Monday, March 31, 2008

Moncton is #1 business centre in Atlantic region: report

Moncton is #1 business centre in Atlantic region: report

Last Updated: Friday, March 28, 2008 | 2:51 PM AT CBC News

For the second year in a row Moncton has been named the best place for business in Atlantic Canada and New England, according to a KPMG report.

The report compares business climates in major centres along the Atlantic seaboard, looking at real estate prices, central location and bureaucratic red tape.

Fredericton placed second in the KPMG report, followed by Charlottetown, and Halifax. Overall, Canadian cities ranked higher than more expensive New England cities.

John Thompson, CEO of Enterprise Greater Moncton, an economic development group, was pleased with Moncton's rating.

"Our labour costs are still reasonable, and our cost for commercial property is still reasonable compared to other jurisdictions," he said. "That combines to make for a healthy and vibrant business environment."

But it's also about attitude, Thompson said, noting that over the past few years Moncton has hosted a number of major concerts and sports events. Also, he said, a new bridge to the downtown has just opened and a new casino could be next.

By contrast, Thompson said, Halifax has lost out on major concerts, and the city's bid for the Commonwealth Games fell apart over financial troubles.

Nervous U.S. consumers keep wallets closed

Nervous U.S. consumers keep wallets closed
Weak spending highlights risk of recession

Last Updated: Friday, March 28, 2008 | 9:55 AM ET CBC News

American consumers, jolted by a credit crisis, job cuts and soaring energy costs, turned in their weakest spending performance in 17 months in February, further evidence that recession risks are increasing.

The U.S. Commerce Department said Friday that consumer spending edged up by just 0.1 per cent last month, the poorest showing since September 2006. And if the effects of inflation are removed, spending was flat in February, the third consecutive month of sluggish activity.

The performance of the consumer is closely watched since consumer spending accounts for two-thirds of U.S. economic activity.

Economists said sustained weakness in this area is one of the most worrisome signs that the economy could be tipping into a recession.

The prolonged slump in housing, rising job layoffs, soaring energy costs and a severe credit crisis are taking their toll on consumer confidence. All of these troubles are causing consumers to cut back on their purchases.

The 0.1 per cent gain in spending was in line with expectations.

Personal incomes rose by a better-than-expected 0.5 per cent in February — a surprise given that employers cut jobs for a second consecutive month.

A key inflation gauge tied to consumer spending showed a 0.1 per cent gain in February, excluding energy and food.

Over the past 12 months, this gauge, which is closely watched by the Federal Reserve, is up by two per cent, within the Fed's comfort zone of one to two per cent for core inflation.

Weak dollar not at odds with policy: ex-US official

Weak dollar not at odds with policy: ex-US official

The dollar is likely to remain under pressure for the next few months at least, but its weakness is not inconsistent with the Bush administration's strong dollar policy, former U.S. Treasury undersecretary Tim Adams said on Monday.

"A strong dollar policy is a pledge by the United States not to use the dollar as a tool to gain competitive advantage in global markets. So it's not inconsistent," Adams, who was the Treasury's top international official until last summer, told a conference in Hong Kong.

The dollar has plumbed record lows against the euro as the U.S. credit crunch has worsened.

This has prompted some commentators, including Mohamed El-Erian, co-chief executive officer of Pimco, the world's biggest bond fund, to call for concerted central bank intervention to stabilize the currency and steady global markets.

Steve Hanke, an economics professor at Johns Hopkins University in the United States, agreed that international action, as well as expansionary fiscal policy in Japan and Europe, was needed to help put a floor under the dollar.

Countries including China and Middle East nations that have large holdings of dollars in their reserves should pledge not to talk about diversifying their portfolios while action is being taken to stabilize the U.S. currency, Hanke told the conference.

Gulf countries in addition should stop talking about de-pegging their currencies from the dollar.

"It's unproductive and creates a great deal of short-term volatility in the dollar," he told the Credit Suisse Asian investment conference.

Adams said the dollar was likely to remain under pressure for the next few months because of uncertainty about when the U.S. business cycle will bottom out and how far the Federal Reserve will cut interest rates.

But he said the currency would find its footing as the American economy is still fundamentally stable and the United States is one of few countries that will be able to keep absorbing huge global capital flows.

(Reporting by Susan Fenton, Editing by Anne Marie Roan tree)

High prices spark fresh gold rush in California

High prices spark fresh gold rush in California
By Matthew Garrahan in Los Angeles


It has been almost 160 years since the first California gold rush but, with prices hitting record highs, prospectors are once again flocking to the state’s rivers and deserts in search of the precious metal.

Gold’s ascent – prices crossed the $1,000 an ounce barrier this month and remain well above $900 – has sent sales of mining equipment soaring.

“There’s been a dramatic change . . . our sales have risen four-fold in the last three months,” said Harrigan McGregor, owner of, an equipment retailer in northern California.

“This is the second big California gold rush. We’ve had a lot of phone calls from people who are quitting their jobs and prospecting full-time.”

The growth of prospecting by individuals has been accompanied by a sharp increase in commercial mining activity. Commercial claims, most of which involve gold mining, rocketed to 2,274 in the first quarter of this year, up from 132 in the same period of 2005, the Bureau of Land Management says.

Roger Haskins, senior specialist for mining law at the BLM, said the high price of gold was “obviously driving [mining] activity up tremendously”.

“We have a market imbalance at the moment and there’s more demand than supply,” he added. “Gold sits in a little niche because it’s speculative . . . People buy it as a hedge for the future.”

Membership in the Gold Prospectors Association of America “has tripled in a very short space of time”, said Corey Rudolph, an official of the southern California-based group, which organises events for recreational miners.

The hotspot is a 320km strip known as the Gold Belt, or “Motherlode”, which runs near Highway 49 (named for prospecting “49ers” of the 19th century) and the Sierra Nevada mountains. Mr Rudolph said 5-10 per cent of available gold had been mined. “There’s still a lot of gold out there for the smart guys.”

The market in second-hand gold is also booming, with southern California pawnshops reporting increased trade as people sell unwanted gold items. Depending on the quality, these items can be refined and resold.

However, Mr McGregor said raw gold can fetch even higher prices. “If you find a nugget larger than your pinkie finger, it could sell for up to 30 per cent more than the spot price.”

U.S. considers overhaul of financial industry

U.S. considers overhaul of financial industry
Last Updated: Saturday, March 29, 2008 | 1:09 AM ET
The Associated Press

The U.S. government is proposing a sweeping overhaul of the way the nation's financial industry is regulated.

In an effort to deal with the problems highlighted by the current severe credit crisis, the new plan would give major new powers to the Federal Reserve, according to a 22-page executive summary of the proposal obtained Friday by the Associated Press.

The proposal would designate the Fed as the primary regulator of market stability, greatly expanding the central bank's ability to examine not just commercial banks but all segments of the financial services industry.

The administration proposal, which is to be formally unveiled in a speech Monday by Treasury Secretary Henry Paulson, also proposes consolidating the current scheme of bank regulation.

The plan would shut down the Office of Thrift Supervision, which supervises thrift institutions (savings and loan associations), and transfer its functions to the Office of the Comptroller of the Currency, which regulates banks.

The plan would eliminate the distinction between banks and thrift institutions.

The role the Federal Reserve has been playing in efforts to stabilize the financial system after a credit crisis hit last August would be formalized.

The Fed would become the government's "market stability regulator," given sweeping powers to gather information on a wide range of institutions so that Fed Chairman Ben Bernanke and his colleagues could better detect where threats to the system might be hiding.

The proposal is certain to generate intense scrutiny in Congress and within the financial services industry, where past efforts to change how regulation is handled have met with fierce resistance.

'He is on the money'

Sen. Charles Schumer, a Democrat from New York, said that he approved of much that Paulson had included in the administration proposal.

"In broad outlines, we agree with large parts of Secretary Paulson's plan," Schumer, chairman of the Joint Economic Committee, said in a statement.

"He is on the money when he calls for a more unified regulatory structure, although we would prefer a single regulator to the three he proposes."

Under Paulson's approach, the Fed would serve as the market stability regulator and there would also be a financial regulator that would focus on financial institutions that operate with government guarantees such as deposit insurance for banks.

The administration plan also proposes a business conduct regulator who would be in charge of overseeing consumer protection issues.

The plan was first reported by the New York Times on its website Friday night.

Lehman to sue over Japan 'fraud'

Lehman to sue over Japan 'fraud'

Lehman Brothers, one of America's largest investment banks, plans to sue a Japanese trading house, saying it has been the victim of a complex fraud.

The US giant is seeking to recoup $350m (£175m) from Marubeni over loans given through Marubeni to a now bankrupt medical company called Asclepius.

Marubeni counters that it has also been a victim of fraud, yet added that it had sacked two employees.

No-one from Asclepius or its parent firm LTT Bio-Pharma have commented.


"We are confident in our legal claim which we will pursue until we receive repayment from Marubeni," said Matthew Russell, Lehman Brothers' head of corporate communications for Asia-Pacific.

