Irish economy faces record downturn

From 2008 to 2010 Ireland is to suffer the largest contraction of any industrialized country since the 1930s, think-tank predicts. The Irish gross domestic product will fall by 11.6% from 2008 to 2010, the Economic and Social Research Institute, ESRI, forecast in a statement released Wednesday. "By historic and international standards, this is a truly dramatic development," ESRI, an independent institute partly funded by the finance ministry, announced. "Prior to this, the largest decline for an industrialized country since the 1930s had been in Finland, where real GDP declined by 11% between 1990 and 1993," the statement said. Ireland, beaten by the global economic downturn, was the first Euro-zone nation to feel the recession in the beginning of 2008. The ESRI welcomed efforts by the Irish government to deal with billions of euros in risky property loans which have battered the country's banking sector. The ESRI expects Ireland to be obliged to cut 300,000 jobs before 2011 as the recession extends. The think-tank also predicts that the rate of Irish unemployment during 2010 will average 17%. According to the report, by the end of next year, living standards in Ireland will be lower than in 2007.

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New data signal US economic recovery

US consumer confidence rises and home prices continue to fall, reviving hopes that the US economy is on the road to recovery. Home prices declined 18.6 percent in February compared with one year earlier, the Standard & Poor's/Case-Shiller Home Price Indices said on Tuesday. This was the first time in 16 months that the annual decline was not a record. The S&P/Case Shiller index records prices in 20 of the largest cities in the US. Separately, the Conference Board said its sentiment index had climbed to 39.2 this month, up from a revised 26.9 in March. The reading was the highest since November 2008. Analysts believe the two reports are signs of recovery for the world's largest economy. They however argue that huge problems in the financial sector and severe job losses are still preventing an economic turnaround. The Labor Department said last week that the number of Americans filing applications for jobless benefits had reached a record high of 640,000 in the week ending April 18, up from a revised 613,000 the previous week. On a monthly basis, house prices were down 2.2 percent, from a 2.8 percent fall in January. The index is down 30.7 percent compared with its peak in mid-2006. As of February, average home prices are now at levels similar to where they were in the third quarter of 2003.

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Global stocks fall on swine flu fears

Global stocks have fallen further amid concerns over the US banking system and mounting fears over a swine flu pandemic. The MSCI world equity index fell 1.4 percent, extending Monday's losses after seven weeks of gains, and the FTSEurofirst 300 index dropped more than 2 percent. The decline comes after The Wall Street Journal reported that US regulators have told Bank of America Corp and Citigroup Inc they may need to raise more capital following the initial results of stress tests on 19 US banks. Futures on the US S&P 500 pointed to a weaker start in Wall Street. The World Health Organization (WHO) has raised its alert level on swine flu to a phase four, or two steps short of the first full pandemic in 40 years. Alert level four means the virus is showing a sustained ability to pass from human to human and is able to cause community-level outbreaks. New cases of the virus were confirmed in New Zealand and Israel on Tuesday. Britain, Canada, Spain and the US have also confirmed cases but so far the deaths have not spread beyond Mexico, where the outbreak began. Mexico has raised the number of probable deaths to 152, with 1,614 suspected sufferers under observation.

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GM receives another $2B in loans

US automaker General Motors has received another $2 billion in government aid to add to its working capital, the Treasury has announced. On Tuesday, the US government agreed to lend up to $5 billion to GM as the giant automaker faces the possibility of bankruptcy. GM has already received more than $13 billion in emergency loans from the US government. The automaker announced on Thursday that it would halt production at some US factories for up to nine weeks starting next month in a move which would provisionally cut the pay for as many as 55,000 American autoworkers. The US government has given GM until June 1 to complete restructuring plans or file for bankruptcy, after President Barack Obama's administration rejected a proposal by the company in late March. Separately, Chrysler and its Canadian union reached an agreement on pay and benefits intended to cut costs and keep the automaker from bankruptcy. Under the new agreement, the Canadian Auto Workers (CAW) agreed to cut a range of benefits, an annual Christmas bonus, and add flexibility to work rules that would make it easier for Chrysler to hire temporary workers. The agreement would help Chrysler save an estimated 240 million Canadian dollars ($198.2 million) in annual labor costs. The deal should be approved by the 8,000 CAW-represented workers this weekend. Chrysler has until April 30 to reach agreements that would cut its debt and labor costs and seal a partnership with Italian carmaker Fiat, in order to secure more government funds to help it survive.

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G20 London decisions 'assessed' in Washington

World finance chiefs are meeting to assess the progress on combating the worst global economic crisis since the 1930s Great Depression. On Friday, the Group of Seven industrialized nations and the Group of 20, which includes the G7 and developing countries such as Brazil, China, India and Russia, were holding back-to-back gatherings in Washington on the eve of the IMF and World Bank spring meetings. "Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilization are emerging," a statement issued after finance ministers of the G7 met behind closed doors on Friday said. "Economic activity should begin to recover later this year amid a continued weak outlook and as downside risks persist," the statement added. Finance chiefs at the G20 meeting in Washington will assess the progress made in the three weeks since the G20 leaders pledged in London to fight the crisis with stimulus measures and with the reform of financial sector regulations.

