governments

‘NO MORE DEBT’: Municipal Bond Issuance Down By Half This Year

by on June 3, 2011

Huffington Post…

NEW YORK — As cities and states struggle with historic budget shortfalls, governments have put one item squarely in the cross-hairs: their debt. Restricting the debt burden has proven to be a politically feasible way for a local government to address its larger fiscal problems — or at least to give the impression it’s doing so. While local politicians clash over pension reform, tax increases and other divisive issues, debt-reduction has emerged as a relatively popular measure. Issuance of long-term municipal bonds dropped by 51 percent during the first five months of the year, compared to the same period a year ago, the Bond Buyer reported, citing data from Thomson Reuters. Limiting bond sales constricts governments’ ability to pave roads, repair bridges and build hospitals and parks. And while the budget relief won from this austerity isn’t large, even for the governments that pay the most interest to bondholders, it sends a message to taxpayers and investors that a government is at least attempting to get its house in order. “I just don’t think people are in the mood to have governments issuing debt at this time, when they’re making service cuts,” said Howard Cure, director of municipal research at Evercore Wealth Management. “The optics of issuing debt,” he said, do not “play very well.” The first five months of the year saw about $83.7 billion of new municipal debt, less than half of the $170 billion that came to market during the same period last year, the Bond Buyer noted, adding that the volume so far this year is the lowest it’s been since 2000. This restricted supply has helped boost the value of bonds. It’s been a difficult several months for municipal bonds, as predictions of widespread defaults have roiled markets, and investors have steadily pulled money from municipal mutual funds. But limited issuance has helped curb adverse effects, the Wall Street Journal reported last month. Municipal yields have fallen this year as the value of bonds has risen, making it cheaper for governments borrow money. The difference, or spread, between yields on an index of municipal bonds and equivalent Treasury bonds was 0.85 of a percentage point at Thursday’s close, down from a January high of 1.04 percentage points, data from Bloomberg show. The states with the most bond issuance saw dramatic year-over-year drops. Issuance in New York, California and Illinois — the top three states for issuance this year and last — dropped, respectively, 38 percent, 70 percent and 48 percent, the Bond Buyer noted. In Illinois, the state legislature voted down a sale of more than $6 billion in bonds on Sunday, and there’s no new bond issuance planned for the coming fiscal year, said Illinois Treasury spokesman Matt Butterfield. For the state that bears the second-lowest credit rating of all 50 states from Standard & Poor’s, borrowing is costly. “Any bonding that is not done here, it’s because it’s expensive,” Butterfield said. “We’re paying a premium because of the credit rating we’re suffering from.” In Illinois, as elsewhere, debt has been painted as an enemy. “Some policy makers want to continue to spend more dollars than the state brings in. Some are advocating long-term, significant borrowing which will spread the state’s challenges into the future. I respectfully disagree,” Illinois Treasurer Dan Rutherford said in a recent release entitled “NO MORE DEBT.” In California, the strategy is similar. S&P has given California the single lowest rating of all 50 states, prompting investors to demand higher yield from the state and also from its local governments. No bonds have been sold at the state level so far this year, when typically there would have been a spring sale, said Tom Dresslar, a California Treasury spokesman. As a portion of the budget, debt payments are dwarfed by spending on services such as education, corrections and health care. But debt has nevertheless been targeted for reduction. “It’s not the biggest by any means, but it’s been growing,” Dresslar said. “Every dollar that you have to pay in debt service is a dollar that you cannot spend on schools, public safety, health care — the whole gamut of public services.” Yields on the state’s debt have indeed fallen. As of May 27, California’s 10-year paper was yielding 3.60 percent in the secondary market, compared to 4.01 percent that time last year, according to data provided by the state Treasury. Restricting bond issuance, though, limits a government’s ability to spend. California will not be able to start some new infrastructure projects it had planned for this year, Dresslar said. But as long as the state sells bonds this fall, the projects that are already in the works will be funded, and new ones will eventually commence, he added. “Whenever you defer capital improvements you’re going to have a bigger problem later on,” said Cure, of Evercore. “Inevitably [bond] issuance will bounce back because infrastructure is in bad shape in this country, but right now the more immediate issue is balancing the budget.”

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‘NO MORE DEBT’: Municipal Bond Issuance Down By Half This Year

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China Posts First Quarterly Trade Deficit In Six Years

by AP on April 10, 2011

Huffington Post…

BEIJING — China reported its first quarterly trade deficit since 2004 on Sunday as surging prices for commodities pushed up its import bill. The General Administration of Customs said in an online statement that China posted a trade deficit of $1.02 billion from January to March this year. However, China reported a small trade surplus of $140 million in March, up from a deficit of $7.3 billion the month before, it said. Export growth in the first quarter was strong, it said, increasing 26.5 percent to $399.64 billion compared to a year earlier, but imports soared 32.6 percent during that period, to $400.66 billion. “The value of imports in the first quarter hit a record high for the first time of more than $400 billion,” the administration said. It said China imported more mechanical and electrical equipment, including cars, as well as iron ore and soybeans, than it did a year ago and that the prices of those commodities had all shot up. Analysts expect a Chinese global trade surplus this year of $160 billion-$200 billion but say that should narrow if oil and commodity prices stay high. Last year, China ran a trade surplus of about $16 billion a month. A smaller trade surplus might help to ease trade strains with Washington and other governments that complain Beijing is giving its exporters an unfair advantage with currency controls and other policies. Stronger imports could help economies looking to China’s robust growth to drive demand for their goods. Imports also might benefit from ongoing government efforts to boost consumer spending to reduce reliance on exports and investment. China is a major importer of oil, iron ore and raw materials and runs a deficit with suppliers such as Saudi Arabia and Australia. It pays for that by running multibillion-dollar surpluses with the United States and Europe. ___ Online: General Administration of Customs of China (in Chinese): http://www.customs.gov.cn

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China Posts First Quarterly Trade Deficit In Six Years

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Mark Plant: Raising Government Revenue in Africa: A Road Out of Poverty

