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Exodus unnerves Denmark

by on May 15, 2011

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Exodus unnerves Denmark

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Exodus unnerves Denmark

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Income Inequality Is Soaring Globally — Even In Sweden

by The Huffington Post on May 3, 2011

Huffington Post…

Widening income inequality has been a thorn in America’s side for some time now. Turns out, other countries in the developed world aren’t exempt from it, either. Yes, even Sweden. In a new report , the Paris-based Organisation for Economic Co-operation and Development (OECD) finds that since the mid-1980s income inequality has increased in 77 percent, or 17 of the 22 surveyed countries. Across all OECD countries, the report found, the average income of the richest tenth of the population is now nine times that of the poorest tenth. Globalization, technological innovation and relaxed regulatory environments have all contributed to the growing gap between rich and poor, the OECD found. The report pays special attention, though, to the changing formation of families, pointing to research showing the income inequality has risen in the U.S. as a result of growing numbers of single-headed households. Globally, household income has increased overall by 1.7 percent annually, the OECD found. But not all income levels have benefited equally. The world’s bottom decile of earners saw their income grow annually by only 1.4 percent in the last 30 years or so, while the top decile grew at an annual rate of 2.0 percent. Countries at both extremes of the inequality spectrum are moving closer to the center. Mexico and Chile, which together have the two highest levels of inequality, have seen the gap between rich and poor narrow in recent years. But surprisingly, it’s in the historically egalitarian countries of Denmark, Germany and Sweden that the divide between the rich and poor has widened most in the past decade. This isn’t just an issue of poor versus rich, however. The middle-class has largely been left behind too: “The highest 10% of earners have been leaving the middle earners behind more rapidly than the lowest earners have been drifting away from the middle,” the report’s authors write. Capital income, or income derived from wealth not work, has been a particularly notable source of rising inequality, the report notes, widening more than wage inequality in two-thirds of surveyed countries. Still, capital income remains a relatively low percentage of overall income at 7 percent. On Monday, though, Paul Krugman noted that 400 people alone accounted for 10 percent of all U.S. capital gains income in 2007. With the exception of France, Japan and Spain, wages of the rich have grown more than those of poor since the mid-1980s, the report finds. That has something to do, according to the OECD, with the declining number of average hours worked by low-wage workers, even in comparison to also declining hours worked by the high-wage workforce. Only in Greece and the United States, the report finds, have the average number of hours worked risen for the bottom quintile while declining for the top. (See below chart): The below graph shows where inequality has risen, where it has fallen, and by how much since the mid-1980s: Read the paper: GROWING INCOME INEQUALITY IN OECD COUNTRIES: WHAT DRIVES IT AND HOW CAN POLICY TACKLE IT?

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Income Inequality Is Soaring Globally — Even In Sweden

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Global IPOs Have Best Start To Year On Record

February 25, 2011

LONDON (By Kylie MacLellan and Simon Jessop) – Global listings activity has been the highest on record so far this year, with firms raising a total of $24 billion to date, according to Thomson Reuters data, boosted by buoyant stock markets and improved investor interest. It follows a record quarterly volume of initial public offerings (IPOs) in the final three months of 2010, which saw $122.2 billion raised globally, lifted by the mega floats of Asian insurer AIA Group (1299.HK) and U.S. automaker General Motors (GM.N). Fundraising activity has been buoyed by relatively strong stock markets, with world equities, measured by the MSCI All-Country World Index .MIWD00000PUS, hitting 2-1/2 year highs this month despite unrest in the North Africa region. “Investor appetite for IPOs is effectively leveraged to equity market tone, and we finished 2010 with an exceptionally strong four month window from September to December that continued into early 2011,” said Chris Whitman, global co-head of equity capital markets at Deutsche Bank. “A larger universe of willing buyers then entices a larger universe of aspiring sellers.” Last year pockets of market volatility linked to euro zone sovereign debt worries created windows in which the IPO market, particularly in Europe, effectively closed, with billions of dollars worth of planned listings pulled. “It’s a sign of confidence that businesses which have been holding off in the past, as conditions weren’t right, feel there’s enough demand at the moment to get their floats away,” said Henk Potts, equity strategist at Barclays Wealth. “Valuations remain attractive and investors believe the equity market is a promising place to invest and therefore demand for those riskier equities has been increasing, and of course that very quickly filters through into a flourishing IPO market.” Although there are still some difficulties in the macro environment, investors are viewing the corporate environment more positively, Potts added. The $24.3 billion raised globally since the start of January is a 20 percent increase on the same period last year, the data showed. Secondary offerings have also seen a boost, up 23 percent year-on-year to raise $67.7 billion globally. Asia, which dominated equity capital markets in 2010, has continued to lead the field so far this year, with China accounting for 41 percent of issuance, including wind turbine maker Sinovel Wind’s (601558.SS) $1.4 billion listing last month. Boosted by strong energy and commodity prices, energy and power has been the most active sector, making up 30 percent of fundraising, followed by industrials on 16 percent. U.S. pipeline company Kinder Morgan (KMI.N) raised around $2.86 billion earlier this month in the largest U.S. energy-related IPO since 1998, upping the size and price of its offering after strong demand. With several big listings — including a $3.7 billion offering from U.S. hospital operator HCA Holdings and a $2.4 billion IPO by Denmark’s ISS — currently in the works, and a huge pipeline of deals still to launch, the market shows no signs of slowing. In particular, Europe is braced for a flurry of stock market listings in the next two months as firms use annual results as launching pads for share sales and hope to complete deals before investors disappear for the Easter break. “If equity markets continue to be stable-to-higher, IPO activity is poised to continue to intensify,” said Whitman. “There is a good chance that IPO volumes for 2011 will be markedly higher than 2010.” (Editing by Hans Peters) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Global IPOs Have Best Start To Year On Record

February 25, 2011

LONDON (By Kylie MacLellan and Simon Jessop) – Global listings activity has been the highest on record so far this year, with firms raising a total of $24 billion to date, according to Thomson Reuters data, boosted by buoyant stock markets and improved investor interest. It follows a record quarterly volume of initial public offerings (IPOs) in the final three months of 2010, which saw $122.2 billion raised globally, lifted by the mega floats of Asian insurer AIA Group (1299.HK) and U.S. automaker General Motors (GM.N). Fundraising activity has been buoyed by relatively strong stock markets, with world equities, measured by the MSCI All-Country World Index .MIWD00000PUS, hitting 2-1/2 year highs this month despite unrest in the North Africa region. “Investor appetite for IPOs is effectively leveraged to equity market tone, and we finished 2010 with an exceptionally strong four month window from September to December that continued into early 2011,” said Chris Whitman, global co-head of equity capital markets at Deutsche Bank. “A larger universe of willing buyers then entices a larger universe of aspiring sellers.” Last year pockets of market volatility linked to euro zone sovereign debt worries created windows in which the IPO market, particularly in Europe, effectively closed, with billions of dollars worth of planned listings pulled. “It’s a sign of confidence that businesses which have been holding off in the past, as conditions weren’t right, feel there’s enough demand at the moment to get their floats away,” said Henk Potts, equity strategist at Barclays Wealth. “Valuations remain attractive and investors believe the equity market is a promising place to invest and therefore demand for those riskier equities has been increasing, and of course that very quickly filters through into a flourishing IPO market.” Although there are still some difficulties in the macro environment, investors are viewing the corporate environment more positively, Potts added. The $24.3 billion raised globally since the start of January is a 20 percent increase on the same period last year, the data showed. Secondary offerings have also seen a boost, up 23 percent year-on-year to raise $67.7 billion globally. Asia, which dominated equity capital markets in 2010, has continued to lead the field so far this year, with China accounting for 41 percent of issuance, including wind turbine maker Sinovel Wind’s (601558.SS) $1.4 billion listing last month. Boosted by strong energy and commodity prices, energy and power has been the most active sector, making up 30 percent of fundraising, followed by industrials on 16 percent. U.S. pipeline company Kinder Morgan (KMI.N) raised around $2.86 billion earlier this month in the largest U.S. energy-related IPO since 1998, upping the size and price of its offering after strong demand. With several big listings — including a $3.7 billion offering from U.S. hospital operator HCA Holdings and a $2.4 billion IPO by Denmark’s ISS — currently in the works, and a huge pipeline of deals still to launch, the market shows no signs of slowing. In particular, Europe is braced for a flurry of stock market listings in the next two months as firms use annual results as launching pads for share sales and hope to complete deals before investors disappear for the Easter break. “If equity markets continue to be stable-to-higher, IPO activity is poised to continue to intensify,” said Whitman. “There is a good chance that IPO volumes for 2011 will be markedly higher than 2010.” (Editing by Hans Peters) Copyright 2010 Thomson Reuters. Click for Restrictions .

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David Isenberg: Considering Counter-Piracy Protection? Here’s What to Ask Before You Hire

December 10, 2010

Recent news reports state that someone is apparently funding a 1,050 man private Army in Puntland in the name of anti-piracy. Specifically a company, which some claim is Saracen, which it vehemently denies , in partnership with the government, has embarked on a comprehensive program to assist the government of Puntland to build its capacity in order to regain control of its territorial waters and marine resources, fighting against the pirates and the unregulated, unlicensed, illegal fishing in the Puntland territorial waters. It is unclear just how serious an effort this, which helps explain why other countries have greeted the news cautiously. But there is one thing about this that should not be overlooked. If you are going to involve the private sector in anti-piracy operations, strengthening the ability of the host nation’s forces, whether they be regular military, the coast guard, law enforcement agencies, or militias is far more preferable than using foreign security contractors as armed guards aboard ship ore escorting them. Consider what this paper from Risk Intelligence in Denmark says: Security providers, companies that provide guards, include the likes of Drum Cussac, HART, MAST, Muse, PVI, Salama Fikira and Gulf of Aden Group Transits (GoAGT). These services are often called upon during transit or operation in a high risk area. Private security providers are the recent poster-children of private maritime security, as this type of PSC has had the most visible growth during the upsurge of maritime security awareness. Several new companies have been formed in this area since 2008 and many existing PSCs have refocused on maritime security. These companies offer guard services and accompanying hardening on actual transits through or operations in high risk areas. Following, they have attracted criticism from within and outside the maritime (security) industry, companies being blamed for having reckless “cowboy mentalities” and lacking the necessary skills. But if you are going to use them then the client should at least be smart enough to ask the following questions: General considerations Is the security provider certified or otherwise accredited in its home country? If so, for which services? Is the company accredited, or does it possess valid permits, for transferring and/or carrying arms on vessels of the flag state (if applicable), in the country of embarkation/disembarkation or in the coastal states that may be passed or in whose EEZ operations may take place? If restrictions for armed private security exist for the operation, is there a verifiable relationship with local law-enforcement or military? Have legal implications including liability, detention risks and flag/crew state legal positions? Contractor’s bid/offer Is the proposed interaction of different elements of defensive concept (including passive defences) explained? Has the adverse impact of customer’s operational requirements on proposed security measures been identified, described and contingencies provided? Are rules of engagement (ROEs) explicitly explained and not just referenced to (e.g. voluntary principles) Armed team considerations Are on-board roles and responsibilities of team members clearly described? Shipboard etiquette understood by armed team, including acceptance of master’s authority? Are safety considerations clearly understood and is an effort made to reconcile safety/security conflicts?

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EU Agrees To $89 Billion Bailout For Ireland

November 28, 2010

BRUSSELS — European Union nations agreed to give euro67.5 billion ($89.4 billion) in bailout loans to Ireland on Sunday to help it weather the cost of its massive banking crisis, and sketched out new rules for future emergencies in an effort to restore faith in the euro currency. The rescue deal, approved by finance ministers at an emergency meeting in Brussels, means two of the eurozone’s 16 nations have now come to depend on foreign help and underscores Europe’s struggle to contain its spreading debt crisis. The fear is that with Greece and now Ireland shored up, speculative traders will target the bloc’s other weak fiscal links, particularly Portugal. In Dublin, Irish Prime Minister Brian Cowen said his country will take euro10 billion immediately to boost the capital reserves of its state-backed banks, whose bad loans were picked up by the Irish government but have become too much to handle. Another euro25 billion will remain in reserve, earmarked for the banks. The rest of the loans will be used to cover Ireland’s deficits for the coming four years. EU chiefs also gave Ireland an extra year, until 2015, to reduce its annual deficits to 3 percent of GDP, the eurozone limit. The deficit now stands at a modern European record of 32 percent because of the runaway costs of its bank-bailout program. Cowen said the accord – reached after two weeks of tense negotiations in Brussels and Dublin to fathom the true depth of the country’s cash crisis – “provides Ireland with vital time and space to successfully and conclusively address the unprecedented problems that we’ve been dealing with since this global economic crisis began.” However, in a surprise accounting move, European and IMF experts decided that Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout. Until now Irish and EU law had made it illegal for Ireland to use its pension fund to cover current expenditures. This move means Ireland will contribute euro17.5 billion to its own salvation. The three groups offering funds to Ireland – the 16-nation eurozone, the full 27-nation EU, and the global donors of the International Monetary Fund – each have committed euro22.5 billion ($29.8 billion). Extra bilateral loans from Sweden, Denmark and Britain are included within the EU contribution totals. Ireland’s finance ministry said the interest rates on the loans would be 6.05 percent from the eurozone fund, 5.7 percent from the EU fund and 5.7 percent from the IMF. That’s higher than the 5.2 percent being paid by Greece for its own May bailout. Ajai Chopra, deputy director of the IMF’s European division who oversaw the Dublin negotiations, confirmed Ireland’s government would have freedom to set its own spending and tax plans. He said Ireland will have 10 years to pay off its IMF loans, and that the first repayment won’t be required until 4 1/2 years after a drawdown. Greece, in contrast, has three years to repay its loans. Chopra said Ireland’s decision to use its pension reserve fund had helped win the confidence of those who offered help. He declined to say if negotiators had demanded Dublin use its reserves under terms of the deal. “It makes total sense to use them at this time. I think this is quite unique in this type of arrangements and it will be taken as a sign of underlying strength,” he said. Embattled Prime Minister Cowen told a press conference that Ireland had no choice but to take help, because international investors had decided that lending to Ireland was too risky and were demanding unreasonable returns. The yield on 10-year Irish bonds rose Friday to a euro-era high of 9.2 percent. “If we didn’t have this program, we would have to go back to the markets, which as you know are at prohibitive rates,” Cowen said. “We would pay far more.” Still, analysts and opposition leaders in Ireland warned that the country of 4.5 million was taking on a bill it couldn’t afford to repay at rates exceeding 5 percent. Michael Noonan, finance spokesman of the main opposition Fine Gael party, said he believed that fellow EU members – particularly Germany, the eurozone’s bankroller – didn’t want to give money too cheaply to Ireland, for fear that Dublin would grow addicted to it. Noonan said the loans were “pitched high to drive us back into the market,” and would encourage Ireland to pursue maximum austerity measures in hopes of reassuring the bond markets. Cowen told reporters there had been no support in talks to ask senior bondholders to lose part of their stake on loans made to Ireland’s debt-crippled banks. “There was no agreement from the European Union for such a proposal, because of the impact it could have in the relation to the stability of the entire banking system,” he said. Ireland in recent days committed to slashing euro10 billion from spending and raising euro5 billion in new taxes over the coming four years, with the harshest steps coming in the 2011 budget to be unveiled Dec. 7. Cowen has only a two-vote majority in parliament. Last week he pledged to dissolve parliament for early elections next year – but only after the budget is fully enacted. Opposition leaders won’t say if they will support the budget, leaving Cowen vulnerable to losing a key budget-related vote within the next two months. To shore up longer-term confidence in the euro, EU finance ministers also agreed on a permanent mechanism that from 2013 would allow a country to restructure its debts once it has been deemed insolvent. Jean-Claude Juncker, the head of the Eurogroup, which represents the 16 euro nations, said private creditors would be forced to take losses only if ministers agreed unanimously that the country had run out of money. He said that if a country is merely facing a crisis of liquidity, it would get financial help similar to the bailout agreed for Ireland. European Central Bank chief Jean-Claude Trichet said making senior bondholders – chiefly banks that loan to other banks – suffer losses when a nation’s finances head toward bankruptcy would be “fully consistent” with existing IMF policies. ___ Pogatchnik contributed from Dublin. David Stringer in Dublin also contributed.

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David Ropeik: Europe Says Bisphenol A. Is Safe. But…

October 6, 2010

BPA x EFSA x FDA should = SAFE, right? Both the European Food Safety Authority and the U.S. Food and Drug Administration have studied the science on Bisphenol A and, at the moment, they say that at the tiny doses most people consume, it’s safe. The Europeans just reviewed more than 800 studies on BPA and “they could not identify any new evidence that would lead them to revise the current tolerable daily intake — the level below which EFSA scientists think there is no risk. EFSA also said “the data currently available do not provide convincing evidence of neurobehavioural toxicity of BPA.” But several other governments say the same evidence does convince them, at least enough to ban certain uses of BPA, particularly in baby bottles. BPA x Denmark x Canada x several states in the U.S. = not safe , or, at least, not sure . And that’s why this case is so interesting. It’s not about what we know. It’s about how we choose to keep ourselves safe when we don’t know. How do we deal with uncertainty when our health is on the line? The Canadian position on BPA captures this conundrum perfectly. “Health Canada’s Food Directorate has concluded that the current dietary exposure to BPA through food packaging uses is not expected to pose a health risk to the general population, including newborns and infants.” Pretty direct. Even a country that banned it says the doses we currently get are safe. But then they go on to say they are banning its use in baby bottles “due to the uncertainty [my emphasis] raised in some animal studies relating to the potential [again, my emphasis] effects of low levels of BPA.” Most of the bans around the world say the same thing. They are being precautionary in light of evidence suggesting that BPA may be a health threat, instead of waiting until the evidence confirms one way or another whether BPA actually is bad for us. What do we do with risks like this? Better Safe Than Sorry make sense, right? It feels right, anyway, although lots of times we make decisions about risk that feel right but actually make things worse. Worried about anything that raises the emotionally-compelling risk of cancer, we replaced a chemical solvent used to clean circuit boards with the non-carcinogenic chlorofluorocarbons that ripped a hole in the ozone layer. Freaked out about nuclear power, another cancer risk, we ended up with energy policy heavily weighted toward fossil fuels that kill tens of thousands from fine particle pollution, and fuel global climate change. Worry at the expense of reason doesn’t seem like the smartest way to make social policy. But reason, as glowing a goal as that is, is an unreasonable expectation. You and I are not nearly expert enough or informed enough to figure BPA out on our own. Regarding scientific evidence that some governments find convincing enough to ban BPA, EFSA said “these studies have many shortcomings. At present the relevance of these findings for human health cannot be assessed…” Geez, if the experts can’t decide, how are we supposed to judge? That’s where a different science comes in. Not the toxicology, but the psychology of risk perception. And that science is pretty clear. Uncertainty about a risk makes it scarier. In addition, the fact that a risk like BPA is human-made makes it scarier than if the same substance were natural. Risks from sources we don’t trust, like the chemical industry, are scarier. Risks that fit stigmatized patterns of what we’ve already learned to automatically worry about, like industrial chemicals, are scarier. Risks to kids? Whoa! Way scarier! That’s a lot of reasons why something like BPA fuels a lot of concern. And it explains why some governments, even those that acknowledge the stuff is safe, are taking a precautionary approach, particularly with the risk it may pose to kids… note that the bans are mostly on baby bottles. All those psychological characteristics make BPA scary. And scary is enough to prompt governments — which are, after all, made up of politicians who like to keep voters happy so they can keep their jobs — to act. Listen to the Canadian Environment Minister John Baird in announcing the ban: “Many Canadians, especially mothers of babies and small children in my own constituency of Ottawa West-Nepean, have expressed their concern to me about the risks of bisphenol A in baby bottles.” Concern is not the same as evidence of harm. But it’s real, and in a democracy, how we feel must be respected. So the formula really ought to look like this: BPA x Uncertainty x Human-Made x Lack of Trust x Risk Belongs to Stigmatized category x Kids at Risk = Concern . We don’t know if BPA is safe. Experts don’t either — though industry experts seem sure it is, and environmental health experts seem pretty sure it’s not. I have no clue. Let me repeat that for all my environmental and industry friends. I am not nearly expert enough to know whether BPA is safe or harmful. But I have read up on and written about what smart scientists have learned about how we deal with risks like this, and BPA is a classic case of how, as much as we’d like to think our thinking brain can figure out risks like this based on the facts, in the end it’s not just about the facts, but how those facts feel.

