, which let it keep most of its price-gouging profits — a spokesperson for the then-governor said that Constellation and BGE were “doing a victory lap around the statehouse” after the bill passed.

In February 2008, however, Constellation announced that it intended to sue the state for unconstitutionally “taking” its assets via the mandatory consumer credit. In March, following a preemptive lawsuit by the state, the matter was settled. BGE agreed to make a one-time rebate of $170 million to residential ratepayers, and 90 percent of the credits to ratepayers (totaling $346 million) were left in place. The deal also relieved ratepayers of the obligation to pay for decommissioning — an expense that had been expected to total $1.5 billion (or possibly much more) from 2016 to 2036.

The deal also included regulatory changes making it easier for outside companies to invest in Constellation — a move of greater import than initially apparent. In September, with utility stock prices plummeting, Warren Buffet’s MidAmerican Energy announced it would purchase Constellation for $4.7 billion, less than a quarter of the company’s market value in January.

Meanwhile, Constellation plans to build a new reactor at Calvert Cliffs, potentially the first new reactor built in the United States since the near-meltdown at Three Mile Island in 1979.

“There are substantial clean air benefits associated with nuclear power, benefits that we recognize as the operator of three plants in two states,” says Constellation spokesperson Maureen Brown.

It has lined up to take advantage of U.S. government-guaranteed loans for new nuclear construction, available under the terms of the 2005 Energy Act [see “Nuclear’s Power Play: Give Us Subsidies or Give Us Death,” Multinational Monitor, September/October 2008]. “We can’t go forward unless we have federal loan guarantees,” says Brown.

Building nuclear plants is extraordinarily expensive (Constellation’s planned construction is estimated at $9.6 billion) and takes a long time; construction plans face massive political risks; and the value of electric utilities is small relative to the huge costs of nuclear construction. For banks and investors, this amounts to too much uncertainty — but if the government guarantees loans will be paid back, then there’s no risk.

Or, stated better, the risk is absorbed entirely by the public. That’s the financial risk. The nuclear safety risk is always absorbed, involuntarily, by the public.

CNPC: Fueling Violence in Darfur

Many of the world’s most brutal regimes have a common characteristic: Although subject to economic sanctions and politically isolated, they are able to maintain power thanks to multinational oil company enablers. Case in point: Sudan, and the Chinese National Petroleum Corporation (CNPC).

In July, International Criminal Court (ICC) Prosecutor Luis Moreno-Ocampo charged the President of Sudan, Omar Hassan Ahmad Al Bashir, with committing genocide, crimes against humanity and war crimes. The charges claim that Al Bashir is the mastermind of crimes against ethnic groups in Darfur, aimed at removing the black population from Sudan. Sudanese armed forces and government-authorized militias known as the Janjaweed have carried out massive attacks against the Fur, Masalit and Zaghawa communities of Darfur, according to the ICC allegations. Following bombing raids, “ground forces would then enter the village or town and attack civilian inhabitants. They kill men, children, elderly, women; they subject women and girls to massive rapes. They burn and loot the villages.” The ICC says 35,000 people have been killed and 2.7 million displaced.

The ICC reports one victim saying: “When we see them, we run. Some of us succeed in getting away, and some are caught and taken to be raped — gang-raped. Maybe around 20 men rape one woman. … These things are normal for us here in Darfur. These things happen all the time. I have seen rapes, too. It does not matter who sees them raping the women — they don’t care. They rape girls in front of their mothers and fathers.”

Governments around the world have imposed various sanctions on Sudan, with human rights groups demanding much more aggressive action.

But there is little doubt that Sudan has been able to laugh off existing and threatened sanctions because of the huge support it receives from China, channeled above all through the Sudanese relationship with CNPC.

“The relationship between CNPC and Sudan is symbiotic,” notes the Washington, D.C.-based Human Rights First, in a March 2008 report, “Investing in Tragedy.” “Not only is CNPC the largest investor in the Sudanese oil sector, but Sudan is CNPC’s largest market for overseas investment.”

China receives three quarters of Sudan’s exports, and Chinese companies hold the majority share in almost all of the key oil-rich areas in Sudan. Explains Human Rights First: “Beijing’s companies pump oil from numerous key fields, which then courses through Chinese-made pipelines to Chinese-made storage tanks to await a voyage to buyers, most of them Chinese.” CNPC is the largest oil investor in Sudan; the other key Chinese company is the Sinopec Group (also known as the China Petrochemical Corporation).

Oil money has fueled violence in Darfur. “The profitability of Sudan’s oil sector has developed in close chronological step with the violence in Darfur,” notes Human Rights First. “In 2000, before the crisis, Sudan’s oil revenue was $1.2 billion. By 2006, with the crisis well underway, that total had shot up by 291 percent, to $4.7 billion. How does Sudan use that windfall? Its finance minister has said that at least 70 percent of the oil profits go to the Sudanese armed forces, linked with its militia allies to the crimes in Darfur.”

There are other nefarious components of the CNPC relationship with the Sudanese government. China ships substantial amounts of small arms to Sudan and has helped Sudan build its own small arms factories. China has also worked at the United Nations to undermine more effective multilateral action to protect Darfur. Human rights organizations charge a key Chinese motivation is to lubricate its relationship with the Khartoum government so the oil continues to flow.

CNPC did not respond to repeated requests for comment.

Dole: The Sour Taste of Pineapple

Starting in 1988, the Philippines undertook what was to be a bold initiative to redress the historically high concentration of land ownership that has impoverished millions of rural Filipinos and undermined the country’s development. The Comprehensive Agricultural Reform Program (CARP) promised to deliver land to the landless.

It didn’t work out that way.

Plantation owners helped draft the law and invented ways to circumvent its purported purpose.

Dole pineapple workers are among those paying the price.

Under CARP, Dole’s land was divided among its workers and others who had claims on the land prior to the pineapple giant. However, under the terms of the law, as the Washington, D.C.-based International Labor Rights Forum (ILRF) explains in an October report, “The Sour Taste of Pineapple,” the workers received only nominal title. They were required to form labor cooperatives. Intended to give workers — now the new land owners — a means to collectively manage their land, the cooperatives were instead controlled by wealthy landlords.

“Through its dealings with these cooperatives,” ILRF found, Dole and Del Monte, (the world’s other leading pineapple grower) “have been able to take advantage of a number of worker abuses. Dole has outsourced its labor force to contract labor and replaced its full-time regular employment system that existed before CARP.” Dole employs 12,000 contract workers. Meanwhile, from 1989 to 1998, Dole reduced its regular workforce by 3,500.

Under current arrangements, Dole now leases its land from its workers, on extremely cheap terms — in one example cited by ILRF, Dole pays in rent one-fifteenth of its net profits from a plantation. Most workers continue to work the land they purportedly own, but as contract workers for Dole.

The Philippine Supreme Court has ordered Dole to convert its contract workers into regular employees, but the company has not done so. In 2006, the Court upheld a Department of Labor and Employment decision requiring Dole to stop using illegal contract labor. Under Philippine law, contract workers should be regularized after six months.

Dole emphasizes that it pays its workers $10 a day, more than the country’s $5.60 minimum wage. It also says that its workers are organized into unions. The company responded angrily to a 2007 nomination for most irresponsible corporations from a Swiss organization, the Berne Declaration. “We must also say that those fallacious attacks created incredulity and some anger among our Dolefil workers, their representatives, our growers, their cooperatives and more generally speaking among the entire community where we operate.” The company thanked “hundreds of people who spontaneously expressed their support to Dolefil, by taking the initiative to sign manifestos,” including seven cooperatives.

The problem with Dole’s position, as ILRF points out, is that “Dole’s contract workers are denied the same rights afforded to Dole’s regular workers. They are refused the right to organize or benefits gained by the regular union, and are consequently left with poor wages and permanent job insecurity.” Contract workers are paid under a quota system, and earn about $1.85 a day, according to ILRF.

Conditions are not perfect for unionized workers, either. In 2006, when a union leader complained about pesticide and chemical exposures (apparently misreported in local media as a complaint about Dole’s waste disposal practices), the management of Dole Philippines (Dolefil) pressed criminal libel charges against him. Two years later, these criminal charges remain pending.

Dole says it cannot respond to the allegations in the ILRF report, because the U.S. Trade Representative is considering acting on a petition by ILRF to deny some trade benefits to Dole pineapples imported into the United States from the Philippines.

Concludes Bama Atheya, executive director of ILRF, “In both Costa Rica and the Philippines, Dole has deliberately obstructed workers’ right to organize, has failed to pay a living wage and has polluted workers’ communities.”

GE: Creative Accounting

General Electric (GE) has appeared on Multinational Monitor’s annual 10 Worst Corporations list for defense contractor fraud, labor rights abuses, toxic and radioactive pollution, manufacturing nuclear weaponry, workplace safety violations and media conflicts of interest (GE owns television network NBC).

This year, the company returns to the list for new reasons: alleged tax cheating and the firing of a whistleblower.

In June, former New York Times reporter David Cay Johnston reported on internal GE documents that appeared to show the company had engaged in long-running effort to evade taxes in Brazil. In a lengthy report in Tax Notes International, Johnston cited a GE subsidiary manager’s powerpoint presentation that showed “suspicious” invoices as “an indication of possible tax evasion.” The invoices showed suspiciously high sales volume for lighting equipment in lightly populated Amazon regions of the country. These sales would avoid higher value added taxes (VAT) in urban states, where sales would be expected to be greater.

Johnston wrote that the state-level VAT at issue, based on the internal documents he reviewed, appeared to be less than $100 million. But, “since the VAT scheme appears to have gone on long before the period covered in the Moreira [the company manager] report, the total sum could be much larger and could involve other countries supplied by the Brazil subsidiary.”

A senior GE spokesperson, Gary Sheffer, told Johnston that the VAT and related issues were so small relative to GE’s size that the company was surprised a reporter would spend time looking at them. “No company has perfect compliance,” Sheffer said. “We do not believe we owe the tax.”