March 21, 2011

Governments in Africa have a prime objective–to reduce poverty. To improve living standards and create jobs, they need to provide their citizens with better health care, better education, more infrastructure. They need to build hospitals, schools, and to pay doctors, nurses, teachers. All this costs money. How to pay for this–in a way that is both fair and efficient–is a question that all governments face. There are limits to how much a government can receive as grants from donors or borrow from donors or the private sector. So raising tax revenues is a necessary element for governments to spend on providing more of these essential services and, in turn, reduce poverty. Building on progress While African countries have made important strides in boosting revenue collection in recent years–from around 11½ percent of gross domestic product (GDP) in 1995 to 15 percent in 2009–they continue to lag behind most other regions. Yet African countries that have had successes on this front demonstrate clearly the importance of stronger revenue performance for making in-roads into poverty reduction. Take Mozambique, for example. An impressive near doubling of tax revenues relative to the overall economy since 1992 has allowed substantial increases in social spending with tangible rewards–in increases in enrollment in primary education, better vaccination, and better basic water and sanitation infrastructure. In Liberia, revenues increased from only 6 percent in GDP to 2003 to 20 percent in 2009, even after a very difficult history of civil war. In addition to significantly better primary enrollment rates, numbers of teachers, and child and the maternal mortality, spending for infrastructure has increased. To help capitalize on country successes such as these, a conference on Revenue Mobilization in Sub-Saharan Africa is being co-hosted by the IMF and Kenyan government in Nairobi on March 21-22. The primary goal is to provide African policymakers with an opportunity to learn from each other, and to identify lessons on what has and has not worked in their efforts to mobilize revenues. Priority issues There are, of course, a wide range of issues for countries to contend with in improving tax revenues, but to help frame the discussion, we see the following as some priority areas for action. First and foremost, countries should avoid taxes that hamper economic development or job creation. Instead they should be designed to be pro-development and pro-jobs. There are two pieces to this puzzle: improving revenue administration; and better tax policy. 1. Revenue administration reforms should concentrate on reducing corruption and addressing the problem of what we call non-compliance. That’s when people just don’t pay their taxes. As much as half of the tax base is lost because taxpayers escape taxation. 2. Tax policy reforms can be incredibly wide-ranging, but here are five issues to look at: First, eliminating tax exemptions. In African countries these are often quite substantial and can rob the government of quite a bit of revenue, and inevitably they favor some people, which isn’t fair. There are also better ways to protect the poor on the spending side, through well-targeted safety nets. Second, making value added taxes (VATs), which many countries have, less complicated through fewer tax rates, fewer exemptions, and a reasonable threshold that keeps small taxpayers out of the VAT system and assures equity across individuals. Third, countries need to find ways of compensating for the loss of revenues resulting from trade liberalization, including trade revenues within customs unions such as in the East African Community where our conference is taking place. It’s also important to adopt clear laws and regulations that include strong taxpayer protection against harassment from tax officials. Again, this ensures that taxes are administered equitably. Finally, many African countries need to ensure that governments get a fair share when negotiating deals on exploitation of their natural resources, like oil, natural gas, and minerals. Ongoing Assistance The IMF has a long history of providing technical assistance in tax policy and revenue administration in Africa and throughout the world. We will continue to offer assistance to countries in the region, benefiting from the lessons to be drawn in Nairobi. We aim to provide technical assistance that is close to our customers, the governments of the region, through our regional Technical Assistance Centers –what we call our AfriTACs . We have three located in Africa and two more will open soon. This Nairobi event coincides with the launch of two Topical Trust Funds created specifically to support the delivery of IMF technical assistance in tax matters: one in the area of tax policy and revenue administration , the other for the management of natural resources . Our discussions in Nairobi will inform a global conference on resource mobilization to be held on April 17-19, 2011 in Washington, DC, and responds to an ongoing initiative by Group of Twenty industrialized and emerging market economies on enhancing revenue mobilization in developing countries. From iMFdirect blog

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Michael J. Critelli: Why We Love Sports and Don’t Like Business and Government

February 15, 2011

Every sport imparts certain unique implicit values. For example, as we portray in From the Rough , in golf, a competitor plays with integrity and with what he’s got. However, there are certain values associated with all sports. Those values help sports succeed for participants, spectators and investors. When we think of great leaders and teams today, we do not think of great political figures, but of legendary coaches like John Wooden of UCLA, Vince Lombardi, Eddie Robinson of Grambling, or Joe Paterno of Penn State, and their teams. Why do government, health care, education, and most other businesses fail to measure up to the performance excellence, the economic performance and entertainment value of sports? Professional and college sports are true competitive meritocracies. We demand excellence from sports, and the owners of sports franchises feel pressured to deliver excellence. As a result, most sports franchises take decisive action when their team loses consistently. Teams fire non-performing managers and coaches. They create highly competitive processes to source and test talent, and get rid of even beloved underperforming players. Athletes do not promote a seniority system, because they recognize that performance excellence makes the overall product viable. Unfortunately, the common thread running through government, health care, education, and many businesses is that they function to enable employees to stay employed, not to deliver excellence, In government, health care, and education, collective bargaining agreements make reducing non-performers extremely difficult. Closing poor quality, high cost organizations is very difficult because politicians, business leaders, and labor unions lobby to preserve jobs even bad ones deliver. Sports is data driven and transparent. As a child, I collected and traded baseball cards, and have always been a sports statistics junkie. Baseball embraced publicly available statistics almost from the beginning, as Alan Schwartz’s pointed out in The Numbers Game . Bill James revolutionized baseball’s statistical reporting systems with his Baseball Abstract series. Michael Lewis transformed baseball as a business with Moneyball . Beyond periodic statistical reporting, daily sports team performance is reported everywhere. Moreover, statistical reporting keeps improving to insure accuracy. In government, education, and health care, there is ferocious resistance to any data analysis or reporting that would tell the public how service is being delivered. Governments are in deep financial trouble because the true retirement benefits costs were hidden for so long. Teachers unions strongly oppose any actionable performance reporting. Our health care system’s best kept secrets is that over 200,000 people die unnecessarily in hospitals annually. Business performance reporting is better, but the average person has an easier time figuring out how a favorite team is performing than figuring what’s going on with even a public company. Misguided government regulation, accounting-driven reporting diverging from economic reality, and business executives who, for competitive reasons, try not to be transparent, have made individual investing riskier than necessary. We understand sports better than other sectors. Most of us have played sports and understand how athletes, coaches, and general managers do their jobs. What we do not learn as a participant, we learn in 24×7 media discussions. Few of us had granular exposure to business when growing up. We pay a lot of attention to health care, education, and local government, but their complexity makes understanding challenging, a complexity driven by government laws and regulations. Federal government school bus regulations span 300 pages. While driving a school bus is simpler than hitting a golf ball, running a school bus service is exceptionally and probably unnecessarily complex. Sports have transcended local, regional, and national barriers to become global. The market for sports talent sourcing and for marketing outreach is global. Every sport has sourced talent outside its borders, and every major sport originating in one country has exported its entertainment to many others. Baseball, basketball and ice hockey have broadened their reach far beyond their regions of origin since 1975. Sports know no boundaries in improving. Governments, health care systems, and school systems are highly localized and isolated. Some innovation occurs because small units of government experiment, but our governments, health care systems, and educational establishments are often untouched by global marketplaces and competitive standards. We do not know enough to demand that our schools be as good as those in Singapore, or that health and life expectancy should be comparable to Norway’s, or that governments should complete big projects as efficiently as China does. I long for the time when we demand as much of service sectors that matter deeply for global competitiveness as we do of our athletes and sports franchises.