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AIG Rescue Spared European Banks From Raising $16 Billion, U.S. Panel Says

June 14, 2010

By Hugh Son June 14 (Bloomberg) — American International Group Inc. ’s U.S. government rescue spared European banks from raising as much as $16 billion in capital during the depths of the global financial crisis, according to a Congressional panel. ABN Amro Holding NV and Danske Bank A/S , Denmark’s biggest bank, were among the firms that bought the most derivatives from AIG to trim reserves they held against investment losses, the Congressional Oversight Panel said last week in a report . ABN Amro may have had to raise $3.5 billion if New York-based AIG was allowed to fail in 2008, and Danske Bank would have lost as much as $2.1 billion in relief, the panel wrote. The banks “would’ve needed to come to the capital markets in a time when it would’ve been nearly impossible to raise that kind of capital,” said Jonathan Hatcher , a Jefferies Group Inc. desk analyst and former Federal Deposit Insurance Corp. bank examiner. “This was point-blank regulatory arbitrage, AIG lending out its credit rating so institutions could hold less real capital.” The Federal Reserve Bank of New York weighed the consequences that an AIG failure would have on Europe’s largest financial institutions days before the September 2008 rescue, the panel said. The banks had bought credit-default swaps from AIG to cut the capital that regulators demanded be held against potential losses on about $250 billion in securities tied to mortgages and corporate debt, according to the report. ‘Catastrophic Market Disruptions’ The report shows which banks relied most on capital relief from the insurer. AIG had refused to disclose a list of the firms, according to the panel, which based its analysis on a document from the New York Fed with data as of Oct. 1, 2008. The insurer had named most of the banks, without disclosing the value of each firm’s coverage, in a confidential presentation to regulators as AIG appealed in early 2009 for its fourth rescue. AIG said then that its failure may lead to credit rating downgrades of the banks, which “could result in catastrophic market disruptions.” KFW Bank and Credit Logement SA each had $1.9 billion in capital relief protected by AIG’s rescue, the panel said. Credit Agricole SA’s Calyon had $1.6 billion, BNP Paribas SA had $1.5 billion and Societe Generale SA had $1 billion. Other unidentified firms had a total of $2.4 billion. “We entered into the contracts in order to get downside risk protection on our mortgage portfolio and thereby reduce risk-weighted assets,” said Peter Rostrup, chief risk officer at Danske Bank in Copenhagen. The capital relief was about $770 million, rather than the panel’s $2.1 billion estimate, Rostrup said. He said the panel’s analysis was based on assumptions that assign too much risk and that the company would have met capital requirements even without the AIG contracts. ‘Low Risk’ KFW’s contracts with AIG involved “low-risk senior tranches” of debt, and the use of the derivatives has declined in the past two years, the bank said in a statement Mark Herr , an AIG spokesman, declined to comment, as did representatives at BNP Paribas, Societe Generale and Credit Agricole. A spokeswoman for Royal Bank of Scotland Group Plc’s Netherlands unit, wasn’t immediately able to comment. RBS bought ABN Amro’s wholesale bank. Credit Logement Chief Financial Officer Eric Veyrent said last year that the firm “wouldn’t be directly touched by an AIG failure.” He didn’t immediately return a call yesterday outside of regular business hours. Two days before AIG’s Sept. 16, 2008, rescue, Timothy F. Geithner , then president of the New York Fed, was sent an e- mail from Alejandro LaTorre , an assistant vice president at the regulator, about the consequences a failure would have on European firms, according to the report. ‘Significant Problems’ “A bankruptcy filing had the potential to cause significant problems for numerous European banks” and could have led to their seizure by governments, said the panel, led by Harvard University law professor Elizabeth Warren . It is also possible that “some countries would have granted forbearance to their banks,” the panel said. Congress created the panel to oversee Treasury Department activities in stabilizing the economy and the $700 billion Troubled Asset Relief Program that bailed out firms including AIG. Geithner, 48, is now Treasury secretary. Goldman Sachs The so-called regulatory relief swaps are separate from the contracts tied to U.S. subprime mortgages that drained the insurer of cash in 2008, forcing a bailout that swelled to $182.3 billion. Goldman Sachs Group Inc. and Societe Generale were among the biggest counterparties in those transactions, which involved multisector collateralized debt obligations. As part of AIG’s third rescue, banks received payments in exchange for delivering the CDO assets linked to $62.1 billion in swaps. The securities were placed in a taxpayer-funded vehicle called Maiden Lane 3. The total size of European bank assets AIG protected shrank to $109.4 billion as of March 31, about 60 percent residential loans and the rest largely made of corporate debt, as some of the contracts expired. The average weighted duration of the swaps protecting residential loans is 31 years, while the span tied to corporate loans is about 5 years, AIG said in a May regulatory filing. AIG has said that it doesn’t expect to make payments tied to the European swaps. Banks that continue to get regulatory benefits from the derivatives may not terminate the contracts as early as expected, AIG said in the May filing. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

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Emerging Market Stocks, Commodities Rally, Led by China; U.S. Futures Drop

May 24, 2010

By Gavin Serkin May 24 (Bloomberg) — Emerging-market stocks gained, lifting the benchmark index by the most in eight days, and commodities rallied on speculation China will delay efforts to cool economic growth. U.S. stock index futures fell. The MSCI Emerging Markets Index advanced 0.6 percent as of 10:14 a.m. in London as the Shanghai Composite Index jumped the most in seven months. The Stoxx Europe 600 Index rose 0.3 percent, rebounding from a six-month low. Futures on the Standard & Poor’s 500 Index fell 0.5 percent after the U.S. benchmark index advanced 1.5 percent on May 21. Copper rose for a third day and palladium for a second day. The ruble strengthened the most since January against the euro. The euro declined against all 16 of its most-traded peers. President Hu Jintao said China will move gradually and independently in changing the nation’s exchange-rate mechanism, as talks with the U.S. opened in Beijing today. China should be cautious in introducing new tightening measures because the global economic environment is complex, Xu Lianzhong , an official with the National Development and Reform Commission’s price monitoring center, wrote in a commentary published today in the China Securities Journal. “The market is expecting a softening in the government’s stance on tightening given the uncertain outlook on global growth,” said Larry Wan , Shanghai-based deputy chief investment officer at KBC-Goldstate Fund Management Co., which oversees about $583 million. China’s Gains The Shanghai Composite jumped 3.5 percent, paring its retreat this year to 18 percent. China Vanke Co. , the nation’s biggest listed developer by market value, surged 4.9 percent. India’s Bombay Stock Exchange Sensitive Index advanced the most in two weeks as Citigroup Inc. said the benchmark climb 10 percent by December. Reliance Natural Resources Ltd. soared 22 percent in Mumbai after Chairman Anil Ambani and his brother Mukesh Ambani agreed to scrap a deal that prevented the billionaires from competing with each other in business. The decline in U.S. futures indicated the S&P 500 may pare some of its late rally on May 21, when it broke a three-day losing streak as investors speculated equities may have fallen too much following a 12 percent retreat since April 23. Sales of U.S. previously owned homes probably rose 5.6 percent in April to the highest level in five months as buyers took advantage of the last weeks of a government tax credit, economists said before a report from the National Association of Realtors at 10:00 a.m. in Washington. Metals Advance In London, Rio Tinto Group , the world’s third-largest mining company, gained 2.1 percent as base metals advanced. Barratt Developments Plc rose 3.2 percent after JPMorgan Chase & Co. recommended Britain’s biggest homebuilder by volume. Prysmian SpA rallied 2.4 percent in Milan on a report a group of investors are considering buying a stake in the company. Markets including Switzerland, Austria, Norway, Denmark and Greece are closed today for public holidays. Copper for delivery in three months gained 0.5 percent to $6,881 a metric ton on the London Metal Exchange. Nickel and zinc also advanced. Gold for immediate delivery added 0.8 percent to $1,185.89 an ounce and palladium by 2.3 percent to $446.60 an ounce. Crude oil for July delivery rose 0.4 percent to $70.28 a barrel in New York trading. The euro weakened 1.1 percent to $1.2436 and 111.82 yen. The Dollar Index, which tracks the currency against those of six major U.S. trading partners, rose for the first time in four days, climbing 0.8 percent. Bonds Climb Government bonds rose, with the yield on the 10-year Treasury dropping 4 basis points to 3.21 percent. German 10-year government bonds advanced for a fifth day, driving the yield almost 2 basis points lower to 2.65 percent, after earlier sliding to within a basis point of the lowest level since at least 1990. The cost of insuring against losses on European corporate bonds fell, with credit-default swaps on the Markit iTraxx Crossover Index of 50 mostly high-yield companies declining 6.5 basis points to 581.75, according to Markit Group Ltd. Swaps tied to government securities sold by Greece, whose deficit crisis sparked declines in sovereign debt that have roiled markets this month, dropped 46.5 basis points to 672, CMA DataVision prices show. To contact the reporters on this story: Gavin Serkin at gserkin@bloomberg.net

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Thom Hartmann: The IMF Knows How to Help America

May 17, 2010

The Financial Times is reporting that leading nations are still piling up debt even though there’s technically been an economic recovery. In particular, the IMF is looking at US debt over the next decade and predicting that it’ll be unsustainable if we don’t do something quick. Of course, what conservatives want to do is slash Social Security and Medicare while letting the government keep all those funds we’ve paid into the system. The IMF, on the other hand, is suggesting that a 10% value added tax (VAT – basically a national sales tax) along with increasing income taxes on rich people and adding a carbon tax like Denmark has done would raise revenues — income to the US treasury — by about 4.5 of GDP, which would largely solve the problem of the deficits Reagan and Bush left us. These are actually very doable solutions, but Republicans — representing the interests of the top 1 percent of big corporations and the top half of one percent of very rich individuals — will fight them tooth and nail. The question now is whether the Obama administration will have the political will to do it, and whether — while Karl Rove is raising hundreds of millions of dollars in private corporate money to destroy Democrats in the 2010 and 2012 elections — there will be any progressive politicians left to help things along.

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Greenland Oil Rush Looms as Exxon Eyes Cairn’s $400 Million Arctic Wager

May 5, 2010

By Marianne Stigset May 5 (Bloomberg) — Cairn Energy Plc is betting $400 million this year on striking oil off Greenland, a campaign that will be closely watched by producers such as Exxon Mobil Corp. and Chevron Corp. that hold rights off the island. The potential rewards may justify the cost of Arctic drilling: Greenland’s waters could hold 50 billion barrels of crude and gas, the U.S. Geological Survey estimates, enough to meet Europe’s energy demand for almost two years. More companies are on the way. Royal Dutch Shell Plc and Statoil ASA were among bidders in this week’s auction of offshore drilling rights. After six failed attempts by explorers in Greenland over the past 30 years the rush is on as global warming eases Arctic exploration and because of dwindling resources in areas such as the North Sea. For Greenland’s 56,000 inhabitants, largely dependent on shrimp exports, petroleum may also bring wealth and allow more independence from Denmark, which has held sway over the world’s largest island since 1721. “It’s an enormous acreage area and you’ve got to have stamina to see this through properly,” Simon Thomson , legal and commercial director at Cairn, which holds eight Greenland licenses, said in an interview. “Obviously we’re hoping for success, but the blocks are 10,000 square kilometers each.” ‘Serious Threats’ The far north’s potential is spurring exploration from Russia to Alaska. The Arctic may hold 27 percent of the world’s undiscovered gas and 13 percent of the oil, the USGS said in 2008. Areas off Greenland, including some shared with Canada, may hold 17 billion barrels of oil, 148 trillion cubic feet of gas and 9.3 billion barrels of gas liquids, the USGS said. Highlighted by the unfolding disaster in the U.S. Gulf of Mexico from a BP Plc oil spill, exploring in untouched , environmentally fragile waters home to whales and walruses isn’t without risk. According to the WWF , development and transport are “already serious threats” to the Arctic and has met opposition and kept areas off limits from Alaska to Norway. “Oil exploration in Greenland is very closely tied to independence, so there’s enormous local support,” said Truls Gullowsen, head of Greenpeace in Norway. “The area of the 2010 licensing round is very complicated, it’s very far up north, there’s lots of ice, lots of natural resources and very far away from any form of support should things go wrong.” Fishing, Hunting Greenland will in August announce the winners of 14 blocks in a 150,000-square-kilometer area in Baffin Bay, more than doubling its available acreage after holding regular rounds since 2002. The areas are north of the 67th parallel, where oil has been seen seeping out of rocks along the shoreline. The government has financed seismic surveys to attract explorers. It has handed out 13 licenses since 2002 to Cairn, Exxon, Chevron, Encana Corp., Husky Energy Inc., Dong Energy A/S, PA Resources AB and Nunaoil A/S, the state-owned company. There was “fierce” competition in the latest round, Greenland’s Bureau of Minerals and Petroleum said in a statement on May 3. “We’re a fishing and hunting economy, just like Norway used to be,” Oil Minister Ove Karl Berthelsen said by phone from Nuuk, drawing a comparison with the world’s sixth-biggest crude exporter. “We want our industry to stand on several legs and oil is very important. The next 20 years will be vital.” Greenland gets about $600 million a year, or $10,700 a person, from Denmark. It was granted home rule in 1979 and increased local powers in 2009. The island’s $2 billion economy derives about half its exports from shrimp, according to Greenland’s statistics agency . With planned taxes and royalties, and the 12.5 percent stake held in each license by Nunaoil, the government will get about 59 percent of the revenue, according to Joern Skov Nielsen , head of the petroleum agency. Oil Seeps In November, seven companies including Chevron, Exxon and Dong Energy A/S formed the Greenland Oil Industry Association, to share data and hold talks with the local government on environmental and safety issues. For companies like Norwegian Energy Co., the licensing round this year and in 2012 may be the right time to get a share of the potential windfall, Chief Executive Officer Scott Kerr said in an interview. “A small company like us we need to go in now, because if someone goes in and a discovery is made, we immediately get priced out of the market If Cairn has success, there are going to be a lot of people looking at Greenland,” he said. Statoil Returns Spokespeople at Statoil, Shell, Norwegian Energy and Cairn confirmed that they had applied for licenses in this year’s round. Of companies with current licenses, Exxon and PA Resources decided not to bid, according to spokespeople. “We’re still considering other Greenland opportunities,” said Patrick McGinn , an Exxon spokesman. Spokespeople at Chevron, Dong, Husky and Encana weren’t immediately available for a comment. For Statoil it will be a comeback to Greenland after drilling a dry well off Nuuk in 2000, the first for any explorer since the late 1970s. “Arctic projects are very close to the capabilities of Statoil,” Helge Lund , chief executive of Norway’s largest oil company, said on April 26. “We are interested in Greenland and the prospects there.” Cairn, based in Edinburgh, is preparing to drill as many as four wells off Disko Island, a whaling and hunting community where icebergs and humpback whales can be spotted offshore. The company expects to invest $1 billion over three years. Cairn acquired “a large amount of seismic data” in the past two years and plans four more wells next year, Thomson said. Cairn is assuming a 10 percent chance of success. Investments Needed As many as 20 wells may be drilled in the next 10 years with potential production in a decade, said Skov Nielsen. Exxon, Chevron and Dong must decide on drilling in their licenses off Disko over the next four years. The costs per well is about $100 million and eventual production facilities may need investments of $5 billion to $6 billion, he said. “The first discovery has to be at least 250-300 million barrels but any subsequent discoveries could be smaller because then you have the infrastructure,” he said. Companies drilling in the area will be able to build upon experience from other Arctic exploration, said Cairn’s Thomson. Still, icebergs, water depths that reach 1,500 meters toward the sea border with Canada, and months of darkness are challenges, said Hans Kristian Olsen , chief executive at Nunaoil. The island will also need to build up the industry, said Olsen. “We are starting from scratch in terms of developing an exploration and production industry.” To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net .

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London Airports Reopen as Carriers Pressure U.K. to End Six-Day Flight Ban

April 21, 2010

By Steve Rothwell and Ben Martin April 21 (Bloomberg) — U.K. airports including London Heathrow, Europe’s busiest, ended six days of closures after carriers pressured the government to permit flying in the volcanic ash cloud that’s snarled travel across the region. British Airways Plc and Virgin Atlantic Airways Ltd. aim to operate all long-haul services from London, according to their Web sites. European flights still face cancellation as planes are out of position and discount carriers Ryanair Holdings Plc and EasyJet Plc said they’ll run limited timetables. Services were restored last night after the government and planemakers agreed new rules for plane inspections and flights through thinner parts of the ash plume. British Airways, led by former pilot Willie Walsh , had criticized the U.K. for applying a stricter safety regime and keeping airports closed even as hubs in Paris, Frankfurt and Amsterdam opened for business. Flight bans imposed after the April 14 eruption of Iceland’s Eyjafjallajökull volcano grounded 95,000 flights through yesterday, according to Eurocontrol, which coordinates flight paths in the region. Restrictions remain in place in northwest Scotland where “a dense concentration” of ash persists, Britain’s National Air Traffic Services Ltd. said. Airlines must conduct their own risk-assessment tests, undertake damage inspections before and after each flight and report any ash-related incidents, according to the U.K.’s Civil Aviation Authority. ‘Increased Tolerance’ “Manufacturers have now agreed increased tolerance levels in low ash density areas,” the CAA said, adding that these will allow for “a phased reintroduction” of flights. The safety body will also run ash tests from the air and on the ground. “As we have many aircraft and crew out of position, it will still take some considerable time before we can restore our full flying program,” British Airways said on its Web site . Short-haul cancelations to and from London airports will continue until at least 1 p.m. local time. Chief Executive Officer Walsh said in a televised briefing for reporters that the imposition of a “blanket ban” on U.K. flights was unnecessary. Services from Paris’s Charles de Gaulle and Orly terminals resumed yesterday morning, enabling Air France-KLM Group, Europe’s biggest airline, to restore schedules. Lufthansa Schedule Deutsche Lufthansa AG plans to operate about 500 flights today, spokesman Thomas Jachnow said by telephone. Frankfurt airport has officially reopened, said Axel Raab , a spokesman for Germany’s DFS air traffic control agency. The terminal had previously permitted operations under “visual-flight rules.” Asian carriers including Singapore Airlines Ltd., Korean Air Lines Co. and Cathay Pacific Airways Ltd. also plan to resume some services to northern European today. Travel disruptions began last week after ash from the Eyjafjallajökull volcano began drifting across northern Europe, grounding planes and leaving travelers stuck across much of the continent. Ash represents a threat to jetliners because it could stop their engines by melting and congealing in turbines. European Union transport ministers agreed this week to loosen limits on flying after airline losses reached as much as $300 million a day, according the International Air Transport Association. British Airways has said it was losing 20 million pounds ($30 million) a day in revenue from the airspace restrictions. Repatriation Plan “The government will continue to work with all of the relevant agencies to ensure that people can return home to the U.K. quickly and safely, and that those booked on flights out of the U.K. can travel as soon as possible,” a spokesman for Prime Minister Gordon Brown said in a statement. “We will of course continue to monitor the situation closely.” As of midday yesterday, the ash plume covered a swath of Europe from Ireland to Russia, including northern France and Italy and the whole of Germany, Denmark, the Benelux nations, Switzerland, Austria, Poland, the Czech Republic, Latvia and Lithuania, according to the Met Office. Most of Scandinavia and Scotland were ash free, as was the Iberian peninsula. The U.K.’s relative proximity to the eruption has been a consideration in decisions taken about airport openings, Transport Secretary Andrew Adonis said in an interview. ‘Closer to Iceland’ “Britain is closer to Iceland than other parts of Europe and we’ve been more severely affected, so judgments we make here may not be the same judgments made in Europe,” he said. European airlines have asked governments and the European Union for aid, British Airways’ Walsh said. Payments were made after the Sept. 11 terror attacks on the U.S. in 2001, “and clearly the impact of the current situation is more considerable,” he said. European Union Competition Commissioner Joaquin Almunia said restrictions on assistance may be eased as the impact of the disruption is discussed by ministers. The Eyjafjallajökull eruption began on March 20 with a lava flow on the eastern flank of the volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14 directly under the glacier that covers most of the mountain. The previous eruption of the 1,666-meter peak in December 1821 continued until January 1823. To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net ; Ben Martin in London bmartin38@bloomberg.net

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U.K.’s Airports Reopen on New Rules for Flying After Icelandic Ash Cloud

April 20, 2010

By Ben Martin and Steve Rothwell April 21 (Bloomberg) — U.K. airports are reopening after the government and planemakers agreed on inspections and new rules for flying in the remnants of the cloud of Icelandic volcano ash that snarled travel across Europe. Airspace restrictions began easing at 9:34 p.m. yesterday, Britain’s National Air Traffic Services Ltd. said. Air-traffic control service resumed except for an area in northwest Scotland where “a dense concentration” of ash persisted, NATS said. The accord to restart U.K. flights helped end a patchwork of closings across Europe. While airports reopened in Paris, Frankfurt and Amsterdam , London’s Heathrow hub, the busiest in Europe, had stayed shut because regulators deemed the risk from the ash plume to be too great to fly safely. “Manufacturers have now agreed increased tolerance levels in low ash density areas,” the U.K.’s Civil Aviation Authority said. That allows “a phased reintroduction” of flights in airspace that had been closed due to the volcanic dust, the safety regulator said in an e-mailed statement. Airlines must conduct their own risk-assessment tests, “develop operational procedures to address any remaining risks,” add intensive inspections for ash damage before and after each flight, and report any ash-related incidents, the CAA said. The CAA said it will continue to run ash tests from the air and on the ground. Late Announcement Transport Secretary Andrew Adonis announced the agreement late yesterday after flights restarted in Europe and airlines pressed for an easing of U.K. flight curbs. Prime Minister Gordon Brown ’s government pledged to work with “all of the relevant agencies” to help travelers stranded by the cloud to reach their destinations. British Airways Plc plans to operate all of its long-haul flights from Heathrow and Gatwick today, according to a statement on its Web site. It anticipated short-haul cancelations to and from London airports until 1 p.m. at least. “As we have many aircraft and crew out of position, it will still take some considerable time before we can restore our full flying programme,” the carrier said. Chief Executive Officer Willie Walsh was “very pleased” that airports were reopening, he said in a televised briefing for reporters in London yesterday. He doesn’t “believe it was necessary to impose a blanket ban on all U.K. airspace.” Services from Paris’s Charles de Gaulle and Orly terminals resumed yesterday morning, with 30 percent of flights likely to operate, according to French Transport Minister Dominique Bussereau . ‘Different Model’ “They are using a different model in Paris and other parts of Europe,” said Richard Goodfellow , a spokesman for British Airways, which uses Heathrow as its main hub. Virgin Atlantic Airways Ltd. planned to operate a number of flights to the U.K. starting over the next 24 hours, with a goal of resuming its full schedule as soon as possible, according to a statement. BMI, a U.K. airline owned by Deutsche Lufthansa AG, and EasyJet Plc said they planned to restart service today. Asian carriers including Singapore Airlines Ltd., Korean Air Lines Co. and Cathay Pacific Airways Ltd. also planned to resume some services to northern European today. Eyjafjallajökull volcano Travel disruptions began last week after ash from an eruption of Iceland’s Eyjafjallajökull volcano began drifting across northern Europe, grounding planes and leaving travelers stuck across much of the continent. Ash represents a threat to jetliners because it could stop their engines by melting and congealing in turbines. European Union transport ministers agreed this week to loosen limits on flying after airline losses reached as much as $300 million a day, according the International Air Transport Association. British Airways , the country’s largest airline, has said it is losing 20 million pounds ($30 million) a day in revenue from the airspace restrictions. “The government will continue to work with all of the relevant agencies to ensure that people can return home to the U.K. quickly and safely, and that those booked on flights out of the U.K. can travel as soon as possible,” a spokesman for Prime Minister Gordon Brown said in a statement. “We will of course continue to monitor the situation closely.” As of midday yesterday, the ash plume covered a swath of Europe from Ireland to Russia, including northern France and Italy and the whole of Germany, Denmark, the Benelux nations, Switzerland, Austria, Poland, the Czech Republic, Latvia and Lithuania, according to the Met Office. Most of Scandinavia and Scotland were ash free, as was the Iberian peninsula. ‘Closer to Iceland’ The U.K.’s relative proximity to the eruption has been a consideration in decisions taken about airport openings, Transport Secretary Adonis said in an interview yesterday. “Britain is closer to Iceland than other parts of Europe and we’ve been more severely affected, so judgments we make here may not be the same judgments made in Europe,” he said. European airlines have asked governments and the European Union for aid, British Airways’ Walsh said. Payments were made after the Sept. 11 terror attacks on the U.S. in 2001, “and clearly the impact of the current situation is more considerable,” he said. European Union Competition Commissioner Joaquin Almunia said restrictions on assistance may be eased as the impact of the disruption is discussed by ministers. The Eyjafjallajökull eruption began on March 20 with a lava flow on the eastern flank of the volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14 directly under the glacier that covers most of the mountain. The previous eruption of the 1,666-meter peak in December 1821 continued until January 1823. To contact the reporters on this story: Ben Martin in London bmartin38@bloomberg.net ; Steve Rothwell in London at srothwell@bloomberg.net

