EU banks refuse loans to firms doing business with Africa
ED CROPLEY JOHANNESBURG, SOUTH AFRICA - Nov 30 2011 11:12
Some European banks are now refusing to lend to firms trading with Africa, threatening growth in the world's poorest continent, a senior official of the African Development Bank (AfDB) said on Tuesday.
The AfDB is looking into ways of providing trade finance to firms doing business with Europe, where an inter-bank credit squeeze has driven up the cost of funding when it is available at all, chief economist Mthuli Ncube said on Tuesday.
The reluctance of some banks to make Africa-related loans as Europe's own debt crisis turns them increasingly risk-averse is an ominous sign as it repeats one aspect of the 2008 credit crisis.
"With the crunch in Europe the cost is creeping up and the willingness of the banks to extend the credit in the first place is also an issue," Ncube told Reuters in an interview.
In 2009, the Tunis-based AfDB clubbed together with the International Monetary Fund and South Africa's Standard Bank to provide commercial guarantees to keep imports and exports flowing smoothly.
Since then, the AfDB has received a massive $100-billion capital injection, most of which has been earmarked for infrastructure investment rather than trade finance. Ncube said that emphasis was likely to shift.
"With the credit crunch in Europe we maybe need to look at providing credit more directly," he said. "Trade finance is an area where we will intervene more visibly. It's something that we have not done a lot in the past but that is going to change."
Exports
Africa's trade with Europe was the only affected route, Ncube said, with the resource-rich continent's exports of minerals and hydrocarbons to the likes of China, India and North America flowing as normal.
He was unable to quantify the extent of the impact on European trade, but any sort of financing hiccup is likely to hit countries such as South Africa and Kenya, for whom Europe is the biggest trading partner.
CONTINUES BELOW
A European economic slowdown is already hitting demand for African exports. South Africa, the continent's biggest economy, sends a third of its exports to Europe, and Kenya more than 25%.
In 2008, Africa was largely insulated from the first round of the credit crisis triggered by a collapse in the US housing market, but felt the heat subsequently as commodity prices fell, direct investment dried up and Western aid budgets were trimmed.
Ncube said those latter situations were likely to happen again, while remittances from Africans abroad, which totalled $40-billion a year before the crisis, could drop if Europe slid into recession.
"As the economic slowdown continues, Africans working abroad will lose their jobs or become less secure, and so will send less home," he said. -- Reuters
Labels: AfDB, FINANCIAL CRISIS, GREAT DEPRESSION II
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COMMENT - Typical corporate stuff coming out of Reuters (whose shareholders also own Anglo-American De Beers and The Economist Magazine, which funded Mugabe And The White African). 'Debt-choked Greece' was sank by Toxic Assets from Goldman Sachs. Get rid of those toxic assets, and there is no budget problem.
Greece's government 'won't survive the night'
DINA KYRIAKIDOU AND LEFTERIS PAPADIMAS ATHENS, GREECE - Nov 03 2011 14:56
The Greek government teetered on the brink of collapse on Thursday over plans for a referendum on a eurozone bailout with turmoil in the ruling party casting grave doubt on whether Prime Minister George Papandreou and his government can survive a confidence vote.
Conservative opposition leader Antonis Samaras demanded that a transitional government be formed immediately to run the country until snap elections, with the current parliament ratifying the financial rescue for debt-choked Greece.
State television and the state ANA news agency said that Papandreou would meet the Greek president after an emergency Cabinet session on Thursday, without giving further details.
Papandreou would have to submit his resignation or a request for a unity government to President Karolos Papoulias.
Won't resign
Papandreou's chief-of-staff denied the prime minister intended to resign, although sources within his PASOK socialist party said some senior lawmakers wanted a Greek former top official at the European Central Bank (ECB) to head a new government.
"I don't think the government will last until tonight [Thursday]," said Costas Panagopoulos, managing director of pollsters ALCO.
Papandreou's surprise decision to call a referendum on the €130-billion bailout to save Greece from bankruptcy and prevent a global financial crisis provoked an uproar at home and across the eurozone.
Rejection of the package, which includes yet more austerity measures for the long suffering Greek electorate, would unravel the eurozone's plan for tackling its wider debt crisis and cut off Greece's international financial lifeline.
Finance Minister Evangelos Venizelos broke ranks with Papandreou, coming out against holding the referendum after a bruising meeting with the German and French leaders, who made it clear that Greece would not receive a cent more in aid until it votes to meet its commitments to the eurozone.
'Referendum is dead'
Chaos over Greece's role in the eurozone swept financial markets with early losses in stocks and the euro turning to gains on hopes Athens might ditch its referendum plans.
The Greek stock exchange rose 4% on speculation the referendum would be abandoned. World stocks, as measured by MSCI, were flat after earlier being sharply lower.
In Europe, the FTSEurofirst 300 lost 1% initially but later stood close to 1% percent higher. Earlier, Japan's Nikkei closed down 2.2%.
"The referendum is dead," Greek ruling party lawmaker Nikos Salayannis said on state radio.
The spectre of a hard Greek default and euro exit hung over a meeting of G20 leaders beginning in Cannes on Thursday.
The French Riviera summit had been meant to focus on reforms of the global monetary system and steps to curb speculative capital flows but the shockwaves from Greece have upended the global talks.
-- Reuters
Labels: FINANCIAL CRISIS, GREAT DEPRESSION II
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No Solution to The Eurozone Crisis
October Summit Agreement Spells Disaster
by CADTM
Global Research, October 29, 2011
CADTM
The agreement of the 26/27 October 2011 European summit meeting is unacceptable
The agreement made at dawn on the 27th October 2011 brings no solution to the eurozone crisis, neither to the banking crisis, the sovereign debt crisis or the euro crisis. The decisions taken do not solve any of the problems in an acceptable way, they only postpone them. CADTM considers this agreement unacceptable.
by Pascal Franchet , Yorgos Mitralias , Griselda Pinero , Eric Toussaint (CADTM Europe)
The heads of states, heads of governments, the leaders of the European commission (EC), the private banksters and the managing director of the IMF met in Brussels in order to find a solution to the risk of serial bankruptcies among Europe’s biggest banks, particularly French, Spanish, Greek, Italian, German, Portuguese and Belgian...
Those who, before and after 2007 - 2008, multiplied their risk taking behaviors to make short term profits for their shareholders and to give marvelous bonuses to their directors and traders. Domestic and business loans being only a small part of their turnover : between 2 and 5 %. The massive support they have received from the states, the ECB (European Central Bank) or the Fed (Federal reserve Bank of the USA) has not been used to stimulate the productive economy, it has been diverted to more highly speculative activities. Private banks are financed for the short term at the same time as they take on medium and long term engagements : public or private bonds, commodity futures, currency swaps and positions on derivatives that are not under any public control. The bankruptcy of the Franco-Belgian bank Dexia at the beginning of this month of October 2011 is the direct result of these policies. The fear of an oncoming domino effect in Europe and north America weighed heavily on the meeting of the 26/27th October 2011.
The decision to give Greek bonds in bankers possession a 50% haircut, as opposed to the 21% cut agreed on the 21st July, had become inevitable since August following their 65% to 80% price fall on the secondary debt market. Although the state leaders announced they had imposed important sacrifices on the banks, as usual the banks are coming out well. This explains why for the time being, bank stock in particular and the financial markets in general have shown important upward movements.
The 27th October agreement is not a solution for the Greek people who are suffering the full effects of the crisis, aggravated by the austerity measures the government has inflicted on them. This operation is entirely managed by the creditors and is in conformity with their interests.
This debt reduction plan is a European version of the "Brady plans" that had such devastating effects on the developing countries during the eighties and nineties. The Brady plan (named after the US Treasury secretary at the time) involved debt restructuring by exchange of bonds, in the principal indebted countries that took part. These were Argentina, Brazil, Bulgaria, Dominican Republic, Ecuador, Jordan, Mexico, Nigeria, Panama, Peru, Philippines, Poland, Russia, Uruguay, Venezuela and Vietnam. At the time, Nicholas Brady had announced that the volume of the debts would be reduced by 30% (in fact, the reductions, when they did happen, were much less ; in some cases, and not the least, debts even increased) and the new bonds (Brady bonds) guarantied a fixed interest rate of around 6%, which was very favorable to the creditors. This also assured application of austerity measures dictated by the IMF and the World Bank. Today, under other latitudes the same logic provokes the same disasters. The Troika (ECB, EC, IMF) imposes endless austerity measures on the Greek, Irish and Portuguese people. If there is no reaction from their people in time, others will have the same : Spain, Belgium, France...
This plan cannot validly permit Greece to resolve its problems for two reasons :
- 1. the debt reduction is totally insufficient ;
- 2. the economic and social policies applied in accordance with the Troika demands will fragilize the country even more. This characterizes the odious nature of these financial agreements with Greece, any future loans in this framework and the restructuring of the previous debts.
Greece must make a choice between two options :
- Throw in the towel and be again subject to the gauntlet of the Troika ;
- Refuse the dictatorship of the markets and the Troika in suspending the payments and by proceeding to a debt audit so that the illegitimate part may be repudiated.