He added that Lehman Brothers had been "working closely with the [Japanese] authorities on a fraud it uncovered that was perpetrated by employees at Marubeni... at the company's offices."

While the exact details of the alleged fraud are unknown, lurid media reports coming out of Japan allege the wholesale use of fake documents.

"We have nothing to do with the fraudulent acts, and we have no obligation to cover any repayment requests," Marubeni said in a statement.

Story from BBC NEWS:

Published: 2008/03/30 10:41:04 GMT

Friday, March 28, 2008


UR Seoul April 5th METRO 11:00 PM

UR Seoul April 5th Metro in Ilsan 11:00 PM

Dollar Heads for Biggest Weekly Drop Against Euro in a Month

Dollar Heads for Biggest Weekly Drop Against Euro in a Month

By Kosuke Goto and Yumi Teso

March 28 (Bloomberg) -- The dollar headed for its biggest weekly decline in a month against the euro as traders increased bets that the Federal Reserve will cut interest rates to avert a recession and curb credit-market losses.

The currency was also poised for losses against the yen before a government report today that may show slowing growth in U.S. consumer spending. New Zealand's dollar rose after a statistics bureau report showed the nations' economic growth accelerated at the fastest annual pace in three years in the fourth quarter.

``I am super dollar bearish,'' said Michiyoshi Kato, a senior vice president of currency sales at Mizuho Corporate Bank Ltd. in Tokyo, a unit of Japan's second-largest publicly traded lender by assets. ``The U.S. may have already entered a recession. The Fed will keep lowering rates to defuse criticism that it always falls behind the curve.''

The dollar weakened to $1.5799 per euro at 11:54 a.m. in Tokyo from $1.5779 in late New York yesterday and $1.5431 a week ago. The U.S. currency slid to 99.51 yen from 99.65 yesterday and 99.58 a week ago. Japan's currency was at 157.02 per euro from 157.21, following a 2.2 percent loss this week.

The dollar may fall to $1.60 a euro next month, Kato forecast. That would surpass the low of $1.5903 reached March 17, the weakest level since the European currency debuted in 1999.

New Zealand's currency rose to as high as 80.68 U.S. cents before trading at 80.47 cents, compared with 80.35 cents in New York. It also climbed to as high as 80.40 yen before trading at 80.13 yen from 80.06 yen yesterday.

Asian Currencies

The Taiwan dollar dropped on speculation the central bank will stem its gains to protect exporters, after the fastest advance this quarter since June 1987. It weakened 0.7 percent to NT$30.377. The central bank probably intervened to sell the nation's dollar at least twice yesterday, according to a Credit Suisse Group report.

South Korea's won fell 0.6 percent to 993.55 per dollar after a central bank report showed a third consecutive current account deficit and Yonhap news agency reported that North Korea had fired short-range missiles.

The U.S. dollar has fallen 7.5 percent against the euro this year, heading for its sixth straight quarterly loss and the biggest since 2004 as the Federal Reserve slashed interest rates by 3 percentage points since September to 2.25 percent. Personal spending rose 0.1 percent last month, the smallest gain in more than a year, according to a separate Bloomberg survey before the Commerce Department report today.

The Dollar Index traded on ICE Futures in New York, which tracks the currency against those of six trading partners, fell to 71.642 today from 71.660 yesterday. It reached a record low of 70.698 on March 17.

Futures Bets

Futures on the Chicago Board of Trade show traders increased bets the Fed will lower its benchmark target lending rate by a half-percentage point at a meeting ending April 30. The futures showed a 42 percent chance of a reduction of that size, compared with 36 percent the prior day. The remaining bets were for a cut of a quarter-point.

U.S. stocks dropped the most in a week on concern banks and securities firms will add to the $208 billion in asset writedowns and credit losses stemming from the collapse of the U.S. subprime-mortgage market.

The yen snapped a five-day losing streak against the euro as a drop in stocks prompted traders to reduce holdings of higher-yielding assets funded with loans from Japan. It rose against 12 of the 16 most-traded currencies as the MSCI Asia- Pacific Index of regional stocks fell 0.4 percent, down for a second day.

``Risk aversion among investors still prevails, buoying the yen,'' said Yuji Kameoka, a senior economist and currency analyst at Daiwa Institute of Research, a unit of Japan's second-largest brokerage. ``U.S. subprime problems won't be solved soon, and stocks will remain sluggish in the first half of this year before rebounding.''

The yen may rise to 95 per dollar by June 30, Kameoka forecast.

Carry Trades

In carry trades, speculators get funds in a country with low borrowing costs and invest in one with higher returns, earning the spread between the two. The risk is currency moves erode those profits.

The yen also strengthened against the dollar after a government report showed Japan's consumer prices rose at the fastest pace in a decade in February, prompting some investors to cut bets the Bank of Japan will lower its benchmark 0.5 percent interest rate this year.

Core consumer prices, which exclude fruit, fish and vegetables, climbed 1 percent from a year earlier, compared with a 0.8 percent gain in January, the statistics bureau said.

``The rising CPI supports the case for the BOJ to gradually raise interest rates,'' said Osamu Takashima, chief analyst for global market sales and trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo. ``Such a scenario is yen positive. There is more room for the dollar to fall and the yen to rise.''

The yen may advance close to 90 per dollar by the end of this year, Takashima said.

There is a 46 percent chance the central bank will reduce the benchmark interest rate to 0.25 percent by December, according to calculations by JPMorgan Chase & Co. using interest-rate swaps. The odds were down from 53 percent on March 25.

To contact the reporters on this story: Kosuke Goto in Tokyo at; Yumi Teso in Singapore at

Last Updated: March 27, 2008 23:18 EDT

Thursday, March 27, 2008

Canadian dollar slips on U.S. economic outlook

Canadian dollar slips on U.S. economic outlook
Wed Mar 26, 2008 5:07pm EDT

By John McCrank

TORONTO, March 26 (Reuters) - The Canadian dollar slid lower against the U.S. dollar as investors were loath to bet on the currency, given Canada's heavy dependency on the waning U.S. economy.

Domestic bond prices, with no Canadian economic data to influence direction, ended mostly higher along with the larger U.S. market.

The Canadian currency closed at C$1.0188 to the U.S. dollar, or 98.15 U.S. cents, down from C$1.0173 to the U.S. dollar, or 98.30 U.S. cents, at Tuesday's close.

Early on in the session, rising oil prices helped the currency climb to C$1.0095 to the U.S. dollar, or 99.05 U.S. cents, which marked its highest level in a week.

Canada is a major oil producer and exporter, and rising oil prices have been a major factor in the currency's 60 percent rise since 2002.

But the currency slipped from its intraday high, even as oil prices pushed higher, due to concerns that the growing economic softness in the United States would weaken global growth and cut demand for commodities.

"The U.S. data has certainly deteriorated over the last week and that is weighing on the NAFTA bloc, as well as the procyclical currencies," said Camilla Sutton, currency strategist at Scotia Capital.

The worst performers among major currencies were the Canadian dollar and the Mexican peso, along with the commodity-linked New Zealand dollar.

A report showing U.S. durable goods orders fell in February was the latest bad news from south of the border. The data, which is a key gauge of companies' appetites for investment, came on the heels of U.S. reports that showed dwindling consumer confidence and eroding home prices.

The United States is by far Canada's biggest trading partner and while many areas of the economy are decidedly more robust than the corresponding U.S. sectors, a slowdown in the world's largest economy will hit Canada, Sutton said.

"Certainly our growth will be weighed down because of what's happening in the U.S., along with the strong Canadian dollar," he said.

Over the medium term, however, Canada is seen weathering the storm, partly because of its relatively low inflation rate, which leaves the Bank of Canada room to cut interest rates to stimulate the economy.

In a recent Reuters poll, the majority of Canada's primary securities dealers said they expect the central bank to cut interest rates by 50 basis points to 3 percent when it meets in April.


Canadian bond prices were mostly higher, in line with the larger U.S. market as there was no domestic data to influence direction.

"The risks of a recession in the U.S. are much higher following today's durable goods orders numbers," said Carlos Leitao, chief economist at Laurentian Bank of Canada.

Those increased risks fed the demand for safe-haven government debt, he said.

Canada's economic calendar is bare until the January gross domestic product report, due on Monday. Market focus next week will be on the March jobs report due April 4.

The two-year bond was up 13 Canadian cents at C$102.65 to yield 2.621 percent. The 10-year bond increased 11 Canadian cents to C$104.16 to yield 3.465 percent.

The yield spread between the two- and 10-year bonds was 84.4 basis points, up from 77.5 points at the previous close.

The 30-year bond dropped 34 Canadian cents to C$117.82 to yield 3.963 percent. In the United States, the 30-year treasury yielded 4.321 percent.

The three-month when-issued T-bill yielded 1.77 percent, down from 1.93 percent at the previous close.

Gold and oil soar as commodity rebound accelerates

Gold and oil soar as commodity rebound accelerates
Last Updated: Wednesday, March 26, 2008 | 5:22 PM ET CBC News

Oil and gold futures surged on Wednesday after a report of U.S. oil inventories and a weaker U.S. dollar sent commodity prices shooting higher.

