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Financial Crisis Inquiry Commission Announces Full Witness List For First Public Hearing

January 10, 2010

Next week, the Financial Crisis Inquiry Commission — the bi-partisan 10-member panel established by Congress to examine the causes of the financial crisis — will hold its first public hearings featuring a selection of the nation’s top bank executives — Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase, John Mack of Morgan Stanley and Brian Moynihan of Bank of America. On Sunday night, FCIC released the full witness list for the first public hearing. List and press release below: The Commission will begin its thorough examination of the root causes of the crisis, hearing testimony on the causes and current state of the crisis from top leaders of both private and public sector entities. When: Wednesday, January 13, 2010: 9:00 a.m. ET Thursday, January 14, 2010: 9:00 a.m. ET Where: 1100 Longworth House Office Building, Washington, DC Day One Panel 1: Financial Institution Representatives Mr. Lloyd C. Blankfein, Chairman of the Board and Chief Executive Officer Goldman Sachs Group, Inc. Mr. James Dimon, Chairman of the Board and Chief Executive Officer JPMorgan Chase & Company Mr. John J. Mack, Chairman of the Board Morgan Stanley Mr. Brian T. Moynihan, Chief Executive Officer and President Bank of America Corporation Panel 2: Financial Market Participants Mr. Michael Mayo, Managing Director and Financial Services Analyst Calyon Securities (USA) Inc. Mr. J. Kyle Bass, Managing Partner Hayman Advisors, L.P. Mr. Peter J. Solomon, Founder and Chairman Peter J. Solomon Company Panel 3: Financial Crisis Impacts on the Economy Dr. Mark Zandi, Chief Economist and Co-founder Moody’s Economy.com Dr. Kenneth T. Rosen, Chair, Fisher Center for Real Estate and Urban Economics University of California, Berkeley Ms. Julia Gordon, Senior Policy Counsel Center for Responsible Lending C.R. “Rusty” Cloutier, President and Chief Executive Officer MidSouth Bank, N.A. and Past Chairman of the Independent Community Bankers Association Day Two Panel 1: Current Investigations into the Financial Crisis – Federal Officials Honorable Eric H. Holder, Jr., Attorney General U.S. Department of Justice Honorable Lanny A. Breuer, Assistant Attorney General, Criminal Division U.S. Department of Justice Honorable Sheila C. Bair, Chairman U.S. Federal Deposit Insurance Corporation Honorable Mary L. Schapiro, Chairman U.S. Securities and Exchange Commission Panel 2: Current Investigations into the Financial Crisis – State and Local Officials Honorable Lisa Madigan, Attorney General State of Illinois Honorable John W. Suthers, Attorney General State of Colorado Ms. Denise Voigt Crawford, Commissioner Texas Securities Board and President, North American Securities Administrators Association, Inc. Mr. Glenn Theobald, Chief Counsel Miami-Dade County Police Department, Chairman, Mayor Carlos Alvarez Mortgage Fraud Task Force ### About the Financial Crisis Inquiry Commission (FCIC) The bi-partisan 10-member Financial Crisis Inquiry Commission was created by Congress and is charged with examining the causes of the financial meltdown. It is also examining causes of the collapse of major financial institutions that failed or would likely have failed had they not received exceptional government assistance. The Commission is comprised of Chairman Phil Angelides, Vice Chairman Bill Thomas, and Commissioners Brooksley Born, Byron Georgiou, Robert Graham, Keith Hennessey, Doug Holtz-Eakin, Heather Murren, John W. Thompson, and Peter Wallison. Findings and conclusions are to be presented in a formal report to Congress and the President by December 15, 2010.

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Assessing the Commercial Real Estate Market | Kingston Commercial …

January 10, 2010

There are many important factors that effect the price of commercial real estate , but perhaps few are as important as that of the local job market. Without a.

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Posco Will Pursue $30 Billion Overseas Expansion to Catch China’s Baosteel

January 10, 2010

By Sungwoo Park Jan. 11 (Bloomberg) — Posco , Asia’s most profitable steelmaker, is set to report the highest net income in six quarters as prices recover. Further growth depends on $30 billion in overseas expansion. Chief Executive Officer Chung Joon Yang last week added plans for a $7 billion plant in India’s Karnataka state to a $12 billion project in Orissa in the south Asian nation and a $6 billion Indonesian plant. Together with an investment in Vietnam, the South Korea-based company may leap from fifth-place to regain its spot as Asia’s largest steelmaker. Chung, 61, who took the helm in February, wants to regain ground lost to China’s Baosteel Group Corp. Three years of delay at the Orissa project and slowing domestic growth weighed on the stock, with Posco lagging behind ArcelorMittal, the world’s largest mill. “Posco has to show that it is a growing company,” said Kim Do Joon , a Seoul-based fund manager who helps manage $1.5 billion of assets including Posco shares at Hanwha Investment Trust Management Co. “They cannot expect a growth momentum from the local market.” Shares of Posco , which counts Warren Buffett ’s Berkshire Hathaway Inc. as a stakeholder, gained 63 percent in Seoul trading last year. ArcelorMittal jumped 89 percent. China’s Baoshan Iron & Steel Co. and local rival Hyundai Steel Co. doubled. Profit at the Pohang-based company may almost double to 1.37 trillion won ($1.2 billion) in the three months ended Dec. 31, according to the median estimate of 23 analysts compiled by Bloomberg. It may be the largest quarterly gain in three years. Chung will announce results at 4 p.m. Seoul time on Jan. 14. Fresher Look “I’ll try to boost the future competitiveness of the company through investments and M&As,” Chung, a 35-year Posco veteran, said in February when he took over the job. He declined to be interviewed for this story on his first full-year earnings result as CEO. In the past year, Chung has acquired Asia Stainless Corp. in Vietnam, TaihanST Corp. in Korea, and is in talks to buy Thailand’s Thainox Stainless Pcl . He’s approved U.S. and Chinese expansion and is studying a bid for Daewoo International Corp. , which has a Myanmar gas project worth at least $4 billion. “Scale is pivotal for competitiveness,” Choi Doo Jin , a Posco spokesman, said in an interview. “We’re going into India and Indonesia with a main focus on resources and into Vietnam on markets.” Three-Prong Expansions Those expansions will add 28 million metric tons of capacity, or 85 percent of Posco’s 33.1 million tons crude steel output in 2008. The Orissa and Indonesian projects alone may add 60,000 won to Posco’s stock price, said Kim Gyung Jung , an analyst with Samsung Securities Co. Chung, who studied at the nation’s top Seoul National University, was head of Posco Engineering & Construction Co. when he was picked to be CEO. The metal engineer, who snowboards and plays the saxophone, has spent most of his career in production after joining Posco in 1975. Like Buffett, Chung is seeking to take advantage of the crisis to expand. Posco is the only steelmaker among the 10 biggest that didn’t report a loss in any quarter in the 12 months ended Sept. 30, according to data compiled by Bloomberg. “You have to invest when others don’t,” Samsung’s Kim said. “You can avoid competition and pre-occupy markets, leaving little room for latecomers.” ‘Aggressive Investments’ Steel demand may grow 9.2 percent this year as the global economy rebounds from the recession, the World Steel Association forecast in October. Posco will be able to maintain its risk profile during the course of “aggressive investments,” Standard & Poor’s said Dec. 14. It has 8 trillion won ($7 billion) in cash, near-cash items, short-term investments and receivables as of Sept. 30. Posco is pressing ahead in Orissa after winning government approval to acquire 88 percent of the land needed, spokeswoman Choi Youn Joung said Jan. 4. The project has been delayed since 2007 when construction was to start. It still needs approval from remaining villagers and a permit to mine iron ore, required to feed its steel plant. The delays won’t affect plans for the 6-million-ton plant in Karnataka that were revealed last week. Chung also has to progress Posco’s $5 billion investment in Vietnam, where the government in 2008 told the company to seek a new location for its plant. Right Thing “Targeting India, Vietnam and Indonesia is the right thing to do to prepare for the future as demand outlook for the emerging markets is quite good,” said Im Jeong Jae , a Seoul- based fund manager at Shinhan BNP Paribas Asset Management Co., which manages about $26 billion in assets including Posco shares. Southeast Asia is the world’s biggest net importing steel market with demand expected to grow 9.2 percent a year, according to Posco’s Research Institute. Posco dropped to sixth in global steelmaking in 2008, overtaken by Baosteel and Hebei Iron & Steel Group. China plans to create one or two producers the size of ArcelorMittal. The world’s largest steelmaker had 101.6 million tons of output in 2008, three times Posco’s production. “Bigger Chinese rivals may eventually threaten Posco’s edge in high-end products such as automotive steel,” said Chung Ji Yun , an analyst with HI Investment & Securities Co. in Seoul. To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net .