Other countries are, or soon will be, confronted with the same choice : Spain, Ireland, Italy, Portugal... This list is far from exhaustive. In any case, these same policies are applied, in differing degrees, all over the EU. These austerity plans must everywhere be refused and citizen controlled audits of public debt put into operation.
The events of 2007 - 2008 have not incited governments to imposing strict prudential rules. On the contrary, measures must be taken to prevent financial institutions, banks, insurance companies, pension and hedge funds from causing further damage. Public authorities, company directors directly, or complicity responsible for the stock market and banking Kraches must be brought to justice, it is urgent to expropriate the banks and put them to the service of the common good by nationalizing them under worker’s and citizen’s control.
Not only must any form of indemnity for the shareholders be refused but they should also have there own wealth put to contribution to cover the cost of repairing the financial system. It is also necessary to repudiate the illegitimate claims that the private banks hold on public authorities. Of course a series of complementary measures must also be adopted : control the movements of capital, prohibit speculation, prohibit transactions going through tax havens, creation of taxes aimed at establishing social justice... In the European Union certain treaties, such as Maastricht and Lisbon must be repealed. It is also necessary to radically change the statutes of the ECB. Before the crisis gets to its worst it is high time to radically change direction. The CADTM supports, along with other organizations, the initiatives that have been taken in certain countries in favor of public debt audits under citizens control. The « Occupy Wall Street » movement has set a creative and emancipative ball into motion. It must be reinforced.
Translated by Mike Krolikowski
URL: http://www.cadtm.org, CADTM Europe (Comité pour l’annulation de la dette du tiers monde) is present in Greece, France, Belgium, Spain, Switzerland and Poland. In all, the CADTM network is present in 33 countries. The most recent CADTM book is : La dette ou la vie : Damien Millet – Eric Toussaint (coord.), ADEN, Bruxelles, 2011.
Labels: EURO, FINANCIAL CRISIS, GREAT DEPRESSION II
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COMMENT - Actually derivatives are securities whose value is derived from other securities. That would traditionally be all futures, warrants, and mainly options.
Figuring the odds
By Dr Guy Scott
Tue 16 Feb. 2010, 04:00 CAT
The financier Warren Buffet famously called them “financial weapons of mass destruction”; wildly successful currency speculator George Soros claimed that he did not trade in them because “we do not really understand how they work”. You can buy them now in Lusaka, from a highly respectable bank on Cairo Road. We are of course on to the subject of derivatives.
To make matters clear, I should here point out that when people talk about derivatives, especially in a worried way, they are talking about “custom-made” new-fangled derivatives. All sorts of “regular” financial instruments, including shares and insurance certificates, perhaps even a banknote, are strictly speaking derivatives; they derive their value as assets from underlying “fundamentals”. Both Buffet and Soros have a long history of dealing in such everyday derivatives, and have been accused of hypocrisy accordingly.
But, if we understand that their warnings refer to only certain types of instrument we perhaps have some chance of understanding their concern. This can be expressed as the worry that it is unavoidably difficult to compute the risk factors, and thence market value, of a new-fangled or one-off type of derivative, and if too much dependence is placed upon them as securities then big mistakes, big bubbles and bursts, will occur.
Some people think this is because the new stuff is too complicated to do calculations with but that is not really a problem if you are a big enough trader: you just hire a computer whiz or a mathematician (there is a book called Nuclear Physicists on Wall Street). No, the real problem exercising Warren and George has to do with elementary statistical theory; I will try and explain how in 1700 words, without any equations or graphs. If I succeed it may be some kind of record.
Every year I insure my car. The “actuarial value” of my insurance is less than what I pay for it; meaning that the “average” car-owning citizen pays out more in premiums than he/she claims in vehicle damage or loss. This excess of premium over actuarial value must be there otherwise the insurance company would not be able to operate, let alone at a profit. So why do I pay? Why do I part with more cash than the thing I am buying is worth? I do so because I wish to avoid the uncertainty, the nightmare scenario of a car theft or crash that keeps me awake at night; I am “risk averse” and I want to “hedge”, in the jargon, and am prepared to pay what it takes, essentially, for a good night’s sleep. Uncertainty is not equal to probability, especially since I am a damn good driver.
Now how does the insurance company know how much it is going to have to pay out in claims (and therefore how much it must charge in premiums)? Luckily, so long as it insures a sufficiently large number of cars, the past frequency of accidents and thefts gives a very good estimate of the mean probability per vehicle of accidents and thefts. This probability in turn is a good predictor of future frequency! In other words, for large numbers frequency and probability are very close together and can be used as estimates for each other.
This is not true when numbers are small however. An insurer who insured only ten vehicles (or ten houses or ten lives) could easily make a roaring profit one year and go bust the next. With small numbers, frequency and probability lose their intimate connection. But for an insurer who insures tens of thousands of cars, lives, houses or whatever, that intimate connection is there and he/she is assured of a financially stable if boring life.
Let me illustrate this difference between large and small by simulating on a computer (in Microsoft Excel) the outcomes of repeatedly tossing a coin various numbers of times. (If you do not know what a coin is ask your grandparents). Each “run” I toss the coin ten times (and do a trial of ten runs); this yields the following numbers of heads: 4, 6, 4, 7, 4, 3, 2, 6, 5, 4. The expected number of heads, based on a probability of 0.5 is exactly five each time – but this is the frequency on only one run! Frequency varies across the ten trials between 0.2 and 0.7. You cannot get a reliable estimate of the probability from observed frequency on a single small run.
Now if I do a simulation of coin tossing 100 times per run (with ten runs) I get the following numbers: 54, 49, 54, 52, 46 45, 51, 45, 42, 46. The frequency is running much closer to 0.5, staying comfortably between 0.4 and 0.6. If I toss the coin 1000 times the observed frequency hugs 0.5 very much more closely still.
One of the core difficulties with the “custom-made” derivatives, it seems to me, is a problem of small numbers. Small numbers (some derivatives are designed for only one customer) make it difficult to work out the underlying probabilities. Also, the magical effect of large numbers in insurance, where people paying premiums provide the money for those making claims at any one time, is not there. The derivatives currently being “custom made” in Zambia are in some respects like insurance policies.
For example, a producer of, let us say, sweet potatoes (I think this is an imaginary example as it should be) is worried that the export price for his commodity when sold south of the Zambezi is (a) likely to fluctuate in Rand terms and (b) in kwacha terms may be adversely affected by appreciation of the Zambian (ZMK) relative to the Rand. So he negotiates a contract (which may be in more than one part) with the derivative supplier (“the bank”) under which the bank guarantees a floor price in kwacha; in exchange the bank sets a ceiling price, above which it takes the excess. This is called a “collar”. What is relevant is the fact that, while there is a long history of insuring against all kinds of eventualities in Zambia (including even hail and drought) there is no history of insurance against negative market conditions (unless you count Government’s loss-making interventions in the maize market).
Regular insurers have steered clear of commodity markets for good reason. Only some farmers are hit by hail in any one season, droughts are similarly localised, but a depressed market affects everyone: there are no “lucky” punters to pay out the “unlucky” ones. And there is no simple frequency counting to determine probabilities: but it is probabilities that determine the value of the derivative to the bank, or to someone to whom the bank sells it as a security.
Note that problems with underlying value of a derivative on the securities markets do not affect its value to the customer, who entered into the contract on the basis of evading risk and getting a good night’s sleep. Hedging is good and the actuarial value is not his concern (so long as the bank does not go bust). Nor would derivatives much affect the stability of the banking system in Zambia; unless they came to be a substitute for more easily valued assets, as happened in the world banking system before the crash.
So far as I can establish the types of hedging done in Zambia currently include: FX forwards, cross currency swaps (CCS), Interest Rate Swaps (IRS), FX Options, call (buy), puts (sells), collars (buy and sell). Though some of it sounds like gobbledegook it probably makes sense: you just need to find someone in the know to explain it to you if you are having sleep problems.
Plan B, if you are trying to discover the probability of something, is to work it out from first principles. In the case of the physical tossing of a physical coin, you do not have to observe frequencies nor be a red hot engineer to figure out that, give or take some tiny effects due to distortion or wear and tear of the coin the odds of a head or a tail are equal i.e. the probability of either is 0.5. Though more complex, clever people can look at the underlying factors driving commodity prices, and that of sweet potatoes in our example, and come to some estimate, all factors considered, of how prices might move. This is chancy, however, given the complex dynamics of commodity markets and the role of externalities (such as recession). And even simple mechanical devices can spring surprises as the following true story illustrates!
Joseph Jagger was an English engineer of the 19th Century who had an intuition that roulette wheels, if made to a poor standard, would not produce equal probabilities of the little ball ending up in each of the 38 slots in the wheel. His conjecture appears to have concerned the inaccuracies in the machining of the “frets” – the little metal plates that separate the slots. If some stood higher than others they would cause bias in the destination of the ball.