Johnston did not identify the source that gave him the internal GE documents, but GE has alleged it was a former company attorney, Adriana Koeck. GE fired Koeck in January 2007 for what it says were “performance reasons.” GE sued Koeck in June 2008, alleging that she wrongfully maintained privileged and confidential information, and improperly shared the information with third parties. In a court filing, GE said that it “considers its professional reputation to be its greatest asset and it has worked tirelessly to develop and preserve an unparalleled reputation of ‘unyielding integrity.’”

GE’s suit followed a whistleblower defense claim filed by Koeck in 2007. In April 2007, Koeck filed a claim with the U.S. Department of Labor under the Sarbanes-Oxley whistleblower protections (rules put in place following the Enron scandal).

In her filing, Koeck alleges that she was fired not for poor performance, but because she called attention to improper activities by GE. After being hired in January 2006, Koeck’s complaint asserts, she “soon discovered that GE C&I [consumer and industrial] operations in Latin America were engaged in a variety of irregular practices. But when she tried to address the problems, both Mr. Burse and Mr. Jones [her superiors in the general counsel’s office] interfered with her efforts, took certain matters away from her, repeatedly became enraged with her when she insisted that failing to address the problems would harm GE, and eventually had her terminated.”

Koeck’s whistleblower filing details the state VAT-avoidance scheme discussed in Johnston’s article. It also indicates that several GE employees in Brazil were blackmailing the company to keep quiet about the scheme.

Koeck’s whistleblower filing also discusses reports in the Brazilian media that GE had participated in a “bribing club” with other major corporations. Members of the club allegedly met to divide up public contracts in Brazil, as well as to agree on the amounts that would be paid in bribes. Koeck discovered evidence of GE subsidiaries engaging in behavior compatible with the “bribing club” stories and reported this information to her superior. Koeck alleges that her efforts to get higher level attorneys to review the situation failed.

In a statement, GE responds to the substance of Koeck’s allegations of wrongdoing: “These were relatively minor and routine commercial and tax issues in Brazil. Our employees proactively identified, investigated and resolved these issues in the appropriate manner. We are confident we have met all of our tax and compliance obligations in Brazil.GE has a strong and rigorous compliance process that dealt effectively with these issues.”

Koeck’s Sarbanes-Oxley complaint was thrown out in June, on the grounds that it had not been filed in a timely matter.

The substance of her claims, however, are now under investigation by the Department of Justice Fraud Section, according to Corporate Crime Reporter.

Imperial Sugar: 13 Dead

On February 7, an explosion rocked the Imperial Sugar refinery in Port Wentworth, Georgia, near Savannah.

Tony Holmes, a forklift operator at the plant, was in the break room when the blast occurred.

“I heard the explosion,” he told the Savannah Morning News. “The building shook, and the lights went out. I thought the roof was falling in. … I saw people running. I saw some horrific injuries. … People had clothes burning. Their skin was hanging off. Some were bleeding.”

Days later, when the fire was finally extinguished and search-and-rescue operations completed, the horrible human toll was finally known: 13 dead, dozens badly burned and injured.

As with almost every industrial disaster, it turns out the tragedy was preventable. The cause was accumulated sugar dust, which like other forms of dust, is highly combustible.

The Occupational Safety and Health Administration (OSHA), the government workplace safety regulator, had not visited Imperial Sugar’s Port Wentworth facility since 2000. When inspectors examined the blast site after the fact, they found rampant violations of the agency’s already inadequate standards. They proposed a more than $5 million fine, and issuance of citations for 61 egregious willful violations, eight willful violations and 51 serious violations. Under OSHA’s rules, a “serious” citation is issued when death or serious physical harm is likely to occur, a “willful” violation is a violation committed with plain indifference to employee safety and health, and “egregious” citations are issued for particularly flagrant violations.

A month later, OSHA inspectors investigated Imperial Sugar’s plant in Gramercy, Louisiana. They found 1/4- to 2-inch accumulations of dust on electrical wiring and machinery. They found 6- to 8-inch accumulations on wall ledges and piping. They found 1/2- to 1-inch accumulations on mechanical equipment and motors. They found 3- to 48-inch accumulations on workroom floors. OSHA posted an “imminent danger” notice at the plant, because of the high likelihood of another explosion.

Imperial Sugar obviously knew of the conditions in its plants. It had in fact taken some measures to clean up operations prior to the explosion.

Graham H. Graham was hired as vice president of operations of Imperial Sugar in November 2007. In July 2008, he told a Senate subcommittee that he first walked through the Port Wentworth facility in December 2007. “The conditions were shocking,” he testified. “Port Wentworth was a dirty and dangerous facility. The refinery was littered with discarded materials, piles of sugar dust, puddles of sugar liquid and airborne sugar dust. Electrical motors and controls were encrusted with solidified sugar, while safety covers and doors were missing from live electrical switchgear and panels. A combustible environment existed.”

Graham recommended that the plant manager be fired, and he was. Graham ordered a housekeeping blitz, and by the end of January, he testified to the Senate subcommittee, conditions had improved significantly, but still were hazardous.

But Graham also testified that he was told to tone down his demands for immediate action. In a meeting with John Sheptor, then Imperial Sugar’s chief operating officer and now its CEO, and Kay Hastings, senior vice president of human resources, Graham testified, “I was also informed that I was excessively eager in addressing the refinery’s problems.”

Sheptor, who was nearly killed in the refinery explosion, and Hastings both deny Graham’s account.

The company says that it respected safety concerns before the explosion, but has since redoubled efforts, hiring expert consultants on combustible hazards, refocusing on housekeeping efforts and purchasing industrial vacuums to minimize airborne disbursement.

In March, the House of Representatives Education and Labor Committee held a hearing on the hazards posed by combustible dust. The head of the Chemical Safety Board testified about a 2006 study that identified hundreds of combustible dust incidents that had killed more than 100 workers during the previous 25 years. The report recommended that OSHA issue rules to control the risk of dust explosions.

Instead of acting on this recommendation, said Committee Chair George Miller, D-California, “OSHA chose to rely on compliance assistance and voluntary programs, such as industry ‘alliances,’ web pages, fact sheets, speeches and booths at industry conferences.”

The House of Representatives then passed legislation to require OSHA to issue combustible dust standards, but the proposal was not able to pass the Senate.

Remarkably, even after the tragedy at Port Wentworth, and while Imperial Sugar said it welcomed the effort for a new dust rule, OSHA head Edwin Foulke indicated he believed no new rule was necessary.

“We believe,” he told the House Education and Labor Committee in March, “that [OSHA] has taken strong measures to prevent combustible dust hazards, and that our multi-pronged approach, which includes effective enforcement of  existing standards, combined with education for employers and employees, is effective in addressing combustible dust hazards. We would like to emphasize that the existence of a standard does not ensure that explosions will be eliminated.”

Philip Morris International: Unshackled

The old Philip Morris no longer exists. In March, the company formally divided itself into two separate entities: Philip Morris USA, which remains a part of the parent company Altria, and Philip Morris International.

Philip Morris USA sells Marlboro and other cigarettes in the United States. Philip Morris International tramples over the rest of the world.

The world is just starting to come to grips with a Philip Morris International even more predatory in pushing its toxic products worldwide.

The new Philip Morris International is unconstrained by public opinion in the United States — the home country and largest market of the old, unified Philip Morris —and will no longer fear lawsuits in the United States.

As a result, Thomas Russo of the investment fund Gardner Russo & Gardner told Bloomberg, the company “won’t have to worry about getting pre-approval from the U.S. for things that are perfectly acceptable in foreign markets.” Russo’s firm owns 5.7 million shares of Altria and now Philip Morris International.

A commentator for The Motley Fool investment advice service wrote, “The Marlboro Man is finally free to roam the globe unfettered by the legal and marketing shackles of the U.S. domestic market.”

In February, the World Health Organization (WHO) issued a new report on the global tobacco epidemic. WHO estimates the Big Tobacco-fueled epidemic now kills more than 5 million people every year.

Five million people.

By 2030, WHO estimates 8 million will die a year from tobacco-related disease, 80 percent in the developing world.

The WHO report emphasizes that known and proven public health policies can dramatically reduce smoking rates. These policies include indoor smoke-free policies; bans on tobacco advertising, promotion and sponsorship; heightened taxes; effective warnings; and cessation programs. These “strategies are within the reach of every country, rich or poor and, when combined as a package, offer us the best chance of reversing this growing epidemic,” says WHO Director-General Margaret Chan.

Most countries have failed to adopt these policies, thanks in no small part to decades-long efforts by Philip Morris and the rest of Big Tobacco to deploy political power to block public health initiatives. Thanks to the momentum surrounding a global tobacco treaty, known as the Framework Convention on Tobacco Control, adopted in 2005, this is starting to change. There’s a long way to go, but countries are increasingly adopting sound public health measures to combat Big Tobacco.

Now Philip Morris International has signaled its initial plans to subvert these policies.

The company has announced plans to inflict on the world an array of new products, packages and marketing efforts. These are designed to undermine smoke-free workplace rules, defeat tobacco taxes, segment markets with specially flavored products, offer flavored cigarettes sure to appeal to youth and overcome marketing restrictions.

The Chief Operating Officer of Philip Morris International, Andre Calantzopoulos, detailed in a March investor presentation two new products, Marlboro Wides, “a shorter cigarette with a wider diameter,” and Marlboro Intense, “a rich, flavorful, shorter cigarette.”

Sounds innocent enough, as far as these things go.

That’s only to the innocent mind.

The Wall Street Journal reported on Philip Morris International’s underlying objective: “The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but don’t always finish a full-size cigarette.”

Workplace and indoor smoke-free rules protect people from second-hand smoke, but also make it harder for smokers to smoke. The inconvenience (and stigma of needing to leave the office or restaurant to smoke) helps smokers smoke less and, often, quit. Subverting smoke-free bans will damage an important tool to reduce smoking.