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Ash Zones Breed Confusion as Paris Airports Open, Heathrow Remains Closed

April 20, 2010

By Steve Rothwell and Alex Morales April 20 (Bloomberg) — Europe’s air-traffic controllers can’t agree on whether it’s safe to fly through the Icelandic ash cloud as airports in Paris, Frankfurt and Amsterdam reopen while London’s Heathrow hub remains closed. Services from Paris’s Charles de Gaulle and Orly terminals resumed this morning, with 30 percent of flights likely to operate, according to French Transport Minister Dominique Bussereau . Heathrow, Europe’s busiest airport, probably won’t reopen today, Britain’s National Air Traffic Services said. “They are using a different model in Paris and other parts of Europe and we are speaking to the authorities about this,” said Richard Goodfellow , a spokesman for British Airways Plc , which uses Heathrow as its main hub. The carrier said NATS was to blame for six days of disruption to its services. About 14,000 flights should take place in Europe today, or 50 percent of the usual total, as flight bans imposed after the eruption of Iceland’s Eyjafjallajökull volcano are eased, according to Brussels -based Eurocontrol, which oversees flight paths in the region. Airspace is still restricted in 10 countries, based on decisions by local traffic control bodies. Ash represents a threat to jetliners because it could stop their engines by melting and congealing in turbines. European Union transport ministers agreed yesterday to loosen limits on flying after airline losses reached as much as $300 million a day, according the International Air Transport Association . Under the EU accord, the U.K. Met Office’s Volcanic Ash Advisory Centre is supplying maps showing areas where ash concentrations are more than 10 times normal levels and flights are banned, together with ones where the dust is thinner. Local controllers must decide whether to permit flying in those zones. ‘Safest Thing’ “They have to make a decision about the safest thing to do,” Eurocontrol spokeswoman Kyla Evans said in an interview. “Using the more detailed information available, some have decided to open a little bit, some are waiting a bit longer and some have said that flying will open up completely.” As of midday, the ash plume covered a swath of Europe from Ireland to Russia, including northern France and Italy and the whole of Germany, Denmark, the Benelux nations, Switzerland, Austria, Poland, the Czech Republic, Latvia and Lithuania, according to the Met Office. Most of Scandinavia and Scotland are ash free, as is the Iberian peninsula. BA Thwarted British Airways, the largest carrier between London and New York, said after yesterday’s EU meeting that it would resume flights from the U.K. capital at 7 p.m. today. It later scrapped short-haul services throughout the country after NATS warned of a new ash cloud, together with all long-haul departures. The company, losing 20 million pounds ($30 million) a day in revenue , still wants to operate more than a dozen inter- continental routes into Heathrow and with aircraft already in the air is monitoring airport availability, Goodfellow said. Among Air France arrivals at Charles de Gaulle this morning were services from Los Angeles and New York, while planes departed for Beirut, Algiers and Cairo. Flights to European destinations were schedule to resume at noon. France’s civil-aviation authority, the DGAC, opened Paris- area airports after Air France completed test flights from the capital to Bordeaux, Toulouse, Marseille and Nice without incident, spokesman Eric Heraud said by telephone. Paris and London are both under the same ash cloud as modeled by the Met Office and a British Airways plane also flew a three-hour test flight from the U.K. capital without incident. Faced with similar data, “it’s for each authority to reach the interpretation it considers most appropriate,” Heraud said. Lufthansa Flights Deutsche Lufthansa AG intends to operate 200 flights today under visual flight rules after receiving special clearance from German air-traffic regulator Deutsche Flugsicherung, spokeswoman Claudia Lange said in a telephone interview today. The carrier will operate the majority of long-haul services to destinations including New York, Boston and Miami, as well as some flights within Europe and Germany, she said. German airspace is officially closed for normal flight rules until 8 p.m. local time, DFS said in a statement on its Web site. With planes out of position and airlines concentrating on repatriating stranded passengers, the restoration of full timetables may take six days, according to IATA. Flight bans imposed after the April 14 eruption in Iceland grounded 95,000 services through today, Eurocontrol said in a statement. Restrictions remain in Denmark, Estonia, Finland, Latvia, Slovenia, Slovakia, Ukraine and parts of France and Italy. Airspace above 20,000 feet (6,100 meters) is also open. Not Normal “It’s a long way short of any semblance of normal operations,” said John Strickland , an analyst at JLS Consulting Ltd. in London. In the U.K., skies over Glasgow, Edinburgh and Aberdeen were reopened to limited services at 7 a.m., though they may close later today, according to BAA Ltd., which owns the airports in the Scottish cities. European airlines have asked governments and the European Union for aid, British Airways Chief Executive Officer Willie Walsh said yesterday, adding that money was paid after the Sept. 11 terror attacks on the U.S. “and clearly the impact of the current situation is more considerable.” European Union Competition Commissioner Joaquin Almunia said restrictions on aid may be eased as the impact of the disruption is discussed by ministers. U.K. Prime Minister Gordon Brown said today that “every aspect of contingency planning is being looked at” in order to restore flights and repatriate stranded Britons. ‘Safe Corridors’ “We know that further volcanic ash will be in the clouds over the next day or two, so we are taking advantage of the window of opportunity,” Brown told reporters in London. “We are having discussions with the manufacturers, airline authorities, safety representatives and the Met Office about what would be safe corridors that we might be able to use.” The Eyjafjallajökull eruption began on March 20 with a lava flow on the eastern flank of the volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the glacier that covers most of the mountain. The previous eruption of the 1,666-meter peak in December 1821 continued until January 1823. Asian carriers including Singapore Airlines Ltd., Cathay Pacific Airways Ltd. and Air China Ltd. have added extra flights or larger planes on services to Rome and other open airports to help stranded passengers. U.S. Services Delta Air Lines Inc. , the world’s largest carrier, aimed to have overnight flights to Madrid, Barcelona, Rome, Athens and Istanbul, spokesman Anthony Black said. The company canceled 90 services yesterday and 39 for today until European airspace controllers provide further updates, he said. UAL Corp.’s United Airlines intends to operate all of its flights from the U.S. to Europe later today and have a “full recovery” with normal schedules by tomorrow, said Robin Urbanski , a spokeswoman for the Chicago-based carrier. AMR Corp. ’s American Airlines canceled 62 European flights today because of ash from a new eruption, spokesman Tim Wagner said in an e-mail. The airline will operate flights between the U.S. and Madrid, Barcelona and Rome, he said. To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net ; Alex Morales in London at amorales2@bloomberg.net .

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Carlsberg Workers Strike Over Ban On Drinking At Work

April 9, 2010

COPENHAGEN — Scores of Carlsberg workers walked off their jobs in protest Thursday after the Danish brewer tightened laid-back rules on workplace drinking and removed beer coolers from work sites, a company spokesman said. The warehouse and production workers in Denmark are rebelling against the company’s new alcohol policy, which allows them to drink beer only during lunch hours in the canteen. Previously, they could help themselves to beer throughout the day, from coolers placed around the work sites. The only restriction was “that you could not be drunk at work. It was up to each and everyone to be responsible,” company spokesman Jens Bekke said. Carlsberg had mulled a stricter drinking policy for years and finally decided to impose the new rules on April 1, prompting protests from the staff. Bekke said around 800 workers went on strike Wednesday and around 250 walked off their jobs Thursday, resulting in interruptions to beer transports in and around Copenhagen. Carlsberg’s truck drivers joined the strike in sympathy – even though they are exempt from the new rules, Bekke said. The truck drivers are permitted to bring three beers from the canteen because they often don’t have time to have lunch there. The trucks have alcohol ignition locks preventing the drivers from driving drunk, he added.

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French Government Backs SNCF in Bidding War With Deutsche Bahn Over Arriva

March 24, 2010

By Andreas Cremer and Gregory Viscusi March 24 (Bloomberg) — France’s Transport Ministry said it will back state railroad SNCF in a bid for Arriva Plc, setting up a contest with German rival Deutsche Bahn AG for a U.K. bus and train company valued at 1.49 billion pounds ($2.24 billion). “We are for any project that helps SNCF expand and grow,” Transport Secretary Dominique Bussereau said yesterday in an interview in Paris. “But there is competition from Deutsche Bahn. May the best one win, even if I hope it’s SNCF.” Bussereau’s comments come as representatives of the German government prepare to back a bid from state-owned Deutsche Bahn at a supervisory-board meeting today, two people familiar with the matter said. The Berlin-based company said March 18 it had contacted Arriva regarding a possible cash offer for the biggest public transport company in Europe that’s not in national hands. “There’s no doubt that an acquisition of Arriva would make good sense,” Volkmar Vogel, a lawmaker and member of Chancellor Angela Merkel ’s ruling Christian Democrats, said in an interview. The purchase “may yield major benefits,” he said. Arriva rose as much as 4.9 percent in London trading and was up 4.1 percent at 746 pence at 8:12 a.m. The stock has gained 50 percent this year. Deutsche Bahn and SNCF, as Société Nationale des Chemins de fer Français is known, are competing for Sunderland, England- based Arriva as they target primacy in the liberalizing European transport market. Keolis Plan SNCF, led by Chief Executive Officer Guillaume Pepy , has already sought a combination of Arriva and its Keolis unit once this year. Talks were called off earlier this month. A merger with Keolis, which runs buses, trains and trams in seven European countries, would create a business with 6.5 billion euros ($8.7 billion) in sales and help win contracts as local governments open public transport to private investment, Arriva said Jan. 28, when it confirmed the discussions. Merkel’s coalition government will accept Deutsche Bahn’s argument that the benefits of buying Arriva to expand abroad outweigh the likely costs, according to the two people, who declined to be identified because the matter isn’t public. Net income at the German company amounted to 830 million euros last year, according to a third person, almost 40 percent lower than in 2008. Sales fell 12 percent to 29.3 billion euros as the recession hurt demand for transport, said the person, a labor official who spoke on condition that he not be identified. High Prices Adding Arriva would boost Deutsche Bahn’s presence in the lucrative U.K. rail market, which has been run by private companies since the last Conservative Party government, bringing access to franchise contracts with high ticket prices by European standards without the need to bid for them. Arriva runs trains in Wales and also the CrossCountry franchise that operates the long-distance route from Cornwall to Scotland. Deutsche Bahn already owns Britain’s biggest rail- freight company, together with Chiltern Trains, which provides passenger services from London to Birmingham, and has 50 percent stakes in Wrexham, Shropshire & Marylebone Railway and the London Overground commuter route. It won a seven-year contract to run streetcars in northeast England on Feb. 4. Arriva , which had net income of 108.5 million pounds last year, would also help Deutsche Bahn CEO Ruediger Grube expand into more European markets, helping to match SNCF. The U.K. company, which employs about 42,000 people, gets 52 percent of revenue from its home country and the rest from units in the Czech Republic, Denmark, Germany, Hungary, Italy, the Netherlands, Poland, Portugal, Slovakia, Spain and Sweden. ‘More Pillars’ German Transport Minister Peter Ramsauer , who will attend today’s supervisory board meeting at 10 a.m. in Frankfurt, said March 12 that Deutsche Bahn shouldn’t focus solely on Germany and needs “a few more pillars internationally.” Deutsche Bahn spokesman Reinhard Boeckh declined to comment on the meeting’s agenda when contacted by telephone yesterday. The company’s main labor unions, Transnet and GDBA, say they’re not opposed to international expansion, while cautioning that Arriva must be bought at a price that has no repercussions for pay and conditions for workers in Germany. “Deutsche Bahn is a huge international player,” said Klaus Dieter Hommel , leader of GDBA and a supervisory-board member.“ What matters is that any step the company is now considering to expand its footprint further is taken in a way that doesn’t impact on employment conditions.” The railway’s board will today appoint former Degussa AG CEO Utz-Hellmuth Felcht as chairman, replacing former economy minister Werner Mueller , whose contract is not being extended. Merkel’s ruling coalition of the center-right CDU and CSU parties and the pro-business Free Democrats has three deputy ministers on the 20-strong body. The panel will also approve Deutsche Bahn’s 2009 results, which are due to be published tomorrow. A German government spokesman couldn’t be reached immediately for comment. To contact the reporters on this story: Andreas Cremer in Berlin at acremer@bloomberg.net ; Gregory Viscusi in Paris at gviscusi@bloomberg.net .

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Sweden Unexpectedly Slid Back Into Recession in Fourth Quarter on Exports

March 1, 2010

By Johan Carlstrom March 1 (Bloomberg) — Sweden unexpectedly fell back into recession in the fourth quarter as the exports that make up more than half the economy declined, suggesting the central bank may delay interest-rate increases. Gross domestic product in the Nordic region’s largest economy slumped 0.6 percent from the previous quarter and fell a revised 0.1 percent in the third, Statistics Sweden said. The median estimate of 13 economists in a Bloomberg survey was for 0.3 percent growth. The reversal was triggered by the lackluster performance of Sweden’s biggest export markets in Europe and the muffled impact of tax cuts, economists including Roger Josefsson at Danske Bank A/S said. Prospects this quarter look rosier, economic reports show, though the Riksbank, which on Feb. 11 lowered its forecast for 2010 growth, may delay raising rates until September from its previously projected “summer or early autumn.” “This gives us a completely new starting point for 2010,” said Roger Josefsson , chief economist at Danske Bank A/S in Stockholm. “We need to kick-start exports. If the bet before this was 50/50 between a July rate increase and a September increase, there’s now a clear bias toward September.” The krona fell as much as 0.8 percent against the euro and traded at 9.76 at 4:37 p.m. in Stockholm. Against the dollar, the krona dropped as much as 1.6 percent. ‘Negative Surprise’ The currency strengthened more than all the other 156 tracked by Bloomberg except Brazil’s real with February’s 5.5 percent gain against the euro, the krona’s best month since January 1999. Some traders predicted it will appreciate at least 10 percent in 2010 as the economy grows almost twice as fast as Europe’s and the Riksbank raises interest rates. “The main negative surprise was private domestic demand as both investments and household consumption came in markedly lower than forecast,” said Stefan Hoernell , senior economist at Svenska Handelsbanken AB. Exports, which fell 5.7 percent in the quarter, “were weak.” Sweden has been affected by the economic recessions and slowing recoveries in Europe, which attracts almost three- quarters of its overseas sales. The economies of neighboring Norway and Denmark grew less than economists expected in the quarter, while the recovery in the European Union almost stalled and German output stagnated in the period. Little Impact The government’s domestic stimulus had little impact, economists said. Household consumption rose 1.8 percent, government consumption rose 2.1 percent and investments fell 11.9 percent. “It seems like corporates are delaying expanding their investments,” said Nicola Mai , an economist at JP Morgan in London. Prime Minister Fredrik Reinfeldt , who faces elections this year, cut income taxes for a fourth time since 2006 on Jan. 1 as part of a plan to spend about 1 percent of GDP this year to boost demand and get more people into jobs. Swedish unemployment will rise to 9.4 percent this year and stay at that level in 2011, the central bank predicts. Exporters in manufacturing industry are disappointed by the pace of recovery in cross-border trade, the central bank said on Feb. 1, citing a survey of business representatives. SKF AB , the world’s biggest maker of ball bearings, on Jan. 28 said demand for its products going forward is “still uncertain” as it posted worse-than-expected results in the fourth quarter. Electrolux AB , the world’s second biggest appliance maker, on Feb. 3 reported lower-than-forecast profit in the fourth quarter “due to continued weak markets” as demand “dramatically declined” last year. Picking Up The central bank on Feb. 11 lowered its expectations for growth to 2.5 percent this year from 2.7 percent earlier as it kept its key lending rate at a record-low 0.25 percent to boost growth. Still, it brought forward the expected timing of its next rate increase to “summer or early autumn” from a previous projection of “autumn.” There are signs economic growth may be picking up. Consumer and manufacturing confidence rose to their highest levels in more than two years in February, and exports grew on an annual basis for the second time in 15 months in January. “The manufacturing industry reports strong order growth from both the domestic and export markets for the past three months, the National Institute of Economic Research said on Feb. 25. “Output has also increased considerably.” Economic reports this year “showed improvement, giving positive signals for first quarter GDP growth,” said Gizem Kara, an economist at BNP Paribas in London in a note. Annual retail sales rose the most in more than two years in January. Hoernell at Svenska Handelsbanken said the fourth quarter decline was a “a blip in an upward trend.” The current quarter “has started off sturdy with strong retail and car sales and a further increase in key barometers,” he said. To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net

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Iceland Credit Risk Rises `Considerably’ If Bailout Loan Shelved, S&P Says

January 18, 2010

By Tasneem Brogger Jan. 18 (Bloomberg) — Iceland’s credit risk may rise “considerably” as the island faces the threat of a shelved emergency bailout and a government collapse, Standard & Poor’s said. “The risk is there that the program will fall apart and with that, the downside risks would increase very considerably,” Moritz Kraemer , S&P’s managing director for Europe, the Middle East and Africa, said in a Jan. 15 telephone interview. If the outlook for the bailout program doesn’t improve, “it’s quite possible” the government will collapse. President Olafur R. Grimsson’s Jan. 5 decision to block a U.K. and Dutch depositor accord called into question the continued disbursement of a $4.6 billion loan from the International Monetary Fund and the Nordic countries that Iceland needs to avert default. Fitch Ratings cut the island’s credit grade to junk the same day and S&P said it may lower its BBB- rating to non-investment grade within a month if the rejection halts bailout flows. “We were not encouraged by the statement of the president because it also made it clear that predictability of policy implementation in Iceland is not what we thought it would be,” Kraemer said. “The political process has turned out to be even more cumbersome than we had anticipated.” The cost of protecting Iceland’s sovereign bonds from non- payment increased last week, according to CMA DataVision prices in New York. Credit-default swaps on the nation’s debt rose 37 basis points last week to 543.58 basis points. A basis point is 0.01 percentage point. Government Collapse? “The increasing sovereign risk in countries such as Iceland and Greece in Europe will very likely impact the European-based lenders and I could also see it having a spillover effect on some of the U.S. banks,” said Brayan Lai , a Hong Kong-based credit analyst at Calyon. “If that’s the case, the recovery phase is going to be more protracted than people initially thought.” The so-called Icesave bill, which allows the government to guarantee a $5.5 billion loan from the U.K. and Netherlands to repay depositor claims, is due to be put to a referendum by March 6. Most polls since Jan. 5 show Icelanders will reject the legislation, which lawmakers passed 33 to 30 on Dec. 30. The political strain of any failure of the accord with the U.K. and Dutch may be too much for the government to survive, Kraemer said. “The cohesion in the coalition is superficial in the sense that it’s forced upon the coalition because they have so few options,” Kraemer said. “But the centrifugal powers may just get the upper hand here.” No Cross-Border Deal Grimsson’s decision has interrupted government efforts to resurrect the economy, which buckled in October 2008 under the $80 billion debt burden amassed by its three biggest banks. Prime Minister Johanna Sigurdardottir’s coalition of Social Democrats and Left Greens has spent almost a year trying to settle creditor claims and rebuild Iceland’s banking system. A U.K. and Dutch depositor settlement was the final milestone needed to normalize Iceland’s international relations. Grimsson said in a Jan. 14 interview that his decision to block the bill will leave the economy unscathed, because an earlier accord will take effect. That bill, which he signed in September, was rejected by the U.K. and Netherlands. Nordic Governments “There is no cross-border agreement” if the current bill is voted down in a referendum, Kraemer said. “The external financing complementing the IMF stand-by agreement may not be in place, because the Nordic governments had made future disbursements contingent on the resolution of Icesave. That’s where it all ends. Basically if the program were to collapse because there’s no resolution, then the external financing conditions for Iceland could become quite precarious.” The “common view” of Sweden, Norway, Finland and Denmark on the status of their $2.5 billion loan after Grimsson’s de facto veto of the Icesave bill is that continued disbursement of the loan “would require that Iceland complies with its deposit guarantee scheme obligations,” Dorte Drange, a spokeswoman at Norway’s Finance Ministry said in an e-mailed response to questions. “If the Nordic governments were to conclude that the June legislation does not satisfy their expectations because of its unilateral nature, the IMF loan would have to be renegotiated,” Kraemer said. “That creates a huge amount of uncertainty. The surprising non-signature of President Grimsson gives the indication that one should possibly expect the unexpected.” To contact the reporter responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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Research and Markets: The Essential Corporate Tax Handbook – 2010 Edition Now Available

January 8, 2010

UK, Russia, Denmark, the Netherlands, Luxembourg and many others. Topics cover, among others, tax incentives for green investing, debt restructuring, cross-border mergers, exchange of information, restructuring of distressed businesses, and many regional