In 1873 he hired six clerks to clandestinely record all the numbers that came up from the six roulette wheels in the main casino in Monte Carlo over a period of weeks. Upon analysis he discovered from the frequencies that one of the wheels showed a distinct bias towards nine numbers: 7, 8, 9, 17, 18, 19, 22, 28, and 29. He immediately moved to Monte Carlo and started betting heavily on these numbers. It took the management some time to notice what was going on and he made money heavily.
Management eventually twigged and moved the wheels around at night, causing Jagger to lose money until he rediscovered his biased table. In the end the management took to moving the frets around each day; finally confounding Jagger. So he took his winnings – about USD5 million in today’s money – and invested it wisely. Other punters who had emulated Jagger’s bets also took large sums home with them. Although others have laid claim to the title, Jagger (who is supposedly an ancestor of Mick the Rolling Stone) was the genuine Man Who Broke the Bank at Monte Carlo. And gave a lesson in very practical statistics to us all.
Labels: FINANCIAL CRISIS, GUY SCOTT
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SADC must regulate financial markets says -Ligoya
By Nyasa Times
Published: September 17, 2009
The Southern African Development Community must maintain a high standard of financial markets’ regulation to limit the impact of the global economic crisis, Malawi’s central bank Governor Perks Ligoya said on Thursday.
Ligoya told financial sector professionals from the 15 member countries of the SADC that recent global developments highlight the importance of effective regulatory regimes in capital markets.
“Many countries in the developed world are now calling for a review of the regulatory infrastructure because the general feeling is that (ineffective regulation) caused the financial crisis,” Ligoya said.
The world economy is in a recession brought on by a financial markets’ crisis that has its roots in the sub-prime mortgage industry in the United States.
This week marks a year since the failure of large investment bank Lehman Brothers, which spread panick and exacerbated the global slowdown.
Ligoya said misguided regulation can have adverse impact on the financial sector and economies in the region.
“It is for this reason that SADC must maintain high standards of regulation for our financial markets,” said Ligoya, who was appointed as governor for the central bank on Monday.
The global economic slowdown has hit the world’s poorest continent and international financial institutions slashed Africa’s growth rates from around seven percent to below two percent.
The SADC Committee of Insurance, Securities and Non-Banking Financial Authorities is meeting in Malawi to discuss the impact of the global financial crisis in the region and harmonise legislation of capital markets.–Reuters (Editing by Phumza Macanda)
Labels: FINANCIAL CRISIS, GREAT DEPRESSION II, PERKS LIGOYA, REGULATION, SADC
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Banks are liquid, says former BoZ director
Written by Fridah Zinyama
Thursday, November 27, 2008 11:55:34 AM
FORMER Bank of Zambia (BoZ) financial director Richard Chembe has assured the business community in Zambia that commercial banks have enough liquidity to continue lending despite the global financial crisis.
And BoZ governor Dr Caleb Fundanga has said there is need to heavily invest in hydropower generation to meet the country’s consumption demands and export surplus power in place of copper.
In an interview, Chembe, who was recently appointed President Rupiah Banda’s economic advisor, said commercial banks had enough liquidity to lend each other and the private sector.
“The banking sector in Zambia is quite liquid and there should not be any concerns about whether the private sector will continue to get loans to invest or recapitalise their businesses,” he said.
Chembe said there was interbank borrowing going on and banks were quickly paying back the loans they were getting from each other.
“All the banks in Zambia are not holding any toxic assets that are linked to the international market,” he said. “If the scenario was different, then we would have concerns on the banks’ liquidity and their ability to continue lending to each other and the private sector.”
Chembe therefore said the international banks operating locally were insulated from what was happening in their countries of origin.
And Dr Fundanga said Zambia has so much water resources that could be used to generate power which is in high demand in the region.
“As a country, we are in need of power but I strongly believe that if we heavily invested in hydropower generation, we would have enough power to meet our needs and have surplus electricity to export,” said Dr Fundanga.
“Even as copper prices keep on fluctuating, we need alternative exports that can earn the country the much needed foreign exchange.”
Labels: BANKING, BOZ, CALEB FUNDANGA, FINANCIAL CRISIS, RICHARD CHEMBE
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(Mailing List) Robert Shu's China Strategy Newsletter
By Robert Hsu, Editor, China Strategy
Fellow Investor,
Just because Barack Obama won the election, doesn’t mean this credit crisis is now over, that housing prices will automatically rebound, or that the stock market will hit new heights.
On the contrary, it's about to get a whole lot uglier, and there’s nothing the President-elect can do to stopping it.
If you don’t reposition your assets now, as I’ll show you in tonight’s issue (posted online), the continuing financial collapse could wipe out what’s left of your wealth.
Here’s why…
The banking crisis, the liquidity squeeze, and the collapse in home prices has sent investors fleeing U.S. stocks as if by being chased by the running of the bulls in Spain.
The result has crushed the U.S. financial system, triggered a $700 billion bailout, and led to the demise of many hallowed financial institutions—blindsiding U.S. investors who have been told that “everything would be OK with President Obama at the controls. ”
And that’s not even the half of it
The financial crisis has now spilled over to Europe, Russia, Latin America and Asian markets. Which is why European and U.S. central bankers coordinated a global rate cut of epic proportions.
And now with the International Monetary Fund estimating US loan defaults could hit $1.4 trillion in short order, it’s no wonder why foreign investors are avoiding ALL U.S. investments at all costs and are piling into China stocks hand over fist—despite Obama’s stunning victory.
The reason is simple:
China is the only country that’s not only growing but also has the financial muscle to pull the world out of this economic mess.
You needn’t take my word.
World Bank President Robert Zellick said the same thing on October 8th. What’s more, experts estimate that China’s growth will hit 8.5% for 2009 and accelerate to nearly 9% again in 2010.
On top of that, the Asian Development Bank estimates that China’s trade surplus and surging capital inflows will not only increase the country’s liquidity but also result in faster appreciation of the yuan against the dollar.
Do you realize what this means?
As the Fed hands out money like pancakes at a fireman’s picnic, more foreign investors are going to flee U.S. stocks and head straight for China where they will profit not only from economic growth but also from currency appreciation as well.
And the result will enrich those investors who understand that capital flows to the highest return in good times and bad…
…and are taking this opportunity to scoop up world-class assets at 40%, 50%, even 70% off their past highs in advance of the pending recovery.
That’s why it’s crucial that you add our top China stocks to your holdings now and why I’ve sent you this Special Alert.
If you can buy our top stocks today—while they’re still bargains—you could be looking at 20% to 40% gains in the next 12 months as the flight to safety lands squarely in China.
Details in tonight’s China Strategy.
What the Government Isn’t Telling You Could Send You to the Poorhouse …
…or Make You Wall Street’s Next Millionaire
I’m Robert Hsu, and as you’ve suspected, you’re not getting the full story on the continuing credit crisis from the U.S. government or the Fed.
The shocking truth is that Bernanke’s monetary policy and the Fed’s bailout plan has flattened economic growth like a mud hut in the middle of a hurricane.
The long-term results are so disastrous for U.S. markets, that foreign investors are now saying “thanks, but no thanks” to U.S. stocks—despite their love affair with Barack Obama.
The reasons are simple:
Foreign investors know the U.S. stock market won’t come back for some time. They know that layoffs in the U.S. manufacturing jobs will result in new hires in China. They also know that as U.S. growth slows, China growth will drop too—but to nowhere near U.S. levels.
In fact, our research shows that China growth will hit a mind-boggling 8% in 2009.
To be sure, that’s less than the sizzling hot years of 11% annual growth, but compared to the negative U.S. growth next year, you don’t have to be a computer scientist to know where the big money will be made in the next two years.
What’s more, foreign investors also know something that Obama and his team of advisors would never admit: that unlike the U.S. banking system, the Chinese banking system is much safer now—with none of the exposure to the subprime mess.
In fact, most U.S. investors don’t know this, but the Chinese banking system is dominated by four big state-owned banks—banks backed by the world’s largest foreign reserve that can write a check anytime they want—and without Congressional approval or bickering!
And with $1.4 trillion in cash sitting in their banks, there’s no liquid crisis in China. The Chinese government can write a check anytime they want—and it will clear!
Which is why the smart money is flooding into China at light speed, with investors cherry-picking world-class Chinese companies for pennies on the dollar.
And if Warren Buffett’s $230 million investment in China’s leading car and manufacturing company is any indication of the opportunity at hand, this is a situation you can’t ignore.
Which is why…
You Must Reposition Your Assets Now
Let me sum up the dangers and the opportunities:
Obama’s proposed bailout plan is sending U.S. stocks into the tank. The giant sucking sound you hear are foreign investors who are fleeing U.S. markets in search of safer and higher returns.
The result has slowed U.S. and global growth, forced energy prices to fall to eight-month lows, and triggered a global rate cut of epic proportions.
The chain reaction will make the US stock market even less attractive to U.S. investors…as the combination of low energy costs, low interest rates, and a stable banking system drives more investment into China.
If you can take a small position in just one of our top China stocks—before the flood of cash begins in earnest—I guarantee you’ll not only thank me 1000 times come this time next year…
…but I’ll win you as a subscriber for life.