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Dennis Santiago: Walking the Talk

January 8, 2010

Nine days since launching the Move Your Money (MYM) zip code tool. Over half the country’s zip codes have been searched and the phone at my office rings off the hook mostly from bankers calling to find out more about “the list”. I apologize that I can no longer answer all of them. I am trying to take as many as possible. Since Monday bankers have graciously assisted in identifying and plugging holes in the MYM zip code tool. As of Thursday night it is a vastly improved analytical filter from the one that came online on the 29th of December. It now covers a broader range of small and mid-size banks. The branch listings have more of the recently opened banks covered. The ‘B’ or better criteria continues to hold as a good cut off point for inclusion in the list. According to the IRA databases, we’ve determined that the MYM tool includes just under 5,100 small and mid-size banks and excludes just under 2,800. That means 2/3′rds of the banking industry is being acknowledged as worthy of the public’s consideration by the system. These bankers are energized! Many literally start the phone call saying it’s like a new ray of hope has arrived for the industry. And they say it whether their bank is listed or not. Sometimes they’ll help by anecdotally confirming that the list is indeed identifying good banks in their operating areas. And who should know if a list of good banks is right if not the bankers in that area themselves? All I can say is thanks so much for helping. Help comes in other forms as well. The conversations I’ve had with bankers from the one third of the industry that have C, D and F grades confirm that the stress test outcomes indicated by the IRA computations are indeed very real and on the whole accurately pinpoint where the problems are within these banks. I must tell you that many of these have been heartfelt conversations. What many people probably don’t realize is just how hard working bankers really are. I’ve gotten calls well into the evening Pacific Time from people still working on the East Coast. I do feel the deepest sympathy for those bankers who tell me just how heartbreaking it is to when an external economic shock puts them further behind the eight ball even as I tick off the checklist about why IRA’s computers says they didn’t make the list. Yes for those of you with colder hearts some of their problems are self-inflicted. Others are systemic. I’m beginning to get an inkling that might yet lead to a clearer understanding of what can and should be solved by normal market disciplinary measures and what might require some new corrective vehicles to prevent the issues from lingering like sea anchors on the rest of the economy. I am grateful to these bankers in particular for their candor. “And now for something completely different.” I’ve always loved that old Monty Python line. It makes me impish. Yesterday I got the yen to try an experiment. What does it take to put that MYM tool printout into action? How much bother and time? What’s a reasonable first step? So I printed out the zip code of my office in Torrance, Califorina. It’s 90501. The page makes me smile. It includes some of the oldest and most respected regional banks in the Los Angeles area and they’ve got branches located within five minutes of the office. So I grab my checkbook and I.D. to head off to “walk the talk”. Here’s the timeline. 1:05pm Leave office. Hit traffic. I hate traffic. 1:15pm Arrive at the local branch of City National Bank. It’s in a cluster of buildings of housing several banks. In the “theme park” I recognized one that failed and has been taken over by another institution. I take a quick look at the services brochure so I can figure out what it’ll take to make the proper initial deposit to be above the bank’s monthly minimum to qualify for a fees free checking account. A very helpful person fills out all the paperwork and loads the computer while we chat about the pictures of my kids that come up when my iPhone rings and how I need to use a different email surname for her if I need anything because she just got married and the IT department hasn’t updated her email address yet. Pleasantries done. Account’s set up. Deposit hold expires and checks and a debit card will arrive in about 10 days. It’s been about 20 minutes. 1:35pm Back in the car and off the local branch of Farmers and Merchants Bank of Long Beach. 1:40pm Arrive. F&M is one of the oldest banks in California going back to the days when Los Angeles was an agricultural ocean of citrus. This F&M branch stands alone on it’s corner just south of the Del Amo shopping mall. Again a friendly greeting and a quick look at the services brochure to identify the minimum initial desposit to start a fees free checking account. Ooh this is green! I elect not to have paper checks for now, just a debit card and online banking is plenty fine for this 21st century consumer. This time it’s a chat your way through as the friendly face types in your information directly into the terminal. Review the printout to make sure everything is ok, write a check and wait as they photo copy my drivers license. Back comes a deposit slip. Again, the deposit hold expires and the debit card and other info should show up shortly. This one took a little longer, about 25 minutes. 2:05pm Leave F&M and head back to the office. So in a lunch hour it’s possible to begin a new banking relationship. Not much fuss at all. Now most people don’t really need multiple bank accounts at multiple institutions but if you do as you can see even this can begin in a lunch hour. In practical terms what you’ve done is start a process. As the sun sets, you’ll be on a journey instead of watching one. Now there’s a week to ten days to ponder how you really want to move your money around. “Mischief managed. Nox.”

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Goldman’s China Partner Said to Plan Mainland Brokerage for Retail Clients

January 8, 2010

By Cathy Chan Jan. 8 (Bloomberg) — Beijing Gao Hua Securities Co., Goldman Sachs Group Inc. ’s partner in China, plans to start brokerage services for individual investors as early as this year, said two people with knowledge of the matter. Gao Hua, created in 2004 with funding from Goldman Sachs, is adding outlets in Guangzhou, Shenzhen, Nanjing and Chongqing that will serve retail customers, said the people, declining to be identified as the plan is confidential. Gao Hua and New York- based Goldman Sachs operate a local investment banking venture. Goldman Sachs, which controls Gao Hua through the loan, may gain a head start over rival UBS Securities Co. as more of China’s 25.3 trillion yuan ($3.7 trillion) of household savings flow into the stock market. The plan would pit the firm against the likes of China Galaxy Securities Co., the country’s largest retail brokerage by revenue, which has more than 200 outlets. “Retail trading is still a very crucial revenue stream for securities companies in China, though the focus will gradually shift to institutional when the market becomes more mature,” CG Wu , China chairman at CLSA Asia-Pacific Markets, said in an interview. “It would be a tough fight for Goldman to compete with the local houses, because they have much fewer outlets and their cost base is higher.” CLSA Asia-Pacific Markets , the regional broking arm of Credit Agricole SA, received approval in June 2008 to trade yuan-denominated shares for institutional investors after operating in the country for five years. It doesn’t have a retail brokerage license. Asset Management Beijing-based Gao Hua also plans to start an asset management business this year after receiving a license from regulators in 2009, the people said. The company will use the new retail outlets to expand its wealth management operations in China, they said. Outside China, Goldman Sachs has predominantly shunned brokerage for individuals, focusing instead on serving institutional investors and trading with its own money. Almost 18 million brokerage and mutual fund accounts were opened in China in the first 11 months of 2009, according to the nation’s biggest clearing house. That brought the total to 168 million, equivalent to more than half the U.S. population. Retail investors accounted for 99.6 percent of accounts opened for trading on Shanghai’s stock exchange in last year’s first 11 months, according to China Securities Depository and Clearing Corp. Prepare for Rally China’s CSI 300 Index rallied 97 percent last year and the Hang Seng China Enterprises Index, tracking so-called H shares of Chinese companies listed in Hong Kong, rose 62 percent. Investors should be positioned for a rally in China stocks in the first quarter, driven by favorable policies and liquidity, Goldman Sachs said in a research note this week. UBS AG got regulatory approval to form a brokerage and investment banking venture with Beijing Securities Co. in December 2006. The Zurich-based bank owns 20 percent of the venture, called UBS Securities. Like Gao Hua, UBS Securities offers brokerage services for institutions in China. Goldman Sachs Gao Hua Securities Co., the U.S. firm’s venture with Gao Hua, only has a license to underwrite stock and bond sales. Goldman Sachs owns 33 percent of the venture. Angela Yu , a spokeswoman at Goldman Gao Hua Securities, declined to comment. UBS Securities ranked ninth in advising on share sales in mainland China last year, working on 6.3 billion yuan of deals, according to Bloomberg data. Goldman Gao Hua was No. 11 with 5.6 billion yuan. UBS Securities also led Goldman Gao Hua in underwriting in the previous two years, Bloomberg data show. Deutsche Bank AG and Credit Suisse Group AG, which last year won licenses to underwrite share and bond sales, don’t have permits to trade shares on the mainland. Bank of America Corp. , JPMorgan Chase & Co. and Citigroup Inc. have yet to find venture partners in China. To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net .