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Ford good news springs US stocks

US stocks spike on the back of good news by the giant auto maker Ford Company, which announced better-than-expected results for the first quarter. US stock futures turned higher on Friday as the market warmly greeted a USD 1.4 billion loss at Ford Motor Co. and a 32% profit drop at Microsoft (MSFT), with preliminary indications from the banking sector stress test and durable-goods order data still on tap, Reuters reported. “We've driven down expectations so low that earnings across the board have been ahead of estimates,” said James Dunigan, managing executive of investments at PNC Wealth Management in Philadelphia, which oversees usd 96 billion. “That's providing some catalyst for people to put together a story of where the economy is going to be in couple of months. We have seen the worst.” US stocks closed higher on Thursday, with the Dow Jones Industrial Average rising 70 points, the S&P 500 up 8 points and the Nasdaq Composite up 6 points. Despite dim speculation that the US should brace for tougher days in the year ahead, some perceive recent development as "glimmers of hope" heralded by President Barack Obama. “A lot of the big negative surprises are behind us,” said David Rudow, an analyst with Thrivent Asset Management in Minneapolis. The company oversees about USD 65 billion, including Microsoft shares. “We've seen the worst. It's just a question of when we see return to growth and normal spending again.”

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Ford's loss smaller than estimated

Ford Motor Co. announces a lower than expected first quarter loss raising the prospect of going through recession with no government aid. Lewis Booth, the US giant automaker's chief financial officer told reporters on Friday that he expected a USD 3.7 billion cash burn rate in the first quarter to be worst for the year. "This is a fantastic performance," John Wolkonowicz, an IHS Global Insight analyst in Lexington, Massachusetts, said. "They're burning cash at a much lower rate. They're going to come out of this OK. I now believe they won't need a government handout." Ford, the only major US automaker not receive federal loans to help it avoid bankruptcy, posted net losses of USD 1.4 billion, or only 60 cents a share. Revenue fell to USD 24.8 billion from USD 39.2 billion, excluding special items, as Ford slashed North American production by half. The average analyst estimate was for USD 23.2 billion. Still, the latest losses come on top of USD 30 billion in net losses the company reported from 2006 through 2008. The report also once again showed Ford is in far better shape to weather the crisis in the global auto industry than Chrysler LLC and General Motors, its two US-based rivals. The US President Barack Obama in a recent address told his audience at Georgetown University in Washington, DC. That despite the upcoming tough times he could see light at the end of the tunnel. "There is no doubt that times are still tough," Obama said adding that "By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope."

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IMF: World economy in severe recession

The International Monetary Fund (IMF) warns the global economy is in a 'severe recession' and will decline by 1.3 percent this year. The IMF predicted a growth of 0.5 percent in January but by March it forecast a contraction of between 0.5 percent and 1 percent. "The global economy is in a severe recession inflicted by a massive financial crisis and acute loss of confidence," the IMF said in its semiannual World Economic Outlook (WEO) report. According to IMF, developed economies will see their gross domestic product (GDP) shrink at an annual rate of 3.8 percent this year while emerging economies will generate a weak growth of 1.6 percent. Japan's economy is expected to have the highest decline of 6.2 percent in 2009 while other major economies such as Germany, Italy, Britain, France and the US will see their economies shrink significantly, the IMF said. The fund predicted a slow recovery next year with growth to reemerge in 2010. However, the IMF said growth in 2010 would come entirely from emerging markets and developing countries, at a weak level of 1.9 percent, while the economies of developed countries are expected to stagnate. Economies in the Middle East will grow by 2.5 percent in 2009 and by 3.5 percent next year, the IMF said. The IMF warned on Tuesday that worldwide losses from the credit crunch could reach $4 trillion by the end of 2010.

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Oil prices slid over large crude stockpiles

Oil prices slid over news of a bigger-than-expected jump in crude stockpiles in the US, which is the world's biggest energy consuming nation. On Wednesday, Brent North Sea crude for delivery in June fell 44 cents to 49.38 dollars a barrel in late afternoon trade. New York's main futures contract, light sweet crude for June, slid 32 cents to 48.23 dollars. The US Department of Energy (DoE) said on Wednesday that American crude reserves soared 3.9 million barrels in the week ending April 17. That was larger than market expectations for a smaller gain of 2.5 million barrels. Crude stockpiles in the United States are now about 17.2 percent above their level at the same stage last year, and remain at the highest level since September 1990. Analysts say that the Organization of the Petroleum Exporting Countries (OPEC) would have to consider another production cut to offset the current reserves, even if there is some economic recovery later in the year.