The U.S. Energy Information Administration said crude oil inventories were unchanged in the past week — surprising analysts, who'd expected supplies would grow by 1.7 million barrels.

Supplies of gasoline and heating oil fell.

Oil futures were up $4.68 to settle at $105.90 US a barrel on the New York Mercantile Exchange.

The TSX energy sub-index was up 2.4 per cent, leading the broader TSX market higher. The benchmark index of the TSX rose 70 points to 13,392 — bringing its gain over the past four trading sessions to almost 700 points.

Talisman Energy rose 88 cents to $17.64; EnCana climbed $1.63 to $76.88; Suncor added $1.25 to $100.14.

Gold futures also gained more ground as the U.S. dollar weakened against a wide basket of currencies. The April contract rose $14.40 to $949 US an ounce as the precious metal continues to rebound from last week's big sell-off.

The TSX gold sub-index gained 2.1 per cent. Barrick Gold moved $2.15 higher to $46.30.

Financial stocks lost more ground Wednesday amid ongoing concerns about the credit market. Oppenheimer & Co. lowered their first-quarter profit forecasts for a number of U.S. banks by an average of 84 per cent.

The TSX financials sub-index shed 1.4 per cent.

The Dow Jones industrial average lost 110 points to 12,423. U.S. stocks slipped as new economic data showed new homes sales fell to the slowest pace in 12 years and sale of big-ticket manufactured goods unexpectedly fell.

Fed May Emerge From Crisis With More Influence at SEC Expense

Fed May Emerge From Crisis With More Influence at SEC Expense

By Craig Torres

March 27 (Bloomberg) -- America's financial system faces its biggest overhaul since the Great Depression as officials weigh lessons from the credit-market rout and the near collapse of Bear Stearns Cos.

Federal Reserve policy makers are redefining which companies are vital to the flow of credit, an area once the sole domain of commercial banks, and which institutions pose risks to the entire economy if they fail. Treasury Secretary Henry Paulson said in a speech yesterday that the Fed should broaden its oversight to include Wall Street investment firms, now regulated by the Securities and Exchange Commission.

Former regulators predict the changes will see the Fed accrue influence at the expense of the SEC, which was created by President Franklin Roosevelt to make rules for dealers and stock exchanges. The Fed is taking almost $30 billion in assets off Bear Stearns's balance sheet to encourage JPMorgan Chase & Co. to buy the firm, even though Bear's main supervisor is the SEC.

``This is tectonic,'' said Ralph Ferrara, a former general counsel at the SEC, and now a partner at Dewey & LeBoeuf LLP in Washington. ``We no longer want to have a balkanized response to a national crisis.''

In 2006, New York Fed President Timothy Geithner, saw the need to ``revisit'' the Fed's authority. In a panel discussion on Sept. 26 of that year, he said the Fed supervised a ``diminished'' portion of the system as securities firms and hedge funds grew in influence. Paulson is finishing his own review.

`View of Potomac'

The SEC will be so diminished that it ``will be given a nice view of the Potomac from whatever floor of the comprehensive financial services regulator they are given,'' said Ferrara.

Geithner has already redrawn the lines, invoking a little- used authority to push the Fed into the role of an orderly bank liquidator, much like the Federal Deposit Insurance Corp., by helping finance and sell $30 billion of illiquid Bear Stearns securities.

``Because of financial innovation, we have lots of these financial firms that started to look like banks,'' said Mark Gertler, a New York University professor and visiting scholar at the New York Fed. ``Any institution that may need to go to the discount window directly or indirectly ought to be under the supervisory control of the Fed.''

Congressional Role

As Paulson addressed the U.S. Chamber of Commerce yesterday, the Senate Finance and Banking committees said they are reviewing the Bear Stearns sale.

``We want to know the extent to which Paulson was involved in the deal, whether it was done by an independent Fed on their own impetus,'' Charles Grassley, the top Republican on the panel, said in an interview with Bloomberg Television. He said he doubted Congress would try to block the deal.

Legislators are already considering a new regulatory structure. House Financial Services Chairman Barney Frank said last week Congress should consider creating an agency to monitor market risk or give that authority to the Fed. The Massachusetts Democrat also said he will seek less duplication. Currently, there are five separate regulators of banks, thrifts, and credit unions.

Congress may not control the debate over the future of the Fed, SEC and other regulators because many of the institutions are already redefining their roles in the credit crunch.

FDIC Chairman Sheila Bair has been praised by consumer advocates for pushing lenders toward a voluntary mortgage modification program.

Extended Credit

For the first time since the 1930s, the Fed extended credit to non-bank corporations, lending $28.8 billion as of March 19 to bond dealers, including Morgan Stanley and Goldman Sachs Group Inc. The Fed said on March 16 that the facility will be available for at least six months.

``You need to follow the money,'' said David Becker, a former SEC general counsel and now a partner at Cleary Gottlieb Steen & Hamilton LLP in Washington. ``The fact that the Fed has now put up a great deal of money in dealing with an investment bank means they are going to want, and may well get, a more active regulatory role.''

The SEC was created to restore confidence in markets after the 1929 stock-market crash and the Depression. The agency's mandate is to make sure investors are treated fairly, and it enforces rules for both companies that sell stock to the public and people who sell and trade securities.


``While each of the agencies has different roles and responsibilities, together we bring our collective authorities to bear on behalf of investors and capital markets,'' said John Nester, a spokesman for the SEC in Washington.

On Wall Street and in Washington, the SEC has a reputation as a much stronger enforcer and prosecutor of malfeasance than the central bank. Congress blamed the Fed for lax consumer protection during the housing boom and has threatened to strip or share its consumer protection powers.

``Bank regulators have, in general, been good at worrying about the safety and soundness of banks,'' said Harvey Goldschmid, a former SEC commissioner who's now a professor at Columbia Law School in New York. ``They have not, however, been strong on protecting consumers and investors.''

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.netJames Tyson in Washington at

Last Updated: March 27, 2008 00:01 EDT

Tuesday, March 25, 2008

U R Seoul are playing their first gig since last year.

Event Info Name: U R Seoul
Tagline: Been a long time since we rock n rolled...
Host: U R Seoul
Type: Music/Arts - Concert
Time and Place Start Time: Saturday, March 29, 2008 at 11:45pm
End Time: Sunday, March 30, 2008 at 2:00am
Location: Club FF, Hongdae
City/Town: Seoul, South Korea

U R Seoul are playing their first gig since last year. Location is Club FF in Hongdae so expect the usual combination of solid rock music, dancing and booze. We expect to be onstage at midnight(ish) and hope to see you there.

Pope's Easter Day message: peace for war-torn regions

Pope's Easter Day message: peace for war-torn regions
Sunday, March 23, 2008 | 5:09 PM ET CBC News

Thousands of pilgrims, residents and tourists went to St. Peter's Square in Rome in dismal weather Sunday to hear Pope Benedict XVI give Easter mass, followed by a speech calling for peace in the world's strife-torn regions.

He mentioned Darfur, Somalia, Iraq, the Middle East, and Tibet, "all of which I encourage to seek solutions that will safeguard peace and the common good."

The Pope also denounced "selfishness, injustice, hatred and violence" as the "scourges of humanity, open and festering in every corner of the planet."

He was protected from the weather by a white canopy over the steps of St. Peter's Basilica, but the crowd braved a fierce rainstorm and thunder that drowned out a band playing in the square.

Easter is an important period for Christians because it marks the resurrection of Jesus following his crucifixion, a central tenet of the faith.

At Canterbury Cathedral, the head of the Anglican Church, the Archbishop of Canterbury Rowan Williams, used his Easter message to warn against "anxious and acquisitive" lifestyles.

In Kandahar, hundreds of Canadian soldiers attended Easter services in a small chapel.

"We're all in this together … it is important that we support each other in this journey," Canadian chaplain Rev. Bastien LeClerc said.

Pilgrims visited Christian holy sites in Jerusalem, the city where they believe Jesus rose from the dead two millennia ago.

Monday, March 24, 2008

Dollar Gains on Speculation Fed's Actions Will Revive Growth

Dollar Gains on Speculation Fed's Actions Will Revive Growth

By Ron Harui and Kosuke Goto

March 24 (Bloomberg) -- The dollar rose, gaining the most against the Swiss franc, on speculation the Federal Reserve's interest-rate cuts and efforts to spur lending will help revive economic growth.

The U.S. currency has gained 2.4 percent against the euro and 2.6 percent versus the yen since March 17, the day before the Fed lowered its benchmark rate by 0.75 percentage point to 2.25 percent. The dollar also climbed as the Group of Seven nations may take coordinated action in foreign-exchange markets to counter the impact of a sinking U.S. economy.

``The dollar will remain firm in the near term,'' said Kosuke Hanao, head of currency sales in Tokyo at HSBC Bank, a unit of Europe's biggest lender. ``The markets valued the Fed's relief measures last week as good ones.''