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Li Ka-Shing’s Hutchison Offers to Buy Out Telecom Unit for $545 Million

January 7, 2010

By Mark Lee Jan. 8 (Bloomberg) — Billionaire Li Ka-shing’s Hutchison Whampoa Ltd. offered HK$4.23 billion ($545 million) to buy out a phone unit and take the company private after the stock underperformed the Hong Kong benchmark index for three years. Hutchison Whampoa agreed to buy outstanding Hutchison Telecommunications International Ltd. shares at HK$2.20 each, the parent said in a statement to the Hong Kong stock exchange today. That’s 33 percent higher than the stock’s last-traded price of HK$1.65 on Jan. 4. Li, Hong Kong’s richest man, is stepping up purchases of his own companies’ shares after they trailed gains in the Hang Seng Index last year as the global recession damped earnings from its ports and energy operations. The delisting plan is part of Hutchison’s efforts to reorganize its phone units following the merger last year of a wireless division in Australia with the local arm of Vodafone Group Plc . “Hutchison is taking the view that the unit’s emerging- market assets have been undervalued, so they will now buy them back at a discount, and perhaps spin them off later when they become profitable,” Benjamin Lo , who rates the parent’s shares “neutral” at Nomura Holdings Inc. in Hong Kong, said before the announcement. To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

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Rich Nadworny: It’s Time for Online Retailers to Support Local Communities

January 5, 2010

Online retail continues to grow while local communities struggle with deep economic problems. Do these two economic trajectories have anything to do with one other? While there may not be a causal link between the two trends, it’s time for online-only retailers to do the right thing: Charge and pay local sales tax. Put very simply, the convoluted online tax system works like this: If a retailer maintains physical commercial space in a state, people who buy from its online domain are required to pay sales tax on their purchases. This is why individuals pay sales tax when shopping online from websites like Walmart or Costco. If an online retailer does not maintain a physical presence, it does not charge and don’t pay sales tax. This is why individuals don’t pay sales tax when you purchasing on websites like Amazon or MacMall. In the current system, local communities subsidize online-only retailers at the expense of bricks and mortar stores – you know, the retailers that provide jobs to the people in your community. Even more distressing, these subsidies come from local tax coffers. It’s time to change the system: All online retailers must be made to pay and charge a sales tax to help local communities. The choice is ours, really, as consumers. What do we support more? Roads, schools and police in our cities and towns? Or 4-6% off our consumer purchases? We may think that we’re saving by embracing the rapidly growing realm of e-commerce, but in reality, we end up paying in an unacknowledged capacity – either through property taxes or increased sales tax, which hits our local retailers even harder. Here are a few things to think about: According to Mercent, Black Friday online sales for 2009 grew by 41% since 2008. That does not even include so-called Black Monday. Washington Post ‘s David Ignatius perceives the Californiazation of America , where local government don’t have the will to balance spending with tax revenue, as inviting another looming financial meltdown. Seth Godin shows succinctly how online retailers have already changed the nature of the record and bookstores. Online commerce has won here and is winning in other areas as well. Online retailers don’t need our help and don’t need to be subsidized. They already offer more choice, greater convenience and more competitive pricing than brick and mortar stores. Our communities need our help. The question is whether lawmakers have the guts to legislate this much-needed change. I doubt they do. Maybe concerned local citizens should band together and publicly target and shame the sites that don’t support their communities through local sales tax. The difference between one online retailer and another is pretty slim. If the choice is between supporting my local police force and supporting some unknown corporate wonk, the choice is easy, if somewhat blunt. And if you really don’t want to pay sales tax, there’s always New Hampshire, where you can basically live free or die. Come on, online retailers. It’s time to do the right thing. Pay up.

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Stores Open On New Year’s Day 2010: Walmart, Target, Best Buy All Open Today, Hours Vary

January 1, 2010

If you have some shopping to do, there are stores open New Year’s Day 2010, including Walmart, Best Buy and Target. This is true even though all federal, state, county and municipal offices are closed today, Jan. 1, 2010, due to the holiday. Some store locations may have limited hours today so it is best to call your local store. Although these national chains are open, some research may be required to see what additional stores are open for you locally. Several local newspapers and blogs list openings and closings for your convenience, and they’re the best place to check. Here are a few examples of these local listings for New Year’s Day 2010: – Washoe County, Nev. – Orange County, Calif. – Boston, Mass.

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Seven CIA Workers Killed in Afghanistan as U.S. Increases Its Spying Role

January 1, 2010

By Viola Gienger Jan. 1 (Bloomberg) — Seven CIA employees were killed and six others injured in a terrorist attack on a base in eastern Afghanistan as the agency steps up its presence in the country alongside thousands more U.S. military forces. President Barack Obama told Central Intelligence Agency employees yesterday that their colleagues who died Dec. 30 were “patriots who have made great sacrifices for their fellow citizens and for our way of life.” “In recent years, the CIA has been tested as never before,” Obama, who is on vacation in Hawaii, said in the letter to agency employees. The attack occurred at a forward operating base in Khost Province, CIA Director Leon Panetta said in a separate message to employees. The names and details of the employees’ work won’t be released “due to the sensitivity of their mission and other ongoing operations,” the agency said. “Those who make a real difference often face real danger,” Panetta said. U.S. military doctors and nurses saved the lives of those wounded in the attack, according to the statement. The CIA statement on the Afghanistan blast didn’t provide specifics on how the assault occurred or who was responsible beyond saying it was “the result of a terrorist attack.” ‘Staggering’ Losses “This has to be one of the highest losses in a single bombing” in the agency’s history, said Mark Lowenthal , a former CIA assistant director for analysis and production. “To lose seven at one time, that’s a bit staggering.” The Taliban claimed responsibility, Agence France-Presse reported earlier. The chief of the CIA base, a mother of three, was among those killed, according to the Associated Press, which cited former agency officials. CIA officers operating from such a base regularly mingle with the local population as part of their job, so it wouldn’t be unheard-of that an attacker could slip through security, Lowenthal said. Obama has stepped up pressure on a resurgent Taliban in Afghanistan by increasing the U.S. military force by 23,000 earlier this year, including 4,000 trainers, and authorizing 30,000 more to be in place next year. Panetta said in a Sept. 18 interview that the renewed strength of the Taliban insurgency prompted the CIA to establish more bases there. “We are increasing our presence” because the Taliban’s “capabilities have improved a great deal” in Afghanistan, he said. “The result is that I think everyone, our military and civilian operations, demand better intelligence.” Role of CIA Lowenthal, the former assistant director, said the incident isn’t likely to change the role of the CIA, which sent the first U.S. personnel into Afghanistan after the 2001 terror attacks. “They will not rethink the CIA’s role in the mission,” said Lowenthal, now president and chief executive officer of Intelligence & Security Academy LLC in Reston, Virginia. “What they’ll rethink is how can we do this more safely.” Obama lamented the loss of the CIA officers and praised the agency in his letter to employees. “Your triumphs and even your names may be unknown to your fellow Americans,” Obama said. “But your service is deeply appreciated.” The U.S. is pressing the government of neighboring Pakistan to cooperate more in combating militants on its own territory, and Obama has vowed to use all elements of U.S. power to destroy al-Qaeda and undermine its allies. Taliban Inroads American forces ousted the Taliban from power in Afghanistan for harboring al-Qaeda before the Sept. 11 terror attacks on New York and the Pentagon. As the U.S. military’s attention shifted to Iraq in recent years, the Taliban made their biggest inroads in southern and eastern Afghanistan. The border between Afghanistan and Pakistan is porous and largely out of the control of governing authorities in the two nations’ capitals. In the attack, an Afghan National Army officer wearing a suicide vest entered the base and blew himself up inside the gym, the AP reported, citing a statement from Taliban spokesman Zabiullah Mujahid. A U.S. official briefed on the blast also said it took place in the gym, the AP reported. Reports surface periodically of CIA air strikes on militant hideouts in Pakistan by drone aircraft, a practice that Pakistani leaders publicly condemn. “Our operations in Pakistan, directed at al-Qaeda, have been very successful in disrupting al-Qaeda as far as their operations and their planning,” Panetta said in the September interview at CIA headquarters in Langley, Virginia. The Los Angeles Times reported earlier this month that U.S. officials are pressing to expand CIA drone strikes beyond Pakistan’s tribal region to target Taliban leaders based in Quetta. The Pentagon and the State Department said Dec. 30 that preliminary information indicated that eight Americans had been killed. To contact the reporter on this story: Viola Gienger in Washington at vgienger@bloomberg.net .