Details in tonight’s issue.
Your Timing Is Perfect
As U.S. investors continue to hide in panic, shrewd investors like you and me are going to make a bundle as investment in China surges and the country uses its newfound capital to build more roads, bridges and infrastructure at record pace.
You needn’t take my word, a recent report by McKinsey Global Institute will tell you the same thing:
“In 20 years, China’s cities will have added 350 million people—more than the entire population of the United States today.”
“By 2025, China will have 221 cities with more than one million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.”
“By 2030, 1 billion people will live in China’s cities…170 mass-transit systems could be built…40 billion of square meters of floor space will be built in five million buildings—50,000 of which could be skyscrapers.”
In other words, as China transforms itself from a nation of farmers to a nation of urban dwellers, the equivalent of 10 New York cities will need to be built, and in doing so will richly reward U.S. investors who invest now.
Truth is, China will continue to grow…
Despite the collapse in the U.S.
Despite the failure of the U.S. banking system
Despite the demise in the U.S. housing market
The reason is simple:
With 8% growth, China’s economy is still growing like a weed. Its standard of living is on the rise. And its people are spending like there’s no tomorrow: buying into a much richer lifestyle, filled with cell phones, big-screen TVs, and cars—the same things we Americans take for granted.
When you consider that by the year 2025 China will have 221 cities with more than one million people living in them, you can only imagine the kind of money that is going to be made, as China’s newfound consumer class enters the marketplace and replaces the American consumer as the supreme driver of world growth.
All thanks to infusion of cash from foreign investors that’s going on behind the scenes now.
Tragically, the financial media is missing this investment story by a country mile. That’s because they’re blinded by the daily ups and downs in the Dow and simply can’t see beyond U.S. borders.
And since by all accounts “China’s growth is dead,” Wall Street’s analysts are not only missing this story…
…but also U.S. investors are missing out on huge profits that are headed this way.
And I’d like to help you grab your share.
For more than a decade, I’ve been helping my readers and clients grow steadily richer investing in Asia.
And I can tell you with unmatched certainty that if you invest alongside us now—while Wall Street is looking the other way—you’ll be in a superb position to pyramid your wealth as the coming capital infusion triggers a second wave of growth to hit China.
In fact, since I’ve been telling my readers about China’s next phase, our individual stocks have banked up to 130% profits…while our total holdings have beaten the S&P 500 by more than $4-to-$1 in 2007.
But even these great gains will pale in comparison to what lies ahead as China continues to build more factories, more roads, more bridges and more skyscrapers.
When you consider the U.S. economy is projected to contract next year while China is on track to grow at 8%, you don’t have to be an Einstein to know that the surge in China stocks will form the foundation for a turnaround in the U.S. stock market as many leading China stocks are traded right here on the NYSE and NASDAQ.
The bottom line is this:
In a world that’s been crippled by the U.S. financial crisis, the Fed bailout and collapsing consumer and investors confidence, the flood of capital pouring into China will not only put powerful upward pressure under the stock prices of companies that are fueling China’s new growth…
…but also change the face of Wall Street forever.
Which is why I’m telling my readers to expect…
20%—40% Profits in the Next 12 Months
Here’s where the biggest profits will be made:
Profit From China’s Thirst for Oil:
Our top oil stock here has handed my readers 30% gains so far. Our newest recommendation could be even bigger. Two reasons: 1. Rising oil prices, and 2. China’s dependence on foreign oil to fuel its growth.
When you consider that China’s dependence on energy exports is expected to increase significantly over the next 20 years and it is projected that China will need to import at least 60% of its oil and 30% of its natural gas by 2020…
… you can see why I’m confident our oil strategy ALONE will make you 20%-40% richer in the next 12 months alone. Details here.
Profit From China’s New Housing Boom:
As Chinese workers invest their newfound wealth, their first goal is to own their own home.
Our top company in this sector is China’s leading real estate services company, whose earnings have not only risen an incredible 84% in the last quarter, but whose revenue has jumped 79%
In tonight’s issue (posted online), you’ll read how the company’s transactions grew fivefold in the past year and why we see the company repeating its two-month gains of 70% that it enjoyed in 2007.
Profit From China’s Love for Cell Phones and All Things Wireless:
Make no mistake about it, China leads the world in telecom growth. By 2010, half of the world’s 1 billion global subscribers will be located in China.
This is what makes our top China telecom a great play for American investors. It’s not only a state-run oligopoly but also has handed us 74% gains since we bought it.
Our most recent update, now posted online, brings you the full story on all of our current holdings and why we’re banking on another 50% profits by year’s end.
As you’ll see…
The Biggest Move Will Come
in the Next 15 Days
As you know, nobody rings a bell to tell you when the big buying wave will begin, but I can tell you this:
Our time-proven, momentum-based stock-picking system continues to deliver profits for our readers, not only beating the market by more than $8-to-$1 since 2005…
…but also thrashing the market by $7-to-$1 last year, specifically with 35% returns vs. 5% for the Dow.
Our biggest winners to date include:
CNOOC, +30%
Ctrip, +30%
Aluminum Corp of China, +285%
New Oriental Education, +133%
Mindray Medical, +41%
Sinopec, +58%
SPDR Gold, +30%
Apple, +118%
Las Vegas Sands, +52%
Yum Brands, +15%
Now with China’s second wave set to deliver even greater growth, even these great gains could look like a drop in the bucket.
Frankly, no other investment newsletter advisory in the world knows the China market like we do, spends as much money on research as we do or makes as much money in China as we do.
Which is why I can tell you with unmatched certainty that our research shows there’s a buying wave forming within the next 15 days.
That is also why you can invest in our recommendations with confidence that you’ll grow 20%-40% richer in the next 12 months.
My $99 Trial Guarantees
You’ll Profit or Pay Nothing
Look…
A regular one-year subscription to my China Strategy service costs $199.
However, because my research shows the big move on these stocks will be coming in the next 15 days, my publisher has let me open the door to a limited number of trial subscriptions for just $99, along with our “profit or pay nothing” guarantee.
By simply accepting my trial offer today, you get to…
Try China Strategy risk-free
Profit from Wall Street’s turnaround
Bank your profits and decide on your own terms
And that’s just the beginning.
You’ll also receive five FREE bonus reports:
5 Stocks to Buy Now
China’s Golden Age: Companies Cashing In on China’s Next Generation
China’s 5 New Energy Opportunities
Wall Street’s Biggest Losers: Stocks to Avoid
The Chuppie Strategy
Once you receive everything, you will understand why my approach has not only delivered $8-to-$1 gains since 2005…
…but also beat the market by $7-to-$1 last year…
…and why nobody makes more money investing in China than we do.
Window of Opportunity
Closes at Midnight
When it comes to China, the big money is always made when most investors are looking the other way. Frankly, it’s been that way for the past 120 years. It will continue to ring true for the next 20 as well.
With all eyes on the U.S. economy NOW, you couldn’t ask for a better time to add our top stocks to your holdings—before free-market forces smell a turnaround and bid our stocks higher and higher.
That’s why my offer to join me expires tonight.
My China Strategy service is for investors who understand the great opportunities that lie in China RIGHT NOW and are willing to act on my recommendations—and without reservation.
If you can’t make up your mind before midnight on my $99 money-back trial, chances are you won’t follow our recommendations, and you would take away a slot from an investor who would profit from our advice.
Which is why my window of opportunity expires tonight.
That’s why if you are serious about profiting from China’s second wave and are willing to take me up on my special offer today …
… I guarantee you’ll be the first in line to profit from Wall Street’s China-driven turnaround, or you won’t pay a dime.
And the best part is, you have nothing to risk by accepting my invitation today.
Join me now. I guarantee it will be the best financial decision you’ll make in 2008.
Sincerely,
Robert Hsu
Editor, China Strategy
P.S. If you’ve read this far and decided not to grab my $99 offer and profit from China’s second wave, please remember this:
China will continue to grow at 8% in 2009…
Despite the collapse in the U.S.
Despite the failure of the U.S. banking system
Despite the demise in the U.S. housing market
As one of my readers, you’ll not only be first in line to catch the next wave of China profits, but also find yourself 20% to 40% richer in the next 12 months.
Today’s issue and your free report reveal why, and promises you’ll profit or get your money back.
-------------------------------------------------------------------------------------
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Labels: CHINA, COPPER, FINANCIAL CRISIS, RECESSION, ZOELLICK
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In Praise of a Rocky Transition
Lookout
By Naomi Klein
The more details emerge, the clearer it becomes that Washington's handling of the Wall Street bailout is not merely incompetent. It is borderline criminal.
In a moment of high panic in late September, the US Treasury unilaterally pushed through a radical change in how bank mergers are taxed--a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140 billion in tax revenue, lawmakers found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that "Treasury had no authority to issue the [tax change] notice."
Of equally dubious legality are the equity deals Treasury has negotiated with many of the country's banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals, "Any use of these funds for any purpose other than lending--for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc.--is a violation of the act." Yet this is exactly how the funds are being used.