The dollar climbed to $1.5341 per euro, the highest since March 12, before trading at $1.5369 as of 2:42 p.m. in Tokyo, from $1.5431 in New York on March 21, when it posted its first weekly advance against the euro in more than a month. It also advanced to 99.82 yen from 99.58. Japan's currency traded at 153.42 per euro from 153.55.

Currency moves may be exaggerated because trading volumes are less than normal due to the Easter holiday, said Kenichiro Fujita, manager of derivatives marketing in Tokyo at Aozora Bank Ltd., Japan's ninth-largest publicly traded lender by assets. Markets are closed in the U.K., Australia and New Zealand.

Dollar Index Rebound

The U.S. Dollar Index traded on ICE Futures in New York, which tracks the value of the currency against six major counterparts including the euro and yen, rose 0.6 percent to 73.144. Gold fell 1.1 percent and crude oil dropped 1.6 percent.

The dollar climbed 0.9 percent versus the Swiss franc to 1.0180, 0.6 percent against the Norwegian krone to 5.2953 and 0.7 percent against Canada's dollar to 1.0302.

Taiwan's dollar gained against all 16 major currencies after Ma Ying-jeou won the presidential election, ending eight years of Democratic Progressive Party rule, on pledges to open ties with China and improve the economy. The island's dollar rose 1.1 percent to as high as NT$30.201 versus the U.S. currency, the strongest since October 1997.

The U.S. central bank on March 20 expanded collateral eligible for its auction of Treasuries to include bundled mortgage debt and securities linked to commercial-property loans. The Fed announced on March 11 a program to swap $200 billion in Treasuries for debt including mortgage-backed securities.

The Fed may need to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, said Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co.

Inflation Expectations

The Federal Open Market Committee on March 18 said that inflation expectations may have risen, even as they cut the benchmark interest rate three- quarters of a percentage point and began lending directly to big Wall Street dealers.

``The FOMC statement last week mentioned increased uncertainty over the inflation outlook, and in doing so, signaled growing reluctance to continue cutting rates,'' Ashley Davies, a strategist in Singapore at UBS AG, the second-largest currency trader, wrote in a research note today. ``This may be helping the U.S. dollar to stabilize.''

The dollar also strengthened on speculation the Group of Seven nations may make a coordinated intervention to counter the impact of a slowing U.S. economy, the weakest dollar since 1971 and the biggest currency fluctuations this decade.

``The risks of coordinated intervention are going to increase in the second quarter for sure as the dollar weakens further,'' said Mitul Kotecha, head of foreign-exchange research in London at Calyon, the securities unit of Credit Agricole SA, France's second-biggest bank.

Pennant Triangle Chart

The dollar may fall to 95.77 yen in two to three weeks, said Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo, citing technical analysis.

The U.S. currency has formed a pennant that signals it's likely to extend its 10.6 percent decline this year, according to Suzuki. A pennant is formed when rising and descending trend lines intersect to form a triangle.

Futures on the Chicago Board of Trade show traders see a 56 percent chance of a half-percentage point cut in the Fed's overnight interest rate between banks to 1.75 percent at its meeting on April 30. The balance of bets are for a 0.25 percentage point cut.

The euro weakened against the dollar before a report this week that economists forecast will show German business confidence fell in March. The Ifo institute's sentiment index slipped to 103.5 from 104.1 in February, according to a Bloomberg News survey.

Euro Bets

The European Central bank will lower its main lending rate to 3.75 percent from 4 percent by mid-year and to 3.5 percent by year-end, according to the weighted average of 20 forecasts in a Bloomberg survey.

Figures from the Washington-based Commodity Futures Trading Commission showed last week that the difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 26,521 on March 18, compared with net longs of 29,099 a week earlier.

``Weak Ifo data will rekindle expectations of an ECB rate cut,'' Aozora Bank's Fujita said. ``A slowdown in the U.S. will slow Europe's economic growth, forcing central banks to lower rates in the U.S. and Europe.''

The single European currency may fall to $1.50 against the dollar by June 30, Fujita forecast.

To contact the reporter on this story: Ron Harui in Singapore at; Kosuke Goto in Tokyo at

Last Updated: March 24, 2008 02:17 EDT

UPDATE 2-Gold falls in Asia as dlr gains ground

UPDATE 2-Gold falls in Asia as dlr gains ground
Mon Mar 24, 2008 3:21am EDT (REUTERS)

By Risa Maeda TOKYO, March 24 (Reuters) - Cash gold fell in Asian trade on
Monday, reversing earlier gains and nearing a one-month low
touched last week below $905 as the dollar gained ground against
other major currencies.

Spot gold briefly rose above $920 an ounce, but
reversed course and slipped more than 1 percent to $907.30.

By 0708 GMT, gold was trading at $908.80/909.60, compared
with $916.60/917.40 in Asia late on Friday. Gold was trading
around $920.30/921.10 in late New York trade on Thursday before
U.S. and European markets closed for the Good Friday holiday.

In Asia, markets in Hong Kong and Australia remained closed
for Easter Monday, but markets in India and Singapore reopened.

Gold hit a record high last Monday at $1,030.80 as concerns
about deepening financial market troubles in the United States
hit the dollar and raised gold's allure as a safe-haven asset.

But the dollar has steadied against other major currencies,
helped by a series of aggressive efforts by the Federal Reserve
to ease the credit crisis.

"Investors had fled to cash and gold as fears about the
liquidity crunch heightened in the United States, but that flight
was coming to a halt given joint efforts by the Fed and the
Treasury Department," said Yuki Sonoda, adviser at Daiichi
Commodities Co, referring to the proposed takeover of troubled
U.S. investment bank Bear Stearns.

"A sell-off in all commodities late last week means that a
reversal mode has set in," he said.

On Thursday, gold bottomed at $904.65, a level last seen on
Feb. 18, as investment funds cashed in bullion to cover losses in
other financial markets.

The dollar rose 0.2 percent to 99.85 yen from late
Asian trading on Friday. The dollar hit a 13-year low of 95.77
yen on electronic trading platform EBS early last week.

The euro fell 0.5 percent to $1.5360 from around
$1.5445 in late Asian trading on Friday, slipping further from a
record high of $1.5905 struck on EBS last week.

"The market is still in a phase of adjusting overbought
positions. A further recovery in the dollar is expected to prompt
sales in gold," said Tatsuo Kageyama, analyst at Kanetsu Asset
Management in Tokyo.

"But falls in gold should be limited at around $850, where
buying from India is expected to emerge."

COMEX gold futures slid more than 1 percent in Asia. The most
active April contract GCJ8 on the COMEX division of the New
York Mercantile Exchange stood at $907.50 an ounce, compared with
Thursday's settlement of $920.

Gold futures <0#JAU:> on the Tokyo Commodity Exchange (TOCOM)
fell, with the most active February delivery dropping 2.8 percent
as far as 2,933 yen per gram -- the lowest for a benchmark since
Jan. 22.

Key TOCOM silver futures fell by their daily 40-yen limit to
555.6 yen per 10 grams.

TOCOM platinum futures <0#JPL:> for February delivery was
unchanged at 5,745 yen per gram.

Spot platinum was little changed at $1,850/1,860 an
ounce from late Asian trade on Friday.

Spot silver fell to $16.86/16.91 an ounce from around

Palladium edged down to $427/433 an ounce from
around $431.

(Reporting by Risa Maeda and Chikafumi Hodo)

Mortgage Rescue Options

Mortgage Rescue Options
An Interest-Rate Subsidy,
Debt-Purchase Plans Come
With Moral, Legal Hazards

March 24, 2008; Page C12

Pressure is growing in Washington to help ease the housing crisis. Last week's move by regulators to reduce the amount of surplus capital held by mortgage titans Fannie Mae and Freddie Mac could help make home loans easier to find. But more direct efforts to stem foreclosures seem inevitable. The Federal Reserve's bailout of Bear Stearns may add to the political pressure to do something for homeowners, too.

If the government chooses to rescue ailing homeowners, it should aim to keep its costs and legal hassles to a minimum. And any plan should acknowledge that most people want to remain in their homes -- even if their mortgage is worth slightly more than their house. Those who send their keys to the bank -- known as "jingle-mail" -- have serious negative equity in their homes, cash-flow problems or both. If the government can ease pressure on these homeowners' cash flows, there should be fewer foreclosures.

There are options. The federal government could intervene directly, perhaps by subsidizing a temporary half-point reduction in interest rates for every percentage point a mortgage servicer cuts the rate. As government intervention goes, that approach would be fast and relatively efficient. It also would minimize moral hazard -- the reckless behavior of those who don't bear the full consequences of their actions.

Other plans are more problematic. Economist Martin Feldstein, for example, proposed that the government refinance those with negative equity on their first mortgages into lower-rate loans. But that doesn't make much sense. Given the choice between walking away from a loan worth more than the value of a house, or replacing the debt with a nondischargeable government obligation for the same amount at a slightly lower rate, few would chose the latter. It would also be an unfair boon to investors in second-lien mortgages.

Rep. Barney Frank and Sen. Christopher Dodd take a different approach. The Democrats' closely related proposals would pressure lenders to write off part of the loans held by some two million households. The borrowers would then refinance into as much as $400 billion of new loans, insured by the Federal Housing Administration.