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Meltdown losses to hit $4 trillion

Worldwide losses from the credit crunch could reach $4 trillion by the end of 2010, the International Monetary Fund (IMF) has warned. The Global Financial Stability Report is the first by the IMF to include credit losses on debt originated in Japan and Europe. The IMF said in that US financial institutions are likely to lose $2.7 trillion, which is substantially more than the $2.2 trillion it forecast in January and the $1.4 trillion last October. The report said the banks might need $1.7 trillion in additional capital to be able to stabilize the financial system. The IMF also warned that even with fiscal stimulus and government action, the process of cleaning up the banking system would be 'slow and painful'. The IMF estimated that banks worldwide could suffer credit- related losses of approximately $2.8 trillion from 2007 through 2010, and that about $1 trillion of that amount has already been written down. The fund said US banks have written down about $510 billion in assets with further write-downs of $550 billion expected over the next two years. In the euro area, bank losses are forecast to reach $750 billion through 2010, from $154 billion at the end of 2008. Losses at European financial institutions are projected to reach $1.2 trillion. The IMF said banks in the US, euro area and Britain were expected to post losses between 2008 and 2010 before returning to modest levels of profitability.

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'US Bailout plan vulnerable to fraud'

The $700 billion bailout plan could lead to more scope for fraud and poses risks for taxpayers, says the government's bailout watchdog. Neil Barofsky, the special inspector general for the $700 billion Troubled Asset Relief Program (TARP), said in a report that taxpayer risk was much higher than that of private parties in part of TARP known as Public-Private Investment Program (PPIP) which aims to buy troubled mortgages and securities. "Aspects of PPIP make it inherently vulnerable to fraud, waste and abuse, including significant issues relating to conflicts of interest facing fund managers, collusion between participants and vulnerabilities to money laundering," Barofsky said in his 250-page report to Congress on the bailout plan. He called on the Treasury to impose strict rules to screen investors in such funds and for the disclosure of ownership stakes and all transactions in them. The report warned that taxpayers could suffer big losses as they would be responsible for up $2.977 trillion in total TARP costs once additional Fed financing commitments and asset guarantees are added to the bailout. Barofsky's report did not reveal any special cases of fraud related to TARP, but said that his office has opened nearly 20 preliminary and full criminal investigations associated with the bailout program.

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US banks shares fall amid credit concerns

The US market goes further down following a plunge in bank stocks as concerns over worsening credit overshadow a recent string of promising earnings reports. In afternoon trading, Bank of America Corp. shares dropped 19.5 percent as the $13.4 billion the bank set aside to cover loan losses took the shine off the reports announcing the bank's quarterly profit above Wall Street's estimates. Many bank stocks have doubled or tripled in value since some major US banks said in March that they were operating at a profit during the first quarter -- reliving worries of investors following a quarter of massive losses from soured mortgages and other loans. Although the results posted by Wells Fargo & Co., JPMorgan Chase & Co. and Goldman Sachs Group Inc. have all exceeded expectations, investors remain wary that the profits are not sustainable given the growing credit losses amid the unremitting recession. This is while the government's "stress tests", are probing a potential need for more capital for top US banks if the economy worsens. On Monday, investors seized the opportunity to sell off bank stocks and wait in hopes of better days for industry. Citigroup reported a loss of nearly $1 billion on Friday -- an improvement over the $5 billion loss recorded in the year-ago period and a slightly narrower loss than analysts expected. But the New York banking giant set aside $10 billion to cover loan losses. Fox-Pitt Kelton shares tumbled 18.4 percent to $2.98 while Wells Fargo dropped 10.3 percent to $18.16, and US Bancorp fell 10.2 percent to $16.69. Elsewhere, JPMorgan Chase fell 6.5 percent and PNC Financial Services Group Inc. dipped 7.1 percent, to $38.65. Shares of regional banks also fell sharply. Fifth Third Bancorp lost 24.6 percent, Regions Financial Corp. dropped 16.7 percent, Huntington Bancshares Inc. 15.9 percent and KeyCorp lost 13.9 percent.

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IMF urges cleaning up bad investments

IMF chief Dominique Strauss-Kahn has criticized certain western countries for their slowness in removing toxic assets from their banks. Strauss-Kahn says the countries should clean up the balance sheets of their banks. "In Germany, other European countries or in the United States, everywhere, we are being too slow to deal with this topic," Strauss-Kahn said in an interview with business daily Handelsblatt. He says injecting money into the economy is not a final solution to the current global economic meltdown that began with the credit crunch in the United States. The former French finance minister believes the global economy will not improve until the second half of 2010. Strauss-Kahn also appealed for an ample reconsideration of the market economy system, saying the idea needs firm rules. "I would not say that we are seeing the end of the market economy. But we are certainly seeing the end of the idea that the market can regulate itself," he said. A market economy is an economic system based on the division of labor in which the prices of goods and services are determined by supply and demand, that is, not planned or controlled by a central authority.