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Obama Budget Proposal

February 14, 2011

WASHINGTON – President Barack Obama, less than two months after signing tax cuts for the wealthiest Americans into law, is poised to propose a budget to congress that attacks programs that assist the working poor, help the needy heat their homes, expand access to graduate-level education and undermine that type of community-based organizations that gave the president his start in Chicago. Obama is expected to propose cutting deficits by roughly a trillion dollars over the next decade — or roughly $100 billion each year — by squeezing social programs. A deal struck to extend the Bush tax cuts for just two years, meanwhile, increased the deficit by $858 billion dollars. More than $500 billion of that bargain constituted tax cuts, with billions more funding business tax breaks and a reduction in the estate tax. Roughly $56 billion went to reauthorize emergency unemployment benefits. The president’s budget is expected to mostly target “non-defense discretionary spending,” which makes up less than one-quarter of the overall budget, making balancing the budget with such cuts mathematically impossible. Indeed, the driver of the deficit is tax cuts. The Wall Street Journal is reporting that as a result of the tax cut deal, the projected deficit in Obama’s budget will reach a record level of $1.6 trillion this year, though even that number, relative to GDP, is far lower than many other governments around the world, according to data compiled by the Central Intelligence Agency. And the figure is well below the levels of the 1940s, a time of economic prosperity. “President Barack Obama’s 2012 budget proposal projects this year’s deficit will reach $1.6 trillion, the largest on record, as December’s tax-cut deal begins to reduce federal revenues, a senior Democrat said Sunday,” the Journal reported Sunday evening. (The deficit is only a record if it is neither adjusted for inflation nor considered relative to the size of GDP.) A closer look at surveys suggests that when people say they are concerned about the deficit, they are actually worried about the economy. The president’s official budget proposal will be released Monday morning and we’ll update with breaking news and reactions throughout the day.

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Dan Dorfman: Funeral For a European Myth

October 8, 2010

Here we go again — the death of another myth, namely the one that Europe’s worrisome sovereign debt crisis has run its course. Far more likely, the evidence shows, we’re in for a rerun. To put it in perspective, let’s turn the clock back about six months when the U.S. stock market was repeatedly getting battered on a daily basis in response to news of swelling debt woes in Europe. Adding to the market’s shellacking at the time were riots in Greece over proposed austerity measures. Then came Superman to the rescue, the European Union, with a promise of a $1 trillion bailout package to stabilize Europe and drive away the bond vigilantes who were selling the debt of the weakest European countries, causing interest rates to rise. In response, the euro, aided by Chinese purchases, proceeded to strengthen, and fears of a debt crisis in Europe greatly diminished, so much so that many market pros have eliminated this risk from their radar screens. Judging though from the recent downgrade of Ireland’s credit by the Fitch rating agency, which came on the heels of earlier downgrades of Spain’s and Portugal’s debt, it’s pretty clear that only Rip Van Winkle would dismiss the danger of a fresh outbreak of European debt problems, which has ominous implications for the world’s financial markets. That’s also the thinking of currency tracker Bryan Rich, editor of the World Currency Alert newsletter in Jupiter, Fla., who says “a higher euro may have instilled some investor confidence, but nothing has changed. Not only does a debt problem exist,” he says, “but it’s getting progressively worse and a default by a European country is only a matter of time.” Addressing the trillion-dollar rescue package, Rich describes it as “nothing more than bold shock and awe, a promise that’s a figment of someone’s imagination.” He notes that a number of the more financially muscular European countries, among them Germany, are already balking at the idea of anteing up funds to help bail out their weaker brethren. London money manager Raymond Stahler of Stahler Dearborn, Ltd., concurs. He describes the $1 trillion promise of aid to the struggling European nations, such as Portugal, Ireland, Greece and Spain, as a farce. “Handouts are wonderful,” he says, “but not if nobody is handing out.” Rich views the European financial situation as especially scary in Ireland, which he views as most vulnerable to a default. The European Union’s guidelines prohibit its member nations from having their budget deficits, as a percentage of GDP, exceeding 3%. That’s a meaningless number, though, since no one is paying any heed to it. For example, the 2010 estimates call for Ireland to top the limit by more than 10-fold at 32%, followed by Spain at 9.3%, Portugal at 8.8%, Greece at 8.1%, and Italy at 5%. The EU’s limit on total debt, as a percentage of GDP, is 60%. Here again, Ireland strikes out badly. Its 2010 projection had called for 65%; it’s now projected at 110%. Against this background, a massive amount of debt in the European nations has to be rolled over. A dilemma here is that the governments and the banks will be competing for capital, which will drive interest rates higher. That, in turn, will make it difficult for the governments to raise money at rates they can afford, which, in turn, could cripple the ailing economies. At the same time, Rich notes that the European Central Bank, which has been snapping up government debt of struggling countries to keep them solvent, has acquired a lot of crappy debt. A related problem, as he sees it, is the threat of another major wave of risk aversion. That is when capital flees riskier investments and assets. The chief implications, as Rich sees them: Stocks will go lower, the same for commodities, except gold, and it all bodes well for the dollar. What does all of this mean? Rich’s view: “We’re in a crisis period, a deleveraging phase for the world’s economy, so look for more shocks, such as government defaults, bank failures, currency devaluations and rising protectionism.” He doesn’t say it in so many words, but the word from Rich is clear: Watch out — you could get poor! What do you think? E-mail me at Dandordan@aol.com

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Jeffrey Rubin: Germany and the UK Prepare for Peak Oil