Reducing the debt burden on these households would give underwater borrowers an incentive to stay put along with breathing room to make payments. But it isn't clear whether lenders will play along and reduce their loans by 15% of the current value of the homes, as the plan calls for.

If not, the government might consider another option -- that is, if it wants to go down the route of actually creating equity for homeowners. A lot of the homeowners with 2006- and 2007-vintage adjustable-rate mortgages who are now losing their houses actually have positive equity on their first mortgage. The problem is, they also have second-lien mortgages. If the government were to buy that debt at a steep discount and slash the rates or principal amounts, it would ease borrowers' cash-flow problems and allow them to stay in their homes.

The holders of the second-lien debt would probably jump at the opportunity, because, if the houses go into foreclosure, that debt would be worth less than whatever the government offers. Of course, this approach still creates moral hazard. But limiting the plan to those with positive equity on their first mortgages would minimize its total cost.

However, it wouldn't be easy. The government would have to vet appraisals carefully to ensure it was dealing with borrowers with positive equity. Also, a lot of the loans are wrapped inside mortgage-backed securities. Pulling loans out of those securities could pit one class of investor against another, and could hurt those who have bet the securities will decline in value. The government would have to craft legislation to allow it to purchase the loans without setting off a firestorm of litigation. But if it succeeded, this approach might be a cheap and effective way to stem the rising tide of foreclosures.

--Robert Cyran

Friday, March 21, 2008

Dollar Set for Weekly Gain on Fed Steps to Restore Confidence

Dollar Set for Weekly Gain on Fed Steps to Restore Confidence

By Stanley White

March 21 (Bloomberg) -- The dollar headed for the first weekly advance against the euro and the yen in at least a month after Federal Reserve Chairman Ben S. Bernanke accepted more collateral for loans, restoring confidence in financial markets.

The U.S. currency rose against the pound and the Swiss franc this week after the Fed made an emergency cut to the rate it charges banks to borrow and said it would swap Treasuries for mortgage-backed securities. The Fed also lent $28.8 billion to U.S. securities firms, its first extension of credit to non- banks since the Great Depression.

``The dollar is enjoying a bounce,'' said Hideki Amikura, deputy general manager of currencies at Nomura Trust and Banking Co. in Tokyo, a unit of Japan's largest brokerage. ``The Fed is working to restore confidence. U.S. investment bank earnings weren't as dire as some predicted.''

The dollar traded at $1.5444 per euro, as of 3:52 p.m. in Tokyo, set for a 1.5 percent gain in the past five days, the first weekly advance over a month. The dollar bought 99.61 yen, little changed from late yesterday and up 0.6 this week, the first weekly gain since Feb. 15. The yen rose 1 percent this week to 153.83 per euro, touching the strongest since August.

Currency moves may be exaggerated today as trading volume will be less than half of normal due to public holidays in the U.S., the U.K. and other financial markets, said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co.

The dollar may rise to 101 yen in the next few days, Nomura Trust's Amikura forecast.

The dollar bought 5.2566 kroner from 5.2630 late yesterday, when it touched the highest since Feb. 26. The U.S. currency was up 3 percent against the krone this week. Australia's dollar was little changed at 90.27 U.S. cents, close to a five-week low and on course for a 3.7 percent decline this week.

Fed Moves

Fed officials on March 11 announced a program to swap $200 billion in Treasuries for debt including mortgage-backed securities. Yesterday, the Fed expanded collateral eligible for its auction of Treasuries to include bundled mortgage debt and securities linked to commercial-property loans.

Earlier this month, the Fed increased the size of separate funding auctions to $100 billion in March from a previously announced $60 billion.

The Fed yesterday said it had lent $28.8 billion to large U.S. securities firms under the program announced on March 16, its first extension of credit to non-banks since the 1930s.

The Fed also put taxpayer money at risk by making available up to $30 billion to JPMorgan Chase & Co. for the purchase of Bear Stearns.

`Calm Look'

The Fed cut on March 18 its target lending rate by three- quarters of a percentage point to 2.25 percent, saying ``measures of inflation expectations have risen.'' The cut was smaller than the 1 percentage point traders had expected with 90 percent certainty before the meeting, according to futures traded on the Chicago Board of Trade.

The tumble in commodity prices and the dollar's rebound gained momentum after the size of the cut sapped demand for oil and gold as a hedge against accelerating inflation.

``The dollar's rise against commodities currencies is likely to extend into next week,'' Soma said. ``Traders took a calm look at their bets and realized they can't continue to buy commodities in this environment.''

The Australian dollar may fall to 89 U.S. cents in a few days, Soma forecast.

Earnings Reports

Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Morgan Stanley all said this week first-quarter profits fell less than analysts' estimates. Banks around the world have posted $195 billion in writedowns and credit losses, according to Bloomberg data, due to rising delinquencies on mortgages to U.S. homeowners with poor credit.

The euro headed for a weekly loss on speculation growth in the 15 countries that share the currency will slow and subprime loan losses will spread at European investment banks.

Credit Suisse Group, Switzerland's second-largest bank, said it will write down $2.65 billion after a ``small number'' of its traders deliberately mispriced residential mortgage- backed bonds. Credit Suisse also said it's unlikely to make a profit this quarter.

The French statistics office cut its growth forecast and raised its inflation forecast. Growth in France, Europe's second-largest economy, will slow to 0.3 percent in the second quarter from 0.4 percent in the previous quarter.

``The euro has some room to adjust lower,'' said Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo. ``We're getting confirmation that subprime is shifting to the European financial sector. The euro-zone economy will start to slow from here on.''

The euro may fall to $1.53 next week, he said.

Commodity Currencies

``The dollar's rise against commodities currencies is likely to extend into next week,'' said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co., Japan's fifth-largest brokerage by revenue. ``Traders took a calm look at their bets and realized they can't continue to buy commodities in this environment.''

The Australian dollar may fall to 89 U.S. cents in a few days, Soma forecast.

The U.S. Dollar Index traded on ICE Futures in New York, which compares the currency with those of six trading partners, rose for a third day, to 72.8 from 72.144. The gauge fell to a record 70.698 on March 17, the same day the dollar fell to a record low against the euro.

``Commodities -- one of the few remaining long trades -- have turned south,'' BNP Paribas SA strategists led by Hans- Guenter Redeker wrote in a research note yesterday. ``The currency market is next in line, forcing investors out of yielding positions. We underline our bearish commodity currency call. The dollar will rebound.''

The dollar may rise to 5.47 kroner and 85 cents per Australian dollar at the end of this year, BNP Paribas forecast.

Gold posted its biggest weekly drop since 1990, falling from a record $1,032.70 an ounce on March 17. Oil has dropped 8.9 percent from a record this week, and copper had its biggest weekly slide in 10 months.

To contact the reporters on this story: Stanley White in Tokyo at

Thursday, March 20, 2008

Gold slides almost $60 US an ounce

Gold slides almost $60 US an ounce
Loonie drops below parity

Wednesday, March 19, 2008 CBC News

Gold futures took a big dive Wednesday as the precious metal lost some of its lustre following a smaller-than-expected U.S. interest rate cut.

The April gold contract on the New York Mercantile Exchange tumbled $58.50 to a settle price of $944.70 US an ounce.

The gold market had expected that the U.S. Federal Reserve would cut its key interest rate by a full percentage point on Tuesday. When it was cut by just three-quarters of a point, gold started to tumble.

Silver prices fell by eight per cent.

Better-than-expected earnings reports from three U.S. investment banks also bolstered investor confidence that some stability might be returning to the struggling U.S. financial system.

Recently, gold prices have also tended to track oil prices. On Wednesday, oil futures dipped almost $5 a barrel to $104.48 US a barrel.

The slide in gold, oil and other commodity prices sent the Canadian dollar below par with the U.S. currency. The loonie was down 2.19 cents to a close of 98.49 cents US.

The TSX gold sub-index fell 5.3 per cent, leading 427-point drop in the S&P/TSX composite index.

Barrick Gold shares slid $3.32 to close at $45.96; Goldcorp stock dropped $1.64 to $39.50; Kinross Gold fell $1.85 to $22.30.

Gold futures hit a record $1,033.90 US an ounce on Monday after the weekend collapse of the investment bank Bear Stearns sparked fears that other financial institutions might be at risk.

Even at current prices, gold has still gained $300 US an ounce in the past year.

Mortgage lenders to pump $200 billion into markets

Mortgage lenders to pump $200 billion into markets

By Patrick Rucker (REUTERS)
Wed Mar 19, 5:58 PM ET

WASHINGTON (Reuters) - Two U.S. home financing heavyweights won government approval on Wednesday to pump $200 billion more into troubled U.S. mortgage markets, the latest step to stabilize credit markets and avert a deep recession.

Despite intensive efforts to battle rising home foreclosures and calm shaky markets by the Treasury Department and the Fed, which has pledged $400 billion to free up credit, Democratic lawmakers continue to press for bolder action.