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2008 worst year for top 500 US companies

The year 2008 was the worst year ever for Fortune Magazines' top 500 US corporations, with the companies registering an 84.7 percent decline in profits. It was in 1955 that Fortune magazine published the very first Fortune 500 list. It is an annual compilation of America's 500 largest companies with its changing roster reflecting the current economic climate. Fortune magazine has been publishing this annual report every year since its first publication. "Everything that happens in business in the United States shows up in one way or another in the 500," said Carol Loomis, Fortune's senior editor-at-large on Sunday. "It's a mirror to the economy." Since 1955, more than 2,000 companies have earned a spot on the list, but in 55 years only three have achieved the number one slot; General Motors, Exxon Mobil and Wal-Mart. Originally, the list only included industrial corporations. The top 10 in 1955 included DuPont, US Steel and Gulf Oil. But by 1995 it was clear that America had shifted to a service economy, and corporations like AT&T and financial giants like Citicorp were included. "It's amazing how many companies that are today on the list didn't even exist when we first started the list," said Loomis citing companies like Microsoft, Wal-Mart, Costco and Google. Taking an initial look at this year's list, which is a historical accumulation of US top 500 corporation's earnings ever, indicates that 2008 was the worst year in the history of the Fortune 500 for America's largest companies. Eleven of the top 25 largest corporate losses in the list took place last year. The biggest loser was insurance giant AIG which posted a $99.3 billion loss but is still on the list and is still too big to fall off the list, however it ranked at number 245, down from number 13 just one year earlier. Thirty-eight companies disappeared from the list altogether including Bear Stearns and Lehman Brothers. Elsewhere, Anheuser Busch and William Wrigley Jr., are no longer on the top 500 list.

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China asks Asia to set up 'reserve pool'

The Chinese premier has called for the setting up of an Asian reserve pool to help the region's economies tackle the economic recession. In a keynote speech marking the opening of the Boao Forum for Asia (BFA) summit in southern China, Premier Wen Jiabao urged freer trade and more regional cooperation in the face of the global financial crisis. More than 1,600 political leaders, business people and academic scholars gathered in the island resort of Boao to discuss the effects of the economic downturn in Asia and the role of Asian countries, especially emerging economies, in reforming the global financial system. "Asia is one of the most dynamic and promising regions in the world economy. Together, we take up 60 percent of the world's population, a quarter of the global economy and a third of global trade," Wen said in Boao town, south of China's Hainan Province on Saturday. Asian economies such as China and India are among the few major economies that are forecast to escape recession in 2009. However, the global financial crisis has resulted in reduced exports, shrinking investment and demand, fewer jobs and lower income in many emerging economies in Asia. In its latest forecast in March, the World Bank has lowered the estimated gross domestic product (GDP) growth of 20 East Asian and Pacific developing economies this year down by 1.4 percentage points to 5.3 percent. "We should make greater efforts to promote free trade and expand intra-regional trade," Wen said. "We should accommodate each other's concern to the greatest extent possible, build consensus and establish a regional reserve pool as early as possible so as to better protect our region from financial risks," he added. Iran's Vice-president Parviz Davoodi, who attended the summit, said using Asian currencies in trade between regional countries could ultimately pave the way for establishing a single Asian currency to replace the US dollar. Davoodi also said that promoting Islamic banking system among Asian countries could help regional economies resist the economic downturn as Islamic law prohibits investments in interest-based financial products.

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Sony Ericsson, Toshiba announce job cuts

Mobile phone maker Sony Ericsson and electronics giant Toshiba announce major job cuts to save the firms in face of global economic crisis. Sony Ericsson says it would slash at least 2,000 jobs to secure 400 million euros (523 million dollars) of savings. The decision came after the company announced a loss of 293 million euros (384 million dollars) in the first three months of this year because of the worsening recession that has hit mobile phone demand. "As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand," the firm said in a statement. At the same time Toshiba Corp. says it will go ahead with a plan to lay off 3,900 more jobs by next March as it earlier reduced some 4,500 of its temporary workers. The Japanese company predicted a loss of 350 billion yen (3.5 billion dollars) for its financial year that ended last month. Toshiba shares plunged 3.5 percent to 329 yen after the release of the news.

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Citigroup reports quarterly profit

Citigroup has reported a quarterly profit of $1.6 billion after massive losses in 2008 -- the latest hopeful sign for the US banking sector. The first-quarter profit follows losses of $5.1 billion in the same period last year and $18.72 billion for the whole 2008. Total revenues rose 99 percent from a year ago to $24.8 billion. However, stockholders took a loss of 18 cents per share due to Citigroup's special share arrangements. "With revenues of nearly 25 billion dollars and net income of 1.6 billion, we had our best overall quarter since the second quarter of 2007," said Chief Executive Vikram Pandit. The first-quarter profit came while Citi reported a $1.2 billion loss in its consumer banking operations. The US government, which has already granted $45 billion in aid to the banking group, is to get a 36 percent stake in Citi. The credit crunch has forced Citi to shed 13,000 jobs since the fourth-quarter and 65,000 since peak levels, reducing the group's total workforce to 309,000. Separately, US conglomerate General Electric reported a 35 percent fall in first-quarter profit to $2.89 billion. However, the decline was less than analysts' expectations as GE's financial arm earned $1.1 billion. The economic downturn has reduced sales in most areas of GE's business, which range from jet engines to household appliances.

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California's unemployment highest since 1976

California's unemployment rate has soared to its highest level in more than 30 years in March, climbing to 11.2 percent as 62,100 jobs vanish. California's unemployment rate reached 11.2 percent in March with 62,100 job cuts, the highest rate on record. The figures contrasted with a national jobless rate of 8.5 percent in March. The new jobless figures are the highest since records first began to be released in 1976. Over the last 12 months, California has seen 637,400 job cuts and the state has lost 727,700 jobs since the peak in July 2007. For the past year, California suffered a 4.2 percent decline in job levels compared to the nation's 3.5 percent loss. California's higher rate of job losses is primarily the result of a greater exposure to the housing downturn and related job losses in construction and finance. California's unemployment rate at 11.2 percent is the fourth highest in the US behind Michigan, Oregon and South Carolina. There are now eight states with unemployment rates of 10 percent and more.