September 14, 2010

Why are the folks at the Bundeswehr Transformation Centre, a German military think-tank, already planning for peak oil ? Probably for the same reason the British Department of Energy, in concert with the Bank of England and the British Department of Defense, has ordered similar–and equally secret–studies on its impact. Despite repeated government assurances to the contrary, the global oil supply doesn’t seem to be growing much anymore. In fact, the Bundeswehr Centre study says that oil production may peak this year. Most people judge peak oil concerns by the prevailing oil price. That prices have plunged from their triple-digit perch is proof enough to them that we need not worry about any imminent peak. What they forget is where we’re coming from. The deepest global recession in the entire post-war period can cut oil prices lots of slack while demand is contracting; peak oil isn’t a problem if the economy it powers is shrinking. For the first time since 1983, world oil demand fell last year, bringing oil prices tumbling down. But recessions, even the deepest, only last so long. The first thing you notice about a recovering economy is that it starts burning more fuel. The second is that oil prices are suddenly rising again. Those prices are already twice as high as their lows during the recession and already at levels that, three years ago, would have been all-time highs. And that’s with the economies of the traditionally large oil-consuming countries in the world, like the 19-million-barrel-a-day US economy, still miles below their pre-recession peaks. So while oil production may not have peaked in a geological sense, it may already have done so in a more important economic sense. Geologically, production can be boosted by accessing ever more costly and environmentally problematic sources of non-conventional supply, like tar sands. But as we have seen from the last recession, the global economy can’t run on the prices needed to bring that oil out of the ground. The German study paints a bleak picture of the post-peak world: political power quickly shifts from major oil-consuming economies to major oil-producing economies. Less and less oil is traded on the open market, while more and more is traded between nation states, with national oil companies entering into long-term supply agreements that are tied to broader political and military considerations. And military alliances coalesce around the security of energy supply, rather than between countries with shared political or economic principles. Perhaps these are the contours of the post-peak world. But military strategists shouldn’t underestimate the power of triple-digit oil prices to change the nature of our economies and, hence, our dependence on the fuel. Nevertheless, it’s reassuring to know that at least some of our governments are thinking about peak oil, despite the fact that they still feel they must hide their concerns from their voters.

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Raymond J. Learsy: The New York Times Slays the "Peak Oil" Dinosaur

August 4, 2010

Well there you have it in the opening sentence of an eye-opening article in this Sunday’s New York Times , Tracing Oil Reserves to Their Tiny Origins : “If you believe petroleum came from dinosaurs, think again and look toward the seas.” Here, in the Science section, the Times tells us that the emphasis these many years on “fossil fuels turned out to be wrong.” The article goes on to detail the evolution of vast reservoirs of oil that owe their origins to microscopic life that fell into the sea over the ages and was “cooked” into oil through the earth’s inner heat. That over 95% of the world’s oil traces its genesis to these origins. That the most productive regions are centered on shorelines and coastal regions (think the Gulf of Mexico). According to the article, the broad shelf areas are some of “the best “factories for biogenic proliferation,” especially the shore of the Tethys Sea (a prehistoric, ancient ocean that bordered the equator some 100 million years ago and was to form along its southern shore the oil laden sectors of the Middle East). Similar Cretaceous period events, we are now learning, may have yielded munificent reservoirs of oil. As an example: when the mass of Africa pulled away from South America, “Big rivers poured in nutrients. A biological frenzy on the western shores of the narrow ocean ended up forming the vast oil fields now being discovered.” It is not for naught that Brazil alone has unveiled a five-year, $224 billion investment plan to tap and develop these vast oil deposits. Combine this information with equally impressive work done by Russian and Ukrainian geologists on the theory of Abiotic Oil , (which states that oil is inherent to the geological make up of the earth) and the dimension of extant oil takes on a whole new meaning. It has been the cornerstone of Peak Oil dogma, which has indoctrinated us into believing that oil is imminently running out. It has permitted the oil industry to get away with setting prices unrelated to the forces of supply and demand — prices achieved by having successfully lulled the oil consuming public and their governments into a trance of blind acceptance of costly oil . The peak oil geologists and their prediction of the imminent arrival of peak oil is science paid for in large measure by the best geology that oil money can buy. One after another, the Peak Oil Pranksters are falling all over themselves, fine tuning their prophecies of physical depletion to “well its not so much that there is a physical shortage, but it is more difficult and costly to access.” That may be the case (especially with regards to offshore reservoirs, as we all now know). But that is a very different argument than the oil industry’s self-serving cries of, “there just ain’t no more, so please pay, pay, pay.”

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Ian Gary: Will Chevron Heed the Call for Transparency?

May 25, 2010

Hundreds of Chevron shareholders will descend upon Houston this week to participate in the oil company’s annual general meeting. In the past year, we’ve seen the Huffington Post cover the oil industry and how it affects consumers – from the rise and fall of volatile gas prices to the most recent devastating Gulf of Mexico oil spill. Reading these stories, we can see how this billion-dollar industry has benefited Americans with jobs and fuel to heat their homes and run their cars. But the oil spill has us wondering, what about the adverse effects of the oil industry itself? Who truly benefits from its riches and who suffers the consequences of exploitation? Many communities along the Gulf Coast are yet again facing a threat to their livelihood as oil spreads across the ocean and begins polluting the shoreline. The spill shows us just how dearly local people and the environment can pay for the consequences of nearby oil projects that provide little local benefit. We must stand with these communities to support their right to a full recovery — first from Katrina and now from an oil company. But if corporate neglect and inadequate government response is the story line in the United States, what about the communities overseas that have little or no support from their governments? In 2008, Chevron paid more than $40 billion in taxes to governments around the world. At the same time, more than half of the world’s poorest people live in countries rich in oil and mineral resources, including many countries where Chevron operates. Vulnerable communities are dealing with the environmental and social effects of oil and mining projects, but they are often not benefiting from the revenues coming into their country. Managed properly, oil revenues can contribute to economic growth and poverty reduction. However, history has shown that oil company payments to governments are often kept secret, leading to embezzlement, corruption, and revenue misappropriation, which in many cases, has prevented oil revenues from contributing to economic development in these countries. This is a tragic paradox that must be addressed. Americans have a stake in seeing oil wealth overseas used well. In countries such as Nigeria, grievances over corruption and environmental degradation have led to protests and conflict. American oil workers have been kidnapped, and last year, one million barrels of oil were not produced because of instability in the Niger Delta. This means lost energy and lost jobs for many Americans. The shareholder meeting in Houston is an opportunity to help shed some light on secrecy in the oil industry. A group of shareholders filed a proposal with Chevron calling for a policy of publicly disclosing payments made to governments where the company operates. By publishing this information, Chevron would promote the rights of citizens in oil-rich countries by providing them with vital information, so they could hold their governments accountable for using these revenues for essential services like jobs, education, and healthcare. Chevron can be a leader in the oil industry by supporting transparent and accountable practices that would not only help these vulnerable communities, but also protect company investments and stabilize energy prices for consumers. This effort would go a long way toward improving Chevron’s relations with host communities and, in the long run, strengthening Chevron’s capacity to obtain legal and social “license to operate.” Unfortunately, Chevron management has failed to recognize the benefits of being a leader on payment disclosure and advised shareholders to vote against the shareholder proposal. We encourage Chevron shareholders to join us in support of transparency to break the cycle of secrecy that has undermined development, democracy, and human rights for decades. For more information about Oxfam America’s work to promote transparency in the oil, gas, and mining industry, visit www.oxfamamerica.org/rights-resources.