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Al-Qaeda-Linked Somali Man Is Shot by Police in Home of Danish Cartoonist

January 1, 2010

By Gelu Sulugiuc Jan. 2 (Bloomberg) — A Somali man with ties to al-Qaeda was shot as he broke into the home of Kurt Westergaard , the Danish cartoonist who depicted Islam’s prophet Mohammed, in a “terror-related” act, the Danish Security and Intelligence Service said. Police shot the 28-year-old and wounded him in the knee and hand as he entered the cartoonist’s Aarhus home armed with a knife and a hatchet yesterday, the service said in a statement on its Web site . He was then arrested and charged with attempted murder, the statement said. Westergaard, 74, drew one of 12 cartoons of the prophet Mohammed published in 2005 in the Danish newspaper Jyllands- Posten . His drawing depicted the prophet with a bomb in his turban. The cartoons sparked riots in several Muslim countries that ended with the deaths of more than 50 people. Danish authorities did not release the name of the Somali, who they said had a residence permit in Denmark. The security service said he had close ties with the Somali terrorist organization al-Shabaab and with al-Qaeda leaders in East Africa. “This confirms once again the terrorist threat directed against Denmark and against cartoonist Kurt Westergaard in particular,” said Jakob Scharf, the security service chief. “The security measures introduced to protect Kurt Westergaard have proven effective.” Jyllands-Posten cited Westergaard as saying that he sought shelter in a bathroom modified into a safe room. In 2008, three other men were arrested for plotting to kill Westergaard. To contact the reporter responsible for this story: Gelu Sulugiuc in Copenhagen at gsulugiuc@bloomberg.net

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Swedish Krona to Rally From Worst in Quarter as Growth Prompts Rate Rises

December 27, 2009

By Anna Rascouet and Anchalee Worrachate Dec. 28 (Bloomberg) — The Swedish krona, the worst performer among the 16 biggest currencies this quarter, will rebound in 2010 as the economy recovers and interest rates rise, according to some of the largest foreign-exchange traders. UBS AG has made betting on krona gains versus the euro one of its top trades for next year. UniCredit SpA advises buying options to sell the euro against the krona, Danske Bank A/S says the currency is below its true value, and Deutsche Bank AG sees it rising 6.6 percent versus the euro by the end of March. “It’s the most undervalued currency in the Group of 10 universe by any metric you choose to use,” said John Hydeskov , a foreign-exchange strategist in Copenhagen at Danske Bank, Denmark’s largest lender, which sees the currency gaining about 3.3 percent by the end of the first quarter versus the euro. “The largest potential belongs to the krona. The Riksbank will raise rates quite dramatically in the second half.” Purchasing power parity, a measure of the cost of goods relative to other countries, shows the krona is 46 percent below its true value against the euro, the biggest disparity among the currencies of the G-10 richest countries, according to data compiled by Bloomberg. The krona will appreciate to 9.88 per euro by June of next year and 9.60 by the end of 2010, according to the median of 23 estimates compiled by Bloomberg. The currency was at 10.47 per euro as of Dec. 24. Latvian Effect The krona slid 4.2 percent against the dollar, 2.7 percent versus the euro and 2.7 percent compared with the yen in the fourth quarter through Dec. 24, more than any of the 16 most- traded currencies tracked by Bloomberg. The declines came as the nation’s worst recession since World War II hampered exports at companies from truckmaker Volvo AB to SKF AB , the world’s biggest maker of ball bearings, and investor concern a devaluation by neighboring Latvia would result in losses at Swedish banks, after Prime Minister Valdis Dombrovskis proposed capping mortgage holders’ liability. Sweden’s recession has been deeper than for some of its neighbors. The economy will shrink 4.7 percent this year compared with a decline of 1.4 percent in Norway and a contraction of 4.5 percent in Denmark, according to November forecasts by the Paris-based Organization for Economic Cooperation and Development. Gothenburg, Sweden-based Volvo cut at least 22,000 jobs this year as demand for its goods dropped. SKF, also headquartered in Gothenberg, posted its fourth straight drop in quarterly earnings on Oct. 20. Exports make up half of Sweden’s $480 billion economy. Expanding Economy As the global economic recovery revives demand, the Swedish economy may expand 2.7 percent next year, after shrinking about 4.5 percent in 2009, the Stockholm-based Riksbank said on Dec. 16. Unemployment will peak at 10.1 percent next year, before falling to 10 percent in 2011, it said. “We see good scope for the Riksbank to start raising rates in the second quarter, months before the ECB,” said Mansoor Mohi-uddin , the global head of currency strategy in Zurich at UBS, the world’s second-biggest currency trader. “Some policy makers are already talking about a strong recovery coming through soon in the Swedish economy. Being short euro-krona is one of our top trades for 2010.” Swedish policy makers left the nation’s benchmark interest rate at 0.25 percent on Dec. 16 and repeated a pledge to keep it at a record low until autumn 2010. The Riksbank will raise the rate by 75 basis points in the third quarter next year to 1 percent, according to a weighted average of 11 economist forecasts compiled by Bloomberg. The ECB, whose main refinancing rate is 1 percent, will refrain from increasing it until the fourth quarter, according to the average of 16 forecasts. Fiscal Stimulus Sweden had a budget surplus of 6.7 billion kronor ($915 million) in November, putting it on course to post a smaller deficit than initially forecast, the country’s debt office said on Dec. 7. “Sweden will be among the few countries that can actually afford to continue to provide some sort of stimulus in terms of fiscal policy,” said Henrik Gullberg , a London-based foreign- exchange strategist at Deutsche Bank AG, the world’s largest currency trader. “That will make a big difference, especially compared with some of the major economies where huge deficit numbers are being run.” The krona slumped 2.4 percent against the euro in October, its biggest monthly slide in eight months, as investors speculated Latvia would drop its currency peg with the euro. The Baltic state drew up legislation designed to limit homeowner mortgage liability in case of a decline in its currency, stoking concern that Swedish banks, the biggest lenders in the country, would suffer losses on loans. Baltic Risk ‘Contained’ “The problem is contained in regards to the Baltic nations, Latvia in particular,” said Ken Dickson , a money manager at Edinburgh-based Standard Life Investments, which oversees $220 billion. “We remain very positive on the krona. It’s undervalued, especially against the euro.” While the krona rebounds, bets on other currencies may produce better returns, according to HSBC Holdings Plc, Europe’s biggest bank by market value and the world’s seventh largest currency trader. “The markets always had a love-affair with the krona and they got their fingers badly burnt through the crisis last year,” said Paul Mackel , a director of currency strategy at HSBC Holdings Plc in London. “It looks like Sweden is through the worst but the story is stronger elsewhere and, on a relative basis, the krona doesn’t deserve to fall back into favor the way everyone seems to be thinking.” The krona will strengthen to 6.61 per dollar by the end the second quarter before weakening to 6.92 by the end of 2010, according to the median of 20 estimates compiled by Bloomberg. It was at 7.26 per dollar as of Dec. 24. The Swedish currency may also recover as evidence of the global economic rebound fuels gains in stocks, according to Chiara Cremonesi , a strategist at Unicredit in London. The Standard & Poor’s 500 Index of shares had a correlation with the krona’s moves against the euro of 0.73 last week, and reached 0.87 during the quarter. A value of 1 would mean they moved in lockstep. “Risk appetite will resume at the beginning of 2010,” Cremonesi said. “This will favor the Swedish krona.” To contact the reporters on this story: Anna Rascouet in London at arascouet@bloomberg.net ; Anchalee Worrachate in London at aworrachate@bloomberg.net

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Stocks Rise, Bonds Fall as Economies Improve; Greek Government Debt Gains

December 22, 2009

By David Merritt Dec. 22 (Bloomberg) — Stocks rose, sending the Dow Jones Stoxx 600 Index to a five-week high, and government bonds fell on evidence economies around the world are improving. Greek stocks and debt rallied. The Stoxx 600 climbed 0.6 percent at 10:17 a.m. in London. Futures on the Standard & Poor’s 500 Index added 0.3 percent. Government bonds fell, driving the yield on the U.S. 10-year to its highest level in four months. Greek debt surged, with the 10-year yield dropping the most in a week, as concern eased that credit downgrades might make the debt ineligible as collateral at the European Central Bank. November sales of existing U.S. homes probably rose to the highest level in more than two years, economists said before a report today. European Central Bank policy maker Juergen Stark said euro-area growth reached its “economic trough” in the fourth quarter. The U.K. economy shrank by 0.2 percent, according to final figures for the third quarter that beat the 0.3 percent contraction initially reported by the government, while Denmark emerged from recession in the last quarter. “In the absence of bad news, the market can continue to move back to its highs,” said Kilian de Kertanguy , a fund manager at Cholet-Dupont Gestion SA in Paris, which oversees about $2.3 billion. “Investors want to see the glass half full, and want to be one step ahead.” Goldman Recommendations The MSCI World Index advanced 0.4 percent. All 19 industry groups on the Stoxx 600 Index gained. National Bank of Greece SA, the nation’s biggest lender, surged 4.2 percent in Athens. Barratt Developments Plc and Taylor Wimpey Plc led gains among U.K. homebuilders, adding at least 3.7 percent, after Goldman Sachs Group Inc. recommended buying the stocks. Julius Baer Group Ltd. rallied 3.8 percent as Goldman Sachs initiated coverage with a “conviction buy” recommendation. The MSCI Asia Pacific Index climbed 1 percent, its biggest gain in almost three weeks. Sony Corp. led Asian exporters higher, rising 2.7 percent in Tokyo, after the Bank of Japan said it will “persistently” keep interest rates close to zero. The yen weakened against the dollar. Nissan Motor Co., which gets 36 percent of its sales in North America, climbed 6.1 percent while bigger rival Toyota Motor Corp. jumped 2.2 percent. The gain in U.S. futures indicated the S&P 500 may extend yesterday’s 1.1 percent advance. A report due at 10 a.m. in Washington may show sales of existing U.S. homes rose 2.5 percent to a 6.25 million annual rate, in a sign housing is gaining strength along with the broader economy entering 2010, according to the median forecast of economists surveyed by Bloomberg News. Growth Confirmed The U.S. economy grew at a 2.8 percent annual rate in the third quarter, economists predicted the Commerce Department’s final reading on gross domestic product will show at 8:30 a.m. today in Washington. China’s Shanghai Composite Index lost 2.3 percent for its lowest closing value since Oct. 30 on concern the government will accelerate measures to curb asset bubbles. Industrial and Commercial Bank of China Ltd. led declines among banks after central bank Governor Zhou Xiaochuan said reserve requirements for lenders remain an important policy tool. Poly Real Estate Group Co., the second-largest developer by market value, slid 2.8 percent. Bonds Decline Declines in the U.S. 10-year note drove the yield up by as much as 5 basis points to 3.73 percent, the highest level since Aug. 13. The yield on the 10-year German bund, Europe’s benchmark government security, climbed 4 basis points to 3.23 percent. U.S. 10-year yields have increased 50 basis points this month, widening the difference, or spread, with bunds to 48 basis points yesterday, the biggest gap since July 2007. The spread was 47 basis points today. Emerging-market bonds outperformed, sending the extra yield investors demand to own the debt over U.S. Treasuries down 5 basis points to 2.87 percentage points, the lowest level since August 2008, according to JPMorgan Chase & Co.’s EMBI+ Index . The cost of insuring against a default on European high- yield corporate bonds in the credit-default swaps market fell to a 19-month low, with the Markit iTraxx Crossover Index dropping 6.5 basis points to 452.5, according to JPMorgan Chase & Co. Greek Relief Greek 10-year notes rose, with the yield falling 21 basis points, the biggest decline since Dec. 16. Moody’s Investors Service lowered the government’s rating one step to A2 and said the likelihood that the ECB will make the debt of any euro- member state ineligible at repurchase operations is “very remote.” The difference in yield between the 10-year Greek bond and the German bund, Europe’s benchmark government security, narrowed 25 basis points to 252 basis points. It was 184 basis points at the start of this month. Copper for delivery in three months declined 0.9 percent to $6,875 a metric ton on the London Metal Exchange, leading a retreat in industrial metals. Crude oil for February delivery rose 7 cents to $73.79 a barrel in New York trading, before the Organization of Petroleum Exporting Countries meets today in Angola, where the group is expected to maintain production targets. Gold for immediate delivery added 0.2 percent to $1,096.05 an ounce in London. To contact the reporter on this story: David Merritt in London at dmerritt1@bloomberg.net .

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GE-Mitsubishi Wind-Turbine Battle Threatens Arkansas `Silicon Valley’ Plan

December 20, 2009

By Susan Decker Dec. 18 (Bloomberg) — General Electric Co. ’s effort to keep wind turbines made by Mitsubishi Heavy Industries Ltd. out of the U.S. may hinder Arkansas’s plan to become the “Silicon Valley of wind manufacturing.” The state has spent two years luring wind-related manufacturers, including Denmark’s LM Glasfiber AS and Germany’s Nordex AG . In October, Mitsubishi announced plans to build a $100 million wind-turbine assembly plant that would bring about 400 jobs to Fort Smith, the state’s second-biggest city, with a population of 85,000. “I’m confident they’re coming to Arkansas,” said Joe Holmes, marketing head of the state Economic Development Commission, who used the Silicon Valley comparison. “When you take not just the jobs but also the indirect jobs that this will create with suppliers — everybody’s got to eat — it’s tremendous.” The plan may be delayed if the U.S. International Trade Commission, an agency set up to protect U.S. markets from unfair trade practices, sides with GE in a patent battle and bans Mitsubishi turbines from the U.S. market. The agency, which was scheduled to announce a decision today, will now decide by Jan. 8, it said in a notice posted on its Web site. It gave no reason for the delay. GE, the biggest U.S. wind-turbine maker, claims Mitsubishi infringes its patents. If it wins, the Fairfield, Connecticut- based company might prevent Tokyo-based Mitsubishi from increasing its share of the U.S. wind-turbine market, now dominated by GE and Denmark’s Vestas Wind Systems A/S . GE fell 20 cents to $15.59 in New York Stock Exchange composite trading. Wind turbines accounted for 42 percent of new electricity- generating capacity in the U.S. last year, almost matching the additions of natural gas-fueled plants, according to the American Wind Energy Association , an industry trade group. 20% in 20 Years The U.S. Energy Department is counting on wind to generate 20 percent of the country’s electricity by 2030. The amount was 1.3 percent at the end of last year, the trade group said. The GE-Mitsubishi dispute has prompted politicians to take sides based on businesses in their states. Arkansas Governor Mike Beebe , a Democrat, and Republican congressmen John Boozman and Marion Berry urged the trade commission to let Mitsubishi proceed with plans for the Fort Smith facility, which would assemble the turbines made in Japan. GE targeted Mitsubishi’s 2.4-megawatt turbines, which are higher producers and more efficient than earlier models. The Japanese company has been taking orders since at least 2006 for wind turbines in the U.S. It has installed turbines in Texas and has a contract to supply turbines to farms in Oregon and Texas, according to the wind trade group. GE Backer Bob Inglis , a Republican congressman from South Carolina, backs GE, employer of more than 3,900 people in a Greenville, South Carolina, plant. In a letter to the ITC, he described the plant as “a facility with the most to lose if this process is swayed by politics.” GE, whose equipment generates one-third of the world’s electricity, earlier this month won a $1.4 billion contract to supply turbines and services for an Oregon wind farm that will be bigger than any completed so far, the company says. An ITC judge in August found Mitsubishi violated GE’s patent rights and recommended exclusion from the U.S. The six- member trade commission will decide whether the patents were infringed and, if so, whether to bar imports of the turbines. Infringing goods can be imported if the commission decides overriding the patents rights would be in the public interest. The agency’s staff, which acts as a third party on behalf of the public, sided with Mitsubishi on the underlying patent case. At the same time, the staff lawyers said the Arkansas investment doesn’t meet the public-interest test and those turbines should be barred if Mitsubishi loses. ITC Staff View They said otherwise on one project, arguing that Mitsubishi even if it loses should be allowed to send turbines to an Iberdrola SA -run wind farm in Texas that received $114 million in federal stimulus dollars. An ITC ban on the turbines would face an automatic White House review on public-policy grounds. President Barack Obama’s $787 billion stimulus plan to end the deepest recession since the Great Depression dedicates $6 billion in the next two years to expand the country’s renewable-energy transmission system, including wind. The underlying patent case can be appealed to a federal court. The Fort Smith project was announced after the administrative law judge issued his findings. Construction isn’t expected until 2011, the ITC staff said. The turbines, resembling high-tech windmills, convert wind into electricity for a region’s electrical grid. Wind speeds change all the time, so the turbines must be built to provide a constant source of power. Turbine Patents The three GE patents, issued in 1992, 2005 and 2008, are related to variable-speed turbines. The inventions adjust to ensure a constant amount of power is supplied to the grid without damaging the machines and deal with periods when voltage on the grid is low, such as during an outage. GE entered the market in 2002 after buying assets from the bankrupt Enron Corp. GE reported about $6 billion in global sales of wind turbines last year and said its turbines represent about half the new wind capacity in the U.S. It operates plants making turbines and components in Greenville; Tehachapi, California; and Pensacola, Florida. GE in September sued Mitsubishi Heavy Industries, seeking cash compensation for the patent infringement. That case was put on hold pending the ITC review. The ITC case is In the Matter of Certain Variable Speed Wind Turbines and Components Thereof, 337-641, U.S. International Trade Commission (Washington). The civil suit is General Electric Co. v. Mitsubishi Heavy Industries Ltd., 09-cv- 229, U.S. District Court, Southern District of Texas (Corpus Christi). To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net .

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GE-Mitsubishi Wind-Turbine Battle Threatens Arkansas `Silicon Valley’ Plan

December 20, 2009

By Susan Decker Dec. 18 (Bloomberg) — General Electric Co. ’s effort to keep wind turbines made by Mitsubishi Heavy Industries Ltd. out of the U.S. may hinder Arkansas’s plan to become the “Silicon Valley of wind manufacturing.” The state has spent two years luring wind-related manufacturers, including Denmark’s LM Glasfiber AS and Germany’s Nordex AG . In October, Mitsubishi announced plans to build a $100 million wind-turbine assembly plant that would bring about 400 jobs to Fort Smith, the state’s second-biggest city, with a population of 85,000. “I’m confident they’re coming to Arkansas,” said Joe Holmes, marketing head of the state Economic Development Commission, who used the Silicon Valley comparison. “When you take not just the jobs but also the indirect jobs that this will create with suppliers — everybody’s got to eat — it’s tremendous.” The plan may be delayed if the U.S. International Trade Commission, an agency set up to protect U.S. markets from unfair trade practices, sides with GE in a patent battle and bans Mitsubishi turbines from the U.S. market. The agency, which was scheduled to announce a decision today, will now decide by Jan. 8, it said in a notice posted on its Web site. It gave no reason for the delay. GE, the biggest U.S. wind-turbine maker, claims Mitsubishi infringes its patents. If it wins, the Fairfield, Connecticut- based company might prevent Tokyo-based Mitsubishi from increasing its share of the U.S. wind-turbine market, now dominated by GE and Denmark’s Vestas Wind Systems A/S . GE fell 20 cents to $15.59 in New York Stock Exchange composite trading. Wind turbines accounted for 42 percent of new electricity- generating capacity in the U.S. last year, almost matching the additions of natural gas-fueled plants, according to the American Wind Energy Association , an industry trade group. 20% in 20 Years The U.S. Energy Department is counting on wind to generate 20 percent of the country’s electricity by 2030. The amount was 1.3 percent at the end of last year, the trade group said. The GE-Mitsubishi dispute has prompted politicians to take sides based on businesses in their states. Arkansas Governor Mike Beebe , a Democrat, and Republican congressmen John Boozman and Marion Berry urged the trade commission to let Mitsubishi proceed with plans for the Fort Smith facility, which would assemble the turbines made in Japan. GE targeted Mitsubishi’s 2.4-megawatt turbines, which are higher producers and more efficient than earlier models. The Japanese company has been taking orders since at least 2006 for wind turbines in the U.S. It has installed turbines in Texas and has a contract to supply turbines to farms in Oregon and Texas, according to the wind trade group. GE Backer Bob Inglis , a Republican congressman from South Carolina, backs GE, employer of more than 3,900 people in a Greenville, South Carolina, plant. In a letter to the ITC, he described the plant as “a facility with the most to lose if this process is swayed by politics.” GE, whose equipment generates one-third of the world’s electricity, earlier this month won a $1.4 billion contract to supply turbines and services for an Oregon wind farm that will be bigger than any completed so far, the company says. An ITC judge in August found Mitsubishi violated GE’s patent rights and recommended exclusion from the U.S. The six- member trade commission will decide whether the patents were infringed and, if so, whether to bar imports of the turbines. Infringing goods can be imported if the commission decides overriding the patents rights would be in the public interest. The agency’s staff, which acts as a third party on behalf of the public, sided with Mitsubishi on the underlying patent case. At the same time, the staff lawyers said the Arkansas investment doesn’t meet the public-interest test and those turbines should be barred if Mitsubishi loses. ITC Staff View They said otherwise on one project, arguing that Mitsubishi even if it loses should be allowed to send turbines to an Iberdrola SA -run wind farm in Texas that received $114 million in federal stimulus dollars. An ITC ban on the turbines would face an automatic White House review on public-policy grounds. President Barack Obama’s $787 billion stimulus plan to end the deepest recession since the Great Depression dedicates $6 billion in the next two years to expand the country’s renewable-energy transmission system, including wind. The underlying patent case can be appealed to a federal court. The Fort Smith project was announced after the administrative law judge issued his findings. Construction isn’t expected until 2011, the ITC staff said. The turbines, resembling high-tech windmills, convert wind into electricity for a region’s electrical grid. Wind speeds change all the time, so the turbines must be built to provide a constant source of power. Turbine Patents The three GE patents, issued in 1992, 2005 and 2008, are related to variable-speed turbines. The inventions adjust to ensure a constant amount of power is supplied to the grid without damaging the machines and deal with periods when voltage on the grid is low, such as during an outage. GE entered the market in 2002 after buying assets from the bankrupt Enron Corp. GE reported about $6 billion in global sales of wind turbines last year and said its turbines represent about half the new wind capacity in the U.S. It operates plants making turbines and components in Greenville; Tehachapi, California; and Pensacola, Florida. GE in September sued Mitsubishi Heavy Industries, seeking cash compensation for the patent infringement. That case was put on hold pending the ITC review. The ITC case is In the Matter of Certain Variable Speed Wind Turbines and Components Thereof, 337-641, U.S. International Trade Commission (Washington). The civil suit is General Electric Co. v. Mitsubishi Heavy Industries Ltd., 09-cv- 229, U.S. District Court, Southern District of Texas (Corpus Christi). To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net .