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Mideast TV firm signs major new deal with Warner Bros

Dubai-based broadcasting company MBC Group announced on Friday it has signed a major new deal with giant Warner Bros to show all its US TV shows for the next two years.The agreement inked with Warner Bros International Television Distribution (WBITD) will now make MBC the first-run Middle East home to new television series distributed by US broadcaster.Under terms of the new deal, MBC will now have first-run access to all new TV shows distributed by WBITD from the 2008–2011 US television seasons.

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IMF: Nobody immune in global recession

The International Monetary Fund forecasts a prolonged, deep global recession, in a crisis that nobody will escape, with recovery slow and difficult. Weak capital flows to emerging economies in the downturn will hammer Eastern Europe in particular, the IMF said in a two chapter release of its twice-yearly World Economic Outlook (WEO), stressing that no country is immune from the global meltdown. "The current recession is likely to be unusually long and severe and the recovery sluggish," the multilateral institution said on Thursday. The IMF offered no timeline for a recovery from the first global recession in six decades. "There is some glimmer of hope that the stress is receding," said Stephan Danninger, an IMF economist. But he said any improvement would merely reduce 'extreme levels of stress' to still 'very high levels' of economic stress. Last month, the IMF predicted the first global contraction in 60 years, of between an annual negative rate of 0.5 percent and 1.0 percent in 2009. The world economy is expected to gradually stage a 'modest recovery' in 2010, with growth between 1.5 percent and 2.5 percent, the report says.

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Oil prices fall as reserve hit highest since 1990

Oil prices have fallen over news that US crude reserves have hit the highest level since 1990 due to low demand amid recession. New York's main futures contract, light sweet crude for delivery in May, fell 16 cents from its closing price on Tuesday to 49.25 dollars per barrel. London's Brent North Sea crude for May delivery lost 17 cents to settle at 51.79 dollars per barrel. The US government's Department of Energy (DoE) said crude stocks surged 5.6 million barrels in the week ending April 10 to 366.7 million barrels, the highest level since September 1990. The DoE report is a key focus for the oil market because the United States is the world's biggest energy-consuming nation, followed by China. The market was also dragged lower by official data showing that the US industrial production fell in March for the fifth consecutive month, by 1.5 percent, to the lowest level in a decade amid a prolonged recession. OPEC also revised down its estimate for world crude demand on Wednesday, saying a "devastating contraction" in consumption would keep prices under pressure in the months ahead. "In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," the Organization of Petroleum Exporting Countries wrote in its latest monthly report. OPEC estimated that demand would contract by 1.37 million bpd or 1.6 percent in 2009.

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Fed: US economy still weak

Economic activities in the United States contracted further or remained weak amid prolonged recession, the Federal Reserve says. An overall survey by the Federal Reserve found that in some industries, the economy continued to deteriorate; orders and shipments of paper, automobiles, wood products and electrical machinery across the country were down. Business travel was off, with officials in the Atlanta district reporting convention cancellations. Studies indicate that "overall economic activity contracted further or remained weak" although five of 12 districts surveyed noted a "moderation in the pace of decline," the report said. Several districts also "saw signs that activity in some sectors was stabilizing at a low level," said the report to be used by the Federal Open Market Committee, the central bank's policy-making body, at its next meeting on April 28-29. The current report, based on information gathered from early March until April 6, said residential real-estate markets continued to be weak. Bankers reported tight credit conditions, rising delinquencies, and some deterioration of loan quality. The labor situation was bad as employment continued to decline across a range of industries, with only scattered reports of hiring. "Wage and salary pressures eased as labor markets weakened in all districts, and many contacts continued to report job cuts and wage and hiring freezes," the report concluded.

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OPEC cuts oil demand forecast

OPEC has revised down its forecast for world oil demand this year, saying economic 'uncertainties' will keep the market under pressure. The Organization of Petroleum Exporting Countries (OPEC) lowered its estimate for the 2009 global demand by 430,000 barrels per day (bpd) to 84.18 million bpd. Demand will contract by 1.37 million bpd, or 1.6 percent, in 2009, in its latest monthly report on Wednesday. "In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial overhang in supply," OPEC said in its latest monthly report on Wednesday. This is the eighth successive month that OPEC has brought down its forecast for global oil demand as the economic downturn continues to slash demand growth. The group forecast a decline of 1.1 million bpd, or 1.2 percent, last month. "World oil demand is already out of its high demand seasonality achieving nothing but devastating contraction," the report said. Oil has dropped by almost $100 since hitting a record high of $147.27 a barrel in July as the global financial crisis sharply slashed demand. On Wednesday, US crude for May delivery was up 8 cents at $49.49 a barrel, off a session high of $50.79. Brent crude was down 32 cents at $51.64 a barrel. OPEC decided in a March summit not to cut its current production level at least until May 28, when the group meets in Vienna to re-evaluate the market. The 12-member body said it would instead push its members to 'comply fully' with earlier agreements to reduce oil output. OPEC agreed to cut production by 4.2 million bpd starting from September last year.