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China’s Property Bubble May Foreshadow a U.S.-Style Slump in Real Estate

December 30, 2009

By Dexter Roberts Dec. 31 (Bloomberg) — Li Nan has real estate fever. A 27- year-old steel trader at China Minmetals, a state-owned commodities company, Li lives with his parents in a cramped 700- square-foot apartment in west Beijing . Li originally planned to buy his own place when he got married, but after watching Beijing real estate prices soar , he has been spending all his free time searching for an apartment. If he finds the right place — preferably a two-bedroom in the historic Dongcheng quarter, near the city center — he hopes to buy immediately. Act now, he figures, or live with Mom and Dad forever. In the last 12 months such apartments have doubled or tripled in price, to about $400 per square foot. “This year they’ll be even higher,” says Li in the Jan. 11 issue of Bloomberg BusinessWeek . Millions of Chinese are pursuing property with a zeal once typical of house-happy Americans. Some Chinese are plunking down wads of cash for homes. Others are taking out mortgages at record levels. Developers are snapping up land for luxury high- rises and villas, and the banks are eagerly funding them. Some local officials are even building towns from scratch in the desert, certain that demand won’t flag. And if families can swing it, they buy two apartments: one to live in, one to flip when prices jump further. And jump they have. In Shanghai, prices for high-end real estate were up 54 percent through September, to $500 per square foot. In November alone, housing prices in 70 major cities rose 5.7 percent, while housing starts nationwide rose a staggering 194 percent. The real estate rush is fueling fears of a bubble that could burst later in 2010, devastating homeowners, banks, developers, stock markets , and local governments. High-End Bubble “Once the bubble pops, our economic growth will stop,” warns Yi Xianrong , a researcher at the Chinese Academy of Social Sciences’ Finance Research Center. On Dec. 27, China Premier Wen Jiabao told news agency Xinhua that “property prices have risen too quickly.” He pledged a crackdown on speculators. Although parallels with other bubble markets, the China bubble is not quite so easy to understand. In some places, demand for upper middle class housing is so hot it can’t be satisfied. In others, speculators keep driving up prices for land, luxury apartments, and villas even though local rents are actually dropping because tenants are scarce. What’s clear is that the bubble is inflating at the rich end, while little low- cost housing gets built for middle and low-income Chinese. In Beijing’s Chaoyang district, which represents a third of all residential property deals in the capital, homes now sell for an average of almost $300 per square foot. That means a typical 1,000-square-foot apartment costs about 80 times the average annual income of the city’s residents. Table Talk Koyo Ozeki , an analyst at U.S. investment manager Pimco, estimates that only 10 percent of residential sales in China are for the mass market. Developers find the margins in high-end housing much fatter than returns from building ordinary homes. How did this bubble get going? Low interest rates, official encouragement of bank lending, and then Beijing’s half-trillion- dollar stimulus plan all made funds readily available. City and provincial governments have been gladly cooperating with developers: Economists estimate that half of all local government revenue comes from selling state-owned land. Chinese consumers, fearing inflation will return and outstrip the tiny interest they earn on their savings, have pursued property ever more aggressively. Companies in the chemical, steel, textile, and shoe industries have started up property divisions too: The chance of a quick return is much higher than in their primary business. Built on Sand “When you sit down with a table of businessmen, the story is usually how they got lucky from a piece of land,” says Andy Xie , an independent economist who once worked in Hong Kong as Morgan Stanley’s top Asia analyst. “No one talks about their factories making money these days.” Newly wealthy towns are playing the game with a vengeance. Ordos is a city of 1.3 million in China’s Inner Mongolia region. It has gotten rich from the discovery of a big coal seam nearby. An emerging generation of tycoons, developers, and local officials will go to any length to invent a modern Ordos. So 16 miles from the old town, a new civic center is emerging from the desert that could easily pass for the capital of a midsize country. An enormous complex houses City Hall and the local Communist Party headquarters, each 11 stories tall with sweeping circular driveways. Nearby loom a fortress-like opera house and a slate-gray, modernist public library. Thousands of villas and apartment towers stretch into the distance, all built by local developers in the hope that Ordos’s recently prosperous will buy the places to be near the new center of power. Serial Drama Workers get bused daily to the new city hall, but the housing is still largely unoccupied. “Why would anyone go there,” asks Zhao Hailin, a street artist in the old town. “It’s a city of empty buildings.” Ordos officials declined to comment for this story. The central government now faces two dangers. One is the anger of ordinary Chinese. In a recent survey by the People’s Bank of China, two-thirds of respondents said real estate prices were too high. A serial drama with the ironic name The Romance of Housing, featuring the travails of families unable to afford apartments, was one of the most popular shows on Beijing Television until broadcasting authorities pulled it off the airwaves in November. The official reason was that the show was too racy — one woman got an apartment by becoming the mistress of a corrupt local official –, but online chat rooms speculated that the show was cut because it was upsetting to people unable to afford apartments. Injuries, Death The debate has become even more charged following injuries and deaths related to real estate. A woman from Chengdu committed suicide by torching herself when her former husband’s three-story factory and attached living space were demolished to make way for a new road. A man in Beijing suffered severe burns in a similar protest over his home. In early December five professors at Peking University wrote to the National People’s Congress calling for changes to a land seizure and demolition law and accusing developers of usurping the government’s role when taking land for construction. The law is leading to “mass incidents” and “extreme events,” the professors warned. The second danger is that Beijing will try, and fail, to let the air out of the bubble. Pulling off a soft landing means slowly calming the markets, stabilizing prices, and building more affordable housing. Key to Growth To discourage speculation, the State Council, China’s cabinet, is extending, from two years to five, the period during which a tax is levied on the resale of apartments. Tighter rules on mortgages may follow. Beijing also plans to build apartments for 15 million poor families. The government is reluctant to crack down too hard because construction, steel, cement, furniture, and other sectors are directly tied to growth in real estate. In November, for example, retail sales of furniture and construction materials jumped more than 40 percent. At the December Central Economic Work Conference, an annual policy-setting confab, officials said real estate would continue to be a key driver of growth. The worst scenario is that the central authorities let the party go on too long, then suddenly ramp up interest rates to stop the inflationary spiral. Without cheap credit, developers won’t be able to refinance their loans, consumers will no longer take out mortgages, local banks’ property portfolios will sour, and industrial companies that relied on real estate for a chunk of profits will suffer. Getting Nervous It’s not encouraging that the Chinese have been ham-handed about stopping previous real estate frenzies. In the 1990s the government brutally ended a bubble in Shanghai and Beijing by cutting off credit to developers and hiking rates sharply. The measures worked, but property prices plunged and economic growth slowed. Analysts are divided over the probabilities of such a crash, but even real estate executives are getting nervous. Wang Shi , chairman of top developer China Vanke Co. , has warned repeatedly in recent weeks about the risk of a bubble. In his most recent comments he expressed fear that the bubble might spread far beyond Beijing, Shanghai, and Shenzhen. One difficulty in handicapping the likelihood of a nasty pullback is the opacity of the data. As long as property prices stay high, the balance sheets of the developers look strong. And no one knows for sure how much of the more than $1.3 trillion in last year’s bank loans funded real estate ventures. Profit vs. Soul Analysts figure a substantial portion of that sum went into property, much of it indirectly. Banks often lend to state-owned companies for industrial purposes. But the state companies can then divert the funds to their own real estate businesses or relend the money to an outside developer. Meanwhile, the big banks may be cutting back on their real estate risk by selling loans to smaller local banks and credit co-ops. For now, the party continues. On Dec. 12, Beijing developer Soho China Ltd. celebrated a record-breaking year with a gala at the China Central Place JW Marriott. Guests dined on crab and avocado timbale, white bean soup, and beef tenderloin with wild mushrooms. Soho declined to comment for this story. After a dance performance, a panel debated “The Balance Between Profit and Soul.” When a writer joked he could not afford an apartment — and was still waiting for Soho Chairman Pan Shiyi to give him one — the crowd of 600 well-heeled developers, entrepreneurs, and consultants laughed appreciatively. If the bubble bursts, few will be laughing. To contact the reporter on this story: Dexter Roberts in Beijing at droberts34@bloomberg.net

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Local home sales picking up, but prices not following suit (Newark Advocate)

December 23, 2009

NEWARK — Local real-estate agents enjoyed a good month in November, according to statistics from the Licking County Board of Realtors.

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New Zealand Economy Expands a Slower-Than-Forecast 0.2%; Currency Declines