Philip Morris International says it can adapt to high taxes. If applied per pack (or per cigarette), rather than as a percentage of price, high taxes more severely impact low-priced brands (and can help shift smokers to premium brands like Marlboro). But taxes based on price hurt Philip Morris International.

Philip Morris International’s response? “Other Tobacco Products,” which Calantzopoulos describes as “tax-driven substitutes for low-price cigarettes.” These include, says Calantzopoulos, “the ‘tobacco block,’ which I would describe as the perfect make-your-own cigarette device.” In Germany, roll-your-own cigarettes are taxed far less than manufactured cigarettes, and Philip Morris International’s “tobacco block” is rapidly gaining market share.

One of the great industry deceptions over the last several decades is selling cigarettes called “lights” (as in Marlboro Lights), “low” or “mild” — all designed to deceive smokers into thinking they are safer.

The Framework Convention on Tobacco Control says these inherently misleading terms should be barred. Like other companies in this regard, Philip Morris has been moving to replace the names with color coding — aiming to convey the same ideas, without the now-controversial terms.

Calantzopoulos says Philip Morris International will work to more clearly differentiate Marlboro Gold (lights) from Marlboro Red (traditional) to “increase their appeal to consumer groups and segments that Marlboro has not traditionally addressed.”

Philip Morris International also is rolling out a range of new Marlboro products with obvious attraction for youth. These include Marlboro Ice Mint, Marlboro Crisp Mint and Marlboro Fresh Mint, introduced into Japan and Hong Kong last year. It is exporting clove products from Indonesia.

The company has also renewed efforts to sponsor youth-oriented music concerts. In July, activist pressure forced Philip Morris International to withdraw sponsorship of an Alicia Keys concert in Indonesia (Keys called for an end to the sponsorship deal); and in August, the company was forced to withdraw from sponsorship in the Philippines of a reunion concert of the Eraserheads, a band sometimes considered “the Beatles of the Philippines.”

Responding to increasing advertising restrictions and large, pictorial warnings required on packs, Marlboro is focusing increased attention on packaging. Fancy slide packs make the package more of a marketing device than ever before, and may be able to obscure warning labels.

Most worrisome of all may be the company’s forays into China, the biggest cigarette market in the world, which has largely been closed to foreign multinationals. Philip Morris International has hooked up with the China National Tobacco Company, which controls sales in China. Philip Morris International will sell Chinese brands in Europe. Much more importantly, the company is starting to sell licensed versions of Marlboro in China. The Chinese aren’t letting Philip Morris International in quickly — Calantzopoulos says, “We do not foresee a material impact on our volume and profitability in the near future.” But, he adds, “we believe this long-term strategic cooperation will prove to be mutually beneficial and form the foundation for strong long-term growth.”

What does long-term growth mean? In part, it means gaining market share among China’s 350 million smokers. But it also means expanding the market, by selling to girls and women. About 60 percent of men in China smoke; only 2 or 3 percent of women do so.

Roche: Saving Lives is Not Our Business

Monopoly control over life-saving medicines gives enormous power to drug companies. And, to paraphrase Lord Acton, enormous power corrupts enormously.

The Swiss company Roche makes a range of HIV-related drugs. One of them is enfuvirtid, sold under the brand-name Fuzeon. Fuzeon is the first of a new class of AIDS drugs, working through a novel mechanism. It is primarily used as a “salvage” therapy — a treatment for people for whom other therapies no longer work. Fuzeon brought in $266 million to Roche in 2007, though sales are declining.

Roche charges $25,000 a year for Fuzeon. It does not offer a discount price for developing countries.

Like most industrialized countries, Korea maintains a form of price controls — the national health insurance program sets prices for medicines. The Ministry of Health, Welfare and Family Affairs listed Fuzeon at $18,000 a year. Korea’s per capita income is roughly half that of the United States. Instead of providing Fuzeon, for a profit, at Korea’s listed level, Roche refuses to make the drug available in Korea.

Korea is not a developing country, emphasizes Roche spokesperson Martina Rupp. “South Korea is a developed country like the U.S. or like Switzerland.”

Roche insists that Fuzeon is uniquely expensive to manufacture, and so that it cannot reduce prices. According to a statement from Roche, “the offered price represents the lowest sustainable price at which Roche can provide Fuzeon to South Korea, considering that the production process for this medication requires more than 100 steps — 10 times more than other antiretrovirals. A single vial takes six months to produce, and 45 kilograms of raw materials are necessary to produce one kilogram of Fuzeon.”

The head of Roche Korea was reportedly less diplomatic. According to Korean activists, he told them, “We are not in business to save lives, but to make money. Saving lives is not our business.”

Says Roche spokesperson Rupp: “I don’t know why he would say that, and I cannot imagine that this is really something that this person said.”

Another AIDS-related drug made by Roche is valganciclovir. Valganciclovir treats a common AIDS-related infection called cytomegalovirus (CMV) that causes blindness or death. Roche charges $10,000 for a four-month course of valganciclovir. In December 2006, it negotiated with Médicins Sans Frontières/Doctors Without Borders (MSF) and agreed on a price of $1,899. According to MSF, this still-price-gouging price is only available for poor and very high incidence countries, however, and only for nonprofit organizations — not national treatment programs.

Roche’s Rupp says that “Currently, MSF is the only organization requesting purchase of Valcyte [Roche’s brand name for valganciclovir] for such use in these countries. To date, MSF are the only AIDS treatment provider treating CMV for their patients.  They told us themselves this is because no-one else has the high level of skilled medical staff they have.”

Dr. David Wilson, former MSF medical coordinator in Thailand, says he remembers the first person that MSF treated with life-saving antiretrovirals. “I remember everyone was feeling really great that we were going to start treating people with antiretrovirals, with the hope of bringing people back to normal life.” The first person MSF treated, Wilson says, lived but became blind from CMV. “She became strong and she lived for a long time, but the antiretroviral treatment doesn’t treat the CMV.”

“I’ve been working in MSF projects and treating people with AIDS with antiretrovirals for seven years now,” he says, “and along with many colleagues we’ve been frustrated because we don’t have treatment for this particular disease. We now think we have a strategy to diagnose it effectively and what we really need is the medicine to treat the patients.”

Source

Sierra Leone: A mission for MSF(Doctors Without Borders)

Italian Prime Minister meets with German Chancellor

November 18 2008

By Mathis Winkler

Merkel and Berlusconi Back Alitalia-Lufthansa Deal
Berlusconi and Merkel
Großansicht des Bildes mit der Bildunterschrift: Despite serious problems, Merkel and Berlusconi still had some fun

Meeting in the northern Italian port of Trieste on Tuesday, Germany’s chancellor and her Italian counterpart focused on global economic problems — but also had time for a quick game of hide and seek.

Italian Prime Minister Silvio Berlusconi said Tuesday he and German Chancellor Angela Merkel favor a possible partnership between German airline Lufthansa and ailing Italian carrier Alitalia.

“We both view a collaboration between Alitalia and Lufthansa very favorably. In fact we hope it will occur,” Berlusconi said during a joint news conference with Merkel in Trieste after surprising his German guest with a game of hide and seek at the beginning of their meeting.

As Merkel approached to greet Berlusconi, he hid behind a column and called out “coo-coo!”. Merkel then turned to him, laughed and said “Silvio!” before embracing him, according to reports.

Earlier Tuesday Italy’s top financial newspaper, Il Sole 24 Ore, reported that a private Italian consortium, CAI, which is in the process of purchasing the state’s controlling stake in Alitalia, was on the verge of clinching a deal with French-Dutch airline Air France-KLM.

The “imminent” deal would involve Air France-KLM buying a 20 percent stake of Alitalia for some 200 million euros ($252 million), the newspaper said without citing sources.

But Tuesday’s remarks by Berlusconi suggest the matter has still to be decided. Earlier this year the Italian premier, who was then head of Italy’s opposition, torpedoed a bid by Air France-KLM to buy Alitalia when he campaigned to keep the troubled flagship airline “in Italian hands.”

Focus on economy

Just three days after they both attended the Group of 20 (G20) summit in Washington on the global financial crisis, Berlusconi and Merkel largely focused on economic issues during their talks.

With both Italy and Germany sliding into recession the time has come to “face the economic crisis, but we must not forget environmental themes,” Merkel said.

“We must not choose the wrong measures,” the German chancellor said, adding that “European (Union) but also national assistance packages must be aimed at sectors that have a future,” she added.

Germany was insisting on more flexibility in making EU structural funds available “so that the money can be spent without too much bureaucracy,” Merkel said.

No interventions

As “Europe’s two main manufacturing nations,” Berlusconi said, Italy and Germany opposed any measures contained in a EU climate and energy packet that would negatively impact on their countries’ industries.

Asked whether Italy intended to follow the example of the US, where moves are afoot to bolster that country’s automobile industry, Berlusconi replied: “We don’t believe such measures should be taken.”

“We don’t exclude them, because we first want to see how the market behaves, but at the moment no interventions are planned,” Berlusconi said.

Referring to the importance of the G20, which brought together developed and emerging economies, Berlusconi said he and Merkel still believed the Group of Eight (G8) of the world’s most developed nations should “continue existing.”

The G8, of which Italy next year takes over the presidency and hosts its summit, should however “be enlarged to a G14 or G20 depending on the problems brought to the table,” said Berlusconi,

FMs commemorate Nazi victims

Steinmeier and Frattini at La Risiera di San Sabba memorial

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Steinmeier and Frattini at La Risiera di San Sabba memorial


Germany’s Foreign Minister Frank-Walter Steinmeier on Tuesday meanwhile joined his Italian counterpart Franco Frattini in laying a commemorative wreath for the victims of a former World War II Nazi death camp near Trieste.