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James Zogby: Business Confidence Up in Gulf States

May 17, 2010

Dubai — Ed Koch, the colorful and often controversial former Mayor of New York City, made it a practice as he walked the streets of his city to stop and ask average citizens “How am I doing?” in an effort to learn how they viewed the performance of his administration and its delivery of services. Asking and listening are always useful exercises. Sometimes the results can be surprising. More often then not the results of such an effort affirm what we have assumed to be true, providing data to validate our assumptions as well as additional valuable insights. A recent survey of business executives in the Arab Gulf countries is a case in point. Conducted by Zogby International (ZI), the survey found that optimism has returned to the business community in the Gulf, a sign that the region may have turned a corner following the global economic downturn of 2008-2009. Overall six in ten executives now say that business conditions have improved in their countries, with over eight in ten expressing confidence that conditions will improve even further in the next two years. These are but a few of the findings from the survey of “C-Suite” executives in Saudi Arabia, UAE and Qatar, which ZI carried out for Oliver Wyman (an international management consulting firm with a strong presence throughout the Middle East). It is the second in a continuing series of semi-annual measurements of business confidence in the Gulf region. The mood was positive in all three countries covered in the survey, with the most notable changes occurring in the UAE. Business leaders in that country were especially hard hit by what one prominent Emirati businessman referred to as the “bursting of Dubai’s utopic bubble.” It is significant, therefore, that while in our October 2009 survey 57% of respondents in the UAE reported that their economy was in decline, today that figure has dropped to just 39%; and while in October only 45% of business leaders in the UAE anticipated an improvement in business conditions in the country during the next two years, now 74% are optimistic. Overall, the executives expressed some satisfaction with their governments’ response to the 2008-2009 crisis with those in Saudi Arabia, Qatar and Abu Dhabi indicating strong confidence in their governments’ performance. Only in Dubai was there a somewhat negative mood with over 50% reporting that their attitude toward government had been undermined by its handling of the crisis. When asked to identify the areas that provided the greatest opportunities for the Gulf Cooperation Council countries to improve competitiveness, almost one-half of the surveyed business leaders pointed to the region’s need to diversify its economy. And four times as many executives saw greater opportunity in deepening ties with the emerging economies of China and India than with their traditional partners in the developed West. Some indicated that they saw China’s dramatic growth and the relative ease of doing business in that country as obvious attractions, especially in the face of the uncertainties now facing Europe. In the April survey, as in our earlier October effort, labor and education reform were once again identified as both the most immediate and long-term challenges to the region’s competitiveness. Other problem areas the business executives pointed to as requiring government attention included: improving transparency (especially noted in Dubai and Saudi Arabia’s Eastern Province) and reducing bureaucracy (a major concern in Abu Dhabi). Another major concern noted in all three countries was the difficulty associated with starting new businesses – pointing to excessive regulations and problems obtaining loans at reasonable rates. The utility of surveys of this type is that they provide business leaders with an unofficial sounding board from which they can identify concerns. The results also provide governments with indices by which they can measure the mood and needs of a critical sector of the society that will be the driver of future growth and development. And so getting back to answering the New York Mayor’s question, in the Gulf it would be “quite good”. The bottom line here is that business confidence is up, and significantly so when compared to many other regions of the world, including the U.S. And no wonder. The region weathered a difficult world-wide downturn with governments wisely using reserves both to insure stability and promote growth. Nevertheless, concerns remain in important areas. Singled out for attention were: the region’s dependence on foreign labor; the challenge of modernizing the educational system (especially in the areas of primary education, basic math and science skills and technical training); and easing the way for entrepreneurs to start new businesses – a key to needed job creation. These are issues that the business leaders say must be addressed to insure both future competitiveness and continued prosperity.‬

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Franken Amendment Picks Up Bipartisan Support

May 11, 2010

A critical amendment to the Wall Street reform bill being debated in the Senate this week picked up a key Republican backer Tuesday. The amendment, sponsored by Sen. Al Franken (D-Minn.), would end the practice of banks choosing which credit rating agency they hire to rate a particular offering. Often, banks will ask raters for a preliminary review, allowing them to pick the rater most likely to look favorably on whatever bundle of products the bank wants to sell to investors. Sen. Chuck Grassley (R-Iowa), the highest-ranking Republican on the Finance Committee, said today he’d back Franken’s effort. The amendment is also backed by Sen. Roger Wicker (R-Miss.), who overheard a Franken speech on the measure on the Senate floor and was intrigued. Grassley said that he’s looking to end a conflict of interest. “If the credit rating agencies are going to make a contribution to market integrity, then they can’t be compromised,” said Grassley. “This amendment creates a firewall so that a rating agency can be selected independent of an issuer. It goes after conflicts of interest between rating agencies and issuers, and that’s a very important area where due diligence was missing leading up to the financial crisis of 2008.” Franken chalked up the odd coupling to regional values. “Iowa and Minnesota share a certain sensibility — a commitment to fairness and honesty. Wall Street’s current system just isn’t honest and it’s time we clean it up,” said Franken. Under Franken’s amendment, a bank would be randomly assigned a rating agency and companies who consistently delivered inaccurate results would be penalized with less business — the way the free market would work if there was one. The selection process would also open to gates to smaller rating agencies to compete against the oligopoly of the big three raters — Moody’s, Standard and Poor’s and Fitch. Ed Sweeney, a spokesman for Standard and Poor’s, laid out his rating agency objections in an e-mail: * NRSROs would have little incentive to compete with one another, pursue innovation and improve their models, criteria and methodologies. These reduced incentives would lead to more homogenized rating opinions and, ultimately, deprive investors of valuable, differentiated opinions on credit risk. * If the U.S. government decides it should determine who it wants assigning ratings, then other governments would follow suit and undermine a major benefit of ratings, which is a globally consistent assessment of credit risk. * Most importantly, having the government assign a rating agency to rate a security could lead investors to believe the resulting ratings were endorsed by government, thereby encouraging over-reliance on the ratings.