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Obama Heads to Denmark Under Pressure to Break Rich-Poor Climate Deadlock

December 17, 2009

By Kim Chipman Dec. 17 (Bloomberg) — President Barack Obama leaves for Copenhagen today under pressure to salvage negotiations on a climate-change agreement as the U.S., China and more than 190 countries deadlocked over the terms. Rich nations and emerging economies are fighting over how to proceed in the attempt to reduce the greenhouse-gas pollution blamed for global warming. The U.S. and China, the two biggest emitters, are holding opposing stances on verification of emissions cuts, a dispute that may hinder chances for an accord. “Coming back with an empty agreement, I think, would be far worse than coming back empty-handed,” Obama’s spokesman, Robert Gibbs , said today in Washington. “We hope the Chinese will stay and be part of finding a solution.” Obama, 48, will arrive at the United Nations-led negotiations in Denmark tomorrow morning hamstrung by his own legislative priorities. Focus on U.S. health care has left a proposed law to cap greenhouse gases on the back burner. As a result, the administration lacks a clear outline of what U.S. lawmakers would accept in any eventual treaty. “We have to have legislation,” said Frances Beinecke, head of the New York-based Natural Resources Defense Council. “He has to be mindful about not getting further out than he can take the country” without support from Congress. The U.S., China and the European Union are struggling to complete a deal by tomorrow, when the summit is scheduled to end. The differences include emissions targets for wealthy countries and measures to confirm whether nations are meeting promises on limiting emissions. The U.S. wants independent verification of emissions cuts, a step China has opposed. China’s Sovereignty Chinese Vice Foreign Minister He Yafei today signaled a possible path toward compromise, saying his government would consider action “that is not intrusive and that does not infringe on China’s sovereignty.” Bolivia’s lead negotiator, Angelica Navarro , was among the delegates looking to Obama for a breakthrough. “We have very high expectations for Obama’s visit,” Navarro said. “We hope he brings not only hope, but also concrete steps.” The talks are intended to produce a political agreement that would serve as a foundation for a legally binding treaty next year. Jairam Ramesh , India’s environment minister, and other delegates in Copenhagen were pessimistic about achieving anything more. “I don’t think even Mr. Obama can cut through the Gordian Knot here,” Ramesh said. “For developing countries it’s livelihood issues, for developed countries, lifestyle issues.” Almost 120 Leaders Obama will be among almost 120 prime ministers, presidents and vice presidents from nations accounting for 89 percent of the world’s gross domestic product. The U.S. president’s decision to attend has been closely watched by fellow leaders, lawmakers at home and environmentalists. “It’s certainly risky for Obama to come to Copenhagen, but it would probably be even riskier for him not to attend,” said Michael Levi , senior fellow for energy and environment at the Council on Foreign Relations. “Once the Chinese premier announced that he was coming, it became almost inevitable that Obama would need to come too. The last thing the U.S. needs is for China and Europe to do a deal without it.” The U.S. has come under criticism for Obama’s offer to cut emissions about 17 percent by 2020, a target that China and other nations said was too low. The goal is tied to legislation passed by the House of Representatives in June. The Senate, preoccupied by the debate over health care, hasn’t acted. The president’s lead climate negotiator, Todd Stern , says the administration is hopeful that a U.S. climate measure will be passed early next year that allows the U.S. to make deeper cuts. Offer on Aid A more welcomed U.S. proposal aimed at thawing the talks came today from Secretary of State Hillary Clinton , who announced that the U.S. is willing to contribute to a $100 billion aid package for developing countries to curb greenhouse gases from deforestation and cope with climate change. Dan Lashof , director of the Natural Resources Defense Council’s climate center in Washington, called the offer a “major step” that raised hopes of “additional breakthroughs throughout the day and tomorrow as world leaders arrive.” Clinton, who arrived in Denmark early today and met with leaders including Chinese Premier Wen Jiabao , said she recognized the discord that’s plagued the treaty talks. “We have now reached the critical juncture in these negotiations,” she said. “I understand that the talks have been difficult.” Still, she said, failure to meet U.S. conditions on monitoring reductions would be a “deal breaker.” Measuring Carbon Fred Krupp , head of the New York-based Environmental Defense Fund, said verification is essential to ensure that leaders today don’t sign off on a “squishy” deal. “We have to measure how many tons of carbon pollution countries are putting in the air and there has to be a common way of measuring and verifying that,” he said. Obama was preceded in Denmark by six members of his Cabinet and a group of Republican and Democratic lawmakers. Representative Edward Markey , chairman of the House Select Committee on Energy Independence and Global Warming, said Obama’s appearance in Copenhagen may galvanize the stuck negotiations. “Obama’s presence here will make it clear that the United States wants to be a world leader and hopefully, the Chinese will join us in playing that role,” the Massachusetts Democrat said. To contact the reporter on this story: Kim Chipman in Copenhagen at KChipman@bloomberg.net

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Climate Deal Is Fading as Obama, Brown, World Leaders Gather in Copenhagen

December 16, 2009

By Alex Morales and Jeremy van Loon Dec. 16 (Bloomberg) — World leaders will arrive in the Danish capital of Copenhagen over the next three days to agree on a pact to fight global warming. There may be nothing to sign. Envoys from China, the U.S., the European Union and India, the world’s top polluters, have bickered, quarreled and walked out during talks among 193 nations. They’ve left presidents and prime ministers a choice between a fudge or a flop for the accord that the United Nations framed as the most comprehensive deal to curb global warming. “Countries and blocks of countries have come here with very hard positions,” Guyana’s President Bharrat Jagdeo said yesterday in an interview in Copenhagen. “You need some seismic shifts to really close a deal.” The angst in conference rooms has been reflected on the streets, with protesters fighting riot police as Denmark mounted the biggest security operation in its history. More than half of Denmark’s 10,500 police are providing security for the talks at Copenhagen’s Bella Center, which can hold 15,000 people. The difficulty for the police is 46,000 people have tried to get into the talks in the city dubbed ‘Hopenhagen,’ leaving thousands waiting outside in freezing temperatures and yelling at security. “We’re calling it Constipagen because the line’s not moving and the talks are not moving,” said Jasmine Hyman, who works for the Geneva-based Gold standard Foundation that certifies carbon offsets. She said it took her eight hours to get in. Arrivals Speakers yesterday included Prince Charles , the heir to the U.K. throne, former U.S. Vice President Al Gore , who’s won an Oscar and a Nobel Peace Prize for his efforts to publicize the issue of global warming, and California Governor Arnold Schwarzenegger . U.K. Prime Minister Gordon Brown arrived late Tuesday, while Obama will arrive later in the week. Developing nations accused industrialized countries of trying to kill off the Kyoto Protocol, the current emissions- limiting treaty. Developed nations, including the U.S. and Japan, want to replace Kyoto with another treaty. “The biggest obstacle to progress is that first it has to be clear that the Kyoto Protocol can’t disappear,” Mexican Environment Minister Juan Rafael Elvira Quesada said in an interview in Copenhagen. The U.S., the largest industrialized emitter, never ratified the Kyoto pact, which sets no binding emission targets for developing nations, such as India and China. Disputes The disputes in Copenhagen stem from the division of the UN talks into two tracks: one to extend Kyoto’s binding emissions targets beyond 2012 for all developed nations bar the U.S., and another to establish what the world’s biggest economy and developing nations will do to cut their emissions. The 27-nation European Union, which is bound by Kyoto, has called for the two negotiating tracks to be merged in favor of a single legally-binding treaty, a call rejected by poorer nations. Other developed nations support a single deal. “The fundamental position of our government is that we are seeking a bigger comprehensive agreement than the Kyoto Protocol,” said Makio Miyakawa , the deputy director for global affairs at the Ministry of Foreign Affairs, in an interview on Dec. 14. “But the developing countries are still sticking to the Kyoto Protocol. And their position is very firm.” Other issues dividing delegates include the size of emission reductions by developed nations, verifying emission reductions by developing countries and climate aid worth $100 billion a year from rich to poor nations. Rejection The U.S. has rejected the demands of developing nations and most developed countries that it cut emissions more than its current goal of 17 percent from 2005 levels. China and India don’t want their national commitments to become legally binding in an international treaty. Japan, the EU and other developed nations still haven’t come forward to say how much money they’re prepared to fork out past 2012 to help poorer nations adapt to the consequences of climate change and lower their emissions. “This remains a very, very difficult process, and it could still fail,” said U.K. Energy and Climate Change Secretary Ed Miliband . “It was always going to be the case that the most difficult bits would get left to the end. I hope ministers can sort them out. Some of them may be left to leaders.” To contact the reporter on this story: Jeremy van Loon in Copenhagen via jvanloon@bloomberg.net ; Alex Morales in Copenhagen via amorales2@bloomberg.net .

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LSE Said to Plan FTSE 100 Derivatives, Challenging NYSE Euronext’s Liffe

December 9, 2009

By Nandini Sukumar Dec. 9 (Bloomberg) — London Stock Exchange Group Plc , where the bulk of FTSE 100 Index stocks are traded, plans to offer futures and options based on the U.K. benchmark index in competition with NYSE Euronext’s Liffe futures market, according to people familiar with the situation. LSE, which in 2001 tried and failed to buy London- based Liffe, will begin the program next year and may expand it, said the three people, who declined to be identified before a formal announcement. LSE spokeswoman Lauren Crawley-Moore declined to comment. “LSE still own more than 50 percent of trading in FTSE 100 stocks and the people who trade derivatives on Liffe are already connected to LSE,” said Mamoun Tazi , exchange analyst at MF Global Ltd. “If they succeed this will broaden the range of their products and give them new revenue. But Liffe won’t sit still either.” Tazi has a “sell” rating on LSE. The exchange, which trails rivals NYSE Euronext and Deutsche Boerse AG in derivatives trading, is trying to diversify beyond stocks under Chief Executive Officer Xavier Rolet , who took over from Clara Furse in May. Furse was beaten by Euronext in the 2001 battle to buy London- based Liffe, the world’s fourth-largest derivatives exchange. NYSE Liffe lists futures and options on the FTSE 100 and other European equity indexes. EDX London Licenses to trade derivatives based on the benchmark gauge for U.K. stocks are controlled by FTSE, an independent company jointly owned by LSE and Pearson Plc’s The Financial Times. LSE may offer the derivatives on its EDX London Ltd. futures exchange, the people said. In November, the average daily number of contracts traded on LSE’s two derivatives markets, EDX London and IDEM, was 508,607. That compares with 4.3 million on NYSE’s Liffe’s European products and 9.4 million on Eurex. LSE went live earlier this week with a new trading system and Nordic derivatives for EDX. In May, Toronto- based TMX Group Inc. , owner of Canada’s main equities and derivatives market, agreed to pay 4.35 million pounds ($7.1 million) for a 19.9 percent stake in EDX after LSE agreed to license TMX’s Sola trading technology. Nasdaq OMX “I see terrific opportunities for EDX in the U.K. derivative market that it hasn’t even begun to explore,” TMX CEO Thomas Kloet told reporters in Toronto on Dec. 7. In European derivatives “there are a number of opportunities there that between ourselves and LSE we can begin to develop. We see a lot of opportunity even beyond the Nordic markets.” The new trading system for EDX replaces systems provided by Nasdaq OMX . LSE started EDX in 2003 in partnership with Sweden’s OMX exchange, which is now part of another of LSE’s rivals, New York-based Nasdaq. EDX must now wrest market share away from Nasdaq . As LSE parted with Nasdaq OMX, the U.K. exchange and FTSE said they will offer investors the chance to trade derivatives based on indexes including FTSE Sweden 30, FTSE Denmark 20 and FTSE Finland 25, going head to head with Nasdaq, which offers contracts based on the benchmark OMX Stockholm 30 Index . James Dunseath , a London-based spokesman for Liffe, declined to comment. To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net

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Copenhagen Fools the Young Into Hoping for Jobs: Amity Shlaes

December 7, 2009

Commentary by Amity Shlaes Dec. 8 (Bloomberg) — Youth is what the climate change conference in Copenhagen is supposed to be all about. The advertising campaign for the United Nations Climate Change Conference on global warming that opens this week is even called “ Hopenhagen ,” to suggest that young people need to push their governments to save the Kyoto Treaty if they are going to prevent environmental apocalypse. One reason that Hopenhagen has caught on is that youth fashion these days is as green as it gets. Copenhagen, thrift and handbags made of recycled seatbelts all go together in the under-30 mind. At Williams College in Massachusetts, some 50 students and faculty started a hunger strike to show their support for a climate-change agreement. UCLA students who are attending Copenhagen with their professor have called the event a “rock concert for climate geeks.” The missing part of that message is that environmental accords like Kyoto can actually kill hope of a more mundane kind, like the hope for a job. And that’s especially true when it comes to the darlings of the UN campaign: the young. The reason this is so predates plans for Copenhagen or even the green movement. Employers tend to rehire or hire others before the young, and lay off or fire young workers when job- cutting time comes. There’s also an issue of hope, to use the Copenhagen lexicon. Employers doubtful of the economic future are reluctant to make a commitment to someone who expects to enjoy long-term employment at the workplace. Cutting Mode And what puts employers in lay-off mode? Recession for certain, but also any factor that makes production more expensive. Dozens of studies, for example, have demonstrated that just one such cost increase, the raising of the minimum wage, hurt hiring or employment of younger workers in the U.S. And that’s true elsewhere. In a multidecade survey of 19 countries, authors Juan F. Jimeno and Diego Rodriguez Palenzuela found that minimum-wage rules, along with high taxes, depress youth employment. High-tax Denmark’s joblessness is well below that of the U.S., but Denmark is also among the nations where youth unemployment ranges higher than unemployment of other workers. You can imagine that some Danes feel fairly hopeless about this. In economic terms, a mandate such as Kyoto’s isn’t different from a tax or a minimum wage. It hurts employment. The current cap-and-trade legislation is so structured that the pain comes not in the initial years, when the regime begins, but later, when restrictions for firms are more formidable. Prime Time The real blows come by 2030 — a period irrelevant for many older workers, but a prime earning period in the future of Copenhagen’s youthful attendees. Margo Thorning at the American Center for Capital Formation, a Washington policy research group, ran the numbers on the American Clean Energy and Security Act of 2009, sponsored by Democratic congressmen Henry Waxman and Edward Markey . She found that this legislation could kill as many as 2.4 million U.S. jobs by 2030, just about when today’s Copenhagen youth will be paying for their children’s college. That includes some jobs in Massachusetts, home to Williams College, and 220,000 to 300,000 in California, where UCLA is located. Countries such as Denmark are in many ways greener than the U.S., and the presumption of American college students is that that means such countries are inherently better. That confidence might be shaken by news that in Denmark, the low unemployment rate notwithstanding, the number of unemployed Danes who don’t find work for a year or more has been around two in 10 in the past decade, while in the U.S. the rate was about one in 10. Unfair Trade Defenders of cap-and-trade would argue that billions in revenue the government receives under the law can make up to the poor what they lose in jobs. But it’s hard to imagine the tax break of $359 per household, the proposal in one bit of legislation, compensating for a lost job. It is possible that forgoing those jobs is a social choice this country has made as a collective. When Americans elected Barack Obama , not John McCain , they might have been saying: we care less about improving the economy than we do about social or lifestyle improvements. Economists track such collective choices using something called the Environmental Kuznets Curve , which suggests countries choose to be greener as they become wealthier. Conscious Choice But the question this time is whether that choice is being made consciously. One senses that being green to college or high school students tends to mean buying that recyclable messenger bag, not doing without the salary that enables you to buy the bag. You can hardly fault them for being unaware of trade-offs, bombarded as they are by teachers, their government and YouTube with the message that the greening of America offers pure advantage. As Denmark’s own environmental skeptic, Bjorn Lomborg , has argued, the point here isn’t to say that carbon emissions don’t do damage. They do. The point is that Kyoto is, as Lomborg put it, “an incredibly bad deal” when you compare the pluses and minuses. The future can’t be all Hopenhagen. It has to be Hope- for-Jobs as well. ( Amity Shlaes , senior fellow in economic history at the Council on Foreign Relations, is a Bloomberg News columnist. The opinions expressed are her own.) To contact the writer of this column: Amity Shlaes at amityshlaes@hotmail.com

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Carbon Dioxide Declared Hazard by U.S. EPA, Paving Way for Tighter Rules

December 7, 2009

By Jim Efstathiou Jr. and Kim Chipman Dec. 7 (Bloomberg) — The U.S. Environmental Protection Agency will declare carbon dioxide a health hazard today, paving the way for limits on emissions from sources such as power plants and factories, people familiar with the matter said. The move, on the opening day of an international climate summit in Copenhagen, arms President Barack Obama with new regulatory powers that could help forge consensus in efforts to curb global warming. EPA Administrator Lisa Jackson “will make a significant climate announcement” today, the agency said in a statement. The people requested not to be identified discussing the announcement in advance. Unleashing the EPA to set emissions rules will give Obama standing when asking other nations to make commitments for a new global climate treaty, said Kevin Book , a Washington-based managing director for analysis firm ClearView Energy Partners LLC. Obama now plans to visit Copenhagen at the close of the talks on Dec. 18, when other world leaders will be there, rather than this week. “It’s exactly what you would want to have in your bag on the way to Copenhagen,” Book said in an interview today. “You can’t go and argue for other nations to make changes if you haven’t made any yourself.” Autos, Factories The EPA rules will govern heat-trapping pollution that many scientists say may lead to disruptive and irreversible climate shifts. The Washington-based America Petroleum Institute , which represents oil companies, said today the EPA rules will be “inefficient and excessively costly.” The National Petrochemical and Refiners Association, also based in Washington, said the proposed new rules are based on “selective science.” “The implications of today’s action by EPA are far- reaching, Charles Drevna , president of the refiners group, said in a statement. “This is yet another example of federal policy makers failing to consider the long-term consequences of a regulatory action.” The first regulations under a finding that carbon dioxide is dangerous will be made final on March 10, and will cover emissions from cars and trucks beginning with model year 2012, said David Doniger , policy director for the climate center of the Natural Resources Defense Council, an environmental group based in New York. Automakers signed on to that plan, announced in May. After that, the EPA is expected to begin writing emissions rules for factories, power plants and other stationary pollution sources, Doniger said. The agency has said it would regulate only facilities that produce 25,000 tons of CO2 a year or more. Best Technology The rules are expected to require polluters to use the best available technology to limit emissions of CO2 and other greenhouse gases, Doniger said. The agency can take months or years to complete regulations. White House press secretary Robert Gibbs announced on Dec. 4 that Obama will show up for the conclusion of the talks in Copenhagen, when about 100 heads of government are going, and help guide decisions. Earlier Obama had planned to stop by on Dec. 9. “There is progress toward a meaningful Copenhagen accord,” Gibbs said. The U.S., the world’s second biggest emitter of greenhouse gases, is in the spotlight at the talks in part because lawmakers haven’t approved legislation to set a mandatory limit on carbon-dioxide gas that many scientists say could lead to dangerous climate shifts if left unchecked. “To have this come out now is another concrete sign that the Obama administration is joining the fight on global warming,” Doniger said of EPA rules. Chamber of Commerce The U.S. Chamber of Commerce, the nation’s biggest business-lobbying group, says EPA regulation of carbon would be “burdensome” to businesses and hurt the economy. Chamber President Tom Donohue has said the Washington-based agency, whose top administrator is chosen by the White House, was basing its proposed finding on “shaky, cherry-picked data.” The U.S. House passed legislation in June to cap carbon emissions and set up a market for the trading of pollution allowances. The Senate has yet to act. Lack of guidance from the Senate, the only U.S. body authorized to ratify treaties, left Obama’s negotiators in Denmark without firm guidelines on how to proceed. The administration’s use of the EPA to regulate greenhouse gases under existing law provides a “primary catalyst” for Congress to act, Book said. “The administration’s climate strategy has resembled a coordinated “good cop, bad cop’ routine where Hill Democratic Party leaders (the ‘good cop’) offer new law as a way to prevent EPA’s ‘bad cop’ from imposing economy-wide regulations on lawmakers’ constituents,” Book said in a research note. EPA officials didn’t return calls seeking comment. To contact the reporters on this story: Kim Chipman in Copenhagen at kchipman@bloomberg.net ; Jim Efstathiou Jr . in New York at jefstathiou@bloomberg.net .