The German foreign minister’s morning visit to the Risiera di San Sabba was seen as an attempt to mend fences with Italy. Acrimony exists between the two countries 60 years after the end of the war over demands for retribution for Nazi-era atrocities.

According to estimates, between 3,000 and 5,000 people — mostly political prisoners — were murdered at the camp.

“The atrocities perpetrated at Risiera di San Sabba in the name of Germany are part of our common history,” Steinmeier said during the memorial ceremony. “Many are the events and the places of memory which represent the betrayal of civilization by Germany.”

Steinmeier also recalled the “suffering of around 600,000 Italian soldiers” interned in German prison camps. He was referring to those imprisoned following Italy’s decision in September 1943, after toppling fascist dictator Benito Mussolini’s, to abandon its Axis alliance with Germany.

Joint historic commission

Frattini and Steinmeier also announced the creation of a joint Italian-German commission of historians which would research the treatment of Italian World War II prisoners in German hands.

Last month the German government rejected a verdict from a Rome court ordering Germany to pay personal damages for Nazi atrocities to match reparations already paid to Italy as a nation.

The case was filed by nine families on behalf of relatives killed when Nazi soldiers massacred 203 people at Civitella in northern Italy in June 1944. The Italian court awarded them 1 million euros ($1.3 million).

Germany is currently preparing a complaint to the International Court of Justice in the Hague to fend off further reparation claims.

Source

Ryanair to appeal EU’s ‘corrupt’ support of Alitalia takeover

The do-nothing summit

Nicole Colson reports on the emergency meeting of the heads of the world’s 20 leading economies.

Group of 20 leaders gathered for an official dinner at the White House during an economic summit (Three Trees Images)

Group of 20 leaders gathered for an official dinner at the White House during an economic summit (Three Trees Images)

WORLD LEADERS emerged from the Group of 20 economic summit patting themselves on the back–or in the case of French President Nicolas Sarkozy and George W. Bush, giving each other a celebratory “fist bump”–for coming together to discuss the global economic crisis.

Not that they came up with any real solutions, of course.

Speaking after the meeting, Bush called the agreement negotiated among political leaders from the world’s largest economies “an important first step.” But a closer look at the proposals in question shows that they amount to “too little, too late.”

The general principles included in the G20 declaration include vague calls for strengthening transparency and accountability in financial systems; enhancing sound regulation; promoting “integrity” in financial markets; increasing international cooperation between the countries’ financial regulators; and reforming international financial institutions to include emerging economies.

As National Public Radio’s David Kestenbaum commented:

A lot of the details are “to-be-figured-out-later.”…Oh, the leaders said they thought economic stimulus (building new roads, mailing out checks, that sort of thing) were a good idea. But José Manuel Barroso, president of the European Commission, said each country would have to decide what was right.

In other words, although the G20 summit was portrayed as a coming together of world leaders to take coordinated action to bolster the world economy, the reality is that each country will do what it’s already been doing–use the power of its own state to boost its national corporations and financial systems, at the expense of other countries, particularly poor and developing ones.

That fact was underscored by the announcement that the group isn’t scheduled to meet again until April 30, 2009–more than 100 days after Barack Obama is sworn into office.

“Though the countries’ stimulus packages were cast as ambitious steps, they mainly reflected measures that the countries were already undertaking to respond to the crisis,” the New York Times reported.

“What remains to be seen is whether, working with a new White House, the leaders will cast aside their political and economic differences to embrace more radical changes, including far-reaching but fiercely debated proposals to overhaul regulation.”

– – – – – – – – – – – – – – – –

BEHIND THE scenes, even coming up with an agreement on these relatively toothless “principles” was nearly impossible, according to reports. Unsurprisingly, the U.S. seems to have dug in its heels the most at every suggestion of greater oversight and regulation.

Even mainstream economists rejected the idea that the summit achieved anything substantial. “This is plain-vanilla stuff they could have agreed on without holding a meeting,” Simon Johnson, an economist at the Massachusetts Institute of Technology and a former chief economist of the International Monetary Fund, told the New York Times.

As the Times noted, “despite broad support for economic stimulus, the leaders were not able to agree on a coordinated global effort. The Bush administration, which does not favor a further stimulus, resisted that idea. And the proposal for colleges of supervisors fell short of an international regulatory agency favored by the French. The Bush administration opposes any regulatory agency with cross-border authority.”

The U.S. also made sure that the G20 declaration is explicit in being committed to free-market orthodoxy.

“We recognize that these reforms will only be successful if grounded in a commitment to free-market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems,” the declaration proclaims. “These principles are essential to economic growth and prosperity and have lifted millions out of poverty, and have significantly raised the global standard of living.”

But it is “free-market principles”–specifically wholesale deregulation–that caused the crisis in the first place.

And as global justice campaigners Damien Millet and Eric Toussaint noted following the summit, under the framework of the G20 agreement, the world’s poorest will be the ones who suffer–particularly if discredited institutions like the International Monetary Fund (IMF) and World Bank (WB) gain a new lease on life.

Millet and Toussaint called the summit:

a dismal failure…a sorry show, a script that lacks any credibility, but few spectators seem to care. In detective films, it is seldom the case that the keys to the Court of Justice be given to arch-criminals. Yet this is what the G20 summit is planning to do…This G20 summit shows that lessons have not been learned. The old demons of the past are still with us.

The IMF and the WB, though further delegitimized by the failure of the measures they have enforced for 25 years and by the governance crisis they have experienced over the last years…are still at the heart of the proposed solutions. [World Trade Organization] negotiations aiming at even more economic deregulation, while we have just witnessed the utter failure of this policy, are again on the agenda.

While IMF loans could no longer find clients, Hungary, Ukraine and Pakistan have volunteered. Contrary to denials by concerned institutions, the same intolerable conditionalities are still the order of the day: as counterpart for the latest loan, Hungary had to decide, among other things, to suppress civil servants’ 13th month bonus and freeze their salaries. Japan even proposed to supply the IMF with $100 billion so that it could increase its loans and carry on its fateful activities.

Moreover, the meeting that was intended to find a global solution to the current crisis was not held in the context of the United Nations but in the limited context of the G20. So the very promoters of an unfair and unsustainable model are asked to rescue this model.

The only solutions that were put forward protect the interests of major creditors. Populations and poor countries as usual were not consulted.

When faced with such an inconsistent and ill-conceived script, one cannot but hope for a final twist that would introduce a measure of justice and ethics into all this. This final twist can only be found in social struggles all over the world to bring about a radical change in economic choices.

And if the film should end as dismally as it started, there is a strong chance that the audience will be highly dissatisfied and make it known to the 20 directors in the most vehement manner.

– – – – – – – – – – – – – – – –

EVEN NEOLIBERAL writer Thomas Friedman had to admit in his New York Times column that the financial crisis is far from over:

Governments are having a problem arresting this deflationary downward spiral–maybe because this financial crisis combines four chemicals we have never seen combined to this degree before, and we don’t fully grasp how damaging their interactions have been, and may still be,” he wrote.

Those chemicals are:

1) massive leverage–by everyone from consumers who bought houses for nothing down to hedge funds that were betting $30 for every $1 they had in cash;

2) a world economy that is so much more intertwined than people realized, which is exemplified by British police departments that are financially strapped today because they put their savings in online Icelandic banks–to get a little better yield–that have gone bust;

3) globally intertwined financial instruments that are so complex that most of the CEOs dealing with them did not and do not understand how they work–especially on the downside;

4) a financial crisis that started in America with our toxic mortgages.

When a crisis starts in Mexico or Thailand, we can protect ourselves; when it starts in America, no one can. You put this much leverage together with this much global integration with this much complexity and start the crisis in America and you have a very explosive situation.

“If you want to know where we are right now,” Friedman concluded, “rent the movie Jaws. We’re at that moment when Roy Scheider first sets eyes on the Great White Shark and comes back and says to the skipper, with eyes wide with fear: ‘You’re gonna need a bigger boat.'”

Source

So the bottom line is they had a really great party, at our expense.

They accomplished nothing and want to continue on the road that caused the Crisis in the first place.

Geniuses I tell you, they think they are Geniuses.

So they want to continue to help the planet on a downward spiral to purgatory.

In other wards they may not know what they are doing.  Not that I am cynical or anything.

Being so intertwined is not a good thing. The domino affect is costing we the taxpayers a fortune.

De-regulation is not the way to go. We have been there done that and we have the trillion dollar tee shirts to show for it.  So all we get is a stupid tee shirt.

I wonder what they are giving themselves, a raise in pay?

Someone should be checking their portfolios.

Obama, McCain discuss ways to change ‘bad habits’ of Washington

Obama, McCain discuss ways to change 'bad habits' of Washington

November 17 2008

By BETH FOUHY

CHICAGO

President-elect Barack Obama and former Republican rival John McCain pledged Monday to work together on ways to change Washington’s “bad habits,” though aides to both men said it was unlikely McCain would serve in an Obama cabinet.

The two men met in Obama’s transition headquarters in Chicago for the first time since the Illinois senator vanquished McCain in the presidential election Nov. 4.

Obama said they wanted to talk about “how we can do some work together to fix up the country,” and he added that he would offer his thanks to McCain “for the outstanding service he’s already rendered.”

Obama has said he is likely to invite at least one Republican to join his cabinet, but McCain was not expected to be a candidate. McCain is serving his fourth term in the U.S. Senate.

Obama and McCain sat together for a brief picture-taking session with reporters, along with Rahm Emanuel, Obama’s incoming White House chief of staff, and South Carolina Republican Senator Lindsey Graham, McCain’s close friend.

Obama and McCain were heard briefly discussing football, and Obama cracked that “the national press is tame compared to the Chicago press.”

When asked if he planned to help the Obama administration, McCain replied, “Obviously.”

After the meeting, the two issued a joint statement saying: “At this defining moment in history, we believe that Americans of all parties want and need their leaders to come together and change the bad habits of Washington so that we can solve the common and urgent challenges of our time.”