"All hands are on deck to try and prevent this U.S. situation from becoming a dire crisis," said David Watt, a currency strategist with RBC Capital Markets in Toronto. "They're doing everything they can, making policy on the fly."

Still, markets were not calmed by the latest move by the regulator that oversees Fannie Mae and Freddie Mac to immediately loosen their capital requirements and give them a bigger role in buying up mortgages.

The blue chip Dow Jones industrial average lost almost three-quarters of the 420-point gain notched a day earlier, closing down 293 points, in part on worry brokerage Merrill Lynch & Co may need to write down more bad assets.

More relief, however, is in the works. A separate regulator appeared near a decision to allow the Federal Home Loan Bank System to double some mortgage holdings to around $300 billion -- which would be another big shot of market liquidity.

Sources familiar with the proposal said a vote on the measure was likely this week.


There were no signs, however, that Democratic lawmakers were about to let up in a push to have the government step in to play a larger role.

Rep. Barney Frank, chairman of the powerful U.S. House of Representatives' Financial Services Committee, said the Bush administration was warming to his plan to use the Federal Housing Administration to insure up to $300 billion of shaky home loans for lenders willing to erase some of the debt.

The Treasury, however, said it had "no interest" in the proposal, although it was willing to listen to any new ideas.

Fannie Mae and Freddie Mac's regulator, the Office of Federal Housing Enterprise Oversight, said its decision to relax capital rules toughened in the wake of accounting scandals in 2003 and 2004 would allow the two companies to buy or guarantee $2 trillion worth of mortgages this year.

The decision reduces to 20 percent from 30 percent the additional amount of capital they must keep on hand against potential losses, giving them $200 billion in buying power. OFHEO said it may lower the capital requirements further.

Efforts to ease financial market stress helped bring down mortgage rates early this year, but they have risen in recent weeks as investors dumped souring loans to meet margin requirements, undercutting the Fed's attempts to spur the economy by lowering overnight interest rates.

Shares of Fannie Mae and Freddie Mac, which rose sharply on Tuesday in anticipation of the announcement, blasted higher for a second day on Wednesday. Fannie Mae stock rose $2.49 to $30.71 and Freddie Mac shot up $3.88 to $29.90.

The global nature of the credit crisis was underlined as the Bank of England stepped in to dampen rumors that HBOS, Britain's biggest home lender, might be in trouble. "No meetings have taken place, or been scheduled, to discuss problems with any institution," a BoE spokesman said, taking the rare step to comment on a rumor.


In a joint statement with OFHEO, Fannie Mae and Freddie Mac promised to raise "significant capital" in return for easing in their reserve requirements, but the two companies gave no indication how and when they would do so.

The Treasury Department has been pushing financial firms to face losses and quickly raise new capital. That is vital for a return to normal lending and business activity and to avert a full-blown financial meltdown.

Treasury Secretary Henry Paulson, a pragmatic veteran of Wall Street, has so far hewed to the Bush administration's line that it will not countenance a taxpayer "bailout" for people who took excessive risks.

But that argument suffered over the weekend when Treasury helped broker a proposed deal for a takeover of troubled investment bank Bear Stearns.

President George W. Bush said on Tuesday the White House was monitoring financial markets and, if further actions were needed to ease mortgage woes, it would be done "in a way that does not damage the long-term health of our economy."

(Additional reporting by Svea Herbst in Boston, David Lawder and Mark Felsenthal in Washington, Al Yoon in New York and Steve Slater in London; Writing by Glenn Somerville and Patrick Rucker, Editing by Chizu Nomiyama)

Wednesday, March 19, 2008

Review of The Lexus and the Olive Tree

Review of The Lexus and the Olive Tree
Thomas L. Friedman (1999)

This book was very popular nearly ten years ago. After reading it at a leisurely pace this past month or so I can fully agree that it touches on many major factors concerning this era of globalization in Korea in a manner serving easy understanding through concrete examples and metaphors. I did not choose to read this book out of hindsight however as I enjoy collecting used titles from (at the considerable expense of whathebook)this offering came up at a lovely low price.

My curiosity about this book always focused on the provocative title which describes the world of tradition, and national cultures. This includes the comfort of spirituality, community, religion, and differences in contrast and tolerance. The Lexus may represent a world of convenience, mass production, consumerism, economic interconnectedness, and a mass standardization of product, process and customer service.

What stands out in terms of a notable topic includes Friedman’s description of economic growth contingent upon the putting on of “the golden straight-jacket.” This entails domestic economies compliance with global standards of trade, contract law, and transparency. Such fair trade policies, those which benefit local and international interests equally, equitably and without the taint of informational or cultural bias represent an acknowledgement of the immense power and privilege of being part of the global economy. Those economies responsible and fortunate enough to attract global market investment comply with the needs and goals of speculators and investors worldwide so as to maintain their leveraging capabilities and relationships across wide sources of investment capital.

Korea is often referred to in this book in terms of market forces and reactions or adaptations of local practices to grow more in keeping with international globalization policies whether during the era of the locally termed “IMF Crisis” or as it is known more globally as the “Asian Financial Crisis.” As it is ten years old the last ten years are noticeably absent.

Currently however a different sort of foreign capital flight appears to be taking place in South Korea. Since the elections of the new President, the Honorable Lee Myung Bak, there has been little development of a public policy or plan to adopt a more proactive relationship with the foreign investment community of the world. It appears many Koreans would choose to limit there future comfort and size of the golden straight-jacket out of an unwillingness to collaborate in the dimensions of its size and fit for non-Koreans locally.

Talk and plans of a Korean Tax Capital Rich Canal Project in the press appears a perhaps ominous misdirection of the hard-earned income of the average Korean worker who is often dazzled by showy bits of marketing and advertisement campaigns but for which results and benefits are often lacking.

Especially this development may appear a facile and misguided usage of the President’s considerable power and influence in the construction and heavy industrial sector of the nation geo-politically. While the Sanggye Stream Project was a public relations success, installing a canal which on a cost-benefit analysis provides little or no environmental or globally tuned infrastructural development might satisfy a public desire for an edifice to the tax-payer (as one of my friends argues). However the self-same project might be a disappointing lack of real global development to foreign investors who might at this time seek more improvements in small-business start up or incubator loans, transnational research or partnerships, productivity in the development of a knowledge based economy supported by Korea's web-enabled populace or deeper reforms of inter-governmental policy in terms of integrating global educational and business developments here in Korea which offer opportunities to Koreans and non-Koreans with equanimity.

However, a large scale project of such magnitude defines some of the inherent weaknesses of Korea’s political economy. Centralized planning and government excels at mega-project developments. At the same time narrow hierarchy inadequately invests regional and localized patterns of decision-making present in many other OECD nations. These supply adequate development models to provide road-maps to a less concentrated stratification of planning and decision-making. It may not be a negative positional advantage for a Korean President to wield virtually the entire construction industry of his nation to the developmental benefits of his taxpayers. However international and global investors where and when consulted or perceived as investment partners in Korea’s development might provide alternative patterns to the direction and scale of infrastructural improvements necessary to attract their considerable investment potential. Such a perspective as to the contributions which non-Koreans might add to Korea's list of development options might further the aim of the current government in its “747” plan.

The image of a “747” in most developed nations is that of a workhorse transportation vehicle without any real negative connotations. It has provided steady and fairly reliable service to the world’s international travelling public for nearly forty years. However, it is a large and cumbersome aircraft, with little of current prestige, panache, luster, or comfort to the majority of the travelling public. As a global image to attach to an economic-political plan, it is like advertising that one’s nation seeks to be in some way like a bullock or slow-moving traffic vehicle rather than a gazelle, cheetah, or other lithe, productive, or fast moving globally recognized character of progress.

One might suggest an “A380” plan might make more global sense for some in attracting investors. The “A” could represent seeking to increase Korea’s ratings at Standard and Poor’s or Moody’s Indexes as Friedman would contend this represents the prime investment attractor and the golden aspect of the straight jacket. This would unfortunately require more unbiased and perhaps globally credible regulatory oversight in Korea’s national economic growth plans. Where shareholder interests are heavily protected the gold often appears to outweigh the jacket and could prove painful for local elites accustomed to manipulating their own game plans to ensure hometown successes at the expense of regional growth.

The “3” could represent divesting of political power and decision making away from the perennial focus on Seoul and its environs to that of a federal leadership with truly competitive provincial powers followed by truly competitive municipal powers of decision-making in the attraction of foreign investment. Competition in such plans might provide examples of unique Korean inventiveness, and innovation.

The “8” could represent a Korean recognition that the eight-sided fortification of traditional values and attitudes towards non-Koreans involvement in and influence among Korean society provides few opportunities to install windows or doors to experiment with or develop current positions. To grow a global appreciation of shared interests Koreans might need to realize that capturing gains and creating value for all investors regardless of race, creed, religion or ethnic background is the hallmark of global capitalism. The basic defensive and risk-aversive aspects of Korean political, economic and social community might need to provide greater gaps of opportunity to ensure involved and evolving foreign investment rather than speculation. A widening of acceptance between the structural elements of Korean society to ensure the health and economic prosperity of the core and heart of that society should be the desire of every Korean. Koreans possess all the qualities and aspects of any culture on the earth. Those values which best express a gentile and global Korean identity might grow to possibly require more of the world than an export customer or more of their trade partners in terms of relationship than import source of prestige and/or competitive display of wealth and products.