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US retail sales see surprise fall

Sales at US retailers fell in March after two months of rises, indicating that rising unemployment has reduced consumer spending. The Commerce Department said on Tuesday that total retail sales dropped 1.1 percent in March, after rising by 1 percent in January and 0.3 percent in February. The unexpected fall in March was due to declining purchases for items such as motor vehicles and electronic goods. US stocks opened lower after the report with the Dow Jones industrial average falling 47.63 points, or 0.59 percent, to 8,010.18. The Standard & Poor's 500 Index fell 3.77 points, or 0.44 percent, to 854.96. The Nasdaq Composite Index lost 5.17 points, or 0.31 percent, to 1,648.14. Two months of rise in retail sales had raised optimism that the world's largest economy was slowly recovering from the financial crisis. However, analysts believe the economic downturn is far from hitting the bottom considering the rising number of jobless claims. Sales of electronic goods saw the sharpest drop, falling 5.9 percent while vehicles and auto parts sales dropped 2.3 percent. A separate report from the Labor Department showed producer prices fell by 1.2 percent after two months of rises. Compared with the same period last year, producer prices were 3.5 percent lower, the largest decline since a 3.9 percent fall in 1950, the department said. Core producer prices, which exclude food and energy costs, remained unchanged in March. Energy prices fell by 5.5 percent in March, while food prices dropped by 0.7 percent.

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GM may face "surgical" bankruptcy

Struggling carmaker General Motors, operating under emergency US government loans, has been told to be prepared for a "surgical" bankruptcy by June. The Treasury Department is in negotiation with the world's second biggest automaker to reach an agreement on the issue, The New York Times reported Sunday. The newspaper said that Members of President Obama's automotive task force told GM officials that they should file the bankruptcy if the company is unable to reach agreement with bondholders. GM is in talks with bondholders and the United Autoworkers Union to reach a deal to exchange around 28 billion dollars in debt into equity in the automaker. The bondholders also have reacted to the reports, saying they are preparing legal arguments against the bankruptcy plan. The new plan comes as GM officials say the company can restructure its business on its own. They insist the company's image should not be damaged. GM has been granted 13.4 billion dollars in federal aid to avoid collapse. The task force has given GM the two-month deadline to come up with a restructuring plan and to cut costs and reduce its debts in order to continue to receive aid. Two weeks ago GM former chief Rick Wagoner resigned under the pressure of the White House, after more than eight years of running the largest US automaker.

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Toyota expecting $5b annual loss

Toyota Motor is expected to suffer a second consecutive annual loss as the financial crisis continues to affect the world's auto industry. The world's biggest automaker might suffer an operating loss of 500 billion yen ($5 billion) for the current fiscal year, which started on April 1, as the prospects of a recovery in the world's auto industry remains bleak, the Japanese daily Nikkei reported on Sunday. Toyota has already said it estimates an operating loss of 450 billion yen -- its first annual loss in nearly 60 years -- for the last fiscal year, which ended on March 31. The Japanese automaker's revenue is expected to fall from an estimated 21 trillion yen last year to around 20 trillion yen this year, the business daily said. The forecast is mainly due to the global financial crisis which has severely affected the US, Japan and Europe's auto industries and sharply slashed sales across the world. Toyota group auto sales are now estimated at 6.5 million vehicles for the current fiscal year -- which, if confirmed, would be the first time they have fallen below seven million units, Nikkei said. A strong yen against the dollar and the euro, which has lowered the competitiveness of Japanese products overseas, is another factor which is contributing to Toyota's second consecutive annual loss. Toyota sold 8.97 million vehicles last year to end American General Motors' 77-year run as the world's largest automaker.

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China draws electric car plans

China is to pay subsidies to car-buyers as part of a new strategy to support electric cars, says the country's vice minister of finance. Under the new strategy, unveiled in a Friday conference attended by several Chinese officials as well as car firms' executives, Beijing launches nationwide efforts involving car-producers, research institutes and government agencies to prevail over the technological and safety obstacles to develop electric cars. China will invest $146b in research on the field, while providing most of the subsidies to consumers, rather than car companies. “Otherwise the companies will just fight for subsidies," vice minister Zhang Shaochun said. He added that the government believes the market should decide which electric vehicle model would become popular. So the government is paying some research subsidies, while the main move will be to provide large subsidies for buyers of electric cars. “The fiscal subsidy gives voting rights to the consumer,” he said. Beijing has already provided up to 60,000 yuan, ($8,800), for purchases by taxi fleets and local government agencies. China's minister of science and technology, Wan Gang, said in the conference that the country needed 'to be sustainable in different sectors, particularly in the auto sector'.