“It is in this spirit that we had a productive conversation today about the need to launch a new era of reform where we take on government waste and bitter partisanship in Washington in order to restore trust in government, and bring back prosperity and opportunity for every hardworking American family,” it said.

“We hope to work together in the days and months ahead on critical challenges like solving our financial crisis, creating a new energy economy and protecting our nation’s security.”

Obama and McCain clashed bitterly during the fall campaign over taxes, the Iraq War, and ways to fix the ailing economy. Things got ugly at times, with McCain running ads comparing Obama to celebrities Britney Spears and Paris Hilton and raising questions about his rival’s distant relationship with a 1960s-era radical, William Ayers.

Obama’s campaign labelled the 72-year old McCain “erratic” and ran a campaign ad falsely suggesting that McCain and Rush Limbaugh shared similar anti-immigration views.

McCain delivered a gracious concession speech on election night, paying tribute to Obama’s historic ascendancy as the country’s first black president. The two agreed that night to meet after the election when McCain called Obama to concede defeat.

Meanwhile, Obama said in his first television interview since his historic election that Americans shouldn’t worry about the growing federal deficit for the next couple of years and also urged help for the auto industry.

While investors are still riding a rollercoaster on Wall Street, Obama told CBS’ “60 Minutes” in an interview broadcast Sunday that the economy would have deteriorated even more without the $700 billion bank bailout. Re-regulation is a legislative priority, he said, not to crush “the entrepreneurial spirit and risk-taking of American capitalism” but to “restore a sense of balance.”

He also said, “We shouldn’t worry about the deficit next year or even the year after. … The most important thing is that we avoid a deepening recession.”

Obama said he has spent the days since the election planning to stabilize the economy, restore consumer confidence, create jobs and get sound health care and energy policies through Congress.

“There’s no doubt that we have not been able yet to reset the confidence in the financial markets and in the consumer markets and among businesses that allow the economy to move forward in a strong way,” Obama said. “And my job as president is going to be to make sure that we restore that confidence.”

While he said “we have the tools,” the president-elect said not enough has been done to address bank foreclosures and distressed homeowners.

“We’ve gotta set up a negotiation between banks and borrowers so that people can stay in their homes,” Obama said. “That is going to have an impact on the economy as a whole. And, you know, one thing I’m determined is that if we don’t have a clear, focused program for homeowners by the time I take office, we will after I take office.”

Obama credited Treasury Secretary Henry Paulson for trying to remedy “an unprecedented crisis” the country hasn’t seen since the Great Depression of the 1930s.

A member of the transition team works with Paulson daily, Obama said, getting the needed background and sometimes offering approaches to address the economic meltdown.

Obama also acknowledged meeting with former Democratic rival Senator Hillary Clinton last week, but refused to say whether she was being considered for secretary of state, as has been widely reported. He also said the Republican party will be represented in his cabinet.

In the CBS interview, Obama also said that as soon as he takes office he will work with his security team and the military to draw down U.S. troops in Iraq, shore up Afghanistan and “stamp out al-Qaida once and for all.”

Obama confirmed reports that he intends to close the detention centre at Guantanamo Bay, and “make sure we don’t torture” as “part and parcel of an effort to regain America’s moral stature in the world.”

Obama also said he plans to put al-Qaida leader Osama bin Laden in the crosshairs.

“I think capturing or killing bin Laden is a critical aspect of stamping out al-Qaida,” Obama said. “He is not just a symbol, he’s also the operational leader of an organization that is planning attacks against U.S. targets.”

Source

Published in: on November 18, 2008 at 4:51 am  Comments Off on Obama, McCain discuss ways to change ‘bad habits’ of Washington  
Tags: , , , , , , , , , , , , , , , , , , ,

Senate to take up auto bailout on Monday

By John Crawley and Donna Smith

WASHINGTON

November 14 2008

The U.S. Senate plans to take up a $25 billion bailout bill for distressed domestic automakers on Monday, but it remains unclear if proponents can muster the support necessary to pass the legislation.

Democratic Majority Leader Harry Reid of Nevada said on Friday that he “plans to press forward” with emergency aid to automakers and a plan to extend unemployment insurance, even though Republican backing is not assured.

Reid plans to begin debate on Monday and hopes the Senate will conduct procedural votes early in the week.

It will be difficult for Democrats to push through an auto bailout if minority Republicans object and throw up procedural roadblocks.

In a letter to Republican Minority Leader Mitch McConnell of Kentucky, Reid said the legislation was needed to protect millions of workers “at risk from the possible collapse” of carmakers and companies that depend on their business.

General Motors Corp, Ford Motor Co and Chrysler LLC are furiously lobbying for $25 billion in immediate bailout money to help them survive the industry’s worst financial crisis.

Analysts have warned that any government assistance, which they say is imperative for GM to survive through early 2009, would come at a significant cost to existing shareholders.

Sen. Debbie Stabenow, a Michigan Democrat and a leading architect of bailout strategy, told CNBC that failure of one or more of the domestic automakers would rock the nation’s manufacturing economy, already reeling from downsizing.

“What is being talked about now is bankruptcy,” Stabenow said.

GM, Ford and Chrysler have all said Chapter 11 bankruptcy restructuring is not an option.

On Thursday, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said he did not see enough support in the Senate to approve any auto bailout now and would be hesitant to bring it up if there was a chance of failure.

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said in an interview on MSNBC that a bailout would not help.

“It’s going to be money down a rat hole,” he said.

Detroit needs a plan and new models to reverse its sinking fortunes, he said.

Leaders in the House of Representatives have been working to craft legislation that would allow the Treasury Department to extend emergency assistance to Detroit under its $700 billion rescue program for the financial industry.

In return, the government likely would take an equity stake in the automakers and impose conditions, including limits on executive compensation.

The House would take up a bailout bill if it first clears the Senate. Congress is only expected to meet for a matter of days during its post-election session and will not reconvene until early January.

The White House does not favor using the Treasury’s rescue program to help automakers or other industries outside the financial sector.

Bush administration officials point to other steps Congress could take to help Detroit, including amendments to $25 billion of factory retooling loans approved in September to help the industry make more fuel-efficient cars.

Automakers do not favor that approach, saying the retooling assistance has too many strings attached and will be needed later anyway.

Auto bailout hearings are scheduled for Tuesday in the Senate and Wednesday in the House. The chief executives of GM, Chrysler and Ford are expected to testify.

(Editing by John Wallace)

Source

President Bush: global crisis does not mean free market has failed

November 14, 2008

As he sought to deflect European calls for more regulation, President Bush told world leaders flying into Washington yesterday for an emergency meeting that the global financial crisis did not signal the failure of the free market.

Speaking on Wall Street last night, he said: “Government intervention is not a cure-all. While reforms in the financial sector are essential, the solution to today’s problems is sustained economic growth. The surest path to that growth is free markets and free people.”

His comments were a veiled warning to Nicolas Sarkozy, the French President, and Angela Merkel, the German Chancellor, who are pushing for a drastic restructuring of the world’s financial regulatory systems.

Leaders representing the Group of 20 nations are due to gather in Washington for a working dinner this evening and formal meetings tomorrow to discuss reforms that could prevent a repeat of the global financial meltdown experienced over the last three months.

While this weekend’s summit is not expected to produce dramatic actions, Mr Bush, who is hosting the meeting, has a list of topics that he wants the group to consider, including forcing banks to be more transparent in their accounts. The President is also proposing changes to the way that some complex securities are traded, and a reform of institutions such as the International Monetary Fund (IMF) and World Bank.

Other leaders have come with their own national agendas. Gordon Brown wants the IMF to create a special body of experts who would act as an early warning system for new financial crises. Arriving in New York for the summit, Mr Brown defended his own plans to cut taxes and told fellow leaders that “the cost of inaction will be far greater than the cost of any action”. He hopes to gain political cover for a package of tax cuts and public-spending increases by persuading other nations to match the giveaway at the meeting of the G20 group of nations. “It is now becoming increasingly accepted around the world that a temporary and affordable fiscal stimulus is necessary,” he said. “By acting now we can stimulate growth in all our economies.” He said that there was a “need for urgency”.

France is more preoccupied with plans to introduce cross-border regulations, which would allow them to control the operations of French banks such as Société Générale abroad. The Germans are pushing for very heavy regulation of hedge funds.

All leaders of the G20, however, are united by one factor – fear. During the last three months banks and insurers across the world have collapsed, governments and central banks have sought to cope by co-ordinating interest rate cuts and injecting billions into the global banking system to keep it afloat, and the world’s biggest economies are now facing a prolonged period of severe economic recessions.

The UN Secretary-General gave warning that the financial crisis could trigger unrest and even war. In a letter to the G20 leaders, Ban Ki Moon also underlined the perils of protectionism. “The lesson of the 1930s is that a spiral of protectionism can deepen a recession,” he said.

The ghost at this weekend’s feast is Barack Obama. He has declined an invitation to attend the summit, preferring to remain in Chicago where he is putting together policies and personnel for an administration that will take over on January 20.

According to British diplomats in Washington, Mr Brown believes that he is in broad agreement with the President-elect on the shape of international economic intervention.

Source

President Bush told world leaders flying into Washington yesterday for an emergency meeting that the global financial crisis did not signal the failure of the free market.

Speaking on Wall Street last night, he said: “Government intervention is not a cure-all. While reforms in the financial sector are essential, the solution to today’s problems is sustained economic growth. The surest path to that growth is free markets and free people.”

So he actually believes that? Well that’s fine he has the right to believe it if he wants to.

He also went on about the Weapons of mass destruction in Iraq as well, which was anything but true.

He is a flipping Genius who knows all and should be worshiped, because he thinks he is a flipping Genius.   Spare me the rhetoric of the all knowing Bush.

So anyway the rest of us would believe this BS because WHY ?????????????????????????
Because we all have stupid written across out foreheads.  Right sure we do.

