Treasury: GMAC will receive more aid

US Treasury Secretary Timothy Geithner says troubled lender GMAC will receive additional financial support from the government. "It's likely, again, that GMAC will need to take additional capital from the government and we'll be prepared to provide that," Geithner said in an interview with Reuters on Friday. Geithner made the remarks a day after the Treasury said GMAC, the former financing arm of automaker General Motors, needs to raise $11.5 billion in capital. Results of 'stress tests' released on Thursday showed that 10 of America's 19 largest banks need a total of $74.6 billion in new capital to boost their cash reserves in the event of a deeper economic slump. Geithner said there were signs that the economic downturn was coming to an end. However, he warned that there was still 'a long way to go' before the world's largest economy would have a full recovery. The Treasury has already provided $6 billion in aid to GMAC, which is a vital provider of loans for buyers of US-made cars. GMAC spokeswoman Toni Simonetti said the expected aid from the government was separate from any capital it would need to raise under the stress tests' results.

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'US economy to resume growth in 3rd quarter'

The US economy will resume growth in the second half of this year while the unemployment rate is expected to peak in 2010, a survey shows. The consensus forecast of panelists surveyed for the Blue Chip Economic Indicators newsletter for May, released on Sunday, put the inflation-adjusted gross domestic product (GDP) growth in the third quarter of 2009 at a 0.5 percent annual rate, compared to a month-earlier forecast of a 0.4 percent rise, Reuters reported. The US economy is predicted to grow 1.8 percent in the fourth quarter, the survey shows, compared with a 1.6 percent rise forecast a month ago. Although panelists expect the economic downturn to ease in the second quarter of this year, about 32 percent of them believe the US jobless rate will continue to rise through the year, peaking at 10 percent in the first quarter of 2010. The survey, conducted May 4-5, indicates a belief that the US economy will shrink 2.8 percent in 2009, which is worse than their April forecast of a 2.6 percent decline. The GDP will rise 1.9 percent in 2010, up from the 1.8 percent forecast in April. The May consensus forecast from the economists saw the second-quarter GDP contracting at a 1.7 percent annual rate, 0.4 percentage point better than was forecast a month ago. A US Labor Department report on Friday put the number of job losses at 539,000 in April, pushing the unemployment rate to 26-year high of 8.9 percent. However, the figure was less than analysts' forecast of 590,000 job losses and the March figure of 699,000 layoffs. Some economists believe the better-than-expected data hints that the recession in the US is bottoming out; economic activities are expected to gradually recover toward the end of the year.

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Record fine in line for Intel?

The US-Israeli chipmaker Intel could be in line for one of the biggest corporate fines in history when the EU announces its decision on its case at a meeting of commissioners. Britain's Financial Times reported on Sunday that the fines will be for what the European Commission considers anti-competitive behavior on the part of Intel, which is the world's biggest processor manufacturer. The Intel probe started in 2000, when its smaller rival, Advanced Micro Devices (AMD), filed a complaint with the EU Regulator about being pushed out of the market by Intel's practices. Following a long investigation and a number of raids on its offices, Intel was formally charged in July 2007 with misusing its dominant market position and offering illegal rebates to computer manufacturers, which had shut AMD out of the market. The European Commission carried out further raids in 2008 and accused Intel of using rebates to persuade a leading European retailer to sell only Intel-based personal computers. However Intel has rejected the allegations and has claimed "Our business practices are lawful, pro-competitive and good for consumers." The European Commission has not yet announced what fines it plans to impose on Intel, but it can impose financial penalties up to 10 percent of the company's annual sales. In 2008, Intel's sales amounted to $37.6 bn. As a result, EU competition commissioner, Neelie Kroes, can impose fines up to almost $4bn, although the maximum fine is unlikely. Another US computer giant, Microsoft, was fined about €1bn ($1.35bn) for failing to comply with a 2004 EU decision against it for monopolistic practices. Intel had been fined $21 million last June by South Korea's fair trade commission for anti-competitive conduct and in 2005 was found guilty of similar practices by Japan's fair trade commission. Intel has a giant manufacturing facility in Kiryat Gat in Israel, in an area that was ethnically cleansed of native Palestinians to make room for Israeli settlers. It is only 24 km (15 miles) from the beleaguered Gaza Strip. As a result, the company is the subject of anti-Israeli boycott campaigns for assisting the Israeli occupation and military.

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