December 22, 2009

By Tracy Withers Dec. 23 (Bloomberg) — New Zealand’s economy grew less than economists predicted in the third quarter as construction, business investment and manufacturing dropped. Gross domestic product rose 0.2 percent from the previous three months, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of 12 economists was for GDP to increase 0.4 percent following a revised 0.2 percent gain in the second quarter. The New Zealand dollar extended declines as the weaker-than-expected expansion damped speculation the central bank will need to raise borrowing costs early next year. Reserve Bank Governor Alan Bollard , who forecast third-quarter growth of 0.4 percent, said on Dec. 10 the benchmark interest rate needs to stay at a record-low 2.5 percent until mid-2010 to support growth. “Pockets of strength have been offset by continued weakness in other sectors,” Nick Tuffley , chief economist at ASB Bank Ltd. in Auckland, said ahead of the report. “It would take some extraordinarily strong data to shock the Reserve Bank into hiking earlier.” New Zealand’s dollar dropped to 69.96 U.S. cents at 11 a.m. in Wellington from 70.20 cents before the report was released and 70.54 cents yesterday. The currency had climbed 12 percent against the U.S. dollar the past six months and the NZX 50 stock index gained 14 percent on signs of a pickup in the economy. Global Stimulus Central bankers around the world are assessing when to remove stimulus and emergency aid as the global economy recovers and financial markets stabilize. Australia and Norway have started raising borrowing costs and the U.S. Federal Reserve has committed to scale down buying of mortgage-backed debt. Bollard said on Dec. 10 there is “considerable uncertainty” about the durability of New Zealand’s expansion because business investment and consumer spending are still subdued and the local currency’s appreciation has limited the scope of exports to contribute to the recovery. Warehouse Group Ltd. , the nation’s biggest discount retailer, last month said sales were below expectations in the three months ended Nov. 1. Finance Minister Bill English on Dec. 15 said increased business confidence positions the economy well for a rebound, though it has yet to translate into new jobs or investment. New Zealand’s unemployment rate rose to a nine-year high of 6.5 percent in the third quarter. Six of nine economists surveyed by Bloomberg News this month expected Bollard will increase interest rates in March or April, with the remaining predicting a June move. Annual Contraction The economy shrank 1.3 percent in the third quarter from a year earlier, compared with a 1.2 percent contraction expected by economists in a Bloomberg survey. The central bank forecasts the economy will contract 1.4 percent this year before growing 3 percent in 2010. Household spending , which makes up 60 percent of the economy, rose 0.8 percent in the third quarter, today’s report showed. Sales of cars, home appliances and other so-called durable goods gained 2 percent and spending on services also increased, led by travel. Purchases of food and non-durable items fell. Output from goods-producing industries slumped amid a 4.4 percent decline in construction. Manufacturing fell 1.9 percent led by output from meat plants. Exports Unchanged Exports of goods and services were unchanged in the third quarter as increased spending by tourists offset a fall in commodity exports including meat and seafood. Imports rose 0.7 percent, buoyed by vehicles and spending by citizens traveling overseas. Capital equipment purchases fell. Business investment fell 0.9 percent, the fifth straight decline, as companies spent less on plant and machinery. Investment in residential building fell 5 percent. Inventories declined. In contrast, increased activity in real estate services, health and communications contributed to GDP in the third quarter. Consumer sentiment rose to a 22-month high in October, according to an index compiled by ANZ National and Roy Morgan Research. House prices climbed 7.9 percent in September from a three-year low in January and home sales surged 44 percent, according to Real Estate Institute figures. Immigration is at a five-year high. Output from primary industries surged 3.9 percent in the quarter, led by logging, fishing, oil extraction and exploration. Farm output rose 0.9 percent. The final production well at OMV AG’s Maari oil field was connected in August, boosting output beyond original forecasts, the company said on Aug. 21. The GDP deflator, a measure of prices, rose 2 percent in the year ended Sept. 30. To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net .

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New Zealand’s Economy Expanded Slower-Than-Estimated 0.2%; Currency Falls

December 22, 2009

By Tracy Withers Dec. 23 (Bloomberg) — New Zealand’s economy grew less than economists predicted in the third quarter as construction, business investment and manufacturing dropped. Gross domestic product rose 0.2 percent from the previous three months, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of 12 economists was for GDP to increase 0.4 percent following a revised 0.2 percent gain in the second quarter. The New Zealand dollar extended declines as the weaker-than-expected expansion damped speculation the central bank will need to raise borrowing costs early next year. Reserve Bank Governor Alan Bollard , who forecast third-quarter growth of 0.4 percent, said on Dec. 10 the benchmark interest rate needs to stay at a record-low 2.5 percent until mid-2010 to support growth. “Pockets of strength have been offset by continued weakness in other sectors,” Nick Tuffley , chief economist at ASB Bank Ltd. in Auckland, said ahead of the report. “It would take some extraordinarily strong data to shock the Reserve Bank into hiking earlier.” New Zealand’s dollar dropped to 69.96 U.S. cents at 11 a.m. in Wellington from 70.20 cents before the report was released and 70.54 cents yesterday. The currency had climbed 12 percent against the U.S. dollar the past six months and the NZX 50 stock index gained 14 percent on signs of a pickup in the economy. Global Stimulus Central bankers around the world are assessing when to remove stimulus and emergency aid as the global economy recovers and financial markets stabilize. Australia and Norway have started raising borrowing costs and the U.S. Federal Reserve has committed to scale down buying of mortgage-backed debt. Bollard said on Dec. 10 there is “considerable uncertainty” about the durability of New Zealand’s expansion because business investment and consumer spending are still subdued and the local currency’s appreciation has limited the scope of exports to contribute to the recovery. Warehouse Group Ltd. , the nation’s biggest discount retailer, last month said sales were below expectations in the three months ended Nov. 1. Finance Minister Bill English on Dec. 15 said increased business confidence positions the economy well for a rebound, though it has yet to translate into new jobs or investment. New Zealand’s unemployment rate rose to a nine-year high of 6.5 percent in the third quarter. Six of nine economists surveyed by Bloomberg News this month expected Bollard will increase interest rates in March or April, with the remaining predicting a June move. Annual Contraction The economy shrank 1.3 percent in the third quarter from a year earlier, compared with a 1.2 percent contraction expected by economists in a Bloomberg survey. The central bank forecasts the economy will contract 1.4 percent this year before growing 3 percent in 2010. Household spending , which makes up 60 percent of the economy, rose 0.8 percent in the third quarter, today’s report showed. Sales of cars, home appliances and other so-called durable goods gained 2 percent and spending on services also increased, led by travel. Purchases of food and non-durable items fell. Output from goods-producing industries slumped amid a 4.4 percent decline in construction. Manufacturing fell 1.9 percent led by output from meat plants. Exports Unchanged Exports of goods and services were unchanged in the third quarter as increased spending by tourists offset a fall in commodity exports including meat and seafood. Imports rose 0.7 percent, buoyed by vehicles and spending by citizens traveling overseas. Capital equipment purchases fell. Business investment fell 0.9 percent, the fifth straight decline, as companies spent less on plant and machinery. Investment in residential building fell 5 percent. Inventories declined. In contrast, increased activity in real estate services, health and communications contributed to GDP in the third quarter. Consumer sentiment rose to a 22-month high in October, according to an index compiled by ANZ National and Roy Morgan Research. House prices climbed 7.9 percent in September from a three-year low in January and home sales surged 44 percent, according to Real Estate Institute figures. Immigration is at a five-year high. Output from primary industries surged 3.9 percent in the quarter, led by logging, fishing, oil extraction and exploration. Farm output rose 0.9 percent. The final production well at OMV AG’s Maari oil field was connected in August, boosting output beyond original forecasts, the company said on Aug. 21. The GDP deflator, a measure of prices, rose 2 percent in the year ended Sept. 30. To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net .

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Dubai World Said to Present Standstill Deal on $22 Billion Debt in January

December 22, 2009

By Arif Sharif and Haris Anwar Dec. 22 (Bloomberg) — Dubai World will present a standstill offer to banks in early January as the state-owned holding company attempts to restructure about $22 billion of debt, three bankers who attended a presentation on the matter yesterday said. Dubai World, which owns property unit Nakheel PJSC, port operator DP World Ltd. and private equity company Istithmar World PJSC, told lenders it needs time to allow its assets to recover from the drop in value following the credit crunch, said the bankers, who declined to be identified because the meeting was private. Some assets may be sold over time to repay debt, they said. “They need to sit down and talk it over in more than one meeting,” said Hesham Bakry , Dubai-based institutional sales manager at Al-Futtaim HC Securities Co. “The positive thing is that they are meeting and both parties want to find a better way to handle this issue. It should have happened a lot earlier.” Dubai World, one of the emirate’s three main state-owned business groups, announced Nov. 25 it would seek to freeze or delay repaying debt until at least May 30. The company said Dec. 1 it wants to alter terms on about $26 billion of debt, including of property unit Nakheel PJSC, which is building palm tree-shaped islands off the emirate’s coast. It repaid $4.1 billion on an Islamic bond from Nakheel last week after Dubai received a $10 billion loan from Abu Dhabi. ‘Orderly’ Restructuring Dubai World will work with creditors to reach a standstill agreement on its borrowing “in an orderly way,” it said in a statement following yesterday’s meeting. Dubai’s government promised “financial support to cover working capital and interest expenses to ensure the continuity of key projects” if a standstill is achieved, according to the statement. The cost of protecting Dubai government debt from default fell 2 basis points to 444, according to CMA DataVision prices for credit-default swaps, contracts that fall as perceptions of credit quality improve. A basis point is equivalent to $1,000 a year on a contract protecting $10 million of debt. The terms of government support for Dubai World have yet to be agreed upon, two bankers involved in the talks said ahead yesterday’s gathering. The lack of an accord would lead to a delay in making the standstill request, they said. The complexity of Dubai World Group and its funding structure are to blame for the delay, one banker said ahead of the meeting, citing a Dec. 18 letter from the company’s Chief Restructuring Officer Aidan Birkett about the agenda for the gathering. About 100 bankers attended the presentation at the Dubai International Convention and Exhibition Centre. Borrowing to Diversify Dubai, the second-biggest of seven states that make up the United Arab Emirates, and its state-owned companies borrowed at least $80 billion until last year to transform the emirate into a tourism and financial hub. The seizure of debt markets after the onset of the global credit crisis led to a 50 percent decline in property prices in the city and hampered the ability of Dubai-based companies to raise new loans. Debt restructuring by Dubai state-run companies may almost double to $46.7 billion as more of the emirate’s businesses may need help making payments, Morgan Stanley said earlier this month. Dubai Holding LLC, Dubai Holding Commercial Operations Group LLC, Borse Dubai Ltd. and Dubai Sukuk Center Ltd. may join Dubai World in restructuring debt, Morgan Stanley analysts Mohamed W. Jaber and Paolo Batori wrote in the report. Dubai set up a financial support fund earlier this year to help state-related companies facing problems raising cash amid the credit crisis. It raised $10 billion for the fund in February by selling bonds to the U.A.E. central bank and another $5 billion in November through a bond sale to Abu Dhabi government-controlled banks. U.A.E. Minister of Economy Sultan bin Saeed al-Mansouri said further federal government support for Dubai should be “studied” properly. “Each issue has to be studied in a proper manner, evaluated and based on that an answer will be provided at the federal level or the local level,” al-Mansouri told reporters in Abu Dhabi today when asked whether the federal government will extend more financial support to Dubai. To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net ; Arif Sharif in Dubai at asharif2@bloomberg.net