Bushes comments were a veiled warning to Nicolas Sarkozy, the French President, and Angela Merkel, the German Chancellor, who are pushing for a drastic restructuring of the world’s financial regulatory systems.

Restructuring and regulations are needed for sure.

The free for all and doing anything  financial institutions want too, must come to and end.

De regulation has proved to be a total failure.

Bush knows how to drive a country into a 11 trillion dollar debt, but he certainly doesn’t know how to correct the mess he and his Administration created.

His financial advice is useless.  Listening to him on any count would be absolute foolishness.

He didn’t  run his own country with any inkling of responsibility, how on earth can he tell the rest how to run theirs?

“Free people” like Bush knows anything about that, after all he has done to oppress Americans.

He has taken away their rights on more fronts then the average Dictator.

When Bush wants to help, I advise ducking for the incoming nightmare he will create.

He has created many.

Here is a little question for you.

If you had a magical little button in front of you,

Now if you  push the little button, it would magically make Bush vanish off the planet.

Would you push it?

https://i1.wp.com/www.democraticstuff.com/v/vspfiles/photos/BT94930-2T.jpg

Ottawa to buy $50B in mortgages, hopes to spur loans

November 12 2008

The federal government is purchasing another $50 billion in residential mortgages to further stabilize the lending industry and encourage lower interest rates, Finance Minister Jim Flaherty announced Wednesday.

The Canadian economy has stalled and is on the brink of a recession. The government hopes that its cash injection will keep consumers spending and keep businesses afloat.

The announcement follows a similar move last month in which Ottawa bought $25 billion in mortgages.

The combined mortgage debt, both purchased through the Canadian Mortgage and Housing Corp. (CMHC), will bring the maximum value of bought securities to $75 billion.

“At a time of considerable uncertainty in global financial markets, this action will provide Canada’s financial institutions with significant and stable access to longer-term funding,” Flaherty said at a press conference in Toronto.

“This extension of the program to purchase insured mortgages will further support the availability of credit, which will benefit Canadian households, businesses and the economy.

“In addition, it will earn a modest rate of return for the Government with no additional risk to the taxpayer.”

Flaherty said the government “will not allow Canada’s financial system, which has been ranked as the soundest in the world, to be put at risk by global events.”

Patrick Grady of Global Economics LTD told CTV News, “the banking system would weather this storm whether the government provided assistance or not. But what it would do is cut back on loans it made.”

Will the move help average Canadians?

It is hoped that the announcement will be a boon to entrepreneurs like Joseph Saikely, the owner of an upscale hair salon in Ottawa.

He said despite the economic downtown, business at his salon, Byblos, is booming.

Saikely says he wants to expand his operation, but can’t get a loan from the banks.

“We have been trying to expand for the last few months, even trickling it down to a minor renovation and there is just not one dollar to be given out or lent,” he told CTV News.

Flaherty says that the $50 billion in mortgage purchases should allow banks to start lending again with greater ease.

“It is up to private sector lenders to keep on doing their jobs, making loans to credit worthy people and enterprises of all sizes,” he said.

But Saikely isn’t hopeful that the banks will start passing on the loans anytime soon.

“Put it in the hands of people that will do something with it, the banks are doing absolutely nothing will it,” he said.

Last month, Canada’s big banks lowered their prime lending rates following the announcement about the $25 billion buyout.

Not a bailout, gov’t says

The Tories have been quick to indicate that the deal to buy mortgages is an asset swap, not a bailout.

The idea is that banks can take good assets, in this case the mortgages, and turn them into cash — which can then be made available to people seeking mortgages or to small business.

The “high-quality” assets are already guaranteed by the Canadian government, Flaherty said.

“It is an efficient, cost-effective and safe way to support lending in Canada at a time of extraordinary strain in global credit markets,” he said.

Despite the global financial crisis, Flaherty said he still expects to report a budget surplus.

“We’re still on track for a small, and I emphasize small, surplus in the current fiscal year,” he said.

Meanwhile, the Bank of Canada said Wednesday it will inject an added $8 billion into Canada’s tight money markets.

The Bank said it plans to introduce a Canadian Dollar Term Loan Facility (TLF) in four auctions of $2 billion each in the coming weeks.

Under the plan, qualifying financial institutions will be able to offer non-mortgage loans as collateral — meaning they can offer most loans currently on their books.

Finance Minister Jim Flaherty announces that Ottawa will be purchasing another 50 billion dollars in residential mortgages. View Video

Source

Iceland to Receive Unexpected Loan from Poland

November 7 2008

Polish authorities will participate in the International Monetary Fund (IMF) economic stabilization program for Iceland, which has yet to be accepted by the IMF board, by granting Iceland a USD 200 million (EUR 155 million) loan.

This was confirmed by Magdalena Kobos, a spokesperson from the Polish Ministry of Finance, to Bloomberg news agency.

According to Bloomberg, Iceland is likely to receive an IMF-led emergency loan of around USD 6 billion (EUR 4.7 billion). In addition to Poland, the Scandinavian countries, Britain and the Netherlands will participate in granting the loan to Iceland.

According to late-breaking news from visir.is, Icelandic Prime Minister Geir H. Haarde announced at a governmental meeting this morning that he had not been made aware of Poland’s intentions to offer Iceland a USD 200 million loan.

Source

Published in: on November 8, 2008 at 3:13 am  Comments Off on Iceland to Receive Unexpected Loan from Poland  
Tags: , , , , , , ,

World Bank lends to Bulgaria to tackle poverty, jobless

November 5 2008

SOFIA,

The World Bank has approved two loans to Bulgaria worth 142 million euros, aimed at raising employment, productivity and living standards in the European Union newcomer, the lender said on Wednesday.

The Balkan country, which joined the EU in 2007, is the bloc’s poorest member with the lowest incomes per capita and has one of the lowest productivity rates.

The global financial crisis is expected to hit Bulgaria’s so far booming economy and possibly raise jobless rates as foreign investments and a domestic credit expansion, which supported growth in the past few years, are slowing.

The World Bank said in a statement that one of the loans worth 102 million euros will support Bulgaria’s reform agenda in the areas of health, education, and social protection.

‘Maintaining the momentum of reforms has become more urgent at this time of turbulence in the global financial markets, and the support of the Bank to the reform agenda … has gained additional significance,’ the statement said.

The bank’s project will support policies to increase employment, lay the foundations for long-term productivity growth by providing incentives for job creation and improving quality of education and promote fiscal sustainability, it said.

The second loan of 40 million euros is designed to stimulate social inclusion by helping low-income and marginalised families educate their children and reduce early drop-outs.

Economists and ratings agencies have warned that Bulgaria’s dependence on foreign cash to fund its huge current account deficit and foreign debt make the country vulnerable in times of tight global liquidity and credit conditions.

Sofia’s debts to the World Bank stood at 573.3 million euros at the end of September and account for 17.7 percent of the state public foreign debt, finance ministry data showed.

(Reporting by Irina Ivanova; Editing by Toby Chopra)

Source


Published in: on November 6, 2008 at 9:10 pm  Comments Off on World Bank lends to Bulgaria to tackle poverty, jobless  
Tags: , , , , , , , ,

Ukraine may borrow $2 bln from World Bank

KIEV
November 6 2008

Ukraine could receive a $2 billion loan from the World Bank, the speaker of the country’s parliament said on Thursday.

The International Monetary Fund earlier agreed to lend Ukraine $16.5 billion.

“The ball is in Ukraine’s court now. It is up to us to decide what amount of money we should receive,” Arseniy Yatsenyuk said following meetings in Washington with the heads of both organizations.

The speaker said the funds would be used to reform Ukraine’s financial and banking sectors.

The financial crisis has seen Ukrainians rush to withdraw their savings, fearing banking collapses. More than $3 billion were pulled out of banks in October.

Ukraine’s economy has been hard hit by the global credit crunch, along with the falling price of steel, a key national export.

Last Friday, Ukraine’s parliament approved a set of measures needed to receive the IMF loan. President Viktor Yushchenko signed the bills into law on Monday.

Source


Published in: on November 6, 2008 at 9:03 pm  Comments Off on Ukraine may borrow $2 bln from World Bank  
Tags: , , , , , , ,

IMF approves $16.5 billion Ukraine loan

By Lesley Wroughton and Sabina Zawadzki

November 6 2008

The International Monetary Fund approved a $16.5 billion (10.4 billion pound) loan program for Ukraine that includes monetary and exchange rate policy shifts to ease strains from the global financial crisis.

The IMF, in a statement issued late Wednesday, said it would immediately disburse $4.5 billion to the government under the two-year loan agreement.

“The authorities’ program is designed to help stabilise the domestic financial system against a backdrop of global deleveraging and a domestic crisis of confidence, and to facilitate adjustment of the economy to a large terms-of-trade shock,” the Fund said.

“The authorities’ plan incorporates monetary and exchange rate policy shifts, banking recapitalization, and fiscal and incomes policy adjustments.”

In Kiev, President Viktor Yushchenko welcomed the decision, taken after Ukraine’s fractious parliament approved enabling legislation. He said it provided a “signal to the international community to boost the rating of trust in our country.”

“The economy is getting a powerful resource to develop priority sectors and guarantee the liquidity of the banking system,” he said in a statement on the presidential Web site.

Prime Minister Yulia Tymoshenko, the president’s former ally turned rival, described the loan as a “great victory” and said it would “allow us to stabilise completely the financial situation in Ukraine.”

The IMF decision was issued along with forecast indicators predicting that Ukraine would sink into recession next year, with a 3 percent fall against 6 percent growth this year.

In a statement, Murilo Portugal, IMF deputy managing director, said Ukraine’s economy, especially its banking system, was under severe stress, caused by a drop in global steel prices, the country’s main export, and global financial turmoil.

INTERVENTION, RECAPITALISATION

He said Ukraine’s program would seek to restore financial and economic stability through a more flexible exchange rate regime with targeted interventions, so-called ‘pre-emptive’ recapitalisation of banks, and tighter monetary policy.