Then there is the nearly $2 trillion the Federal Reserve has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg News believes that this secrecy violates the law and has filed a federal suit demanding full disclosure.
Despite all of this potential lawlessness, the Democrats are either openly defending the administration or refusing to intervene. "There is only one president at a time," we hear from Barack Obama. That's true. But every sweetheart deal the lame-duck Bush administration makes threatens to hobble Obama's ability to make good on his promise of change. To cite just one example, that $140 billion in missing tax revenue is almost the same sum as Obama's renewable energy program. Obama owes it to the people who elected him to call this what it is: an attempt to undermine the electoral process by stealth.
Yes, there is only one president at a time, but that president needed the support of powerful Democrats, including Obama, to get the bailout passed. Now that it is clear that the Bush administration is violating the terms to which both parties agreed, the Democrats have not just the right but a grave responsibility to intervene forcefully.
I suspect that the real reason the Democrats are so far failing to act has less to do with presidential protocol than with fear: fear that the stock market, which has the temperament of an overindulged 2-year-old, will throw one of its world-shaking tantrums. Disclosing the truth about who is receiving federal loans, we are told, could cause the cranky market to bet against those banks. Question the legality of equity deals and the same thing will happen. Challenge the $140 billion tax giveaway and mergers could fall through. "None of us wants to be blamed for ruining these mergers and creating a new Great Depression," explained one unnamed Congressional aide.
More than that, the Democrats, including Obama, appear to believe that the need to soothe the market should govern all key economic decisions in the transition period. Which is why, just days after a euphoric victory for "change," the mantra abruptly shifted to "smooth transition" and "continuity."
Take Obama's pick for chief of staff. Despite the Republican braying about his partisanship, Rahm Emanuel, the House Democrat who received the most donations from the financial sector, sends an unmistakably reassuring message to Wall Street. When asked on This Week With George Stephanopoulos whether Obama would be moving quickly to increase taxes on the wealthy, as promised, Emanuel pointedly did not answer the question.
This same market-coddling logic should, we are told, guide Obama's selection of treasury secretary. Fox News's Stuart Varney explained that Larry Summers, who held the post under Clinton, and former Fed chair Paul Volcker would both "give great confidence to the market." We learned from MSNBC's Joe Scarborough that Summers is the man "the Street would like the most."
Let's be clear about why. "The Street" would cheer a Summers appointment for exactly the same reason the rest of us should fear it: because traders will assume that Summers, champion of financial deregulation under Clinton, will offer a transition from Henry Paulson so smooth we will barely know it happened. Someone like FDIC chair Sheila Bair, on the other hand, would spark fear on the Street--for all the right reasons.
One thing we know for certain is that the market will react violently to any signal that there is a new sheriff in town who will impose serious regulation, invest in people and cut off the free money for corporations. In short, the markets can be relied on to vote in precisely the opposite way that Americans have just voted. (A recent USA Today/Gallup poll found that 60 percent of Americans strongly favor "stricter regulations on financial institutions," while just 21 percent support aid to financial companies.)
There is no way to reconcile the public's vote for change with the market's foot-stomping for more of the same. Any and all moves to change course will be met with short-term market shocks. The good news is that once it is clear that the new rules will be applied across the board and with fairness, the market will stabilize and adjust. Furthermore, the timing for this turbulence has never been better. Over the past three months, we've been shocked so frequently that market stability would come as more of a surprise. That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first. Few will be able to blame him for a crisis that clearly predates him, or fault him for honoring the clearly expressed wishes of the electorate. The longer he waits, however, the more memories fade.
When transferring power from a functional, trustworthy regime, everyone favors a smooth transition. When exiting an era marked by criminality and bankrupt ideology, a little rockiness at the start would be a very good sign.
About Naomi Klein
Naomi Klein is an award-winning journalist and syndicated columnist and the author of the international and New York Times bestseller The Shock Doctrine: The Rise of Disaster Capitalism (September 2007); an earlier international best-seller, No Logo: Taking Aim at the Brand Bullies; and the collection Fences and Windows: Dispatches from the Front Lines of the Globalization Debate (2002). more...
Labels: BARACK OBAMA, FINANCIAL CRISIS, GW BUSH, NAOMI KLEIN, NEOCONSERVATISM, NEOLIBERALISM, RECESSION
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Global financial crisis could affect Africa, observes AfDB
Written by Kabanda Chulu
Thursday, November 13, 2008 6:03:36 PM
THE African Development Bank (AfDB) has observed that Africa needs to position itself onthe international financial scene through its response and regulatory measures.
In a statement ahead of today’s high level forum for African Ministers of Finance and Central Banks Governors being held in Tunisia, aimed at discussing the global financial crisis and its potential impact on African economies, the AfDB stated that there is need to mobilise Africans with a view to seeking an answer to the global financial crisis.
“The African continent must also be present in the new architecture that is emerging on the international scene. It is in this context and on the initiative of the AfDB, the African Union and the Economic Commission for Africa that this meeting must take place to seek ways of resolving these issues,” it stated.
And AfDB president Donald Kaberuka expressed concern that Africa could still be seriously affected by the global financial crisis if it records a decline in exports resulting from a downward spiral in world economic growth. Kaberuka reiterated that the African continent has so far been spared by the crisis.
“We are still not safe because the continent can be seriously affected by a downward spiral in global economic growth and a decline in its exports,” he stated.
He warned that budgetary constraints resulting from emergency measures adopted by developed countries to protect their economies would result in reductions in Overseas Development Assistance (ODA).
“The economic slowdown in developed countries can also result in lay-offs and a hardening of policies on foreign migration that can lead to a drastic reductions in monetary transfers by African workers in the developed world,” stated Kaberuka
The AfDB, together with the African Union (AU) and the Economic Commission for Africa (ECA), are today hosting a high-level forum for African Finance Ministers and Central Bank Governors on the global financial crisis in Tunis, Tunisia.
The summit’s objective is to help find a solution to the crisis. Policy makers would discuss the impact of the crisis on the continent and are expected to propose possible solutions to it, considering that it affects the whole continent.
Labels: AfDB, ECA, FINANCIAL CRISIS, RECESSION
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Africa strong despite financial crisis, observes Senegalese minister
Written by Larry Moonze in Havana, Cuba
Friday, November 07, 2008 3:47:32 AM
SENEGALESE commerce minister Mamadou Diop Decroix has said Africa is alive to the international financial crisis but remained strong.
In an interview here where he is leading an official Senegalese delegation to this year’s Havana International Trade Fair (FIHAV), Decroix said there was a paradox on the issue of the current global financial meltdown whose epicenter was the United States of America.
“Sub-Saharan Africa may not very much be concerned about this crisis because we simply are not part of world trade,” he said. “I mean we are not part of world affairs, we are not into that ground, although there could be some aftershocks to hit our economies.”
Decroix said African countries had been crying for space into international trade but to no avail.
He said as the situation stood today one could simply affirm that, “if things are bad we are still not there, but we will be touched by this crisis to a certain level.”
Decroix said Senegal was very interested in fostering strong economic and cultural relations with Cuba.
He said Senegal was interested in enjoying benefits from a various productive sectors of the Cuban economy.
Decroix said he met Cuban foreign trade minister Raul de la Nuez with whom he discussed mutual exchanges between Senegal and the Economic Community of West African States (ECOWAS).
“We believe there are many opportunities in Cuba, particularly in medicines,” he said.
Decroix said Senegal was interested in Cuban diabetes and malaria drugs among other pharmaceutical products and prevention techniques.
“We discussed the Cuban energy saving experience which is very good,” he said.
Decroix said Senegal was also interested in Cuban cultural sector especially now that his country was preparing for an international cultural festival.
And Decroix said Senegal was still renegotiating the Economic Partnership Agreements with the European Union.
He said Senegal and other ECOWAS member states still had some concerns on the EPAs.
“We are discussing this issue and maybe by June next year, as long as our European colleagues continue doing their best in taking into account our concerns, we shall sign,” said Decroix.
Labels: CUBA, FINANCIAL CRISIS, HAVANA INTERNTIONAL TRADE FAIR, SENEGAL
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IMF may need to "print money" to bail out countries
Daily Telegraph
Tue, 28 Oct 2008 11:32:00 +0000
THE International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money. IMF's work in countries such as Turkey is only just beginning.
The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.
Neil Schering, emerging market strategist at Capital Economics, said the IMF's work in the great arc of countries from the Baltic states to Turkey is only just beginning.
"When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds," he said.
Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.
"Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We're in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is," he said.
The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA' bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.
The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world's central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.
"The IMF can in theory create liquidity like a central bank," said an informed source. "There are a lot of ideas kicking around."
For now, Eastern Europe is the epicentre of the crisis. Lars Christensen, a strategist at Danske Bank, said the lighting speed and size of Ukraine's bail-out suggest the IMF is worried about the geo-strategic risk in the Black Sea region, as well as the imminent risk a financial pandemic.