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American Air Delays First Chicago-Beijing Flight on Lack of `Viable’ Slots

April 26, 2010

By Mary Schlangenstein April 26 (Bloomberg) — American Airlines said it delayed the start of its daily Chicago-to-Beijing nonstop service until May 4 from today because of a dispute over takeoff and landing slots in the Chinese city. Customers are being rebooked on other flights and offered a full refund or a chance to fly at a later date, the Fort Worth, Texas-based unit of AMR Corp. said in a statement. American said it canceled the flights after Chinese authorities gave it slots for a 2:20 a.m. Beijing arrival and a 4:40 a.m. departure. “That just doesn’t work, because you couldn’t connect passengers to other flights in a timely fashion,” Mary Frances Fagan , a spokeswoman for American, said in an interview. “They’d be hanging around and waiting for hours on both ends. It’s not commercially viable based on what other competitors are operating. We’d be out of sync with others.” American said it applied for the slots at Beijing Capital International Airport in October 2009 and has been negotiating for new times since then. The airline held off canceling today’s flight in expectation it would be able to negotiate different times, Fagan said. The Chinese Embassy in Washington didn’t immediately respond to a call and e-mail seeking a comment. Today’s flight had been set to depart Chicago at 11:25 a.m. and arrive in Beijing at 1:55 p.m. the next day. The return flight would have departed from Beijing at 4:50 p.m. local time and arrived in the U.S. city at 4:40 p.m. Chicago time. The airline said it’s “hopeful” the issue will be resolved in time for the May 4 flight from Chicago. The initial service from Beijing was reset to May 5. The carrier said the new service “had been approved by the governments of both the United States and China.” AMR rose 6 cents to $7.84 at 4:15 p.m. in New York Stock Exchange composite trading . The shares have gained 1.4 percent this year. To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

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Damien Hoffman: If Terrestrial Airlines Can’t Survive, How Will Galactic Airlines?

March 23, 2010

Today , Virgin Galactic’s first commercial spaceship successfully completed her maiden voyage. However, even at $200,000 per ticket, how are we supposed to believe this nascent industry will become sustainable? The closest comparison is the now deceased Concorde jet. Air France and British Airways were subsidized by their governments to buy the aircraft, and it still failed . Unlike Richard Branson’s new space shuttle, at least the Concorde had a market of transatlantic businesspersons who demanded quicker flights. Space sightseeing is merely a novelty. Furthermore, we all know the perpetual business problems with regular passenger airlines. If we don’t have these kinks worked out, why take the next step? Unfortunately, I think the pursuit of commercial space travel is some silly egotistical obsession of a few bored billionaires and their newfound physicist friends. Even worse, as soon as one crashes, the fun and games will be over. Do you think space flights will thrive or crash and burn? Let us know in the comments below …

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Damien Hoffman: If Terrestrial Airlines Can’t Survive, How Will Galactic Airlines?

March 23, 2010

Today , Virgin Galactic’s first commercial spaceship successfully completed her maiden voyage. However, even at $200,000 per ticket, how are we supposed to believe this nascent industry will become sustainable? The closest comparison is the now deceased Concorde jet. Air France and British Airways were subsidized by their governments to buy the aircraft, and it still failed . Unlike Richard Branson’s new space shuttle, at least the Concorde had a market of transatlantic businesspersons who demanded quicker flights. Space sightseeing is merely a novelty. Furthermore, we all know the perpetual business problems with regular passenger airlines. If we don’t have these kinks worked out, why take the next step? Unfortunately, I think the pursuit of commercial space travel is some silly egotistical obsession of a few bored billionaires and their newfound physicist friends. Even worse, as soon as one crashes, the fun and games will be over. Do you think space flights will thrive or crash and burn? Let us know in the comments below …

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Greek Crisis May Slow Trichet’s Push to Scale Back ECB Stimulus Measures

February 8, 2010

By Gabi Thesing Feb. 9 (Bloomberg) — The European Central Bank may be forced to delay the withdrawal of emergency lending measures because it could inflame financial-market concerns about Greece, Spain and Portugal, economists said. Investors are already dumping those countries’ assets as their governments struggle to rein in budget deficits, making it more expensive for them to finance the debt. Should the ECB push ahead with its exit strategy by pulling its unlimited cash support for euro-area banks, interest rates could rise, further undermining confidence in Europe’s economic recovery. “Banks in Greece, Spain and Portugal are disproportionately dependent on cheap ECB cash so any whiff of that drying up and weakening the banking sector further will rattle markets ,” said Colin Ellis , an economist at Daiwa Capital Markets in London. That “strengthens the case for the ECB to slow down its exit.” The ECB wants to withdraw the measures it introduced to nurse Europe through its worst recession since World War II to avoid inflation down the road. It has already announced it will stop giving banks 12 and 6-month loans, and will decide next month whether to revert to an auction procedure in its refinancing operations. The ECB currently lends banks as much cash as they want at its 1 percent benchmark rate . Next Step ECB officials including Juergen Stark , Yves Mersch , Axel Weber and Erkki Liikanen have said they favor a return to conventional measures as soon as economic and financial-market conditions allow. Weber said on Jan. 27 that the next step in the ECB’s exit could be taken before the end of the first half. Economists including Laurent Bilke , who previously worked at the ECB, said the central bank should hold off returning to an auction in its main weekly tender until at least the second half of the year. He said a return to normal refinancing operations would drive the Eonia overnight rate , or the interest European banks charge each other for overnight loans, about 70 basis points higher toward the ECB’s 1 percent benchmark. “If the ECB exits too soon, it could exacerbate problems for the weaker economies that are most sensitive to short-term market rates, making it more difficult and expensive for their governments and banks to borrow,” said Bilke, now at Nomura International in London. “There is also a risk that euro-area money markets could seize up again, disrupting credit flow to the euro-area economy.” The economy of the 16 nations sharing the euro will grow 0.8 percent this year, the ECB predicted in December. It contracted about 4 percent last year, according to the European Commission. The ECB will publish new forecasts after its policy meeting on March 4. Trichet ‘Confident’ “The Governing Council will, in early March, take decisions on the continued implementation of the gradual phasing out of the extraordinary liquidity measures that are not needed to the same extent as in the past,” ECB President Jean-Claude Trichet said last week. He was “confident” Greece would reduce its budget deficit to below the European Union’s limit of 3 percent of gross domestic product by 2012. Concerns about Greece’s ability to cut the deficit from almost 13 percent of GDP are spreading to the euro region as a whole as investors speculate about a possible default and even a break-up of the currency union. As the cost of insurance against Greek, Spanish and Portuguese sovereign defaults last week rose to a record, European stocks posted the biggest weekly slump in 11 months and the euro plunged to an eight-month low. ‘Bank Panic’ “Plenty of European banks have stuffed their balance sheets with Greek debt,” said Peter Vanden Houte , an economist at ING Group in Brussels. “If they did default, it would create a new round of bank panic.” Eric Nielsen , chief European economist at Goldman Sachs International in London, said Greece is in a worse situation than Spain and Portugal and its impact on market confidence should be limited. “If we are wrong” and “contagion from Greece engulfs other countries, then up to 20 to 30 percent of euro-zone GDP could be under severe stress,” Nielsen wrote in a note to clients this week. “Were a major financial instability event to develop, we would expect the ECB to pause in its exit strategy, and then, if needed, reverse course and reinstate longer-term financing.” “The ECB shouldn’t engage in any tightening at the moment,” said Julian Callow , an economist at Barclays Capital in London. Policy makers “should avoid getting egg on their face at Easter,” he said. To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net ;