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Sheikh Mohammed invites citizens and media to quiz him

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, has announced he will be holding an online question and answer session with residents and the media in a week’s time.The online ‘town hall’ meeting, as the event is being dubbed, will take place on Sheikh Mohammed’s official website www.uaepm.ae on April 18 – however questions can be submitted as of Saturday April 11. The move is part of Sheikh Mohammed’s “keenness to interact with the citizens and media”, said a statement posted on the official WAM news agency. Questions will be taken on the federal government, its strategy, direction, and the affairs of various ministers, Sheikh Mohammed will personally read the questions and post answers on the website on April 18.

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Spain: Gazprom monopolizing EU energy

Spain's Centro Nacional de Inteligencia has accused the Russian gas giant Gazprom of attempting to monopolize the energy supply to Europe. The Spanish agency CNI [National Intelligence Center] charges that Gazprom, which is a state-run company, is going ahead with a plan to "take control of energy sources beyond Russia's borders" in cooperation with other gas producers such as Iran, Algeria, Nigeria and Equatorial Guinea. According to the newspaper Publico, the agency concluded that recent energy deals between the company and some Latin American energy-rich states are in line with the plan. The CNI claims Russia, which meets the energy needs of many European countries, seeks to gain control of a pipeline project linking Nigeria to Europe. The Trans-Saharan Gas Pipeline project is planned to supply Europe with natural gas through Niger and Algeria. Gazprom recently announced its willingness to participate in the 4,400-kilometre Trans-Sahara gas pipeline project (TSGP). "We have the opportunity here to offer some solutions that we have come across. We have experience of running similar long, large-scale projects," said Managing Director of Gazprom in Nigeria Vladimir Ilyanin. Gazprom unveiled a plan to invest about $2.5 billion in infrastructure for the development and production of Nigerian gas.

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Germany expands car-scrapping scheme

The German government increases the budget for its car-scrapping plan with goal of turning over up to two million cars, not just 600,000. The government will triple the amount of money it originally set aside from 1.5b to 5b euros under a program which has been welcomed in the country. The new car purchase incentive scheme came amid signs that the German economy still suffers from the contraction of international demand, as new figures show the country's exports continued to fall for the fifth month in a row. The 2,500 euro bonus is for car owners who scrap cars at least nine years old and buy new ones. It was set up earlier this year in order to boost the country's auto industry as part of a wider 50b euro economic stimulus. The number of applications for car-scrapping in Germany increased by the end of last week to 1.2 million. The government meanwhile announced that the program would be expanded, but has not yet clarified the details. The German car industry, like those in many other countries, has been attempting to deal with a decrease in sales during the economic recession. Scrapping schemes are now in operation in Austria, Portugal, Italy, Spain and France, while the UK is reportedly looking into a similar program.

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"Russia banking problem just beginning"

Russia's banking crisis has only just begun, the chief executive of the country's largest bank says while slamming the government for its "slow reaction". The blunt comments by Sberbank Chief Executive, German Gref, came just two days after Prime Minister; Vladimir Putin said the threat to the banking system had receded. "A banking crisis in Russia is in its very beginning and it will come from the real (non-financial) sector of the economy," the RIA-Novosti news agency quoted Gref as saying at a conference. "Slow decision making and the weakening of regulatory requirements led to the accumulation of bad debts," said Gref, a former long-serving minister of economic development under Putin. In a speech to Parliament on Monday, Putin unveiled an economic recovery plan saying that a 3 trillion rouble ($90bn) aid package will ensure that Russia comes out of the economic downturn. Mounting economic troubles have cast doubt on the future of the government, whose popularity is largely based on the growth and stability achieved during Putin's eight-year presidency that ended in 2008.

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RBS to cut 9,000 jobs worldwide

British lender Royal Bank of Scotland (RBS) is to eliminate up to 9,000 jobs worldwide in order to repay a government bailout. The job cuts, half of them in the UK, are to be in the bank's back-office operations and represent more than five percent of RBS's global workforce. The Edinburgh-based bank said it plans to reduce costs by 2.5 billion pounds ($3.7 billion) to be able to repay a 20-billion-pound taxpayer bailout as soon as possible. The cuts are in addition to the 2,700 job losses already announced by RBS in Britain this year. RBS said in a Tuesday statement that the actual number of job losses might be 'significantly lower than this' and that compulsory redundancies will be used only as a last resort. "We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable," RBS Chief Executive Stephen Hester said in a statement. "To do so we need to cut our costs, as in all businesses, given the current recession." The British government increased on Tuesday its stake in RBS to 70 percent after investors shunned a rights offering. The whole company employs more than 170,000 people, of whom 106,000 work in the UK.

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Negative equity hits 70% of expat property owners in UAE

Seven out of 10 expatriates who own a property in the UAE have revealed if they sold it now they would lose money, according to the findings of a new study.

The research by market research firm Real Opinions found that four out of 10 UAE expatriates had bought property in the country, of which 22 percent had bought off-plan and still had further installments to pay.

Of these a quarter said it was unlikely that they would be able to make the next payment – highlighting the importance of job security in the region at present, according to CEO of the research firm, Dan Healy.

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OECD names tax havens, sparks protest

The OECD has published its blacklist of non-cooperative tax havens, drawing sharp criticism from the countries included in the list. 

The Organisation for Economic Cooperation and Development (OECD) placed Costa Rica, Malaysia, the Philippines and Uruguay on the blacklist, as part of efforts agreed at the G20 summit to crack down on tax havens. 