"The IMF clearly fears a domino effect in Eastern Europe where a collapse in one country automatically leads to a collapse in another," he said. - Daily Telegraph
Labels: FINANCIAL CRISIS, IMF
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Global financial system to lose US$2.8 trillion
Reuters
Tue, 28 Oct 2008 11:45:00 +0000
THE global financial system could lose $2.8 trillion to the credit crisis, the Bank of England said on Tuesday, before an expected interest rate cut in the United States that others are poised to match.
Governments have agreed to inject around $4 trillion into banks and markets to contain the worst financial crisis in 80 years, which has forced stock markets to tumble and banks out of business, hastening a recession in much of the world.
Japan restricted investor bets on falling share prices with immediate effect to try to end a stock market slide, which has particularly hit its banking sector, and tried to talk down a rallying yen that threatens to deepen its economic downturn.
European shares gained 0.9 percent and Japan's Nikkei climbed 6.4 percent after hitting lows not seen in 26 years.
Prime Minister Taro Aso delayed a parliamentary election to take steps to concentrate on protecting Japan, the world's second biggest economy, from global recession.
The Bank of England (BoE) said the work so far in containing the crisis should calm the banking system but was cautious about the impact on the wider economy. It projected losses globally at $2.8 trillion.
"The instability of the global financial system in recent weeks has been the most severe in living memory," said Deputy Governor John Gieve. "And with a global economic downturn under way, the financial system remains under strain."
The BoE is expected to cut interest rates next week, a move the European Central Bank and the Federal Reserve are also expected to take to try to encourage more spending in economies increasingly fearful of a long, deep recession.
The consensus among Fed watchers is for a half-point cut in overnight rates to 1 percent, the lowest level since June 2004. It has already cut the benchmark federal funds rate to 1.5 percent from 5.25 percent over the past 13 months.
It will announce its decision on Wednesday. The ECB and Bank of England are expected to cut rates on Thursday next week.
COMPANIES SEEK AID
Faced with a funding squeeze and a sharp economic downturn across much of the industrialized world, major companies joined banks in the queue for government aid.
U.S. automakers General Motors and Chrysler sought government cash for a merger, South Korean banks tapped a Federal Reserve funding window, Russia was in talks with China for export-backed loans for its companies and Kazakhstan pumped $5 billion into its banks.
The Japanese banking system, which largely escaped the fallout from U.S. mortgage defaults last year, had invested in the stock market and the three largest lenders are looking to replenish capital lost on the bourse.
Tokyo banned naked short selling, bringing the move forward by one week. Naked short selling allows traders to effectively sell stocks they do not own and without borrowing them first in the hope they will profit by buying stocks back at a lower price.
"Similar restrictions have already been put in place in the United States and Europe but Japan has lagged behind," Finance Minister Shoichi Nakagawa said. "I found a lag of a few days is critical for the Tokyo stock market."
The yen pulled away from a 13-year high against the dollar due to growing caution about the possibility of official intervention.
The yen has leapt about 20 percent on a trade-weighted basis this month alone and has compounded fears among Japan's exporters as their key markets lurch toward recession.
"The yen's rise in the past week is astonishing, but it does not reflect Japan's economic fundamentals," Japanese Economics Minister Kaoru Yosano told a news conference.
The Group of Seven finance ministers and central bank governors singled out the yen on Monday in a rare statement that said its rally threatened stability.
AUTOMAKERS SUFFER
With the yen trading at around 94 per dollar, Carlos Ghosn, chief executive of Nissan Motor Co and Renault, said it would be difficult for Nissan to compete, especially with U.S. car sales plunging 26 percent in September from a year earlier.
"Nobody reasonable is going to tell you that next year we're going to be out (of this crisis)," he said.
U.S. automakers are faring much worse than their Japanese rivals and two of America's "Big Three" are planning a merger to survive the crisis.
General Motors Corp and Chrysler LLC's owner, Cerberus Capital Management, asked the U.S. government for a $10 billion rescue package to support the merger, sources familiar with the talks said on Monday.
The U.S. government cobbled together a $700 billion plan to bailout Wall Street last month, after mortgage defaults and credit writedowns wrecked lenders and insurers.
Two South Korea banks joined the queue for U.S. government dollars on Tuesday as the country grappled with an acute dollar funding squeeze and a crisis of investor confidence.
(Editing by Mike Peacock)
Reuters
Labels: FINANCIAL CRISIS
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The economic crisis – what would work
Written by Dr Kenneth D. Kaunda
Monday, October 27, 2008 10:35:50 PM
THE financial crisis that this world faces today is of global impact. Our leaders, world leaders that is, and here I am talking about world leaders in terms of the developed world, have been making effort to meet together to see what it is that we can do together as human beings of this, our one world.
The United States of America, has had its law makers approve $700 billion as proposed by President Bush to throw, and I deliberately use the word “throw,” into their economy.
When President Bush first made this proposal to the House, it met with very serious rejection, especially from his own Republican members of the House. After a lot of discussions, in the end, this proposal has been accepted.
The question is: why did President Bush have to make this proposal? What is the situation on the ground of that economic giant of our one world? Anywhere and everywhere in this, our one world, housing for families is an extremely important matter.
Before this crisis, USA witnessed a terrifying fall in the house market. American who had made various arrangements to own houses began to experience grave difficulties in meeting their obligations to continue with that ownership.
The various methods they had used, with the various banks they have used to own those houses, began to slip through their hands. They began to run away from their homes, without even accounting for their failure to meet their obligations. Collapse of the financial system has come down very heavily on them. In the end, many lost out. It was the beginning of this financial crisis of global impact.
Yes, USA responded through President Bush by that $700 billion we have referred to. But that is not the answer to the problem. By this time President Bush was trying to restore the lost confidence. The question is: Did he succeed?
The truth of the matter is that this is a world crisis. So some leaders worldwide have been concerned.
Apart from the United States, Europe began to feel this same heavy weight problem. Gordon Brown, in Britain, began to intervene. There were serious differences and quarrels in parliament. At first, the Tories supported what Gordon Brown was doing but only a few days ago, on Wednesday 22nd October, Tories began to distance themselves from supporting Gordon Brown and his Labour Party.
The European continent has been going through similar problems. The giant economy of Germany was not spared. Government has had to intervene. We also see that in Asia, Japan is facing similar problems. Government has to decide to intervene. Yes, India has been enjoying its success story of joining both Japan and China into sending some craft into space. But the pain of the United States economic crisis is telling in India as well.
It is obvious that when all these economic giants at various levels of development have been going through these great difficulties, Africa and South America will be naturally not only affected but also shaken. Already, we are beginning to feel what this means in terms of our economic activities.
It is not surprising that already so many meetings have been held between the economic giants. And yet, only the other day, Wednesday 22nd October, United States President George W Bush first called for a world summit of leaders. And on 23rd October, he has added that some African leaders would be involved.
So very soon, a global summit to fight this global problem will be called. It is good, at this juncture, to remind my reader that USA elections are taking place on November 4, 2008. By the end of January 2009, the world will be receiving a new United States of America president.
A digression a bit. I hope my reader joins me in prayer to God our Creator that He guides those great American people, of all colours, in electing Barack Obama as USA president. The polls are showing he is leading against his Republican opposition John McCain. We who have been following, from a distance, the campaign, have noted, with joy, that Obama was leading. As I see it, electing Barack as president of the USA, would be a nice development. It will have effect on the American and world economy.
To go back to our current subject of economic crisis, I learnt that the other day, on Wednesday 22nd October 2008, United Nations have been calling for a conference of poor countries. We know, as they define poor countries, which countries these. But it is clear that in a divided world, the salvation of the poor of the poor, and their United Nations, lies in working together.
The question we must ask ourselves is: where is our world going to? We don't have to worry. What I like about these leaders of the United Nations, is that this world body has invited that Nobel prize winner in the economic field, Prof Joseph Stiglitz to be advisor to poor country leaders.
He is very well qualified in this situation. So, we see now that many conferences are being called at various levels. Leaders of the rich countries and poverty stricken countries are being organised to share their experiences with a view of finding common solutions.
In the end, we must all go back to the question that the whole developed countries are asking. The question therefore is : what Will Work?
Many leading bankers have recently lost their jobs because they lost billions of dollars and pounds. They lost billions of Euros. All these are old capitalist organisers. Does it mean that the capitalist system the West had been boasting about has been cheating us all?
We can only appeal to all those involved in working on this challenge to find a legitimate answer to this crisis. They should put their heads together to find us an honest and lasting answer. We cannot advise as to how they go about this. All we can say is that capitalism has collapsed. It has collapsed in United States of America, the United Kingdom, and Germany. It has collapsed in France and Japan.
Where else can we find a capitalist system that has worked ever since 1929/1930 and the depression? We must pray that the entire world will work together and find a solution to this financial crisis. May the Good Lord, God Almighty, help us all out of this crisis!
May I end this message on the world financial crisis by joining in reminding all fellow Zambians and all our friends of the fact that our 44th anniversay of independence is here. Yes, on August 19, 2008, we lost that great son of Zambia Dr Levy Patrick Mwanawasa, SC, in that tragic way.