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Greek Crisis May Slow Trichet’s Push to Scale Back ECB Stimulus Measures

February 8, 2010

By Gabi Thesing Feb. 9 (Bloomberg) — The European Central Bank may be forced to delay the withdrawal of emergency lending measures because it could inflame financial-market concerns about Greece, Spain and Portugal, economists said. Investors are already dumping those countries’ assets as their governments struggle to rein in budget deficits, making it more expensive for them to finance the debt. Should the ECB push ahead with its exit strategy by pulling its unlimited cash support for euro-area banks, interest rates could rise, further undermining confidence in Europe’s economic recovery. “Banks in Greece, Spain and Portugal are disproportionately dependent on cheap ECB cash so any whiff of that drying up and weakening the banking sector further will rattle markets ,” said Colin Ellis , an economist at Daiwa Capital Markets in London. That “strengthens the case for the ECB to slow down its exit.” The ECB wants to withdraw the measures it introduced to nurse Europe through its worst recession since World War II to avoid inflation down the road. It has already announced it will stop giving banks 12 and 6-month loans, and will decide next month whether to revert to an auction procedure in its refinancing operations. The ECB currently lends banks as much cash as they want at its 1 percent benchmark rate . Next Step ECB officials including Juergen Stark , Yves Mersch , Axel Weber and Erkki Liikanen have said they favor a return to conventional measures as soon as economic and financial-market conditions allow. Weber said on Jan. 27 that the next step in the ECB’s exit could be taken before the end of the first half. Economists including Laurent Bilke , who previously worked at the ECB, said the central bank should hold off returning to an auction in its main weekly tender until at least the second half of the year. He said a return to normal refinancing operations would drive the Eonia overnight rate , or the interest European banks charge each other for overnight loans, about 70 basis points higher toward the ECB’s 1 percent benchmark. “If the ECB exits too soon, it could exacerbate problems for the weaker economies that are most sensitive to short-term market rates, making it more difficult and expensive for their governments and banks to borrow,” said Bilke, now at Nomura International in London. “There is also a risk that euro-area money markets could seize up again, disrupting credit flow to the euro-area economy.” The economy of the 16 nations sharing the euro will grow 0.8 percent this year, the ECB predicted in December. It contracted about 4 percent last year, according to the European Commission. The ECB will publish new forecasts after its policy meeting on March 4. Trichet ‘Confident’ “The Governing Council will, in early March, take decisions on the continued implementation of the gradual phasing out of the extraordinary liquidity measures that are not needed to the same extent as in the past,” ECB President Jean-Claude Trichet said last week. He was “confident” Greece would reduce its budget deficit to below the European Union’s limit of 3 percent of gross domestic product by 2012. Concerns about Greece’s ability to cut the deficit from almost 13 percent of GDP are spreading to the euro region as a whole as investors speculate about a possible default and even a break-up of the currency union. As the cost of insurance against Greek, Spanish and Portuguese sovereign defaults last week rose to a record, European stocks posted the biggest weekly slump in 11 months and the euro plunged to an eight-month low. ‘Bank Panic’ “Plenty of European banks have stuffed their balance sheets with Greek debt,” said Peter Vanden Houte , an economist at ING Group in Brussels. “If they did default, it would create a new round of bank panic.” Eric Nielsen , chief European economist at Goldman Sachs International in London, said Greece is in a worse situation than Spain and Portugal and its impact on market confidence should be limited. “If we are wrong” and “contagion from Greece engulfs other countries, then up to 20 to 30 percent of euro-zone GDP could be under severe stress,” Nielsen wrote in a note to clients this week. “Were a major financial instability event to develop, we would expect the ECB to pause in its exit strategy, and then, if needed, reverse course and reinstate longer-term financing.” “The ECB shouldn’t engage in any tightening at the moment,” said Julian Callow , an economist at Barclays Capital in London. Policy makers “should avoid getting egg on their face at Easter,” he said. To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net ;

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China Becomes World’s Biggest Exporter, Overtakes Germany

