India to focus on economic growth

India's new government is to concentrate on economic growth and pro-poor policies over the next five years, President Pratibha Patil has said. In an address to both houses of the Indian parliament, Patil said the first priority was to oppose the effects of the global economic downturn, stressing financial reform and internal security. "The current financial year is expected to see a slowing down of growth on account of the global recession, she said. "Our immediate priority must be to focus on management of the economy that will counter the effect of the global slowdown." She added that the government would take steps to support foreign investment, provide public sector banks with more capital and introduce pension reform bills. The Indian president said that welfare schemes for farmers and better health facilities for rural areas will be highlighted in the plans of the Congress-led government. The growth of India's economy was limited to 6.7% in the year that ended March 31, while it grew 9% in the previous year. The Indian presidential speech, identifying focus areas for the five-year term of the government, is prepared by the prime minister and his cabinet.

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US pressing Nabucco scheme sans Iran

The US has made it clear that it does not support Iran's involvement in the Nabucco gas pipeline until Tehran 'changes its policies'. Richard Morningstar, the US special envoy for Eurasian energy issues, said that Iran can only join the gas pipeline undertaking after the normalization of ties between Tehran and Washington. He told a group of reporters in Ankara on Thursday that inviting Iran to the project without a resolution to the standoff over its nuclear program could "have a negative effect." "We don't want to change our policy unless Iran changes its policy," AP quoted Morningstar as saying. The pipeline is to link the Caspian Sea region, the Middle East and Egypt to the European Union via Turkey. The Nabucco consortium, which aims at decreasing Europe's dependence on Russian natural gas, has been unable to find sufficient gas supplies necessary for the feasibility of the project. Turkey, which is a member of the consortium, has repeatedly voiced its support for Iran's involvement in the project.

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Japanese companies cut capital investment

In the first quarter of 2009 Japanese companies cut their capital investment at the fastest pace in the last 54 years, a governmental survey says. The 25% decline from the same period in 2008 on plant and equipment followed a 17% fall from October to December last year, announced the survey by Japan's finance ministry that was released Thursday in Tokyo. Japan has been one of the major economies worst hit by the global downturn; export firms have been particularly affected by the drop in worldwide consumer spending. The Japanese gross domestic product (GDP) contracted by a record annual rate of 15% during the January-March quarter of 2009. Japan's Finance Minister Kaoru Yosano said Wednesday that the country's economy will probably begin growing again this quarter, echoing a prediction made last month by Bank of Japan Governor Masaaki Shirakawa. A growth of 1.6% in industrial output -- the first gain in six months -- led economists to predict a modest growth for the world's second largest economy in the coming months. Analysts are also optimistic about Prime Minster Taro Aso's $160B stimulus plan to boost consumption, which accounts for about 55% of Japan's GDP.

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England's Premier League revenues near $3.15B

England's Premier League has seen its profits grow by 26% during the 2007/08 season to nearly $3.15B (£2b), a report on football finances says. According to Deloitte's annual review of football finance, 11 of the 20 top English league clubs made an operating profit in 2007/08, up from eight a year before, despite the current financial crisis. The strong revenue growth surpasses the considerable salary growth in football clubs, which increased by 23% to £1.2B, the biggest annual growth in absolute terms registered by the Premier League. Based on figures from the 2007-08 season, the report suggests that the collective wages of England's 20 biggest clubs have increased by £227M (23%) to £1.2B. "In the season that has just finished [2008/09] we think the growth is going to be a little bit lower, but it is going to get clubs up to that magical £2b mark -- which is a remarkable achievement, an average of £100m a club in the Premier League," the report says. Alan Switzer, a director at Deloitte, said: "Lower revenue growth in forthcoming seasons means clubs will have to focus on improving cost control -- both wages and other operating costs -- if profits are to be maintained."

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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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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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