The “0” might reflect a desire to not only hold and maintain Korea’s position economically in comparison to the OECD but to strengthen that postion with a zero tolerance for Korean companies which do not adequately develop strong trading relationships with non-Korean businesses globally. "No potential investor left out in the cold" would ensure that despite growing global competitiveness zero foreign investors would be repelled from the Korean markets due to local intransigence or unwillingness to participate in multi-dimensional contingencies, negotiations, growth plans, economic development or trade partnerships which equitably distribute the wealth, profits, information, and advantages. Non-Korean investors need to be wooed and are won hearts and minds only to the degree of success in development of a flexible nature for dealing with them in this nation.

Korea has already proven able to adapt quickly enough to retain investment-grade policies and progress which ensure positioning of greater interest than its competitors. However as is described by some concerning the issues of learning English, there needs to be a greater realisation of Korea's interest in the future and plans which enable rather than place limits on that future.

For example, all of the concrete, budgets and profits of construction companies might be better put to expanding current infrastructure in ports, highways, and logistical support for further Kaesong expansion plans. Shaving a few minutes, hours or days off of deliveries could make much of Korea’s desire to improve its international financial status. However it is a demonstration of Friedman’s thesis regarding golden straight-jackets.

In this global age if the political and economic will of a nation is resistant to foreign investment in any way, shape or form, it costs that nation its future developmental successes. For as many construction company sourced advisors the President currently retains one might wish that he would seek the ideas and visions of the world’s great developmental advisors in change process management sourced from corporate, political or advisory capacities far before he pitches the first spade of dirt over another inch of Korea’s most precious resources - scant farmers fields and pure water supplies.

There are many possible local and regional improvements that might make more economic impact and cost the tax-payers far less. To discover these, it is in the Korean identity to listen to one’s family, elders or respected teachers in the delivery of such advice. While few could assume to fill any of those roles as a non-Korean, one might suggest that touring the country’s challenged ports and transportation sectors for information regarding improvements with better benefits than a canal should be made.

Coincidentally these are the Koreans often most in tune and intuitively related to investors, trade partners, entrepreneurs, and global relationship builders. These might also illustrate the experience of constructive concensus which is of the human-kind, one with which past generations of Koreans might easily relate to, the hard work of spirit and personal educational development which is quite independent of any national culture in its benefits.

In maturing one’s own relationships on a global level there might be the possibility that the best plans for Korea’s future do not originate in the successes of construction companies in desert lands but in the hearts and minds of multi-dimensional visionaries, local and global who recognize that the task of attracting and maintaining global investor confidence in the Korean economy should be limitless in its drive to succeed towards such a goal. Friedman explains that such impetus comes from the workers and not the boss. Therefore it may be time for Korean leaders to finally begin listening to their own lower middle classes of managers. Do they have an informed voice? Friedman contends that they often do. Especially if they are encouraged to speak by those who need to learn how to listen.

US crisis tests Fed boss Bernanke

US crisis tests Fed boss Bernanke
Article from: Reuters
By Ros Krasny in Chicago

March 19, 2008 08:49am

THE future job prospects of Federal Reserve chairman Ben Bernanke could hang in the balance as the US central bank wrestles with the biggest global financial market crisis in decades.

The Fed, under Mr Bernanke's guidance, has pulled out the stops in the past couple weeks to push liquidity into shaky credit markets. It has also cut benchmark lending rates from 5.25 per cent to 3.0 per cent since mid-September, with another big rate cut on tap at a policy meeting on Tuesday.

A number of prominent economists, including National Bureau of Economic Research President Martin Feldstein, think the Fed was too slow to respond to the global credit crisis that erupted in August last year and has been swirling ever since.

Ethan Harris, economist at Lehman Brothers, said in a research note that Mr Bernanke has taken a criticism from those who think the Fed has cut rates too much, and those that think they've eased too little.

But Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ, gave Mr Bernanke "very high marks" for the credit-market rescue efforts now under way.

"He has done a good job at marshalling the forces and attacking the problems. If there's any finger-pointing, you could point them at the person who left the Fed in February of 2006," Mr Rupkey said, referring to former Fed Chairman Alan Greenspan.

Others commended Mr Bernanke's creative approach and innovation solutions to a liquidity crisis that has undercut the impact of traditional monetary policy tools.

"The Fed has been trying to distinguish between macroeconomic risks (for which it lowers the federal funds rate) and liquidity concerns in financial markets," said Thomas Lam, senior Treasury economist at United Overseas Bank Group in Singapore.

Analysts said Mr Bernanke has been guided by his historical knowledge, especially of the Great Depression of the 1930s.

"The Bernanke Fed's actions to date are entirely consistent with the view that in the face of the credit crunch ... keeping the monetary spigots wide open and the banking system as liquid as possible offers the best chance of addressing systemic risk," said Ray Attrill, analyst at 4CAST.

The Fed's steps should gain traction over time, said economists at Deutsche Bank.

"We have heard many investors say that the Fed's rate cut actions are not working and that other measures need to be taken ... When the economy bottoms out and investors believe that the financial crisis is not spreading, there will be some light at the end of the tunnel," they said.

If anything, Mr Bernanke could take a higher public profile during these days of crisis, according to Mr Rupkey.

"People see the Fed chairman as the nation's chief economist, but it seems like the White House and (Treasury Secretary Henry) Paulson are taking the lead," he said.

Fed cut brings markets back from the brink· Bank urged to follow 0.75 point move

Fed cut brings markets back from the brink· Bank urged to follow 0.75 point move

· UK stocks recoup Monday's losses

Ashley Seager and Larry Elliott The Guardian, Wednesday March 19 2008

Wall Street

The US Federal Reserve put pressure on the Bank of England and other central banks last night to follow its lead in warding off a global economic slump when it cut interest rates for the sixth time since the financial crisis began last summer.

Amid calls from the City and business groups for the Bank to act, the Fed cut its key interest rate by 0.75 points to 2.25% in an bid to restore confidence to Wall Street following the bailout of Bear Stearns.

The move was less aggressive than the one point cut financial markets had hoped for, but was enough to push leading shares sharply higher. The Dow Jones closed up more than 400 points up and the Nasdaq technology market experienced its biggest one-day gain in five years.

In a statement the Fed said "financial markets remain under considerable stress", adding that credit and housing market problems would continue to weigh on economic growth. But concerns over inflation and the recent weakness of the dollar led two of the Fed's open market committee to vote for a smaller half-point cut in interest rates.

Financial markets rallied before the Fed's announcement on hopes that Sunday's Fed-inspired purchase by JP Morgan of Bear Stearns - America's fifth biggest investment bank - would mark the end of the financial turmoil.

Markets are now looking to the Bank of England and the European Central Bank to lower borrowing costs. In the UK rates are still at 5.25% in spite of two recent cuts by the Bank while the ECB has rates at 4%.

Responding to the Fed's decision, George Bush said he remained confident about the US economy. "In the long term we are going to be just fine," he said.

But analysts cautioned that with rates now at 2.25%, the Fed might soon run out of ammunition with which to fight the credit crisis. "At the risk of stating the blindingly obvious, there are only 225 basis points between the current Fed funds rate and zero. There are very few bullets left for the Fed to fire," said Nick Parsons, of NAB Capital.

In London the FTSE 100 gained 3.5%, or almost 200 points to close at 5,606, recouping almost all of Monday's losses. Bond prices fell as investors left safe-haven assets to move back into shares.

The Dow Jones had gained more than 2% in advance of the Fed's announcement on relief that earnings at investment banks Goldman Sachs and Lehman Brothers had not been worse than expected. Goldman's profits were down 53% in the first quarter as it made $2bn in writedowns related to the credit crunch. Lehman's profits were down a similar amount but trading losses were partially offset by strong earnings in its merger advisory division. Shares in both banks rose, especially as Lehman's fell on Monday on fears it could follow Bear Stearns into collapse.

"Goldman's report was good and Lehman's wasn't the end of the world," said Sal Arnuk at Themis Trading in New Jersey.

Bear Stearns shares rose as investors bet that a rival bid could emerge for the bank JP Morgan agreed to buy at the weekend for just $2 a share. Bear's shares jumped as high as $8.

But the euphoria was dented by figures showing another fall in US housing starts last month where the origins of the credit crunch lie.

Analysts at Morgan Stanley in New York said that pointed to a further drop of more than 10% in house prices in the coming year, which would represent a 25% fall in two years. The rapid fall in house prices has left many properties worth less than the mortgage taken out on them and is the main reason why credit markets are deteriorating nine months after the crunch began.

Henry Paulson, the US treasury secretary, and a former head of Goldman Sachs, said the economy was in "sharp decline" but continued to resist using the word recession.