January 10, 2010

BEIJING — Already the biggest auto market and steel maker, China edged past Germany in 2009 to become the top exporter, yet another sign of its rapid rise and the spread of economic power from West to East. Total 2009 exports were more than $1.2 trillion, China’s customs agency said Sunday. That was ahead of the 816 billion euros ($1.17 trillion) forecast for Germany by its foreign trade organization, BGA. China’s new status is mostly symbolic but highlights its growing presence as an industrial power, major buyer of oil, iron ore and other commodities and, increasingly, as an investor and key voice in managing the global economy. Its ability to unseat longtime export leader Germany reflects the ability of agile, low-cost Chinese manufacturers to keep selling abroad even as other exporters have been hammered by a slump in global demand. China overtook Germany in 2007 as the third-largest economy and is expected to unseat Japan as No. 2 behind the United States as early as this year. Its trade boom has helped Beijing pile up the world’s biggest foreign currency reserves at more than $2 trillion. The global crisis speeded China’s rise up the ranks as a 4 trillion yuan ($586 billion) government stimulus kept its economy and consumption growing while the U.S. and other markets struggled with recession. Chinese economic growth rose to 8.9 percent in the third quarter of 2009 and the government is forecasting a full-year expansion of 8.3 percent. On Friday, data released by an industry group showed China topped the slumping United States in auto sales in 2009 – a status industry analysts a few years ago did not expect it to achieve until as late as 2020. Economists and Germany’s national chamber of commerce said earlier the country was likely to lose its longtime crown as top exporter. China’s exports per person are still much lower than those of Germany, which has a much smaller population of 80 million people. China sells low-tech goods such as shoes, toys and furniture, while Germany exports machinery and other higher-value products. German commentators note their country supplies the factory equipment used by top Chinese manufacturers. “If China grows, this pushes the world’s economy – and that’s good for export-oriented Germany as well,” an economist for the German Chamber of Industry and Commerce, Volker Treier, said last month. Of course, with 1.3 billion people, China is still one of the world’s poorest countries. It ranked 130th among economies in per capita income in 2008, according to the World Bank. China’s trade ended 2009 with exports rebounding in December, jumping 17.7 percent after 13 months of declines, the customs agency said. The upturn was an “important turning point” for exporters, a customs agency economist, Huang Guohua, said on state television, CCTV. “We can say that China’s export enterprises have completely emerged from their all-time low in exports,” Huang said. Plunging demand in 2008 forced thousands of factories to close and threw millions of laborers out of work. China’s trade surplus shrank by 34.2 percent in 2009 to $196.07 billion, the customs agency said. That reflected China’s stronger demand for imported raw materials and consumer goods. Iron ore imports rose 41.6 percent to 630 million tons, while oil imports rose 13.9 percent to 1.4 billion barrels, the agency said. Economists say the buying binge has been driven in part by a Chinese effort to build up stockpiles while global prices are low. The United States and other governments complain that part of China’s export success is based on currency controls and improper subsidies that give its exporters an unfair advantage against foreign rivals. Washington has imposed anti-dumping duties on imports of Chinese-made steel pipes and some other goods, while the European Union has imposed curbs on Chinese shoes. The U.S. and other governments also complain that Beijing keeps its currency, the yuan, undervalued. Beijing broke the yuan’s link to the dollar in 2005 and it rose gradually until late 2008, but has been frozen since then against the U.S. currency in what economists say is an effort by Beijing to keep its exporters competitive. The dollar’s weakness against the euro and some other currencies pulls down the yuan in markets that use them and makes Chinese goods even more attractive there, adding to China’s trade surplus. ___ Associated Press writer Gillian Wong contributed to this report.

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Venezuela’s Chavez Says U.S.-Colombia Base Accord Part of `Pact for War’

November 13, 2009

By Daniel Cancel Nov. 13 (Bloomberg) — Venezuelan President Hugo Chavez said that the governments of the U.S. and Colombia have made a pact for war with a deal to allow U.S. troops access to seven military bases. Chavez, speaking on state television, said the U.S. will use technology in the bases to spy and plan attacks on strategic targets in Venezuela and that President Barack Obama is following the same path as his predecessor George W. Bush . To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net .

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Big Banks Still Too Optimistic About Their Health, G20 Leaders Are Told

November 7, 2009

By Mark Deen Nov. 7 (Bloomberg) — The world’s biggest banks are still too optimistic about the state of their own finances and authorities should be wary of allowing some to exit government support, the Financial Stability Board said. The FSB, a group of regulators charged by global leaders to rewrite global financial rules, said its findings were borne out by the self assessments of 20 global banks given to regulators. The FSB, which drew up a report for Group of 20 finance ministers, didn’t name the banks. “Some banks became dependent on this assistance and don’t seem to be able to detach themselves from the public support,” FSB Chairman Mario Draghi told reporters today after a G-20 meeting in St. Andrews, Scotland. “Some jurisdictions may continue to support unsustainable business models.” Governments spent more than $500 billion in the past year bailing out banks to shore up the financial system amid the worst crisis since the Great Depression. Banks that have received government support during the crisis should only be allowed to exit such programs when their finances are healthy enough to survive another downturn, the FSB said. “While firms indicated that they had either fully or partially compiled with the most recommendations, the Senior Supervisors Group members found that these assessments were, in the aggregate, too positive,” said the FSB. “Much stronger ongoing management commitment to risk control” will be required to close the gap.’’ Market Conditions With market conditions improving, banks ranging from Goldman Sachs Inc. to BNP Paribas SA , have left state support programs, in part to avoid stricter pay and lending demands imposed by the governments who were propping them up. Finance ministries should be wary of institutions wanting to exit the programs too quickly, the FSB said. “Authorities may want to delay exit in order to preserve their freedom of action in case conditions again worsen,” the report said. “A terminated program that subsequently needs to be reinstated could undermine the broader credibility of the official sectors’ policy response.” The FSB also published a paper setting out the ways that policy makers can assess which banks and market instruments have “systemic importance” that make them too big to fail. The paper, drawn up with the International Monetary Fund and the Bank for International Settlements, said the size of an institution, its links with other parts of the financial system and the capability of other organizations to pick up its work in a crisis all matter in identifying the most important banks. To contact the reporters on this story: Mark Deen in St Andrews, Scotland at markdeen@bloomberg.net ;

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Fareed Zakaria: China Is The Recession’s "Winner"

October 19, 2009

The great surprise of 2009 has been the resilience of the big emerging markets — India, China, Indonesia — whose economies have stayed vibrant. But one country has not just survived but thrived: China. The Chinese economy will grow at 8.5 percent this year, exports have rebounded to where they were in early 2008, foreign-exchange reserves have hit an all-time high of $2.3 trillion, and Beijing’s stimulus package has launched the next great phase of infrastructure building in the country. Much of this has been driven by remarkably effective government policies. Charles Kaye, CEO of the global private-equity firm Warburg Pincus, lived in Hong Kong for years. After his last trip to China a few months ago he said to me, “All other governments have responded to this crisis defensively, protecting their weak spots. China has used it to move aggressively forward.” It is fair to say that the winner of the global economic crisis is Beijing.

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Diane Francis: The "Party of Business" Gets the Business of Health Care Wrong

July 21, 2009

The United States has the worst health care system in the developed world because it is a patchwork quilt where government covers the health care needs of the riskiest — indigent, veterans and elderly — and leaves the gravy (young, healthy, business-covered) to private-sector health care insurance outfits.

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