“The flexible exchange rate regime, backed by an appropriate monetary policy and foreign exchange intervention, will help absorb external shocks and avoid disorderly exchange market developments,” Portugal said.

“The recent unification of official and market exchange rates should increase clarity about the regime.”

Exchange controls recently imposed, he said, would be phased out as confidence returns to the economy.

Ukraine’s central bank has been intervening since early October to lift the hryvnia currency from record lows last week. It began offering buy-sell rates for currencies this week after previously only selling or buying a currency.

Portugal said as credit pressures abate, tighter monetary policy will be needed to guard against inflation.

He said the government’s target of a balanced 2009 budget would be reviewed, although it could be achieved through expenditure restraint and a phased increase in energy tariffs.

Portugal said recapitalisation efforts for banks would ease liquidity pressures that could prolong an economic downturn.

“Decisive measures that have been taken to allocate public funds to recapitalise banks and to facilitate bank resolution processes will ensure that problems can be dealt with promptly,” he said.

“A proactive strategy to resolve corporate and household debt problems will also be essential to reduce banking sector vulnerabilities.”

(Editing by Andy Bruce)

Source
Key facts on Ukraine’s finances and politics
The International Monetary Fund approved a $16.5 billion (10.5 billion pound) loan programme for Ukraine late on Wednesday that includes monetary and exchange rate policy shifts to ease strains from the global financial crisis.

Following are key facts about why Ukraine is vulnerable to heightened risk aversion among international investors.

POLITICS

* Ukraine has been plagued by political turbulence since “Orange Revolution” protests in 2004 brought to power President Viktor Yushchenko and a team committed to moving closer to the West and joining NATO and the European Union.

Rows pitting Yushchenko against his former ally Yulia Tymoshenko, who twice served as his prime minister, undermined the “orange” camp and brought down governments.

Although the president dissolved parliament last month and called a December parliamentary election, he has since suspended that decree and a vote this year now seems unlikely.

* Upheaval — and trouble forming a stable ruling coalition — reflect Ukraine’s longstanding division into the nationalist west and centre, which looks to the EU and United States, and the Russian-speaking east and south, friendlier towards Moscow.

* Relations with Russia, bumpy throughout the post-Soviet period, have sunk to unprecedented lows over Yushchenko’s denunciation of Moscow’s military intervention in Georgia. Ukraine depends heavily on Moscow for energy supplies.

* The hryvnia currency hit an all-time low of 7.2 to the dollar on October 29, weakened by growing global risk aversion and regional tensions after Russia’s conflict with Georgia.

* Authorities have said they will formulate a new mechanism which would unify the market, cash and official rates.

* In mid-2008, the hryvnia had strengthened as far as 4.5/$, after the central bank abandoned a policy of keeping it in a corridor of 5.00-5.06 per dollar within a 4.95-5.25 band.

FINANCES

* Foreign exchange reserves fell to $33 billion at the end of October from $37.5 billion end-September, when they covered 3.7 months of imports.

* The current account deficit more than quadrupled in the first nine months of this year compared with the same period last year to $8.4 billion, or 5.8 percent of GDP.

* Analysts based outside Ukraine forecast its current account deficit at $21-25 billion, or 10-12 percent of gross domestic product, by year-end; Ukraine-based analysts give lower forecasts of about 6 percent of GDP.

* Prices for Ukraine’s steel exports are dropping, while Russia’s Gazprom has suggested next year’s price for gas imports could soar to $400 per 1,000 cubic metres from $179.50 now.

* The central bank risks encouraging imports and further widening the trade gap if it supports the hryvnia. However, letting it float would remove an important anchor for domestic and foreign businesses in Ukraine’s export-driven economy.

* Many people hold debt in foreign currency and would have to pay more to service it if the hryvnia weakened.

* Consumers are extremely sensitive to currency movements — they lost savings when the Soviet Union collapsed and again through hyper inflation and a currency crisis in the 1990s that more than halved the hryvnia’s value to about 4/$ and beyond.

* Ukraine was forced to restructure its debts in 2000 and made the final payments on that restructuring just last year.

FOREIGN DEBT

Ukraine’s foreign debt totalled just over $100 billion as of July 1, of which about $15 billion was government debt.

* Analysts estimate Ukraine’s 2009 external financing requirement to be $55-66 billion, of which $32-40 billion is in the private sector. Foreign banks own 40-42 percent of total banking assets and 25 percent of short-term banking debt is owed to parent banks.

(Compiled by Sabina Zawadzki)

Source

Bulgarian analysts in Obama-McCain debate

October 16 2008
Clive Leviev-Sawyer
Associated Press

McCain and Obama during the final debate.
Photo: Associated Press

The American Chamber of Commerce in Bulgaria brought together four leading US expatriates and four Bulgarian analysts to share views on the Barack Obama-John McCain contest for the presidency.

The event, on October 16 2008, took place just a few hours after the third and final televised debate between the Democratic and Republican candidates.

Republican supporter Ken Lefkowitz, from Massachusetts, told the forum that the fall of the US stock market, eight per cent the previous day, had coincided with Obama taking the lead in the polls. He expressed misgivings about the choice of Sarah Palin as McCain’s vice-presidential nominee, saying that McCain had done so to pay attention to the conservative element in the Republican Party.

Lefkowitz said that Obama talked a lot about change, but the US was a conservative country and the ways of Washington were difficult to change. He doubted that Obama would be able to bring the change he promised.

Asked by moderator Boiko Vassilev about the implications for Bulgaria of a victory by the respective candidates, Lefkowitz said that he did a lot of business related to renewable energy, which Obama was strong on. However, one of the crucial matters for American business in Bulgaria was the overall political framework and level of engagement, and McCain knew the dynamics, how to deal with Russia and the historical changes in the region.

Tom Cangiano, also from Massachusetts, said that he had chosen to support Obama because given the US’s difficulties on the foreign policy and economic fronts, the Democratic candidate was best qualified to steer the US in a new and different direction.

On the financial crisis, Cangiano said that the depiction of “Wall Street vs Main Street’ was an over-simplification. One of the hazards of the televised debate format was that candidates seldom went into specifics. Both candidates were talking about greater oversight, but “what made me gravitate to Obama is his tax policy” – meaning tax breaks for the middle class, Cangiano said.

On foreign policy, Cangiano said that it troubled him that America showed an arrogance and an unwillingness to admit mistakes.

Alan Levy, a native Missourian and undecided about for whom he would vote on November 4, said that his reservation about Obama was his lack of experience. “He is a great motivator but I wonder if he has the experience to lead the country in the direction it needs to go.”

New Yorker Dana Leff, an Obama supporter, said that who was president made a difference. Responding to Lefkowitz’s point about how difficult it was to change Washington, Leff said that the Clinton and Bush presidencies had been very different. She believed that Obama could change the situation left by the Bush terms in office, which had seen the budget surplus bequeathed by the Clinton administration turned into a huge deficit.

Leff said that she had much more confidence in the people that Obama was likely to appoint in charge of the treasury and the economy, which the McCain people on these issues “didn’t seem serious”.

Political analyst Ivan Krastev of the Sofia-based Centre for Liberal Strategies told the forum that the crucial difference between the candidates was who potentially could get greater support internationally on foreign policy issues. Obama was better placed, he said, noting that Europe favoured Obama.

When members of the Bulgarian panel got into a discussion about US relations with Bulgaria, Krastev said that the issue had no relevance because a US president was likely to think of Bulgaria only when there was an official visit. “The focus of the next president is going to be the economy, including in Asia”.

The president able to see the world through different eyes would be the more successful. It was a time of a change of generations, Krastev said: “The 90s are well behind us”. Obama’s very lack of experience was a chance for America to see the world with different eyes.

Noting the entry into the parlance of the US election of “Joe the Plumber”, Krastev said: “In the US, politicians speak to plumbers; here, politicians speak to each other”.

Both Americans and Europeans were looking with fear into the future rather than with hope and expectation. “If Obama brings something, it is America as the way the world wants to see it.” McCain wanted the world to listen to America, while with Obama, America could get a new perspective on the world.

Source

Published in: on October 17, 2008 at 3:57 am  Comments Off on Bulgarian analysts in Obama-McCain debate  
Tags: , , , , , , , , ,

Iceland ‘working day and night’

October 14 2008

Iceland’s government is working “day and night” to solve the country’s financial crisis, Prime Minister Geir Haarde has told the BBC.

He said its priority was to get Iceland’s banking system working properly again following last week’s near-collapse.

The central bank has turned to its northern European neighbours for help in raising foreign currency.

Talks with Russia and the the IMF over possible loans continue.

“We need to make sure we have a functioning banking system – this is what we are working on day and night, ” Mr Haarde told the BBC’s Clive Myrie.

On the International Monetary Fund, which has sent a mission to evaluate the situation in Iceland, Mr Haarde said: “We have not decided whether or not we will apply for a loan, and they have not decided what conditions they will set if we do.”

Tuesday saw Iceland’s central bank use a swap facility to receive 200m euros ($273m; £156m) each from the central banks of Norway and Denmark.

The Nordic country’s stock exchange closed down 5.8% when trading resumed on Tuesday, five days after it was suspended.

UK savers

Iceland’s biggest banks were nationalised last week, and the central bank has imposed tight restrictions on the use of foreign currency at home and capped Icelanders’ credit card use overseas.

People can now only purchase foreign currency in Iceland if they have a valid overseas travel ticket.

Firms have to prove to the central bank that they want the money for essential foreign purchases such as food, fuel and medicine.

The difficulties in the Icelandic banking sector have also had a major impact on other European countries, as Iceland’s attractive interest rates had attracted a great many customers from overseas.

Local councils and other public bodies in the UK have about £1bn invested in Iceland, and hundreds of thousands of British savers have also been affected.