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De Boer Asks Obama for `Ambitious’ Copenhagen Goal on Eve of Climate Talks

December 6, 2009

By Kim Chipman Dec. 6 (Bloomberg) — U.S. President Barack Obama should come to climate talks in Denmark with “strong” goals for cutting greenhouse gases and helping poor countries deal with global warming, United Nations climate chief Yvo de Boer said. “I hope that as part of the negotiating process he comes with an ambitious American target” to cut greenhouse-gas pollution and “‘strong financial support to reach out to developing countries,” de Boer told reporters in Copenhagen today on the eve of the two-week negotiations. Obama, facing pressure to assure other countries that the U.S. is moving toward a low-emissions economy, will attend the meeting on Dec. 18 along with about 100 other heads of state. The U.S. president had planned to arrive in Copenhagen on Dec. 9 during the first week of negotiations. De Boer said the change in schedule is welcome. “I’m happy that he’s coming toward the end of the conference together with other heads of state and government,” said de Boer, head of the UN Framework Convention on Climate Change. “It’s especially important for him to hear the concerns of small island developing nations, the countries that are most vulnerable to the impacts of climate change.” Obama expects a “meaningful” agreement in Copenhagen, where almost 200 countries are gathering in an attempt to hammer out terms for a new international treaty to control climate change, the U.S. administration said in a statement last week. To contact the reporter on this story: Kim Chipman in Copenhagen at KChipman@bloomberg.net

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Economists Who Foresaw November’s Better Labor Market Now Expect Job Gains

December 5, 2009

By Timothy R. Homan Dec. 5 (Bloomberg) — Some of the economists who anticipated the U.S. job market would see marked improvement in November now project job gains are around the corner, and possibly in the rearview mirror. Payrolls fell by 11,000 workers, while the unemployment rate dropped to 10 percent. Jobs were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000. The drawdown in inventories and rising corporate profits are the most compelling reasons for payrolls to begin showing sustainable increases as soon as this month, these economists said. What’s more, the recent trend of upward revisions will probably continue, signaling the worst employment slump in the postwar era may have already ended. “We could see a positive number for November next month,” said Stefane Marion , chief economist at National Bank Financial Inc. in Montreal, whose forecast of a 30,000 payroll drop was the closest. “Firms now are beginning to redeploy some of their cash flows” by hiring new workers, he said. Revisions added 159,000 jobs to payroll figures previously reported for October and September, a report from the Labor Department showed yesterday in Washington. The previous month’s report added 91,000 for September and August. Profits, Inventories Corporate profits climbed 21 percent from January through September, the biggest three-quarter gain in five years, while inventories plunged at a record pace, according figures from the Commerce Department. Leaner stockpiles set the stage for recovery in production. “If you run down your inventories hard, you also cut your labor force,” said Peter Possing Andersen , an economist at Danske Bank A/S in Denmark who projected a decline of 50,000 jobs for November. He said the ramp up in production means the manufacturing industry, which has cut workers for the past two years, may stabilize and begin hiring in “a couple of months.” Still, some economists say that even if November’s figures are revised into positive territory, payrolls may not have reached their low point yet. “Revisions lately have been in the favorable direction,” said Neal Soss , chief economist at Credit Suisse in New York who forecast a 50,000 drop in payrolls. “We shouldn’t take that as evidence that we’re at the bottom.” The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, said the head of the group charged with making the call. Yesterday’s report “makes it seem that the trough in employment will be around this month,” Robert Hall , who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Economists Who Foresaw November Payroll Surprise Now See Job Market Gains

December 5, 2009

By Timothy R. Homan Dec. 5 (Bloomberg) — Some of the economists who anticipated the U.S. job market would see marked improvement in November now project job gains are around the corner, and possibly in the rearview mirror. Payrolls fell by 11,000 workers, while the unemployment rate dropped to 10 percent. Jobs were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000. The drawdown in inventories and rising corporate profits are the most compelling reasons for payrolls to begin showing sustainable increases as soon as this month, these economists said. What’s more, the recent trend of upward revisions will probably continue, signaling the worst employment slump in the postwar era may have already ended. “We could see a positive number for November next month,” said Stefane Marion , chief economist at National Bank Financial Inc. in Montreal, whose forecast of a 30,000 payroll drop was the closest. “Firms now are beginning to redeploy some of their cash flows” by hiring new workers, he said. Revisions added 159,000 jobs to payroll figures previously reported for October and September, a report from the Labor Department showed yesterday in Washington. The previous month’s report added 91,000 for September and August. Profits, Inventories Corporate profits climbed 21 percent from January through September, the biggest three-quarter gain in five years, while inventories plunged at a record pace, according figures from the Commerce Department. Leaner stockpiles set the stage for recovery in production. “If you run down your inventories hard, you also cut your labor force,” said Peter Possing Andersen , an economist at Danske Bank A/S in Denmark who projected a decline of 50,000 jobs for November. He said the ramp up in production means the manufacturing industry, which has cut workers for the past two years, may stabilize and begin hiring in “a couple of months.” Still, some economists say that even if November’s figures are revised into positive territory, payrolls may not have reached their low point yet. “Revisions lately have been in the favorable direction,” said Neal Soss , chief economist at Credit Suisse in New York who forecast a 50,000 drop in payrolls. “We shouldn’t take that as evidence that we’re at the bottom.” The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, said the head of the group charged with making the call. Yesterday’s report “makes it seem that the trough in employment will be around this month,” Robert Hall , who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Siemens Hearing-Aid Division Said to Draw Interest From KKR, BC Partners

November 26, 2009

By Aaron Kirchfeld Nov. 27 (Bloomberg) — Siemens AG’s hearing aid business, valued at as much as 3 billion euros ($4.5 billion), is drawing interest from private-equity firms including KKR & Co. L.P. and BC Partners Ltd., two people familiar with the matter said. Several financial investors have contacted the Munich-based company about buying the unit, said the people, who requested anonymity because the process isn’t public. Siemens has been in contact with investment banks about options, and hasn’t decided whether to sell the unit or conduct an initial public offering, though an exit from the business is likely, the people said. Siemens claims the No. 1 position in the global hearing aid market by units manufactured. It trails Sonova Holding AG of Switzerland and William Demant Holding A/S of Denmark by market share, according to Sonova. Siemens, Europe’s largest engineering company, is weighing a retreat from the industry to sharpen its focus on energy, transport and infrastructure, as well as on medical diagnostics tools, the people said. In addition to private-equity firms, makers of medical equipment may also be interested, the people said. Antitrust hurdles would bar Sonova and William Demant from a takeover, the people said. Siemens spokesman Constantin Birnstiel declined to comment, as did spokespeople for KKR and BC Partners in Germany. High Margins “Siemens hearing aids is attractive because the sector has relatively high margins and the business could be further improved by a new owner,” said Daniel Jelovcan , a Zurich-based health-care products analyst at Helvea AG. He estimates the unit could be valued at 2.5 billion euros to 3 billion euros, based on estimated sales of 680 million euros and peer valuation. Siemens, which also makes high-speed trains, power grids and medical scanners, doesn’t disclose sales for its hearing aids. The company has been making the products for more than 100 years , and the business is based in Erlangen in southern Germany, home to some of Siemens’s largest production sites. The unit may fetch 2 billion euros to 3 billion euros in a sale, the people said. The engineering company will likely pursue a so-called dual-track process of seeking a buyer while simultaneously preparing an IPO for 2010, the people said. The company followed a similar strategy with its VDO automotive division, which it sold to Continental AG for 11.4 billion euros in 2007 after simultaneously holding sales talks and preparing an IPO. Past Deals KKR has done deals with Siemens in the past. The private- equity firm run by Henry Kravis and George Roberts bought Wincor Nixdorf AG, a maker of bank machines, in 1999 from Siemens, as well as seven engineering units for 1.69 billion euros, including Demag Cranes AG, in 2002. Sonova Chief Executive Officer Valentin Chapero said on Nov. 14 it “wouldn’t be surprising” if Siemens sold its hearing-aid unit because it’s not “well adapted” to the rest of the German company’s business. The Swiss company has gained 87 percent so far this year, valuing Sonova at 7.77 billion Swiss francs ($7.74 billion). William Demant has a market value of 21.3 billion Danish kroner ($4.3 billion) after doubling in value in the last year. Other competitors include closely held Kind Hoergeraete, based in Hanover, Germany, and Fielmann AG , the German eyeframe manufacturer, which is branching out into hearing aids as an ageing population and ear damage caused by loud music increase the number of people with hearing disabilities. Hermann Requardt , the chief executive officer of Siemens’s health-care division, said on Sept. 29 at a meeting with analysts and investors that the hearing aids are “a very solid business and a strong contributor.” To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

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Siemens Hearing Aids Unit Said to Attract Interest From KKR, BC Partners

November 26, 2009

By Aaron Kirchfeld Nov. 26 (Bloomberg) — Siemens AG’s hearing aid business, valued at as much as 3 billion euros ($4.5 billion), is drawing interest from private-equity firms including KKR & Co. L.P. and BC Partners Ltd., two people familiar with the matter said. Several financial investors have contacted the Munich-based company about buying the unit, said the people, who requested anonymity because the process isn’t public. Siemens has been in contact with investment banks about options, and hasn’t decided whether to sell the unit or conduct an initial public offering, though an exit from the business is likely, the people said. Siemens claims the No. 1 position in the global hearing aid market by units manufactured. It trails Sonova Holding AG of Switzerland and William Demant Holding A/S of Denmark by market share, according to Sonova. Siemens, Europe’s largest engineering company, is weighing a retreat from the industry to sharpen its focus on energy, transport and infrastructure, as well as on medical diagnostics tools, the people said. In addition to private-equity firms, makers of medical equipment may also be interested, the people said. Antitrust hurdles would bar Sonova and William Demant from a takeover, the people said. Siemens spokesman Constantin Birnstiel declined to comment, as did spokespeople for KKR and BC Partners in Germany. High Margins “Siemens hearing aids is attractive because the sector has relatively high margins and the business could be further improved by a new owner,” said Daniel Jelovcan , a Zurich-based health-care products analyst at Helvea AG. He estimates the unit could be valued at 2.5 billion euros to 3 billion euros, based on estimated sales of 680 million euros and peer valuation. Siemens, which also makes high-speed trains, power grids and medical scanners, doesn’t disclose sales for its hearing aids. The company has been making the products for more than 100 years , and the business is based in Erlangen in southern Germany, home to some of Siemens’s largest production sites. The unit may fetch 2 billion euros to 3 billion euros in a sale, the people said. The engineering company will likely pursue a so-called dual-track process of seeking a buyer while simultaneously preparing an IPO for 2010, the people said. The company followed a similar strategy with its VDO automotive division, which it sold to Continental AG for 11.4 billion euros in 2007 after simultaneously holding sales talks and preparing an IPO. KKR has done deals with Siemens in the past. The private- equity firm run by Henry Kravis and George Roberts bought Wincor Nixdorf AG, a maker of bank machines, in 1999 from Siemens, as well as seven engineering units for 1.69 billion euros, including Demag Cranes AG, in 2002. Sonova Chief Executive Officer Valentin Chapero said on Nov. 14 it “wouldn’t be surprising” if Siemens sold its hearing-aid unit because it’s not “well adapted” to the rest of the German company’s business. The Swiss company has gained 87 percent so far this year, valuing Sonova at 7.77 billion Swiss francs ($7.74 billion). To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

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Obama to Offer 17% Emissions-Cut Goal at UN Climate Summit in Copenhagen

November 25, 2009

By Kim Chipman Nov. 26 (Bloomberg) — President Barack Obama will travel to Copenhagen for climate-change talks, where he’ll offer to cut U.S. emissions about 17 percent by 2020 in an effort to help break a deadlock between rich and poor nations. Obama will visit the Danish capital on Dec. 9 during negotiations on a global climate treaty. The U.S. will propose cutting its emissions “in the range of 17 percent” from 2005 levels by 2020, Carol Browner , Obama’s top adviser on energy and the environment, told reporters yesterday. It will be the first time the U.S. has offered such a target. U.S. legislation backed by Obama to cut greenhouse gases and establish a market for the trading of pollution allowances passed the House in June and then stalled in the Senate. Administration officials said they aren’t going to Denmark empty-handed and Obama’s attendance will send a strong signal. “The president going to Copenhagen will give positive momentum to the negotiations,” Michael Froman , Obama’s deputy national security adviser for international economics, told reporters yesterday. “We think it will enhance the prospects for success.” Negotiations for a new global climate treaty have been stymied as industrialized nations and developing countries failed to agree on issues such as emissions-reduction targets and how much financial help rich nations should provide to poor ones. China and India have said industrialized countries must be willing to cut their carbon output 40 percent from 1990 levels by 2020 if they expect poorer nations to agree to long-term reduction goals. ‘Ambitious Actions’ The Obama administration hopes other major economies will “put forth ambitious actions of their own,” Browner said. Obama, who campaigned on a pledge to tackle climate change, has been under pressure to attend the meeting and offer a 2020 reduction target. The U.S., the biggest greenhouse-gas producer among developed nations, has faced criticism for failing to enact legislation. Obama’s attendance is “critical,” Yvo de Boer , executive secretary of the UN Framework Convention of Climate Change, which runs the talks, said yesterday in a Webcast from Bonn. “The world is very much looking to the U.S. to come up with an emissions reduction target” as well as financial aid to help developing countries cut emissions and adapt to global warming, de Boer said. The proposed U.S. emissions reduction is in line with the pending legislation in Congress. The House-passed measure calls for a 17 percent reduction while a version in the Senate calls for a cut of 20 percent. Senate Majority Leader Harry Reid , a Nevada Democrat, said last week that his chamber won’t take up legislation until “sometime in the spring.” ‘Global Game-Changer’ Obama’s decision to go to Copenhagen could prod Congress, Senator John Kerry , a Massachusetts Democrat who has sought a bipartisan compromise on the Senate climate bill, said in a statement. It “could be one hell of a global game-changer with big reverberations here at home,” he said. The president’s plans were also welcomed by companies such as DuPont Co. that are pushing for a cap on U.S. carbon-dioxide pollution that scientists blame for climate change. It “sends a message that addressing climate and energy challenges are priorities for the U.S.,” Michael Parr, manager of government affairs for Wilmington, Delaware-based DuPont, the third-biggest U.S. chemical maker, said in a statement. “Obama has a great story to tell,” James Roger , chief executive officer of Duke Energy Corp. , said in an interview last week, citing House passage of climate legislation and the adoption of greenhouse-gas standards for vehicles. Duke owns electric utilities in the U.S. Southeast and Midwest. ‘Weak and Unfair’ Dissenting from the praise, Friends of the Earth said Obama’s administration has “pushed for a weak and unfair” climate accord. “The president needs to do more than just show up,” Erich Pica , president of the Washington-based environmental group, said in a statement. “He must ensure that the U.S. promotes real solutions.” Danish Prime Minister Lars Loekke Rasmussen has invited the heads of almost 200 countries to the Danish capital for the last two days of the Dec. 7-18 meeting. So far, at least 65 leaders have said they will attend. They include German Chancellor Angela Merkel , U.K. Prime Minister Gordon Brown and Japanese Prime Minister Yukio Hatoyama . Political Agreement Leaders including Obama have said that a binding accord for reducing greenhouse gases isn’t expected in Copenhagen. The UN had previously said the meeting would mark the deadline for completing a treaty. Instead, leaders are now calling for a “meaningful” political agreement as a framework for a final accord to replace to replace the 1997 Kyoto Protocol, which expires in 2012. Negotiations are expected to continue next year. Obama’s visit to Copenhagen, during the first of two weeks of climate talks, will be followed the next day by a stop in Oslo to accept the Nobel Peace Prize. To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net .

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Swine Flu Deaths Double Almost Every Two Weeks in Europe; 670 Since April

November 23, 2009

By Jason Gale Nov. 23 (Bloomberg) — Swine flu deaths have doubled almost every two weeks since mid October in Europe, with 169 occurring in the past week, the European Center for Disease Control and Prevention said. Across the region, 670 people infected with the new H1N1 influenza strain have died since April, the Stockholm-based ECDC said today in a report on its Web site. Cases are being reported in all European Union and European Free Trade Association countries, ECDC said. The infection, which causes little more than a sore throat, fever and a cough in the majority of cases, has hospitalized more than 4,400 people in Europe to date. Among those, the U.K. has 180 H1N1 patients in intensive care units, France has 81, the Netherlands 38, Norway 24 and Ireland 20, ECDC said. “While the most deaths have to date been in Western Europe, there are increasing numbers of deaths being reported from Central and Eastern Europe,” the ECDC said in its daily report. The number of deaths is three more than the agency stated in an earlier version of the report obtained by Bloomberg News before its scheduled release at 9 a.m. central European time. H1N1 accounts for more than 99 percent of flu samples tested in Europe, indicating the pandemic virus has supplanted seasonal strains in the region, said John Paget , an epidemiologist at the Netherlands Institute for Health Services Research in Utrecht who monitors flu patterns for the World Health Organization’s euroflu.org . More than 19,000 specimens were positive for H1N1 in Europe during the week ended Nov. 15, Paget said in a telephone interview last week. ‘So Many Positive Specimens’ “Normally in flu a season we would have a maximum of 3,000,” he said. “We have never seen so many positive specimens reported per week since 1996, when we started collecting data.” Italy, Norway and Sweden reported a “very high intensity” of influenza-like illness or acute respiratory illness in the past week, the ECDC said. Intensity was “high” in Bulgaria, Denmark, Germany, Iceland, Ireland, Lithuania, Luxembourg, Poland and Portugal. The remainder reported predominantly “medium” intensity, it said. The peak of infections has probably occurred in some countries such as Belgium and Ireland, Paget said. In Belgium’s worst week, flu cases reached the fifth highest in a decade, while Ireland’s peak was the highest in about 10 years, he said. “We are not seeing spectacularly high ILI rates if you look at historical data,” Paget said. He said no accurate data are available to compare the number of hospitalizations caused by swine flu and the number that occur due to seasonal influenza. To contact the reporter on this story: Jason Gale in Singapore at j.gale@bloomberg.net

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Nokia to cut 330 jobs in Denmark, Finland

November 22, 2009

Nokia to cut 330 jobs in Denmark, Finland

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BlackRock’s Fink Says Investors Shifting `Record’ Amounts From Cash Funds

November 10, 2009

By Sree Vidya Bhaktavatsalam Nov. 10 (Bloomberg) — BlackRock Inc. Chief Executive Officer Laurence Fink said his firm was hired to manage assets for Swiss Reinsurance Co. and other institutions as investors are moving “record” amounts of funds out of cash. BlackRock gathered $3 billion from an unnamed institutional investor in Denmark and may get $11 billion from an undisclosed client, Fink said today at an event in New York organized by the Wall Street Journal. He didn’t say how much his firm manages for Swiss Re, the world’s second-largest reinsurer. Investor appetite for risk is returning as the U.S. Federal Reserve shows no intention of raising interest rates, assuring investors they’re “fine,” Fink said. The 57-year-old will lead the biggest asset-management firm when BlackRock completes its acquisition of Barclays Global Investors on Dec. 1. “The business is changing dramatically now,” Fink said. Investors are “looking for more holistic advice and more and more clients are looking for beta products,” such as index mutual funds and exchange-traded funds. The Barclays Global deal will boost BlackRock’s assets to more than $3 trillion and add passive investment strategies, such as exchange-traded funds that mimic indexes. The deal will also add quantitative products that use mathematical models to select securities to trade. Assets in money-market funds have fallen to $3.3 trillion as of Nov. 3, from a peak of $3.9 trillion as the market crisis accelerated in early 2009, according data from iMoneynet , a research firm in Westborough, Massachusetts. Market Rebound The Standard & Poor’s 500 Index is up more than 61 percent from its low for the year on March 9. Exchange-traded funds have attracted $63 billion in investor deposits this year, according to data from Washington, D.C.-based Investment Company Institute show. Bond mutual funds have attracted $267 billion, while stock funds and hybrid funds have gathered $18.2 billion in inflows through Sept. 30, according to the trade group. Fink is a former executive at First Boston Corp. who in the 1980s helped create securities known as collateralized-mortgage obligations. He co-founded BlackRock in 1988, primarily as a bond-investment firm. Fink has expanded BlackRock’s offerings by buying companies, including Merrill Lynch & Co. ’s investment unit in 2006. Fink said today that mortgage-backed securities, criticized by lawmakers for their role in the financial-market crisis, aren’t structurally flawed and that they are still a “great idea.” BlackRock has emerged as a top adviser on distressed securities to governments and financial institutions since the credit crisis started in 2007. Fink dismissed as “ludicrous” the idea that BlackRock’s asset-management and advisory units may have conflicts of interest. To contact the reporters on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net .

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Iceland to Remove Capital Controls on New Investments, Central Bank Says

October 31, 2009

By Omar R. Valdimarsson Oct. 31 (Bloomberg) — Iceland will begin lifting capital controls from tomorrow, freeing new investors from restrictions imposed after the collapse of the island’s banking system and the plunge in value of its currency, the central bank said. The decision means foreign-currency inflows linked to new investments will be exempt from the controls, the bank said in a statement in Reykjavik today. “Investors are authorized, without restrictions, to convert into foreign currency the sales proceeds from assets in which they invest after Nov.1,” the bank said in the statement. “Previously, non-residents were fully authorized to transfer foreign currency deriving from interest and dividends on investments in Iceland.” The central bank imposed the restrictions at the end of last year after the failure of its largest banks prompted a sell-off of the krona and plunged the island’s economy into a recession, forcing the government to seek a $4.6 billion International Monetary Fund -led bailout. Even after controls were introduced, the central bank raised the key rate to a record 18 percent, before lowering it to 12 percent in June. “The capital controls imposed on Nov. 28, 2008, were considered necessary in order to stabilize the economy in the wake of the financial crisis that struck Iceland in October 2008,” the bank’s statement said. “The conditions necessary for the initial stage in removing the controls, in accordance with the capital account liberalization strategy presented by the Bank on August 5, 2009, have now developed.” The second stage of the lifting of controls will target foreign-exchange outflows. Next Phase “The next phase of capital account liberalization – the removal of restrictions on capital outflows – will be determined by the success of this phase and the progress made under the macroeconomic program,” according to the statement. Today’s decision comes two days after Iceland completed a review of its economic program with the IMF. Upon completing the review the IMF disbursed $167.5 million to Iceland, and an additional $625 million were made available to the north Atlantic island from Denmark, Finland, Norway, Sweden and Poland. The funds will be used to strengthen Iceland’s reserves as the capital restrictions are scaled back, Economic Affairs Minister Gylfi Magnusson said on Oct. 29. “It was clear we needed it to strengthen our reserves, prior to abolishing the capital controls,” said Magnusson. “Without the funds, abolishing the restrictions would have taken longer.” Opportunities The central bank’s main challenge is to “find opportunities to bring down interest rates with domestic economic circumstances in mind without putting pressure on the exchange rate of the krona and at the same time start the process of removing capital controls,” said central bank Governor Mar Gudmundsson on Aug. 25. All restrictions on capital flows will be dropped in two to three years, the then interim Governor Svein Harald Oygard told reporters in August. Iceland’s economy will contract 9.1 percent in 2009 as household spending falls 19.7 percent and investment slumps 48.4 percent, the central bank said on Aug. 13. To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net .