But we have stood together so far. And we are moving towards the 30th of October and presidential by-elections. My plea is that every Zambian must remember we all have responsibility to see to it that peace continues to rule in Zambia. God will continue to guide us if we continue to remember the Commandments we have been taught. These are: “Love God your Creator, with all your heart, with all your soul, with all your mind, and with all your strength.”
My dear Brother, my dear Sister, my dear Child, this is how we relate to God, our Creator. As to how we relate to each other, we that God has made in His image, it is to “Love thy neighbour as thy self,” and “Do unto others as you would have them do unto you.”
Remember, this is across anything artificial. This is across ethnicism, race or colour, and not even faith should disturb us. Yes, “Stand and Sing of Zambia, Proud and Free.”
44 years after our independence in October 1964, we must continue to thank God for allowing us to remain together through many pitfalls and challenges. I am saying to every Zambian: thank the Lord for this. Just remember what God has taught us. I am confident Zambia will pull through these economic challenges.
We have had peace and stability. Peace is what we need most. We need to stand together, peace is important. We must continue to have peaceful elections. Let us all unite, regardless of who wins the October 30 presidential by-elections.
We must continue to stand together. We must accept the decision of the people of Zambia. We must accept whoever is elected president of Zambia. Together, we can strengthen the economy, and various fields of our human endeavour.
Labels: FINANCIAL CRISIS, KENNETH KAUNDA
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Shock and awe tactics do not work for Zimbabwe
Philip Murombedzi
Sun, 26 Oct 2008 00:10:00 +0000
“THE whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary” wrote H. L. Mencken. The MDC has managed to do this and more. It has managed to induce political, economic, and social chaos that would result in revolution.
To the MDC and many of its supporters, the post Mugabe era is very predictable: plenty jobs, a booming economy, huge inflows of foreign direct investment, regional harmony, no political opposition, great international relations, happy people. Many critics today fantasize about that era – an era they think will be transformed by the exit of just one individual.
The political, social and economic structure that is holding in Zimbabwe today will not be transformed by the exit of just one individual and experiences elsewhere in Africa should inform such debates.
Such narrow-minded political fanaticism is one reason why we, as a nation are failing to develop a mature political culture that is capable of cushioning the problems associated with social and political change.
Change cannot be forced, it is inevitable, but it has to be managed.
The problem, with the change forced upon Zimbabwe, is that the “movement for that change” has a different agenda. You can plan for change, but you cannot force it.
Our current combative leaders, mainly in the opposition, who claim to be the agents of change, give lip service to “a culture of political life” while practicing intolerance and selfish greed.
The argument that Morgan Tsvangirai’s integrity should not be questioned should be placed in the dustbins by those who seek democracy. The current thinking that guides many people in the opposition is that Tsvangirai is infallible and cannot do bad. There is also the argument that Mugabe should go first and then we can all focus on the next system. Others have even gone further to suggest that Tsvangirai would be easier to remove once he becomes president.
This is lazy thinking. Leaders are not elected so that they can be removed.
Morgan Tsvangirai must pass certain tests as a potential leader of Zimbabwe and that test has nothing to do with Mugabe, as a person, as a President or as leader of Zanu PF.
But this is not the main issue. The issue is that power-hungry individuals within the MDC seek to use to various strategies (that do not work in the Zimbabwean body politic) to effect change. For instance, by using a corps of aggressive strategists assisted by outside forces, friendly news media to force a realignment of political power.
Zimbabweans wait with baited breath, not for a replacement for Mugabe, but a successor for President Mugabe – a statesman who can help Zimbabweans develop as people.
As successor for Mugabe, Tsvangirai has never espoused principles and policies that I feel comfortable with, and I will never be as narrow minded as to suggest that we need change for the sake of change.
MDC wants change so that their various groups and individuals control the means of production and political power – nothing more, nothing less. The way to do it, for them, is to create a crisis – publicly visible disruption in Zanu PF’s ability to run the country.
By calling for mass demonstrations, they wanted this to happen spontaneously, but that strategy failed. Then they appealed to people’s emotions: “Are you angry and hungry?” That also didn’t work.
Then they went back to the drawing board.
The economic document RESTART espoused by the MDC some years ago is the last piece of policy document that I remember coming from the MDC. It was based on some pseudo neo-liberal idealism that will never work for Zimbabwe.
For instance the RESTART document talks about privatization of the public health service to ensure efficiency in service delivery. Privatizing the health service will increase the cost of delivery making it inaccessible to the general population. If you do not privatize, what do you do? The MDC seems to think that by some magic wand they will find a national purse ready and waiting to develop the country from.
The rescue package they are expecting from the West will not be forthcoming as US Secretary for African Affairs, Jendayi Frazer indicated two weeks ago, given the current financial crisis in the world.
The MDC has no strategy on corruption. How would they dismantle the culture of corruption, for instance? It does not disappear by controlling a certain ministry; neither does it disappear by changing the top leadership. Where will the MDC get the expertise to run these ministries if it does not draw from the civil servants – some of whom are still supportive of the Zanu PF party? People are not simply going to change their attitudes and allegiances because the leadership has changed.
Many of the people vying for positions in the MDC (Biti, Mutambara, etc) have never run state institutions. How will these people run these ministries without the requisite experience? Lectureship positions and research positions at NASA, and being a human rights lawyer does not prepare one for running institutions of government.
The MDC should let us know who and why certain individuals will be selected into those positions.
Comparisons with institutions in the UK and USA do not hold because these parties have existed for many years and have a repository of able individuals, some of them ex ministers and leaders.
The Conservative Party for instance, has shadow ministers who have been ministers under Margaret Thatcher and John Major.
The MDC simply does not connect the dots sufficiently enough for me to trust that things will transform for the better.
The argument that let’s help run down a country so as to replace government does not bode well with clear thinking people. The principle of “destroy to build” that Tsvangirai has been riding on for a very long time is a very dangerous principle. It is dangerous because you could destroy and fail to build.
The comparisons and contradistinctions between PF Zapu and MDC make me very uneasy. PF Zapu had the same vision as Zanu PF and shared the same roots. The two parties started as one and ended as one. You could change your name by deed of poll, that doesn’t change your fundamental make up.
Morgan Tsvangirai will never come anywhere near the late Dr Joshua Nkomo (May his soul rest in peace). Dr Nkomo was not called Father Zimbabwe for no reason and that title still holds, even in his death.
Nkomo cared about his people to the point of agreeing to completely merge his party with Zanu PF What was in a name afterall?
PF Zapu members never changed their vision of Zimbabwe; neither did they compromise their position with regards to their relationship with former colonizers. In any case, Zanu was formed out of Zapu, so what was wrong with Zapu becoming Zanu PF?
The MDC record of party management disasters and sulking attitude and lack of principle makes me worry about what sort of government will be borne out of this party.
As Zimbabweans we are either very naïve or borderline ignorant to want to install a party that has neither the experience nor the mental stamina to pursue national policies when party policy has been so flawed. I am worried that we do not understand the consequences of our actions and relentlessly carry on anyway because we (or will) somehow benefit.
The strategy of forcing political change through orchestrated crisis is neither honourable not responsible. The MDC merely seeks to hasten the fall of Zanu PF by overloading it with a flood of impossible demands, thus pushing Zimbabwean society into crisis and economic collapse. In the meantime, an unsuspecting population waits in the wings for a sunny day that will never come.
For me, the best arrangement is what we are expecting to be borne out of the Sadc Troika meeting today – the formation of a power-sharing Government, where the MDC and Zanu PF parties can learn from each other.
The winner-takes-all attitude we have witnessed will not bode well for a country that is struggling to reclaim its position in the region and in the world.
Labels: COLOUR REVOLUTIONS, FINANCIAL CRISIS
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Magande advises against disturbing economic targets
Written by Chiwoyu Sinyangwe
Saturday, October 25, 2008 10:17:49 PM
FINANCE minister Ng’andu Magande has urged officers from his ministry and Bank of Zambia (BoZ) to avoid populist tendencies in expenditure during this election period to avoid disturbing economic targets.
After the signing a US$10 million (about K43 billion) Financing Agreement of the Second Economic Management and Development ceremony with the World Bank on Thursday, Magande cited 2006, when the country stayed on course and achieved favourable macroeconomic parameters despite the presidential and general elections.
“2008 happens to be another year of elections due to the demise of the strict and focused commander and guide (president Levy Mwanawasa),” Magande said. “I take this moment to encourage the economic management team and other project officers to continue being effective custodians of the government’s good image, both to the Zambians and to our cooperating partners.
We should continue to guard our best practices that we have learnt in the past and manage the nation’s resources for the benefit of the Zambians. The concession loan I have just signed for, should assist us to stay on course so that our country can attain even higher levels of growth.”
Magande also thanked co-operating partners for the support rendered to the government towards the country’s developmental goals aimed at reducing poverty among Zambians.
He further explained that Second Economic Management and Development credit was a concessional loan to be applied in the implementation of the government’s reform programmes as stipulated in the Fifth National Development Plan.
Magande said the loan had a grace period of ten years with a repayment period of 30 years.