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Google, Yelp Deal: Google Reportedly Close To Buying Yelp

December 19, 2009

Google Inc. is reportedly in talks to buy Yelp Inc., whose website enables users to review restaurants and other businesses — a possible sign that the search giant is ready to train its computing power on the local advertising market.

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Peru Poised to Win More Debt Upgrades, Credit Suisse, Societe Generale Say

December 17, 2009

By Andrea Jaramillo and Tal Barak Harif Dec. 17 (Bloomberg) — Peru is poised to receive more credit-rating increases after Moody’s Investors Service moved it to investment grade because the country is posting above- average growth while keeping its budget deficit under control, said Credit Suisse Group AG and Societe Generale SA. Moody’s raised Peru’s foreign debt rating one level to Baa3, the lowest investment-grade level, from Ba1 late yesterday, more than a year after Standard & Poor’s and Fitch Ratings made identical moves. Moody’s said Peru was able to prevent the global recession from sending the local economy into a “hard landing” by bolstering government spending. “It sets up a trajectory for more upgrades,” Igor Arsenin , an emerging-market strategist at Credit Suisse in New York, said in a telephone interview. “The fundamentals look clean when compared with other investment-grade countries. It reminds everybody of the positive momentum in Peru.” The Andean nation’s credit-default swaps trade almost on a par with Israel and Poland, countries that are rated at least four levels higher by Moody’s. It costs 1.21 percentage points to protect Peru’s debt against default for five years, compared with 1.20 points for Israel and Poland, according to CMA Datavision. Peru’s cost was 1.92 points six months ago. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a country or company fail to adhere to its debt agreements. A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year. Commodity Savings Peru’s “economic fundamentals are very good,” said Greg Anderson , a currency strategist at Societe Generale in New York. This “may bring another rating upgrade within a year’s time.” President Alan Garcia this year tapped savings built up from surging commodity export revenue between 2006 and 2008 to implement a $3 billion stimulus plan. The spending program, along with record low interest rates , helped the economy expand in August for the first time in three months. Peru, the world’s third-biggest exporter of copper, zinc and tin, and the largest silver exporter, will post expansions of 1.5 percent this year and 5.8 percent in 2010, the International Monetary Fund forecasts. By comparison, the IMF predicts a contraction of 2.5 percent in 2009 and an expansion of 2.9 percent next year for Latin America. The 5.8 percent growth forecast for Peru is the IMF’s highest for any major economy in the region next year. Falling Debt Finance Minister Luis Carranza said yesterday that the government’s efforts to cut debt helped free up the cash it needed this year to fund the stimulus program. Government debt has dropped to the equivalent of 25 percent of gross domestic product from 50 percent of GDP at the start of the decade, according to Carranza. “This gave us greater room to implement the economic stimulus plan without difficulty,” Carranza told reporters in Lima. The government forecasts its deficit will narrow to 1.6 percent of GDP in 2010 from 2 percent this year as tax revenue increases, Carranza said last month. Moody’s said the government’s ability to tap savings to fund its stimulus program was a “positive development.” It said the country’s vulnerabilities include its low income per capita and the “high share” of its debt that’s denominated in dollars. The extra yield investors demand to own Peru’s dollar bonds instead of U.S. Treasuries has narrowed to 1.85 percentage points from 5.09 percentage points at the end of last year, according to JPMorgan Chase & Co. Sol Rally “The upgrade will allow Peru to keep its debt costs low and on a downward trend, while increasing financial and real investment flows,” Carranza said. He predicted foreign direct investment will jump almost 50 percent next year. “Moody’s upgrade will accentuate this trend.” The benchmark Lima General Index of stocks has surged 102 percent this year while the sol has gained 9.1 percent to 2.8745 per dollar this year. Societe Generale’s Anderson said the economic rebound and “responsible fiscal policy” may drive the sol to 2.7 per dollar within six months. To contact the reporters on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net ; Tal Barak Harif in New York at tbarak@bloomberg.net

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`Oprah Effect’ Aids Copenhagen Counterattack as Tourists Head to Stockholm

December 16, 2009

By Janina Pfalzer Dec. 16 (Bloomberg) — Oprah is Copenhagen’s newest weapon in the battle to claw back tourists and conventions that have been lured away by Stockholm. After Oprah Winfrey , host of the highest-rated U.S. talk show, visited the city for the International Olympic Committee Congress in October, the local tourism agency put her itinerary on its Web site, making it easier for visitors to book a stay at the five-star Hotel D’Angleterre , where she slept, or sample the cakes she bought from chocolatier Kransekagehuset Summerbird . “We are very much looking forward to the Oprah effect,” said Ulrika Maartensson, a spokeswoman for Wonderful Copenhagen , the city’s tourist and conference agency. Clashes between Danes and Swedes, which have led to 12 wars since 1360, have moved from the battlefield to PowerPoint slides as Copenhagen retaliates after its sister city last year passed it as Scandinavia’s most popular conference venue. While the Danish capital won high-profile events like the IOC and this week’s United Nations climate conference this year, the city is in danger of falling behind Stockholm as a destination for foreign tourists. The number of international tourists traveling to Stockholm rose 3 percent to 2.9 million last year, according to the city’s Visitor’s Board . The Swedish capital narrowed the gap with Copenhagen, where the figure rose 1 percent to 3.15 million, according to Statistics Denmark . Airport Expansion That reverses the trend of the late 1990s, when Copenhagen surged ahead after moving more quickly than Stockholm to invest in projects such as expanding its airport and promoting the city’s shopping and culture offerings, according to an analysis by Wonderful Copenhagen. The two cities may have equal numbers of foreign visitors within four years, the study said. “The development shows investments in know-how and the events economy are needed to achieve growth because results won’t come by themselves,” the analysis said. In response, Copenhagen hotels and businesses have pledged 8.3 million kroner ($1.64 million) to the “Meet Denmark” project aimed at promoting the nation and its capital as the site of international conferences. The Rotterdam, Netherlands-based International Fiscal Association booked Copenhagen for its 2013 Annual Congress. The choice was based on the meeting facility, the number of four-and five-star hotels and fairness in relation to other cities, the group said. The 1990 conference was held in Stockholm. “Because the conference usually lasts a week, it’s important that it can be combined with leisure activities,” said Thea Van Dijk, manager of the IFA General Secretariat. Founded by Hippies Copenhagen cultivates a laid back image, inviting tourists to visit Christiania , a collectively run village founded by hippies in 1971, and the bars of Nyhavn, which sit beside a 17th century canal. For the more traditional, there are the Little Mermaid statue, inspired by Hans Christian Andersen’s fairy tale of the same name, and Kronborg castle, the setting for William Shakespeare’s “Hamlet” north of the city. The city promotes itself as Scandinavia’s gastronomic capital. Thirteen restaurants received a total of 14 stars in the 2009 Michelin Guide, including chef Rene Redzepi’s Noma, a two-star eatery that uses only Nordic produce. This week’s climate summit provides a welcome boost of guests for Copenhagen’s fancy restaurants. “We’re extremely busy through December because of the summit,” said Cecilie Meyer, spokeswoman from Era Ora, a waterside, Michelin-stared Italian restaurant where a seven- course meal with a “Limited Edition” wine menu costs 4,000 kroner ($790) per person. Something for Oprah Oprah’s visit may help Copenhagen sell the city to international tourists, said Kathleen Leuba, a vice president at New York-based conference marketer Mondotels Inc. “For Americans, Oprah Winfrey is an extremely trustworthy person,” Leuba said. “Oprah’s presence in the picture will make a big difference. It demonstrates to tourists traveling that this is something Oprah enjoyed.” Stockholm calls itself the capital of Scandinavia, highlighting its place as the region’s biggest metropolitan area and home of its largest financial market . The city boasts of its own culinary excellence, with nine Michelin-starred restaurants, including Restaurant Mathias Dahlgren and Edsbacka Krog, each of which has two stars. Absolut Ice Bar The city is built on 14 islands, giving it the nickname “Venice of the North.” Top attractions include the medieval Old Town city center, the Vasa Museum , which features the world’s only preserved 17th century warship, and the Absolut Ice Bar, made of ice. The European Society of Cardiology expects about 30,000 people to attend its 2010 conference in Stockholm, the fifth time since 1991 the city has hosted the event. Stockholm International Fairs is one of the few venues that can provide the necessary space and services, the society said. “Our congress venue requirements are enormous and our expectations hard to meet,” said Ben Hainsworth, director of the group’s congress and meetings division. Both cities have major meeting venues located about 10 minutes by train from downtown. Copenhagen’s Bella Center , established in 1964, is the bigger of the two, with 122,000 square meters (1.31 million square feet) of halls and conference rooms. The expansion of Stockholm International Fairs, which opened in 1971, will boost space to 70,000 square meters next year. More International Flights Copenhagen has one major advantage over Stockholm: more international flights. Copenhagen has 15 intercontinental routes, four more than Stockholm’s Arlanda Airport, according to data from the Official Airline Guide. The city offers 87 European routes, 28 more than Stockholm. “We are constantly working on getting more direct lines,” said Peter Lindqvist, chief executive officer of Stockholm Visitors Board. Copenhagen’s weakening position has had economic consequences. Income from visitors who spend at least one night in the city may fall by 6 percent this year from about 32 billion kroner in 2008, according to Wonderful Copenhagen’s estimates. Stockholm earned 22 billion kronor from its visitors in 2008, unchanged from the previous year, the Visitors Board said. Preliminary numbers point to Copenhagen regaining its spot as Scandinavia’s international meeting capital this year with a seven-event lead, according to data from the Stockholm Visitors Board and Wonderful Copenhagen. The Danish capital also leads in events scheduled for 2010, though many are only reported after they’ve occurred. Royal Wedding Competition will increase next year when both cities add new venues. The Tivoli Congress Center , within walking distance from Copenhagen’s Town Hall Square, will seat as many as 2,500 people. The new Stockholm Waterfront Congress Center will have space for as many as 3,000. Stockholm is betting on help from Crown Princess Victoria’s wedding to long-time boyfriend Daniel Westling , Lindqvist said. Stockholm will have two weeks of festivities leading up to the June 19 wedding. Should Oprah decide to visit Stockholm, however, she’s more than welcome, Lindqvist said. To contact the reporter on this story: Janina Pfalzer in Stockholm at jpfalzer@bloomberg.net