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Prince Charles Adversary Rogers Wins Stirling Prize for European Building

October 18, 2009

By Mark Beech Oct. 18 (Bloomberg) — Richard Rogers , the architect whose design for a London building was blocked by the Prince of Wales , last night won this year’s international RIBA Stirling Prize . His firm Rogers Stirk Harbour + Partners received the U.K.’s highest architectural distinction, open to buildings across Europe, for its design of Maggie’s Centre for cancer patients, the Royal Institute of British Architects said at an awards ceremony at Old Billingsgate in London. Rogers, 76, had picked up two of the six nominations for the prize, worth 20,000 pounds ($32,710). He was also shortlisted for the Bodegas Protos winery near Valladolid, Spain. Earlier this year, Prince Charles helped to prevent an apartment complex designed by Rogers being built on the site of a former barracks in London’s Chelsea district. The development is based on 12 acres (5 hectares) of land that were purchased for 959 million pounds by the Qatari Diar Real Estate Investment Co. — a unit of Qatar’s sovereign wealth fund — and by the property-developing brothers Christian and Nick Candy . U.S. architectural writer Charles Jencks has set up cancer- care centers as a memorial to his wife, Maggie Keswick Jencks , who campaigned for patient support and died of cancer. The center by Rogers in Hammersmith, London, joins other Maggie’s buildings designed by Frank Gehry and Zaha Hadid in Scotland. “Maggie’s Centre exceeds at every level in fulfilling the most demanding of briefs,” RIBA said in an e-mailed statement. “This quietly confident building is truly, unquestionably a haven for those who have been diagnosed with cancer.” Barajas Airport Rogers Stirk Harbour + Partners won the RIBA Stirling Prize in 2006 for Barajas Airport in Madrid. This is the second time the practice has been shortlisted twice in the same year: In 2006 Rogers was also nominated for National Assembly for Wales. The other four nominees for the Stirling 2009 were: – Fuglsang Kunstmuseum , in Denmark, by Tony Fretton Architects ; – Liverpool One Masterplan, by BDP ; – 5 Aldermanbury Square, in London, by Eric Parry Architects ; – Kentish Town Health Centre, in London, by Allford Hall Monaghan Morris . The shortlist was missing some acclaimed pieces of architecture from recent years, such as the cloisters at St. Benedict’s School in Ealing, London, designed by Buschow Henley ; the underground area designed by Eric Parry next to the restored church of St. Martin-in-the-Fields; Deal Pier Cafe in Kent, by Niall McLaughlin Architects; the Marks Barfield treetop walkway at Kew and the new Castleford Bridge in Yorkshire. Accordia’s Victory This is the 14th year the RIBA Stirling Prize has been presented. Last year’s surprise winner was the Accordia housing project in Cambridge, England, by Feilden Clegg Bradley Studios, Alison Brooks Architects, and Maccreanor Lavington. Other winners include the Scottish Parliament, designed by EMBT/RMJM ; 30 St. Mary Axe by Foster and Partners; the Laban Centre , London, by Herzog & de Meuron; Gateshead Millennium Bridge by Wilkinson Eyre ; and the American Air Museum at Duxford, also by Foster and Partners. ( Mark Beech writes for Bloomberg News. The opinions expressed are his own.) To contact the writer on the story: Mark Beech in London at mbeech@bloomberg.net .

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Robert Reich: Going To Copenhagen Empty-Handed

October 12, 2009

On Friday, Denmark’s climate and energy minister, Connie Hedegaard, who will be chairing U.N.-sponsored climate talks in December in Copenhagen, said President Obama needs to do more on climate. “It is hard to imagine that he will be receiving the Nobel Peace Prize in Oslo on Dec. 10 and then come empty-handed to Copenhagen a week later,” she said. But there’s no way between now and then that Obama can get a strong climate bill through Congress. Over the next months, the White House needs to focus on health care if it’s to have any hope of coming up with anything more than Big Pharma and the private insurance companies want. This is the cost of trying to do so much so quickly. Initiatives revert to powerful industry lobbyists because there’s no time to organize countervailing power. When he’s trying to do everything at once, the President can’t mobilize public opinion behind any one thing. Progressive voices (which have difficulty being heard even under the best of circumstances) drown each other out because they’re hollering over one another. Climate change legislation is moving forward — but big polluters have shaped much of it. As I noted recently, the Waxman-Markey climate bill, passed by the House last June, gives away 85 percent of pollution permits to the nation’s biggest polluters, and the “cap” it proposes on overall carbon emissions would cut greenhouse gas emissions only by an estimated 2 to 4 percent by 2020 compared to the UN reference year of 1990. The Kerry-Boxer bill has a stronger cap on emissions but it’s still far short of what’s necessary — and it leaves out the hardest part, which is the actual cap-and-trade mechanism. Why has so little been accomplished? Because coal, shale, oil, big manufacturers, and utilities — the big old polluters (BOPs) — have beaten back anything better. The only real countervailing powers on climate change are industries that stand to gain from stronger legislation — mostly nuclear and ethanol, along with a smattering of companies that have invested in wind, biomass, and solar. But they’re no match for the BOPs. Nor do their bottom lines necessarily match what’s good for the world. Yes, the Environmental Protection Agency is moving forward on its own efforts to reduce greenhouse gases, and the White House is quietly using the threat of the EPA doing more as a prod to get the BOPs on board with legislation that the White House says will be easier on them than what the EPA comes up with. But that’s no real threat. The BOPs know they can keep the EPA tied up in litigation for years. So here’s my suggestion. The White House should tell Congress it’s raising the bar on climate change but is simultaneously putting the current legislation on hold — until it can focus the public’s attention on it. That is, until after a worthy piece of healthcare legislation is on the President’s desk. Arriving in Copenhagen strongly committed to fight for a large reduction in greenhouse gases, even if that means empty hands at the time, is better than arriving there with a weak and ineffective law. Cross-posted from Robert Reich’s Blog

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Chile Qualifies for World Cup While Late Goal Revives Argentina’s Chances

October 11, 2009

By Peter-Joseph Hegarty and Michael Buteau Oct. 11 (Bloomberg) — Chile reached soccer’s 2010 World Cup, while a last-gasp goal revived Argentina’s hopes in yesterday’s South American qualifying matches. Chile joined Brazil and Paraguay in clinching a place in South Africa with a 4-2 away win against Colombia in Medellin. Waldo Ponce, Humberto Suazo, Jorge Valdivia and Fabian Orellana got the goals. Argentina needed an injury-time goal from Martin Palermo for a 2-1 win over Peru in Buenos Aires that leaves the nation in fourth place, the final automatic qualifying position. Amid torrential wind and rain, Peru had got the leveling goal in the 90th minute through a Hernan Rengifo header that canceled out Gonzalo Higuain’s opener. Three minutes into injury time Palermo stabbed in the winning goal from close range, prompting his coach Diego Maradona to dive, front first, across the rain-sodden turf in celebration. “The victory gives us new life,” Maradona was quoted as saying by soccer ruling body FIFA on its Web site . “At the interval I told him (Palermo) to go out and win the game, though we never imagined it would happen like this,” he added, describing the winning goal as “a miracle by Saint Palermo.” Argentina would guarantee fourth spot with a win in Uruguay in its final group game in three days, although a draw might be enough depending on Ecuador’s result in Chile. Uruguay requires a victory in Montevideo to come fourth. ‘Incredible’ “What happened today was incredible,” said Palermo, recalled to the national scene last month after a 10-year absence. “What really matters is what happens in Uruguay. It’s going to be another final and we have to go over there and play for our lives.” The fifth-placed team has a playoff against the fourth team from the North, Central America and Caribbean region, from which the U.S. and Mexico have now qualified. Costa Rica and Honduras are vying for the third automatic spot. Conor Casey scored two second-half goals as the U.S. rallied from behind for a 3-2 win over Honduras to earn a berth in South Africa. Casey’s goals, his first two in an international match, helped the U.S. clinch a place in the tournament for the sixth straight time. Landon Donovan scored the team’s other goal in San Pedro Sula, Honduras. With the U.S. leading 3-1, Honduras pulled within one goal as Julio Cesar De Leon scored his second of the match. The home team had chances to tie it when Carlos Pavon put a penalty kick over the U.S. net in the 87th minute and Pavon headed over the bar two minutes later. Mexico Advances Mexico advanced with a 4-1 win over El Salvador. An own goal by Marvin Gonzalez and goals by Cuauhtemoc Blanco , Francisco Palencia and Carlos Vela sealed the win in Mexico City. Italy, the defending World Cup champion, also earned a berth along with Germany, Denmark, Serbia and the Ivory Coast. Nineteen of the tournament’s 32 teams have now been set. Qualified teams: Australia, Brazil, Chile, Denmark, England, Germany, Ghana, Italy, Ivory Coast, Japan, Mexico, Netherlands, North Korea, Paraguay, Serbia, South Africa (host), South Korea, Spain, U.S. To contact the reporters on this story: Peter-Joseph Hegarty in London at phegarty@bloomberg.net ; Michael Buteau in Atlanta at mbuteau@bloomberg.net .

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Bernstein Says Financial Turmoil Showed Denmark’s Need for Safety of Euro

September 30, 2009

By Tasneem Brogger and Gelu Sulugiuc Sept. 30 (Bloomberg) — Danish Central Bank Governor Nils Bernstein said Denmark would have been hurt less by the financial crisis had it adopted the euro, calling the common European currency an “insurance policy” for the economy. “The crisis has shown us this is not just a political problem,” Bernstein, 66, said in an interview in Copenhagen on Sept. 28. “The crisis has shown that we can manage economically outside the euro, but it has also demonstrated that there are big advantages during a crisis to be inside and much more protected against turmoil and to have access to the euro system’s facilities.” Denmark pegged the krone to the euro in 1999, obliging the central bank to use policy to steer the currency. Nationalbanken raised the benchmark rate to 5.5 percent in October as policy makers defended the krone from a sell-off while the European Central Bank cut its main rate. That led to higher mortgage payments for Danish holders of adjustable-rate loans and increased the euro’s appeal among voters. “The big interest rate differential we had last year wouldn’t have been necessary had we been inside the euro zone,” Bernstein said. “We were under pressure.” Denmark would have had earlier access to dollars had it been a member of the common European currency, he said. In September last year, Nationalbanken was one of several central banks outside the euro zone to receive swap lines with the U.S. Federal Reserve. ‘Safe Harbor’ “We had to make an agreement with the Fed and a euro agreement with the ECB to help us through our problems, which demonstrates that in a storm it’s better to be in a safe harbor than alone at sea,” Bernstein said. Momentum in favor of switching to the common currency has ebbed as the crisis abated and the Danish central bank cut its lending rate to a record low of 1.25 percent on Sept. 24. After rising to a three-year high of 53.4 percent in November, Danish voter support for the euro fell to 48.9 percent of respondents, a poll commissioned by Danske Bank A/S showed this month. The government will probably break its pledge to hold a referendum on joining the euro this electoral term, which ends in 2011, as polls show dwindling support, government officials, who spoke on condition of anonymity because an official announcement has yet to be made, said this month. Economists have said if Danes rejected the euro for a third time, after votes in 1992 and 2000, the issue could be sidelined for at least 15 years. “My expectations are that there won’t be a referendum until we are sure to get a ‘yes’,” Bernstein said. “But the polls fluctuate a lot and are not very convincing. We’ve lost before, and you can’t try too often. It’s the government’s job to convince the voters.” Former Prime Minister Anders Fogh Rasmussen , who has said not having the euro “damages” Danish interests, handed the premiership to Lars Loekke Rasmussen in April. The former promised a vote by 2011; his successor has gone on the record to say setting a deadline is “impossible,” though he’s stopped short of officially canceling Fogh Rasmussen’s pledge. To contact the reporter on this story: Gelu Sulugiuc in Copenhagen at gsulugiuc@bloomberg.net

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IMF Cuts Forecast for Global Losses on Loans, Investments to $3.4 Trillion

September 30, 2009

By Timothy R. Homan and Sandrine Rastello Sept. 30 (Bloomberg) — The International Monetary Fund cut its projection for global writedowns on loans and investments by 15 percent to $3.4 trillion, citing improvements in credit markets and initial signs of economic growth. The tally, released in a semiannual report today, was based on a new methodology after criticism of an April estimate of about $4 trillion. Banks’ losses on bad assets are projected to increase from July 2009 through next year by $470 billion in the euro area, $420 billion in the U.S. and $140 billion in the U.K., the report said. As firms from Bank of America Corp. to BNP Paribas SA repair their balance sheets, the report said banks that already have written down $1.3 trillion may have another $1.5 trillion in toxic debt on their books. The result will be impaired credit markets that may stifle the recovery through next year and require sustained attention from policy makers to avoid reigniting the crisis, the IMF said. “Systemic risks have been substantially reduced following unprecedented policy actions and nascent signs of improvement in the real economy,” the IMF said in its Global Financial Stability Report. “Even so, credit channels are still impaired and the economic recovery is likely to be slow.” For the period from 2007 through 2010, banks’ writedowns on nonperforming assets will be $2.8 trillion worldwide, with $1 trillion originating in the U.S., $814 billion in the euro area and $604 billion in the U.K. The IMF said U.S. banks have recognized about 60 percent of their expected losses, compared with 40 percent in both the euro area and in the U.K. Swiss Banks In a category called “other mature Europe” that includes Denmark, Iceland, Norway, Sweden and Switzerland, bank writedowns may increase by $120 billion by the end of 2010, the report said. Banks have already written down $610 billion in the U.S., $350 billion in the euro area and $260 billion in the U.K., the report said. The overall loss projection, which includes pension funds and insurance companies’ potential losses, was lower than an initially projected $4.1 trillion announced in April, attributed to improved economic and financial conditions, the IMF said. After some European officials complained five months ago about IMF estimates for the region’s banks, the fund’s report today said a different approach was used to estimate future loan and securities losses. The new measure links regional economic forecasts and credit developments to project writedowns. The previous method did not take into account geographic differences. U.S. Lending In the U.S., consumer loans “remain the worst performing segment,” and residential and commercial mortgage charge-off rates are expected to increase in the second half of 2010, the report said. In the euro zone and U.K., “muted economic activity and rising unemployment are expected to push up loan Losses,” it said. The financial crisis stemming from the collapse of the subprime mortgage market in the U.S. wiped 44 percent off the MSCI World Index , erasing about $24 trillion from the value of global equities in the 12 months to the end of March. Financial companies worldwide have recorded $1.6 trillion in writedowns and losses, according to Bloomberg News data. “There’s still a lot of impaired assets on the balance sheets of the banks,” IMF Managing Director Dominique Strauss- Kahn said in a Sept. 21 interview. “A lot has been done, but there’s still a lot to do.” The MSCI World Index has rallied about 64 percent from this year’s low in March. Toxic Debt While signs of improvement in the economy and “reassuring” bank stress-test results have relieved some of the immediate pressure to deal with toxic assets, addressing them remains a “a policy priority and a challenge,” the IMF said in the report. In the U.S., the Public-Private Investment Program “has faced significant hurdles,” and authorities could adjust it to encourage banks to participate more in the initiative, according to the report. In Europe, programs to establish “bad banks” to hold impaired assets are still in the early stages and “show promise,” the IMF’s report said. The Swiss government last year invested 6 billion Swiss francs ($5.8 billion) in mandatory convertible notes to help Zurich-based UBS AG split off toxic assets. BNP Paribas, France’s largest bank, earlier this month said 2009 provisions for bad loans will be between 7 billion euros ($10.2 billion) and 8 billion euros, lower than analysts’ estimates. Germany’s Plan Still, the report mentioned “a concern” about Germany’s plan, which instead of demanding upfront recognition of losses, allows banks to spread them over 20 years. A leverage ratio for banks, which would manage holdings relative to total assets, will be added to the existing Basel II capital rules, which all members of the Group of 20 advanced and emerging economies will adopt by 2011. The U.S. has pumped capital into banks with a $700 billion Troubled Asset Relief Program in the past year. Citigroup Inc., Bank of America and American International Group Inc. were among the top recipients. The IMF estimates that credit constraints, while easing in most regions, still pose a threat to the recovery. That’s because overall demand will not slow as fast as supply because governments need cash to finance their stimulus plans and their growing deficits, the IMF said. Bank Credit “Our scenarios envisage the supply of bank credit falling for the remainder of 2009 and into 2010 both in the United States and Europe,” according to the report. “Western European banks appear able to absorb deteriorating credit conditions in emerging Europe, but may lack sufficient capital to support a recovery in the region.” At the same time, the IMF said, “sovereign issuance will effectively compete with — and possibly crowd out — private- sector credit needs.” The IMF dismissed the notion that a temporary rise in sovereign debt issuance by advanced economies can hurt emerging market debt. Such a scenario would occur only, the IMF said, if widening deficits in industrial nations were sustained. Governments need to commit to medium-term plans to ensure fiscal sustainability and avoid an increase in long-term interest rates, the lender said. The IMF predicted that financing an increase in budget gaps of 5 percent to 6 percent of gross domestic product may raise long-term borrowing cost by 150 to 200 basis points. To contact the reporters on this story: Timothy R. Homan in Istanbul at thoman1@bloomberg.net Sandrine Rastello in Washington at srastello@bloomberg.net

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Obama to Attend IOC Vote to Back Chicago Bid for 2016 Games, Jarrett Says

September 28, 2009

By John McCormick Sept. 28 (Bloomberg) — President Barack Obama will fly to Copenhagen this week to attend a vote on where the 2016 Summer Olympics will be held, said Valerie Jarrett , a senior adviser to the president. Obama will attend the Oct. 2 final presentation to the International Olympic Committee for the bid by his adopted hometown of Chicago, Jarrett said in an interview. “It strengthens our bid,” she said. “There is nothing like the president expressing what it means to him.” Chicago is competing against Madrid, Rio de Janeiro and Tokyo. Organizers of the U.S. bid had been lobbying the White House to have Obama make the final pitch, although the president had previously said he was too busy with the battle in Congress over health-care legislation. “President Obama and first lady Michelle Obama symbolize the hope, opportunity and inspiration that makes Chicago great, and we are honored to have two of our city’s most accomplished residents leading our delegation in Copenhagen,” Chicago Mayor Richard M. Daley said in a statement issued by the Chicago 2016 bid committee. Amy Brundage, a White House spokeswoman, said Obama’s absence from Washington will be brief and will not hurt efforts on his top domestic legislative priority. ‘Overall Progress’ “The president made a determination that being out of the country for a day will not negatively affect his efforts on health care or the overall progress of the legislation,” Brundage said. Patrick Ryan , chairman of Chicago’s bid and founder of insurance brokerage Aon Corp., said in a statement that the president’s presence will mean a great deal in Copenhagen. “There is no greater expression of the support our bid enjoys, from the highest levels of government and throughout our country, than to have President Obama join us in Copenhagen for the pinnacle moment in our bid,” Ryan said. Brazilian President Luiz Inacio Lula da Silva, King Juan Carlos of Spain, and Spanish Prime Minister Jose Luis Rodriguez are all also scheduled to be in Copenhagen. Tokyo is urging new Japanese Prime Minister Yukio Hatoyama to attend as well. The White House said the first lady will arrive in Copenhagen on Sept. 30, along with Jarrett, who has led the White House’s Olympics lobbying effort. The president will arrive just prior to Chicago’s presentation and will fly back to Washington the same day, the White House said. ‘Bring the World Together’ “President Obama and First Lady Michelle Obama will both make presentations to the IOC during Friday’s session,” the White House said in a statement. “They will discuss why Chicago is best to host the 2016 Summer Games, and how the United States is eager to bring the world together to celebrate the ideals of the Olympic movement.” While in Denmark, the president and first lady also will meet with Danish royalty and Prime Minister Lars Løkke Rasmussen, the White House said. A White House advance team was sent to Copenhagen last week to make security and other arrangements. White House Press Secretary Robert Gibbs said on Sept. 24 that it would be a “very quick trip” if the president did go. Obama’s decision to make the trip will add star power to a U.S. delegation that already includes the first lady, television host Oprah Winfrey , U.S. Transportation Secretary Ray LaHood and U.S. Education Secretary Arne Duncan . Chicago is bidding to bring the Summer Games back to the U.S. for the first time since Atlanta in 1996. To contact the reporter on this story: John McCormick in Chicago at jmccormick16@bloomberg.net

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Passport-Waving Socialist Challenges London’s Financial Power Over Europe