The UK Treasury is continuing to work with its Icelandic counterpart to ensure all its depositors get their money back as swiftly as possible. It has already said all British savers’ money is protected.

Source

Published in: on October 15, 2008 at 10:42 am  Comments Off on Iceland ‘working day and night’  
Tags: , , , , , , , , , , , ,

The End of the American order

KEVIN CARMICHAEL ,  From Saturday’s Globe and Mail

October 10 2008

OTTAWA — Before U.S. Treasury Secretary Henry Paulson was pressed into becoming the fire chief of the financial crisis, he had a good thing going as an economic missionary.

Basking in what he liked to call “the strongest global economy” of his business lifetime, Mr. Paulson, who joined President George W. Bush’s administration in June, 2006, embraced with zeal an aspect of his new job with roots in Cold War diplomacy.

In his two years as Treasury Secretary before financial markets came totally unhinged this summer, Mr. Paulson conducted more official business in China than he did in New York. He has visited as many cities in Latin America as he has cities in the United States of America. He rolled through Calcutta, New Delhi and Mumbai in three days in October, 2007; two weeks later, he spent five days in Africa.

The places changed, but the message stayed the same: American-style banking, unencumbered by regulation and open to U.S. financial institutions, is the surest way to create wealth.

“An open, competitive and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than government intervention,” Mr. Paulson told an auditorium full of officials in Shanghai in March, 2007.

Mr. Paulson’s brand of capitalism isn’t promoting much stability these days, and prosperity isn’t a word that jumps to mind as policy makers from Canada to Japan to France scramble to avert a global economic recession.

The Made in America financial crisis has seriously undermined the U.S.’s standing as the undisputed leader of the international economy, posing the first serious threat to U.S. hegemony since the height of the Soviet Union.

After decades of strong-arming governments in Asia, Latin America and Eastern Europe to keep the state out of the economy, the U.S. government in September put up $285-billion (U.S.) to nationalize mortgage giants Fannie Mae and Freddie Mac and insurer American International Group Inc.

That’s nothing compared with the $700-billion Mr. Paulson got from Congress yesterday to purge the financial system of the bad debt at the root of the credit crisis. With governments saving failing banks in Europe, stock markets plunging in China and exports slowing in Brazil, the world is in no mood to take economic lessons from the U.S. government.

“There is a real element of anger and frustration around the planet that this is a U.S.-originated problem with global repercussions,” John Manley, a finance and foreign affairs minister under former prime minister Jean Chrétien, said in an interview. “The world will be looking for a loss of hubris from the United States as a result of this.”

America has dominated global economic affairs virtually unopposed since the collapse of the Berlin Wall, an era marked by the acceleration of global free-trade agreements, the confirmation of the dollar as the world’s de facto currency, and the rise of Wall Street as the world’s financial centre.

The U.S. and Britain dictated the Bretton Woods agreement in 1944, establishing the International Monetary Fund and the World Bank. The U.S. became the largest shareholder in the global institutions, which built their headquarters side by side in Washington. Unsurprisingly, the American vision of private ownership and unfettered markets dominated the prescriptions those agencies imposed on weaker economies in return for financial aid. That culminated in the Washington Consensus, a term coined in the 80s to encompass policies such as privatization, lower taxes and deregulation.

These days, countries can’t distance themselves fast enough from the Washington way of economic management.

“The world is on the edge of the abyss because of an irresponsible system,” French Prime Minister François Fillon said on the eve of a gathering of European Union leaders to discuss the financial turmoil.

German Finance Minister Peer Steinbrueck predicted the end of the U.S.’s status as the “superpower of the global financial system.” Chinese officials are rethinking their embrace of globalization, and Colombian President Alvaro Uribe said the U.S. must ensure the situation doesn’t get any worse.

“The Anglo-American model has suffered a big setback,” John Snow, who preceded Mr. Paulson as treasury secretary and is now chairman of private equity firm Cerberus Capital Management, said in an interview. “We don’t have the moral authority we might have had a few years ago to get others to follow our model.”

Other nations appear ready to assume a more assertive role in the global economy.

French President Nicolas Sarkozy, current President of the European Union, wants to host a summit of the world’s major economies next month to consider global rules for financial markets. Germany’s Mr. Steinbrueck, whose push for stricter oversight of hedge funds and private equity firms last year was blocked by Mr. Paulson, will be a ready ally.

“The whole spectrum of options for regulation is now open again,” said Glen Hodgson, chief economist at the Conference Board of Canada and an IMF official. “You only have moral authority when you have your own house in order.”

A new era of global financial regulation – however appropriate given the serious gaps exposed by the credit crunch – will increase costs for businesses and slow global economic growth.

Say what you will about U.S.-style capitalism, its ability to produce wealth is unchallenged. The world economy expanded at an average annual rate of 3.9 per cent over the past decade, as more emerging market nations embraced free-market ideals. Over the previous 10 years, global growth averaged 3.5 per cent.

There’s a risk that countries such as China and India could become more reluctant to ease barriers to international investors, especially in the financial sector.

“It’s a possibility that you see countries become more protectionist,” said Mr. Manley, who is now a senior counsel at law firm McCarthy Tétrault LLP. “That’s going to slow growth.”

There’s an element of schadenfreude in the world’s criticism of the U.S. government’s role in the financial meltdown.

After all, nobody likes a bully, which is essentially the approach American officials have taken to international negotiations for decades, said John Curtis, a former chief economist at Canada’s Trade Department. “They can be insensitive at times to others’ interests,” said Mr. Curtis, who is now a distinguished fellow at the Waterloo, Ont.-based Centre for International Governance Innovation.

Still, Mr. Curtis and others said it would be a mistake to get carried away with the idea that we’re witnessing the death of the American empire.

The U.S. hardly has a monopoly on economic crises, and the German and French governments, among others, have had to put up billions of their own to save several European banks from collapse, which has muted their criticisms of the U.S.

“I don’t think any country is in position to say they have the right regulatory system,” said James Barth, a senior fellow at the Sana Monica, Calif.-based Milken Institute and a former chief economist at the U.S. Office of Thrift Supervision. “One has to be careful to say the U.S. has a terrible financial system and that capitalism doesn’t work because of this particular situation.”

One reason the U.S. can’t be counted out is that Americans are used to such calamities.

Mr. Paulson would often tell his audiences that the U.S. copes with a financial crisis every decade or so because the country’s entrepreneurs get too greedy and overreach. The cleanup is wrenching, but the country’s economy is left stronger as a result, Mr. Paulson argued. The country’s rebound from the collapse of the dot.com bubble is perhaps the most recent example of Mr. Paulson’s creative destruction thesis.

There’s also the sheer size of the U.S. economy. The spread of the Wall Street crisis to other continents is a graphic example of how much the rest of the world still depends on America for their economic growth. The U.S.’s gross domestic product is three times the size of that of Japan, the world’s second biggest economy, and is four times the size of China’s.

The U.S. dollar still makes up more than 60 per cent of the world’s currency reserves, according to IMF data.

“They are so big, you can’t get along without them,” said Mr. Curtis, who also served at the IMF. “They are pre-eminent, they are no longer dominant.”

The U.S.’s standing in the world of global finance may well be determined by the outcome of Mr. Paulson’s $700-billion rescue package.

Observers marvel at the speed with which Mr. Paulson and U.S. Federal Reserve chairman Ben Bernanke developed the plan after earlier efforts failed to reverse the credit squeeze. It took years to sort out the mess created by the defaults of Argentina and Brazil.

If the U.S. can save its banks faster than the Europeans save theirs, Mr. Paulson will restore some of his department’s reputation abroad, said Daniel Drezner, a political science professor at Medford, Mass.-based Tufts University and a former Treasury Department economist.

But gone are the days when a U.S. treasury secretary will automatically be seen as the smartest guy in the room.

“It’s tough to tell other countries you should privatize and liberalize when you are going the other way,” Mr. Drezner said. “The Washington consensus is dead.”

Source

Privatization benefits only those who operate the corporations etc. It does not benefit anyone else. Everything in the end becomes more expensive.

Like Health Care for example. Those profits made by Insurance companies eat up a lot of money. Government run Health Care is more efficient and more cost effective by a long shot. Of course private companies that have tried and have succeeded in some countries have driven up the cost of Health Care and should be eliminated.

Government run systems have no need to advertise so money is not wasted there. The cost of advertising is massive.

You also don’t have to hire a Lawyer to get treatment, because your insurance companies says no. Universal Health Care is something that needs to be protected at all cost.

Social agencies like Welfare, is another thing that should not now, or ever be privatized.

Child protection agencies, should never be privatized.

Prisons should, never be privatized.

Electricity should, never be privatized.

Water should, never be privatized and numerous other things should always be operated by the Governments for the protection of services to the people.

It also keeps the price of services much lower.

Never believe privatizing anything will save you money.

That is a lie always was and always will be.

Governments have no need for profit to feed shareholders.

Their only share holders they have to protect, are the people of their countries.

That is the Governments Jobs to serve and protect the people of their country.

Capitalism just doesn’t work as we have seen. If anything it has caused a world wide epidemic of problems.

Massive problems. Cleaning up this mess is going to take a long time.

Free Trade Agreements should also be revisited as well and changes to them should be turned in to Fair Trade and be absolutely sure it benefits the people and not the Corporations.  Corperations should be regulated so they are not allowed to pollute or sue governments and numerous other restrictions should be implemented to protect all the people around the world.

Trade Agreements, as they stand now are geared giving profit and control to Corporations and do little if anything to protect people or to enhance their standard of living.  If anything they cause an increase in poverty.  Ask Farmers,  in  countries around the world how Free Trade has helped them. Many have gone out of Business. Problems as these have to be rectified. The sooner the better.

Related

A Crisis Made in the Oval Office

Guess What AIG did after the Bailout? Party Time?

Europeans Angry at their Money being Used for Bailouts

Europe catches America’s financial disease

Europe catches America’s financial disease