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Brooklyn Arena Sells $511 Million of Bonds to Fund Nets Basketball Venue

December 15, 2009

By Jeremy R. Cooke Dec. 15 (Bloomberg) — Brooklyn Arena Local Development Corp., the state arm created to help finance a new basketball facility in New York City, sold $511 million of tax-exempt bonds at yields lower than a comparably rated deal last week. Bonds due in 2040 paying 6.25 percent tax-free interest were priced to yield 6.35 percent, 65 basis points less than a comparable maturity issued by Texas Private Activity Bond Surface Transportation Corp. last week, according to data compiled by Bloomberg. A basis point is 0.01 percentage point. The arena bonds are rated at the lowest investment grades by Standard & Poor’s and Moody’s Investors Service, one level higher than high-risk, high-yield junk status. Underwriters were led by Goldman Sachs Group Inc. and Barclays Plc, which bought naming rights to the facility, where the National Basketball Association’s New Jersey Nets plan to move in 2012. Forest City Ratner Cos., which has an ownership interest in the Nets, is developing the arena as part of the Atlantic Yards project. To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net .

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Realtors appeal FHA loan limits in Garfield County (The Aspen Times)

December 11, 2009

GLENWOOD SPRINGS – Area real estate brokers are looking to the local governing boards to support them in an attempt to convince the U.S. Department of Housing and Urban Development to raise the FHA conforming loan limits within Garfield County. The current limit for Garfield County on FHA loans is $425,000. But according to Sarah Thorsteinson, director of Glenwood Springs Association of Realtors …

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Emiratis Celebrate National Day as Expatriates Fret Over Future of Dubai

December 2, 2009

By Camilla Hall and Zahraa Alkhalisi Dec. 2 (Bloomberg) — Dubai national Omar Mohammed said he’s confident that his debt-laden emirate will weather the latest turmoil and if needed neighboring Abu Dhabi will step in. John Kharouf, a real-estate broker who has already lost his job once since the global financial crisis reached Dubai last year, said he’s worried investors will be scared away from the emirate as Dubai World, a government-controlled holding company, is threatened with default. ‘It’s going to affect everything,” said Kharouf, who moved to Dubai after studying in Damascus. The difference between the views shows the gap in perceptions largely between Emiratis — who make up about 20 percent of the United Arab Emirates’s population — and expatriate workers from countries including Pakistan, the U.K. and Lebanon, who fear for their jobs as the stock market plummets and government companies struggle to repay debts. The U.A.E. celebrates its National Day today, with men in white robes and women dressed in black sporting football scarves in the black, white, green and red colors of the flag. In his speech to mark the occasion, Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum said “in spite of the weight of the consequences of the global financial crisis, the wheel of progress and achievement in our country did not stop turning.” U.A.E. President Sheikh Khalifa bin Zayed Al Nahyan , who is also the leader of Abu Dhabi, said the economy is “fine.” Roiling Markets Dubai roiled global markets after it said on Nov. 25 that it was seeking to defer payments on loans incurred by Dubai World, which is saddled with $59 billion in liabilities, for at least six months. Dubai Financial Market General Index declined almost 13 percent in the past two days and Abu Dhabi’s ADX Index saw its biggest two-day loss on record, falling 12 percent. The difference in perception was also reflected in the way the international and local press reported the initial announcement. London’s Sunday Times featured the headline “How Dubai’s Dream Sank in a Sea of Debt.” The paper was removed from newsstands in the country. By contrast, the local Al-Bayan newspaper wrote that “the world unanimously considers Dubai as an investment model that should be followed.” “We were hearing the news that we’re at the bottom, things were picking up, and now we heard this — it was a shock for us,” said Serge Achkouty, 26, a Dubai-based management consultant who said he was watching international media to keep up with the news. ”We’re not exactly sure what the impact will be, but we know it’s bad.” United Rulers In Dubai Mall , which features 1,200 stores, an ice rink and a giant aquarium, Mohammed, 23, dismissed news reports on the possible impact of the debt problems. “I don’t believe it’s true, it’s just to damage Dubai’s economy and its reputation,” said Mohammed, who was wearing a long, traditional white robe and a yellow baseball cap. “As a people we will get through it. The rulers are united. If we go through a rough time, Sheikh Khalifa can boost us.”” Abu Dhabi has one of the largest sovereign wealth funds in the world, worth $627 billion, according to the Roseville, California-based Sovereign Wealth Fund Institute. The upheaval of the past week may mark a turning point in the U.A.E.’s history toward a stronger central state, which investors say will make Dubai a more attractive destination by bolstering its creditworthiness. Dubai is the second biggest of seven states that make up the U.A.E. after Abu Dhabi. Celebrations Last night, emiratis drove through Dubai in cars festooned with the national colors, honking their horns to celebrate the 38th anniversary of the creation of the U.A.E. Since the start of the year, when Sheikh Mohammed launched a new Web site dedicated to his activities as prime minister of the U.A.E., he has been seen increasingly in public in that role. “The media hype is exaggerated and will not hurt our perseverance,” Sheikh Mohammed, referring to the international media reporting of the turmoil, said in an e-mailed statement yesterday. Investor concern lessened after Dubai World issued a statement yesterday saying that the restructuring would be limited to $26 billion in debt. Dubai and its state-owned companies borrowed $80 billion to fund an economic boom and diversify the economy. That included building projects like the mall and Burj Dubai, the world’s tallest tower. The emirate suffered the world’s steepest property slump in the global credit crisis as home prices fell 50 percent, according to Deutsche Bank AG. “Most of my clients are in the financial services industry so if it impacts them it’s bound to impact me,” Kevin Teixeira, a personal trainer originally from Britain, said. “I probably wouldn’t recommend friends to come move out here just now.” To contact the reporter on this story: Camilla Hall in Dubai at chall24@bloomberg.net

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Cobweb-Coated $440 White Riojas Battle Onslaught of Chardonnay: Elin McCoy