September 23, 2009

By Simon Clark and Tom Cahill Sept. 23 (Bloomberg) — European Socialist Party President Poul Nyrup Rasmussen waved his red passport at hundreds of hedge-fund and private-equity managers in London’s 600-year-old Guildhall to assert his challenge to the city’s financial power. London, the meeting place in Europe for bankers and traders from New York to Mumbai, faces an unprecedented challenge to its right to set the rules of financial engagement. Rasmussen, 66, is pushing European Union legislation of all hedge funds and private-equity funds that want to invest in the 27-member region, which makes up the world’s largest economy. “Having a passport as a financial player to the whole of the European Union’s financial market, that is so valuable,” Rasmussen told a packed audience at the Sept. 11 meeting. “If you come from the United States and want to have this passport, this common-entry passport to the EU’s financial market, you’re not going to have it free.” Europe is forging new laws and institutions for markets after the region’s largest pension funds lost 18 percent, or $560 billion, of value last year, according to consultant Watson Wyatt Ltd. As many as three new European financial regulatory agencies with the power to overrule national authorities may be announced today, pressuring London’s bankers. “Punishing or somehow reining in the financial services industry is not the answer,” Ian Luder, the 681st lord mayor of the City of London, said at the annual Mansion House banquet last night, according to a copy of the speech. London’s financial center is a “major national and international asset,” he said. Parliament to Vote As world leaders prepare to meet in Pittsburgh this week to overhaul financial regulation, London’s investors are rallying to fight Rasmussen’s Directive on Alternative Investment Fund Managers in Brussels, the EU capital, on the grounds that it is protectionist and flawed. The European Parliament will vote on the law, currently under review, which proposes that funds disclose more information and limit borrowing. “We must not be beguiled by protectionism hiding as protection,” U.K. Treasury Minister Paul Myners told the audience that Rasmussen spoke to in London. “The draft directive as it currently stands is flawed. It tilts at mythical windmills, at times pandering to prejudice.” Rasmussen forced the directive onto the political agenda in the European Parliament, pressuring the European Commission, the EU’s executive arm, to issue the rules in April. Rasmussen retired from the Parliament in July. In addition, the EU will today propose new regulatory agencies for banking and the securities, insurance and pension industries. Financial Capital “You are the center of Europe for financial activities, but by being that you are also part of the confusion,” Rasmussen said. “After this crisis there has been a socially useless increase in complexity.” London is home to more than 80 percent of the region’s estimated $400 billion in hedge-fund assets and about 60 percent of its private-equity firms and may suffer as managers decide that leaving is easier than complying with new laws, according to Open Europe , a London-based research organization that is critical of EU integration and wants national parliaments to “gain real powers over EU legislation.” Rasmussen’s new rules could cost funds as much as 1.9 billion euros ($2.8 billion) through increased compliance costs in the first year and 985 million euros annually thereafter, according to Open Europe. BlackRock’s View The directive will limit European investors’ choice and challenge non-EU investors who try to raise money in Europe, said Douglas Shaw , director of European alternative investments at BlackRock Inc., which is buying Barclays Global Investors to become the world’s biggest money manager. “Clients fear that under the directive they will only be able to hire EU managers of EU domiciled funds serviced by EU custodians of EU prime brokers,” he told Rasmussen. “I would just like to maximize my consumer choice.” Six days after Rasmussen spoke, Myners met hundreds more investors in a former brewery a mile north of Guildhall to urge them to influence changes to the directive. “I reject this protectionist argument,” he said. “Now is the time to start making these arguments more widely across Europe.” The directive is a direct attack on London, according to some of the City’s investors and politicians. Tomorrow, a London-based research organization, Institute of Economic Affairs , will debate whether the EU has the political goal of blunting London’s power. ‘Downsize the City’ “I’m looking forward to voting against this directive,” David Campbell Bannerman, a European Parliament lawmaker for the U.K. Independence Party , told Rasmussen to loud applause. “You intend to downsize the City because you don’t like our Anglo- Saxon methods.” Rasmussen, a former prime minister of Denmark, disputed his London critics. “My point is not to destroy — I couldn’t dream of that — London City,” he said. “You’re the masters in Europe,” Rasmussen said. “If you are as good as you are without rules, you can become even better with rules. Don’t fear. Be happy. Let’s make a level playing field.” The directive could help London by creating a real EU internal market for funds and by setting a new global standard for private equity and hedge funds, said David Wright , director of financial services and markets policy at the European Commission. That’s what happened when the EU regulated mutual funds under rules known as Undertakings for Collective Investment in Transferable Securities, or UCITS, he said. ‘Global Standard’ “We want to move toward a real internal market for funds,” Wright said. “UCITs are the global standard.” Rasmussen’s directive needs many changes to meet that goal, said Richard Saunders , chief executive officer of the London- based Investment Management Association. Investors can win a technical debate on the directive, he said. “If, however, it gets turned into a political bun fight — the City of London against the dastardly Europeans — mark my words, we lose,” Saunders said. Peter Montagnon , director of investment affairs at the U.K.’s Association of British Insurers, said London’s investors must argue their case in terms that European Parliament lawmakers can understand such as showing job creation. Londoners should also enlist continental Europeans to make their case to Parliament, Montagnon said. “It’s never very good coming from anybody who lives in London,” he said. To contact the reporters on this story: Simon Clark in London at sclark4@bloomberg.net Tom Cahill in London at tcahill@bloomberg.net

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Krugman Says `End of the World Postponed’ as U.S. Economy Exits Recession

September 21, 2009

By Kati Pohjanpalo Sept. 21 (Bloomberg) — The global economic downturn has probably hit bottom though the recovery will be “slow and painful,” said Paul Krugman , the Nobel Prize winning economist. “The end of the world appears to have been postponed,” Krugman, a professor at Princeton University, said at a seminar in Helsinki today. The world economy “does not appear to be falling into an abyss but is still” in trouble. The outlook is “very fuzzy’ and a W-shaped recovery may become U-shaped. Germany, France and Japan emerged from recession last quarter, adding to evidence some of the world’s biggest economies are over the worst. The U.S. recession probably ended in late July or August, Krugman said, after gross domestic product fell 1 percent in the second quarter from the prior three months. The Nobel Laureate said “the truly extraordinary thing” has been “the collapse of world trade,” the subject for which he was awarded the prize last year, and he cast doubt on the potential for exports to lead the global recovery. He also said China’s economy isn’t big enough to serve as a growth engine. “The problem is that this is a global financial crisis,” he said. “How can we have an export-led recovery unless we find another planet to export to?” No Locomotive Krugman questioned whether China’s economy is large enough to be a locomotive of recovery. “One of the reasons it’s so difficult to tell a story about a fast recovery is the large surpluses in Asia,” he said. “If they can find a serious increase in consumer demand, that would help. We don’t really understand why the Chinese savings rate is so high, but it’s probably due to” large precautionary savings. He warned that any decision by China to diversify its currency reserves away from the dollar would “hurt Europe and Japan the most.” While budget deficits “saved the world” in the short term, “for most people things are going to get worse,” he said. “Governments can help us cope with the crisis, but they have levels of debt that are sufficiently high to be a source of concern.” Even so, the recovery remains too frail to warrant scaling back support measures, he said. “Exit from stimulus should certainly wait until we have clear signs that we’re closing the output gap. This is no time to start exiting stimulus.” ‘Don’t Panic’ Economies can “suffer” more than necessary if governments introduce austerity measures prematurely, Krugman said. “Obviously deficits are building up, but to respond with severe cuts increases the human and the economic cost right away. You do not want to inflict upon yourself the equivalent of an IMF program. You want to avoid doing that if you can. You have to keep an eye on the debt numbers but not panic over them if you can avoid it.” While, last quarter’s drop in U.S. GDP was the fourth in a row, the longest contraction since quarterly records began in 1947, Krugman said the U.S. has $1.1 trillion in annual capacity “staying idle.” The U.S. consumer “that’s been such an important driver of the global economy, is exhausted,” he said, forecasting U.S. unemployment may rise until early 2011. Reason to Invest Leading the recovery will be business investment, he said, “but what’s going to drive business investment? It would be very helpful if someone could” make a discovery that would lead us out of this recession. “If we can introduce effective climate change policies, particularly the cost of carbon emissions,” that “would be a reason to invest.” A “good” agreement at the forthcoming international climate change summit in Denmark “wouldn’t just be good for the planet, it would be good for the recovery,” Krugman said. The crisis has hurt the euro in its ‘competition’ with the dollar, he said. “The international role of the euro is that it has suffered a setback. The crisis has not been good for the euro and its competition with the dollar as the international reserve currency.” Krugan said he was concerned global efforts to emerge from the crisis “could just drag on and on for a long, long time.” “The consequences of that are that you start to have problems with financing the debt and you start to have social and political problems,” he said. My great concern is that this just drags on and on with severe consequences for political and social stability.” History is no guide to a path to recovery, he said. “The trouble is, we really have no road maps. The only model is the Great Depression itself.” That “was ended by a very large spending program known as World War II and we don’t really want to repeat that.” To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

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Sweden Predicts Lower Budget Deficits as Tax Cuts, Spending Revive Economy

September 20, 2009

By Johan Carlstrom and Niklas Magnusson Sept. 20 (Bloomberg) — Sweden’s budget deficits will be narrower than the government predicted earlier as the economy returns to growth and the country boosts spending and cuts taxes to support its export-dependent economy . The deficit of the Nordic region’s largest economy will be 2.2 percent of gross domestic product in 2009 and 3.4 percent in 2010, according to the 2010 budget presented by Swedish Finance Minister Anders Borg in Stockholm today. The deficit will shrink to 2.1 percent in 2011 and 1.1 percent in 2012, Borg said. “The public finances have developed somewhat better than forecast in the 2009 economic spring budget both because of higher income and lower expenses,” Borg said in the budget for 2010. “Expectations of stronger export orders, a more positive purchase managers index, further improvements on the financial markets and a stronger global cyclical recovery are factors that may make the recovery faster than expected.” Sweden has suffered a deeper economic decline than neighbors Norway and Denmark after a slump in global trade undermined demand for exports from companies like SKF AB , the world’s biggest bearings maker, and Volvo AB , the world’s second biggest producer of heavy trucks. Exports make up about half of Swedish economy. Elections Next Year The government last month forecast the deficit would amount to 2.4 percent of gross domestic product this year and 3.7 percent in 2010. Prices will rise 0.4 percent in 2010 after falling 0.4 percent this year, the government predicted today. Total government income next year will be 723 billion kronor ($105 billion), according to the budget. Prime Minister Fredrik Reinfeldt’s government plans to cut taxes and raise spending on schools, hospitals and measures to support the unemployed next year as it faces national elections in September. Earlier and new stimulus measures, which follow Sweden’s worst economic decline in at least 15 years in the first half of 2009, will contribute 1.7 percentage points to economic growth next year, according to the budget. Borg today reiterated forecasts from last month that the economy will return to growth of 0.6 percent in 2010 and 3.1 percent in 2011 after shrinking 5.2 percent this year. Unemployment will peak at 11.6 percent in 2011 from 8.8 percent this year. More Tax Cuts The government had prior to today announced plans to cut income taxes for a fourth time since coming to power in 2006 after 12 consecutive years of Social Democratic rule. In today’s budget, the government raised spending on new stimulus measures by 32 billion kronor for next year and by 24 billion kronor for 2011. Reinfeldt came to power in September 2006, pledging to increase employment by cutting taxes, lower benefits and making it cheaper for companies to hire staff. The government trails the three-party opposition bloc, which includes the Social Democrats, Left party and the Greens, by 3.4 percentage points, according to an opinion poll by Sifo Research International published this week. The Social Democratic party wants to raise income taxes and re-introduce the country’s wealth tax in a different shape to create more jobs and invest in hospitals and schools. The “most serious risk” to the government’s economic forecasts and budget stems from the Baltic countries of Estonia, Latvia and Lithuania, where Sweden’s Swedbank AB and SEB AB are the biggest lenders, Borg said. A deepening of the crisis in the Baltics will “affect the entire Nordic region,” he said. Estonia, Latvia and Lithuania, the European Union’s fastest-growing economies from 2004 through 2006, have since toppled into the bloc’s deepest recessions. Property-investment and spending booms, financed mainly by bank lending, turned to bust as inflation soared, cheap credit evaporated and demand for exports ebbed. To contact the reporters on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net Niklas Magnusson at nmagnusson1@bloomberg.net

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Obama Says U.S. Job Losses Ending, Vows to Push on Wall Street Regulations

September 14, 2009

By Rich Miller and Julianna Goldman Sept. 15 (Bloomberg) — President Barack Obama said job losses are “bottoming out” and the U.S. economy looks to be growing again even as he warned against cutting off government aid “so soon that the recovery doesn’t take flight.” Obama, speaking to Bloomberg News one year after the bankruptcy of Lehman Brothers Holdings Inc. crippled the economy, voiced confidence that his plan to overhaul regulation to forestall another crisis would pass Congress this year. He vowed “to do everything I can” to fight banking industry efforts to kill his proposal for a financial products safety agency and stuck by his call to make the Federal Reserve responsible for ensuring the stability of the overall system. “I’m very optimistic about us getting a set of rules in place that prevent the kind of crisis that we’re seeing from happening again,” Obama said in a White House interview yesterday. He opposed setting limits on pay to financial industry executives, even in the face of public outrage over some of the multimillion-dollar bonuses and salaries Wall Street companies are still handing out. “Why is it that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or NFL football players?” he said. On trade, Obama brushed aside concerns that his Sept. 11 imposition of 35 percent tariffs on $1.8 billion in imported tires from China would trigger a cycle of retaliation. “We’re not going to see a trade war,” he said. “There are some tensions around this, no doubt about it. But my message is very simple: We have rules on the books.” Growth in Exports The president ticked off a number of signs the economy is on the mend, including stronger exports and a pickup in manufacturing. Payroll cuts have also tapered off, he said, adding that “we could start seeing some positive job growth.” Since the recession began in December 2007, the U.S. has lost 6.9 million jobs. Payroll cuts peaked at 741,000 in January and have since subsided, with 216,000 job losses in August, according to the Labor Department. The 48-year-old president said the economy was still fragile and cautioned against prematurely removing government programs aimed at supporting financial markets and boosting demand. “I don’t think we’re out of the woods yet,” he said. “What we have to be careful about is taking the crutches away from the patient too early.” He said that was the mistake the U.S. made during the Great Depression. No Second Stimulus Still, Obama told CNBC television in a separate interview that he had a “strong inclination” against a second stimulus package on top of the $787 billion program passed by Congress in February. The world’s largest economy contracted 1 percent from April through June, according to the Commerce Department. The drop was the fourth in a row, making it the longest contraction since quarterly records began in 1947. On health care, Obama was less forthcoming, especially about how to pay for his initiatives. Although he reiterated that two-thirds of the estimated $900 billion cost would come from eliminating waste, fraud and abuse within the system, he wouldn’t commit to sending Congress a bill laying out how to achieve this. He said he would let the Senate Finance Committee “work its way through” the cost-savings process. He also declined to specify what additional revenue measures might be needed other than his earlier endorsement of a fee on insurers for the most-expensive policies. He did pledge “to use my office and my own time and energy anywhere that’s appropriate” to enact the legislation. ‘Common-Sense Rules’ The president’s comments followed an earlier speech in New York where he pushed for a new regime of “common-sense” regulations to avoid another market meltdown. Speaking at Federal Hall on Wall Street, Obama chastised the industry for still engaging in “reckless behavior,” “quick kills,” and “bloated bonuses.” He declined during the interview to identify any of the abusers, saying the tendency to “take exorbitant risks that were unsustainable for the system” was widespread. “And that’s the culture I think that we’ve got to reverse, not to squelch innovation or creativity, but to make sure that we don’t get into what’s called a moral hazard problem, where people assume that government’s there as a backstop,” Obama said. Wall Street Compensation Obama said what’s needed is a change in Wall Street compensation so long-term performance rather than short-term profit is rewarded. “Those principles are ones that I want enshrined in Wall Street’s practices,” he said. “But this has been a country where, as a general proposition, we don’t go around saying, ‘You can’t pay people whatever the market will bear in the private sector.’” Obama’s plan for a consumer financial protection agency has run into opposition from the banking industry and Republicans, who say such a body would limit consumer choice and access to credit. While not promising to veto a bill that lacked such an agency, Obama pledged that he would work to stop opponents from defeating it. “I don’t think they’re going to succeed in killing it, and I’m going to do everything I can to stop them from killing it,” he said. “We need a consumer financial protection agency that consolidates the tasks of all these different agencies right now.” Rewarding Good Practices “That will help the American consumer and ultimately will allow, you know, good, solid business practices to be rewarded in ways that right now they’re not always rewarded,” Obama said. Obama defended his proposal to make the Fed the regulator of systemic risks — a plan that has drawn skepticism from Democrats including House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd , who are reluctant to expand the central bank’s power. They back Federal Deposit Insurance Corp. chief Sheila Bair’s preference for a regulatory council to monitor firms for risk. “What you ultimately have to have is one person or one institution or entity that is making clear decisions at the end of the day, that the buck has to stop with somebody,” Obama said. “And I think that the Fed is best equipped to do this.” ‘Best Representative’ Obama also said he won’t be going to Denmark next month to make a final pitch for Chicago’s bid for the 2016 Summer Olympic Games because of the demands of the health-care and financial-regulation deliberations. He said that while he’s “deeply invested” in winning the Olympics for his hometown, “I’m in the middle of some very important decisions.” The administration announced last week that first lady Michelle Obama will travel to Copenhagen for the Oct. 2 meeting of the International Olympic Committee where the host city will be chosen. Chicago is competing against Madrid, Rio de Janeiro and Tokyo. “Michelle’s our best representative,” Obama said. To contact the reporters on this story: Rich Miller in Washington rmiller28@bloomberg.net Julianna Goldman in Washington at jgoldman6@bloomberg.net

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Obama Says U.S. Job Losses Ending, Vows to Push on Wall Street Regulations

September 14, 2009

By Rich Miller and Julianna Goldman Sept. 15 (Bloomberg) — President Barack Obama said job losses are “bottoming out” and the U.S. economy looks to be growing again even as he warned against cutting off government aid “so soon that the recovery doesn’t take flight.” Obama, speaking to Bloomberg News one year after the bankruptcy of Lehman Brothers Holdings Inc. crippled the economy, voiced confidence that his plan to overhaul regulation to forestall another crisis would pass Congress this year. He vowed “to do everything I can” to fight banking industry efforts to kill his proposal for a financial products safety agency and stuck by his call to make the Federal Reserve responsible for ensuring the stability of the overall system. “I’m very optimistic about us getting a set of rules in place that prevent the kind of crisis that we’re seeing from happening again,” Obama said in a White House interview yesterday. He opposed setting limits on pay to financial industry executives, even in the face of public outrage over some of the multimillion-dollar bonuses and salaries Wall Street companies are still handing out. “Why is it that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or NFL football players?” he said. On trade, Obama brushed aside concerns that his Sept. 11 imposition of 35 percent tariffs on $1.8 billion in imported tires from China would trigger a cycle of retaliation. “We’re not going to see a trade war,” he said. “There are some tensions around this, no doubt about it. But my message is very simple: We have rules on the books.” Growth in Exports The president ticked off a number of signs the economy is on the mend, including stronger exports and a pickup in manufacturing. Payroll cuts have also tapered off, he said, adding that “we could start seeing some positive job growth.” Since the recession began in December 2007, the U.S. has lost 6.9 million jobs. Payroll cuts peaked at 741,000 in January and have since subsided, with 216,000 job losses in August, according to the Labor Department. The 48-year-old president said the economy was still fragile and cautioned against prematurely removing government programs aimed at supporting financial markets and boosting demand. “I don’t think we’re out of the woods yet,” he said. “What we have to be careful about is taking the crutches away from the patient too early.” He said that was the mistake the U.S. made during the Great Depression. No Second Stimulus Still, Obama told CNBC television in a separate interview that he had a “strong inclination” against a second stimulus package on top of the $787 billion program passed by Congress in February. The world’s largest economy contracted 1 percent from April through June, according to the Commerce Department. The drop was the fourth in a row, making it the longest contraction since quarterly records began in 1947. On health care, Obama was less forthcoming, especially about how to pay for his initiatives. Although he reiterated that two-thirds of the estimated $900 billion cost would come from eliminating waste, fraud and abuse within the system, he wouldn’t commit to sending Congress a bill laying out how to achieve this. He said he would let the Senate Finance Committee “work its way through” the cost-savings process. He also declined to specify what additional revenue measures might be needed other than his earlier endorsement of a fee on insurers for the most-expensive policies. He did pledge “to use my office and my own time and energy anywhere that’s appropriate” to enact the legislation. ‘Common-Sense Rules’ The president’s comments followed an earlier speech in New York where he pushed for a new regime of “common-sense” regulations to avoid another market meltdown. Speaking at Federal Hall on Wall Street, Obama chastised the industry for still engaging in “reckless behavior,” “quick kills,” and “bloated bonuses.” He declined during the interview to identify any of the abusers, saying the tendency to “take exorbitant risks that were unsustainable for the system” was widespread. “And that’s the culture I think that we’ve got to reverse, not to squelch innovation or creativity, but to make sure that we don’t get into what’s called a moral hazard problem, where people assume that government’s there as a backstop,” Obama said. Wall Street Compensation Obama said what’s needed is a change in Wall Street compensation so long-term performance rather than short-term profit is rewarded. “Those principles are ones that I want enshrined in Wall Street’s practices,” he said. “But this has been a country where, as a general proposition, we don’t go around saying, ‘You can’t pay people whatever the market will bear in the private sector.’” Obama’s plan for a consumer financial protection agency has run into opposition from the banking industry and Republicans, who say such a body would limit consumer choice and access to credit. While not promising to veto a bill that lacked such an agency, Obama pledged that he would work to stop opponents from defeating it. “I don’t think they’re going to succeed in killing it, and I’m going to do everything I can to stop them from killing it,” he said. “We need a consumer financial protection agency that consolidates the tasks of all these different agencies right now.” Rewarding Good Practices “That will help the American consumer and ultimately will allow, you know, good, solid business practices to be rewarded in ways that right now they’re not always rewarded,” Obama said. Obama defended his proposal to make the Fed the regulator of systemic risks — a plan that has drawn skepticism from Democrats including House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd , who are reluctant to expand the central bank’s power. They back Federal Deposit Insurance Corp. chief Sheila Bair’s preference for a regulatory council to monitor firms for risk. “What you ultimately have to have is one person or one institution or entity that is making clear decisions at the end of the day, that the buck has to stop with somebody,” Obama said. “And I think that the Fed is best equipped to do this.” ‘Best Representative’ Obama also said he won’t be going to Denmark next month to make a final pitch for Chicago’s bid for the 2016 Summer Olympic Games because of the demands of the health-care and financial-regulation deliberations. He said that while he’s “deeply invested” in winning the Olympics for his hometown, “I’m in the middle of some very important decisions.” The administration announced last week that first lady Michelle Obama will travel to Copenhagen for the Oct. 2 meeting of the International Olympic Committee where the host city will be chosen. Chicago is competing against Madrid, Rio de Janeiro and Tokyo. “Michelle’s our best representative,” Obama said. To contact the reporters on this story: Rich Miller in Washington rmiller28@bloomberg.net Julianna Goldman in Washington at jgoldman6@bloomberg.net

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