"There's no doubt that the American people know that the economy has turned down sharply. To me much less important is the label that's placed on it today. Much more important is what we do about it," he said.

Oil prices were more subdued yesterday after achieving a record high of $111.80 a barrel on Monday. The price rose by about $2 over the day to nearly $108. Gold closed in Europe at just over $1,000 an ounce, having set a record of $1,033 on Monday.

In the UK inflation rose to a nine-month high of 2.5% last month from 2.2% in January, well above the Bank of England's target of 2%. The Office for National Statistics ascribed this to a change in the way it put rises in electricity and gas bills into the figures, but economists said the rise complicated the Bank's task of cutting interest rates .

The British Chambers of Commerce, though, urged the Bank to forget inflation for the time being and cut rates in April.

Figures over the next day or two could be crucial in making up the monetary policy committee's mind. These include unemployment and wage growth data today followed by key retail sales figures tomorrow.

Lehman Brothers' Stock Surges As Quarterly Report Assuages Market About Liquidity

Last Call: Lehman Brothers
Tuesday March 18, 3:59 pm ET
Lehman Brothers' Stock Surges As Quarterly Report Assuages Market About Liquidity

NEW YORK (AP) -- Lehman Brothers Holdings Inc.'s stock surged Tuesday after the investment bank reported a profit for the fiscal first quarter and convinced the market its liquidity is not under threat.
The New York-based bank earned $489 million in the fourth quarter, a decline of 57 percent but nothing justifying rumors that Lehman Brothers was in danger of falling victim to the same fate as Bear Stearns Cos.

Standard & Poor's analyst Matthew Albrecht upgraded Lehman Brothers to "Hold" from "Sell." The bank's quarterly report "should assuage fears that it faces any type of liquidity crisis."

Goldman Sachs analyst William F. Tanona added Lehman Brothers to the Americas Buy List, a list of top stop picks. He said he believes the market is overestimating the likelihood Lehman Brothers runs out of cash.

Lehman surged $13.34, or 42 percent, to $45.09. The stock had plunged Monday on fears that Lehman's liquidity was in danger.

Tuesday, March 18, 2008

Asian stocks tumble following news of Bear Stearns buyout

Asian stocks tumble following news of Bear Stearns buyout
Monday, March 17, 2008 The Associated Press

Asian stocks plunged and the dollar sank Monday after JPMorgan Chase said it would buy troubled U.S. investment bank Bear Stearns, signalling to investors the depths of the credit crisis.

Oil prices hit a record in Asian trading and U.S. stock index futures were down sharply, suggesting Wall Street would open lower Monday after sinking Friday.

JPMorgan said Sunday it would acquire Bear Stearns for $236.2 million — or $2 a share — in a deal that represents a stunning collapse for one of the world's largest investment banks.

The buyout was aimed at averting a bankruptcy and a spreading crisis of confidence in the global financial system sparked by defaults in the U.S. subprime mortgage market.

But to Asian investors the move suggested the credit woes are far from over and fanned worries that other big American banks are facing serious troubles.

"There is persistent credit uncertainty. Market players have been repeatedly let down, which shows the subprime mortgage problems are so deep-rooted," said Atsuji Ohara, global strategist of Shinko Securities in Tokyo.

"Just buying an investment bank does not solve the problem," he said. "Markets are prodding [the U.S. government] to inject public funds."

News of the acquisition of Bear Stearns stunned investors just before markets opened in Tokyo and Seoul. Both fell sharply before paring some losses in afternoon trading.

Japan's benchmark 225 index sank 3.7 per cent to close at 11,787.51 points, its lowest in more than 2½ years. In Seoul, the Korea Stock Price Index fell 1.6 per cent to 1,574.44 after sagging as much as 3.9 per cent.

Hong Kong's Hang Seng index was down 3.8 per cent at 21,377.45 after plunging as much as 5.4 per cent.

Across the Asia-Pacific region, all major stock indexes were down, including markets in Australia, China, Indonesia and the Philippines. India's Sensex dropped 3.8 per cent in morning trading.

"We are worried" about what comes next, Shim Jae-youb, a strategist at Meritz Securities in Seoul, said of concerns that other banks may collapse.

Shim said investors were on guard ahead of the release of quarterly earnings reports from big U.S. investment banks this week, including Lehman Brothers Holdings Inc., Goldman Sachs Group Inc. and Morgan Stanley. Bear Stearns had been scheduled to report its results Monday, though it wasn't clear if it would go ahead with that plan.

ADB lowers India's growth rate to 8 p.c. next fiscal

ADB lowers India's growth rate to 8 p.c. next fiscal

Special Correspondent

NEW DELHI: The Asian Development Bank (ADB) has projected a slowdown in India's overall growth to eight per cent during 2007-08 as compared to the 9.2 per cent growth anticipated this fiscal, mainly in view of the country's inadequate infrastructure and the monetary credit tightening measures initiated to contain overheating in the economy.

In its `Asian Development Outlook' report released here, the multilateral institution, however, noted that a pick-up in economic growth to 8.3 per cent would again be witnessed in the following year. It pointed out that a higher economic growth rate of nine to ten per cent would require infrastructure development at a much faster pace. Briefing newspersons here on Tuesday, ADB's Chief Economist in India, Narhari Rao, pointed out that the overall economic situation would have been worse had the Government not taken any measures aimed at fiscal consolidation.

Forecasting that the various steps initiated by the Government to contain inflationary pressures would yield results, the ADB projected the rate of inflation to slide to a more "tolerant" level of five per cent in both 2007-08 and 2008-09 from over six per cent prevailing now. This, it said, would be as a result of tighter monetary policy, an increase in farm crop acreage, a good rabi harvest and import duty cuts on certain essential commodities.

Explaining how the decline in growth rate would come about during the new fiscal, the report said that while domestic overheating was raising demand, the Reserve Bank of India (RBI) was being forced to respond by hiking interest rates. The rising interest rates, in turn, would first lead to a dampening in demand for property, followed by "subtle and wide-ranging consequences" in other components, it said.

"These restraints on demand growth from home buyers, manufacturing investors and consumers will be accompanied by fiscal discipline...These forces are expected to moderate growth rates bringing it down to 8 per cent in 2007-08," the ADB report said.

As a consequence, the drop in construction momentum, the report said, was expected to persist through early 2007-08, with knock-on effects on those consumer durable products which benefited from the construction and sale of new homes so far. Coupled with the rise in interest rates, the slowdown trend would continue during the next fiscal year.

On the other hand, while the modest appreciation in rupee value would check export growth, the growth in imports would also moderate owing to easing of demand growth, it said.

While the Prime Minister's Economic Advisory Council Chairman, C. Rangarajan, had dubbed the overheating as "still a cyclical phenomenon", Mr. Narhari Rao said: "At the moment, overheating is structural due to infrastructure constraints."

As to whether the RBI would further tighten the monetary policy, Mr. Rao said much would depend on the inflationary track in the days to come. Holding out a warning against likely supply shocks in the kharif harvest during 2007 and beyond, the ADB suggested improved food supply management policies so as to reduce the volatility in commodity prices.

"Minimum support prices and buffer stock targets are not being filled, while measures to augment food stocks through imports have failed. A purely monetary solution to price increase will not work if food prices resume their acceleration," the report warned.

GDP Indicator: Russian growth slows to 30-month low in Jan

GDP Indicator: Russian growth slows to 30-month low in Jan
Publication date: 2/11/2008

Russian economic growth slowed to a 30-month low of 6.1% in January, reflecting weaker expansion in services, London-based VTB Bank Europe said in its latest GDP Indicator report released Wednesday.

The figure indicated the weakest rate of economic expansion in Russia since July 2005, VTB Bank Europe said.

The indicator slowed in January from the 6.3% rate registered throughout October-December of last year, the bank said. The Russian economy grew at an annual rate of 6.4% in July-September of last year, according to the bank's earlier GDP Indicator reports.

“The Russian GDP Indicator in January eased back to an estimated annual growth rate of 6.1%,” said Chris Green, senior economist at VTB Bank Europe Research, commenting on the survey. “Underpinning this softening growth profile has been a weakening in the rate of growth in the services sector, although this was somewhat offset by a rise in manufacturing sector activity over the month.”

Despite strong GDP growth in 2007, Green projected the growth rate to slow this year.

“While preliminary official estimates suggest robust GDP growth of around 8.1% in 2007, the latest Russian GDP Indicator survey suggests that the rate of expansion will ease over 2008,” he said.

The survey's seasonally adjusted all-industry index slid to 55.4 in January from 56.9 in December, the weakest combined growth of manufacturing and services sector output in Russia since December 2004, the bank said. A reading above 50 indicates expansion in the economy, while a reading below 50 shows contraction.

The GDP Indicator is derived from VTB Bank Europe's Purchasing Managers Indices (PMI), which are surveys of business conditions in the manufacturing and service sectors of Russia. By weighing together the output measures from these surveys, an indicator of total output is produced.

U.K.-registered VTB Bank Europe, formerly known as the Moscow Narodny Bank, is a subsidiary of Russia's second largest bank, state-controlled VTB Bank.