Labels: FINANCIAL CRISIS, MAGANDE
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Greenspan Concedes Error on Regulation
By EDMUND L. ANDREWS
Published: October 23, 2008
WASHINGTON — For years, a Congressional hearing with Alan Greenspan was a marquee event. Lawmakers doted on him as an economic sage. Markets jumped up or down depending on what he said. Politicians in both parties wanted the maestro on their side.
Greenspan Prepared RemarksBut on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that
he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.
“Those of us who have
looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.
Now 82, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry.
Critics, including many economists, now blame the former Fed chairman for the financial crisis that is tipping the economy into a potentially deep recession. Mr. Greenspan’s critics say that he encouraged the bubble in housing prices by keeping interest rates too low for too long and that he failed to rein in the explosive growth of risky and often fraudulent mortgage lending.
“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”
Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
On a day that brought more bad news about rising home foreclosures and slumping employment, Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken.
He noted that the immense and largely unregulated business of spreading financial risk widely, through the use of exotic financial instruments called derivatives, had gotten out of control and had added to the havoc of today’s crisis. As far back as 1994, Mr. Greenspan staunchly and successfully opposed tougher regulation on derivatives.
But on Thursday, he agreed that the multitrillion-dollar market for credit default swaps, instruments originally created to insure bond investors against the risk of default, needed to be restrained.
“This modern risk-management paradigm held sway for decades,” he said. “The whole intellectual edifice, however, collapsed in the summer of last year.”
Mr. Waxman noted that the Fed chairman had been one of the nation’s leading voices for deregulation, displaying past statements in which Mr. Greenspan had argued that government regulators were no better than markets at imposing discipline.
“Were you wrong?” Mr. Waxman asked.
“Partially,” the former Fed chairman reluctantly answered, before trying to parse his concession as thinly as possible.
Mr. Greenspan, celebrated as the “Maestro” in a book about him by Bob Woodward, presided over the Fed for 18 years before he stepped down in January 2006. He steered the economy through one of the longest booms in history, while also presiding over a period of declining inflation.
But as the Fed slashed interest rates to nearly record lows from 2001 until mid-2004, housing prices climbed far faster than inflation or household income year after year. By 2004, a growing number of economists were warning that a speculative bubble in home prices and home construction was under way, which posed the risk of a housing bust.
Mr. Greenspan brushed aside worries about a potential bubble, arguing that housing prices had never endured a nationwide decline and that a bust was highly unlikely.
Mr. Greenspan, along with most other banking regulators in Washington, also resisted calls for tighter regulation of subprime mortgages and other high-risk exotic mortgages that allowed people to borrow far more than they could afford.
The Federal Reserve had broad authority to prohibit deceptive lending practices under a 1994 law called the Home Owner Equity Protection Act . But it took little action during the long housing boom, and fewer than 1 percent of all mortgages were subjected to restrictions under that law.
This year, the Fed greatly tightened its restrictions. But by that time, the subprime market as well as the market for other kinds of exotic mortgages had already been wiped out.
Mr. Greenspan said that he had publicly warned about the “underpricing of risk” in 2005 but that he had never expected the crisis that began to sweep the entire financial system in 2007.
“This crisis,” he told lawmakers, “has turned out to be much broader than anything I could have imagined. It has morphed from one gripped by liquidity restraints to one in which fears of insolvency are now paramount.”
Many Republican lawmakers on the oversight committee tried to blame the mortgage meltdown on the unchecked growth of Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were placed in a government conservatorship last month. Republicans have argued that Democratic lawmakers blocked measures to reform the companies.
But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”
“The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower,” he said.
Despite his chagrin over the mortgage mess, the former Fed chairman proposed only one specific regulation: that companies selling mortgage-backed securities be required to hold a significant number themselves.
“Whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets,” he said. “Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime.”
Labels: ALAN GREENSPAN, FINANCIAL CRISIS, NEOLIBERALISM
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Zambia freezes non-essential projects
ZAMBIA has frozen financing for all non-essential projects and may delay further cuts to fuel taxes to keep its budget deficit below two per cent of gross domestic product, Finance and National Planning Minister, Ng’andu Magande, said on Tuesday.
Zambia is equally feeling the squeeze from the global financial crisis, which has led to a drop in commodities prices and reduced investor interest in emerging markets in Africa and elsewhere.
Mr Magande told journalists after a signing agreement with the United Nations Development Programme in Lusaka for next week’s presidential election that government would only release funds for road construction and other infrastructure projects that were seen as critical to the development of the economy.
“It simply means that for other projects, we are not going to release funds the ministries needed (and) they have to live within the budget,” Mr Magande said.
Zambia had hoped to keep its deficit this year to 1.2 percent of gross domestic product (GDP), but it conceded last month that it would not reach that target.
Mr Magande said Zambians might have to wait until next year for another drop in the price of petrol.
“When we cut fuel prices in June, we suffered a loss of K120 billion ($31.1 million). This is good because less tax means there will be more economic activity, but I have to find money somewhere to cover the loss,” Mr Magande said.
The bad news was partly offset by the World Bank’s announcement on Monday that it would provide $75.5 million to boost electricity generation in Zambia which is facing a power crisis.
Kapil Kapoor, the World Bank’s country manager for Zambia, said 18,000 additional households would be connected to the national grid as a result of the funding. He noted, however, that Zambia would need up to $2 billion to meet growing power demand from industrial and residential customers.
Only 20 per cent of Zambia’s 12 million people have access to power and only three per cent of those are in rural areas, according to the government. It has targeted raising access to electricity to 50 per cent of the population by 2030.
Officials say Zambia has up to 1,650 megawatts of generation capacity but currently produces only 1,400 megawatts of power due to problems with aging power stations and transmission lines. - REUTERS.
Labels: DEVELOPMENT, FINANCIAL CRISIS, MAGANDE
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COMESA-ECA-SADC concerned about global financial crisis
October 24, 2008
The Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and the Southern Africa Development Community (SADC) tripartite Summit of Heads of States and Government which met in Kampala Uganda on 22nd October expressed concern at the current global financial crisis undermining the economic stability of the world.
The Summit, whose theme was ‘Deepening COMESA-EAC-SADC Integration’ noted that the global financial crisis poses a serious threat to the growth of African economies particularly in terms of demand for African exports of goods and services, tourism, foreign direct investment and the achievement of the MDGs.
This is contained in a final communiqué read by Ambassador Juma Mwapachu, the Secretary General of EAC and made available to ZANIS in Lusaka today.
The communiqué noted that the tripartite summit called for a collective action to help African and other developing and least developed countries to address the adverse impact of the financial crisis and the global economic meltdown.
The summit further urged international financial institutions to adopt effective remedial measures to mitigate the risks.
It also noted the continued world food crisis and agreed to make strategic interventions to exploit the potential of African economies in the production of food and enhance accessibility to all markets.
The tripartite summit agreed on a programme of harmonizing trading arrangements amongst the three Regional Economic Communities (RECS).
In the area of trade, customs and economic integration, the tripartite summit approved the expeditious establishment of the Free Trade Area (FTA) encompassing the member and partner states of the three RECS with an ultimate goal of establishing a single Customs Union.
In the area of infrastructure, the tripartite summit launched the Joint Competition Authority (JCA) on Air Transport Liberalization which will oversee the full implementation of the Yamoussoukro Decision on Air Transport in the three RECS commencing in January next year.
The JCA comprises seven members, two members each from the EAC, COMESA and SADC plus a Chairperson on a rotational basis.
With regard to the Legal and Institutional Framework, the tripartite summit directed the Council of Ministers of each of the three RECs to within six months consider and approve the memorandum of understanding on inter-regional cooperation and integration which should also provide for the powers of each decision making level.
ZANIS/ENDS/CBM/EB
Labels: COMESA, FINANCIAL CRISIS, RECESSION, SADC
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Global crisis to affect dollar trading – Phiri
Thursday, October 23, 2008 8:44:39 PM
Written by Gillian Namungala and Allan Mulenga
INTERMARKET Banking Corporation managing director Richard Phiri has said the global financial crisis will affect the cost of financing in dollar terms.
Addressing trainee journalists at The Post Newspapers on Monday, Phiri said the cost of US dollar has increased to about five per cent since the beginning of the global financial crisis.
“What has happened is that the global economic crisis has led to an increase in the cost of US dollar on what we call the London Interbank Offered Rate (LIBOR) where the cost of a US dollar has gone up from 2.3 per cent to about 5 per cent,” he said.
Phiri also anticipated a squeeze in the rate of lending by international banks as decisions could be made at their headquarters not to lend money to the Zambian economy.
“Lending decisions are made at the head offices in Europe so what we will see in the Zambian economy is that local banks that are international will have to cut their lending projections by 30 per cent or 40 per cent to suit with the global directive,” Phiri said.
Phiri further said there would also be a reduction on the amount of donor aid to African countries as a result of the current global financial crisis.
And Phiri urged journalists to undertake business-related courses in order to report effectively on business issues.
Labels: CURRENCY, FINANCIAL CRISIS, INTERMARKET BANK, RICHARD PHIRI
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