There is a second 'gray list' of 38 countries that have agreed to improve transparency standards but have not yet fully implemented them. 

The second list included European countries such as Austria, Belgium, Liechtenstein, Luxembourg, Monaco and Switzerland as well Cayman Islands, Chile and Singapore. 

OECD also published a 'white list' of 40 countries that have substantially implemented the internationally agreed tax standards. 

The Group of 20 leading industrialized and emerging nations pledged on Thursday to take action including sanctions against tax havens, using information from the OECD as its basis. 

Malaysia, the Philippines and Uruguay protested they had been wrongly included in the black list, saying their countries were committed to global OECD tax standards. 

In Europe, Austria, Belgium, Luxembourg and Switzerland complained of their inclusion on the gray list. 

Luxembourg Prime Minister Jean-Claude Juncker criticized the way the lists were drawn up and said his country's inclusion of any international list of offshore financial centers meant several US states with tax-friendly laws should also be put in the list.

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NGOs urge action, fairness for G20 summit

Commenting on the G20 summit, NGOs say that there is much more to be done to rescue poor countries from the worst of the global financial crisis. 

During Thursday's G20 meeting in London, world leaders agreed to a raft of measures to combat the global financial downturn, pledging to spend five trillion dollars by the end of 2010, with USD 1.1 trillion going to the IMF. 

The measures would see the sale of gold reserves to help poor countries, a new push to pass free trade rules, major reforms to the International Monetary Fund and World Bank, secretive tax havens named and shamed, and new rules on corporate pay. 

"We welcome the 1.1 trillion dollars for global economic recovery. But we must ensure that poor countries get their fair Share -- that Uganda benefits as well as Ukraine," said Oxfam spokesman, Duncan Green. 

This is while Greenpeace said the G20 had missed a chance to secure long-term environmental improvements, saying there were just 'vague aspirations'. 

"Long-term economic recovery is dependent on tackling climate change," said Greenpeace UK's executive director, John Sauven. 

"A full-blown climate crisis raises the prospect of mass migration, mass starvation and mass extinctions. It will make poverty permanent in the developing world and strangle growth in the developed." 

UK Prime Minster, Gordon Brown, noted that the G20 nations are committed to ward off economic catastrophes; however, he pledged 'no quick fixes', for the global financial crises.

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UN chief: Crisis may lead to social unrest

UN chief Ban Ki-moon has warned that failing to act to halt the global economic crisis could lead to widespread social unrest and failed states. 

"What began as a financial crisis has become a global economic crisis," the UN Secretary General wrote on Wednesday, in The Guardian newspaper, ahead of the G20 Summit in London. 

"I fear worse to come -- a full-blown political crisis defined by growing social unrest, weakened governments and angry publics who have lost all faith in their leaders and their own future." 

He said the global economic meltdown affected the poorest countries the most, and noted that in these countries "things fall apart alarmingly fast". 

"Unless we build a worldwide recovery we face a looming catastrophe in human development," Ban wrote. 

He called for a "truly global stimulus" package, and argued that developing countries need one trillion dollars over 2009 and 2010. 

"There is a thin line between failing banks and failing countries, and we cross it at our peril," he concluded.

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World leaders set to tackle economic crisis at G20

declare an end to unfettered capitalism at a G20 summit on Thursday after France and Germany demanded they act fast on promises to prevent a repeat of the worst economic crisis since the 1930s.

A communique drafted for release at a G20 summit in London, obtained by Reuters, signalled that leaders would submit large hedge funds to supervision for the first time and enhance regulation through a new agency and a beefed-up International Monetary Fund.

It included a pledge to deliver "the scale of sustained effort necessary to restore growth" without making any commitments beyond the trillions being spent to stabilise banks, shore up demand and limit job losses.

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Obama issues ultimatum for US carmakers

Barack Obama has issued an ultimatum for US carmakers urging them to hammer out a viable restructuring plan if they seek more federal aid. 

The US President on Monday insisted that US automakers should try to protect the ailing industry as it is 'an emblem of the American spirit.' 

Obama blamed the collapse of the industry on a failure of leadership 'from Washington to Detroit' over the past years. 

"And so today, I am announcing that my administration will offer GM and Chrysler a limited period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success," the president said at the White House. 

Obama has rejected to merely bailout the car industry, conditioning the federal aid on a major management overhaul on the part of the car industry. 

Less than an hour after the White House announcement, Chrysler revealed that it was forming a partnership with Fiat, while at General Motors Corp. new leaders took charge after the chairman was forced to step down. 

General motors said in a statement that the company would "address the tough issues to improve the long-term viability of the company, including the restructuring of the financial obligations to the bond holders, unions and other stakeholders." 

Earlier today, Democratic Senate Majority Leader Harry Reid had praised Obama's unwavering stance in handling the US auto industry issue. 

"We will not give these companies a blank check," the top Senator said. 

Reid hailed Obama's efforts to protect taxpayer's money that is expected to salvage the auto industry, expressing hope that the President's move would prompt the industry to build more fuel-efficient cars to ensure its long-term survival.

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