November 30, 2009

Review by Elin McCoy Nov. 30 (Bloomberg) — I brushed away drooping cobwebs in the spooky cellar at R. Lopez de Heredia winery in Spain’s Rioja region. In front of me, bottles of 45-year-old white wines rested beneath white mold that felt like a furry animal pelt. “We are the ‘last Mohican’ here in making traditional long-aged blancos,” said winemaker Mercedes Lopez de Heredia. On a recent visit to this region best known for reds, I found a new level of excitement about whites. Some vintners have shifted to fresher, fruitier blancos and are even experimenting with chardonnay. Others are creating post-modern versions of the region’s old-style oaky wines. While traditionalists worry that Rioja blanco is losing its soul to experimentation, the confusing range of styles offers surprisingly delicious wines at bargain prices. Among the most fascinating are Lopez de Heredia’s long-aged bottlings with their complex flavors and aromas of toasted coconut. “One hundred years ago, white Rioja was more famous than red and considered more elegant,” Mercedes Lopez de Heredia said as we walked through her family’s 132-year-old stone winery. Though she looked pretty modern herself in fur-trimmed, white-quilted parka, the place is a trip into winemaking past. Workers dumped organically grown grapes into old wooden basket presses and fermenting wine bubbled in 50-year-old vats that she patted gently as if greeting an elderly relative. American Oak The wines are made from local grape viura, whose high acidity allows wines to age, she said. The reserva and gran reserva bottlings, which spend 6 to 10 years in old American oak barrels, include another local grape, malvasia, for complexity and structure. Any doubts I had about the appeal of traditional old whites vanished after Lopez de Heredia chipped the red wax seal off a 1961 Vina Tondonia blanco gran reserva ($440), slowly extracted the crumbling cork and poured out a golden-hued wine. I savored its gorgeous toffee and orange peel aroma, pure silky texture and hazelnut/honey flavors that were perfect with a local cheese. By contrast, the pervasive crisp, modern, drink-it-now style of Rioja blanco started in the 1970s when producers abandoned traditional oak aging for temperature-controlled fermenters and stainless steel tanks. Alas, many of these wines are simple, no-personality quaffers. But Bodegas Dinastia Vivanco’s fresh, lemony, gulp-me- please 2008 blanco (a viura/malvasia blend) was a delicious aperitif, which I sipped before a dinner at their restaurant. A bargain at $11, the wine arrives in the U.S. in early 2010. Dull Grape Many producers dismiss viura (also called macabeo), Rioja’s most planted white, as a characterless dullard of a grape. So after years of debate, the Rioja Regulatory Council approved the planting of chardonnay, sauvignon blanc and verdejo in 2007. These can now make up 49 percent of a Rioja blanco. The idea is to help wines compete with popular zingy albarinos from Rias Baixas in northwestern Spain. Not everyone is happy about this. “Planting chardonnay and sauvignon blanc is a big mistake for rioja,” winemaker Jorge Muga said when I stopped by Bodegas Muga one morning. “We’ll lose our identity. In the world, there are already too many chardonnays.” Muga’s round, ripe, yet lively 2008 Muga Blanco, viura with 10 percent malvasia, is fermented in new French oak barrels — a trend that some winemakers started embracing more than a decade ago. At $16, it’s easy on the wallet. Age and Location Viura’s character depends on how old the vines are and where they’re grown, Muga said, before pouring out samples from five vineyards. One was lusciously mouth filling, while another seemed all high acidity. Muga is also studying garnacha blanca, prominent in 19th century whites, and eventually intends to include it in his blanco. I found the most exotic Rioja white at my next stop, Granja Nuestra Senora de Remelluri , which looks like a Tuscan villa surrounded by vines. Winemaker Ana Barron quickly dismissed viura with a shrug. Remelluri’s tiny-production blanco contains French Rhone varieties, chardonnay, sauvignon blanc and local garnacha blanca and malvasia, all grown in their highest vineyard on the slopes of Tolono peak. The creamy just-released 2007($55) is a stunner, one of most interesting whites in Spain, with aromas of white flowers and intense mineral and tropical fruit flavors. Still, I’m glad that Lopez de Heredia holds fast to tradition. “Our philosophy is to offer wines in the perfect moment to give value for money,” said Lopez de Heredia, as we sipped the just-released 1991 Vina Tondonia reserva ($40). I inhaled its honeysuckle scent and bright complex taste of dried pear. I know which white to serve at Christmas dinner. ( Elin McCoy writes on wine and spirits for Bloomberg News. The opinions expressed are her own.) To contact the writer of the story: Elin McCoy at elinmccoy@gmail.com .

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Thomas Kochan: The Jobs Summit: Opportunity To Forge A New Social Contract

November 29, 2009

This week, President Obama will convene a Jobs Summit to build support for new initiatives aimed at ensuring workers are not left out of the economic recovery. This could be a historic event, but only if it is more than a one-time meeting and serves as the starting point for getting business, labor, and government leaders to work together to create well paying jobs. Current data on jobs and wages show why workers rightly feel they are being left out of the economic recovery. Unemployment is at a quarter century high and the Congressional Budget Office predicts that unless stronger actions are taken, unemployment will remain above 10% in 2010, 9% in 2011, and 7% in 2012. This means that between 15 to 20% of the nation’s human capital will remain unemployed, underemployed, or out of the labor force for the next three years — clearly an unacceptable outcome that will further delay and weaken economic recovery. The wage data are equally unacceptable. Average worker incomes have been flat or fell during the recession. Nor did they grow over the seven years of the past economic recovery. Indeed, workers have been getting a declining share of the productivity they helped create (most of it went to those in the top one percent of the income distribution) for the past three decades. Unless more direct action is taken, the earning power of existing and new jobs will remain stuck at the same levels they have been at for many years. Given that consumption accounts for 70% of the economy, a wage-less recovery translates to a weak and unsustainable recovery. A number of ideas for job creation have been proposed. Among them are a work sharing proposal that would provide unemployment benefits for reduced hours of work, an employer tax credit for creating new jobs, use of TARP funds to provide credit for small business, additional stimulus funds for local and state governments, and expanded investments in infrastructure and construction. All these proposals are worth considering. No one solution alone is a silver bullet. The mix of options chosen will have to produce nearly 8 million jobs just to make up for those lost since the beginning of the recession. Getting wages moving again will require a new social contract between labor and business to replace the one that has been broken since the 1980s. The president should call on workers and their unions and associations to work in partnership with employers receiving taxpayer funds to build the high performance workplaces and work processes needed to generate high productivity and high service quality. Evidence from manufacturing, health care, and other industries shows that major financial and/or technological investments only pay off in high productivity when matched with state of the art workplace practices and cooperative labor management relationships. In return, employers receiving funds should be expected to follow compensation principles that share equitably the gains generated from productivity and economic growth. Implementing this new social contract will require business and labor to work together in ways they have been unwilling to do for many years. The sad reality is that they have been locked in an ideological stalemate over the legitimacy of unions and over how to fix and modernize a failed and outdated labor law. The president needs to use this historic opportunity to break this impasse and launch an era of productive and innovative labor management relations needed to foster and sustain the new pact. To do so, the president should announce his intention to work for speedy passage of a reframed and expanded Employee Free Choice Act, a labor law reform bill currently stalled in Congress. The reframing would state the objectives of the Act are both to restore workers’ ability to join a union and gain access to collective bargaining and to transform labor management relations in ways that get wages once again growing in tandem with productivity and economic growth. Provisions should be added to the bill to create an on-going national labor management advisory council to oversee implementation of the new law and provide advice on how to promote and diffuse productive, innovative, and cooperative labor management relations. This national body should be supplemented by industry-specific councils where taxpayer dollars are being invested such as health care, infrastructure, aviation, and renewable energy. Industry management and labor experts should be held accountable for making sure the right mix of high performance and compensation practices get implemented. Likewise, local level labor, business, community, and government leaders need to work together to translate stimulus funds for infrastructure repair, weatherization, and green jobs into projects that are completed on time, on budget, safely and that generate new job and career building opportunities for women and underrepresented minorities. There is much talk about creating broad-based green jobs coalitions at the local level but to date they have been slow in materializing and, as a result, job creation has been equally slow. Active facilitation of multi-stakeholder negotiations will be needed to accelerate the pace of job creation. If it is a first step rather than a one-time event, the Jobs Summit will be recorded as a historic achievement — the day a new social contract was put in place for workers and families to share in the economic recovery they help produce and the day the foundation was laid for creating good sustainable jobs and 21st century labor management relationships.

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Tax credit could multiply home sales (The Steamboat Pilot & Today)

November 29, 2009

Steamboat Realtors are optimistic that the combined effect of twin federal tax credits for homebuyers could unstick a portion of the local real estate market.

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Fortune’s Stanley Bing: Your Country Needs You! Go Shopping!

November 27, 2009

Pick up those new GPS systems, now on sale at Best Buy, Wal-Mart and other fine stores for under $100! Don’t forget that flat-screen TV that’s suddenly within your price range! Remember to stop by the gigundo superstore to stock up on potato chips, lawn furniture and frozen shrimp! Swing by the enormous drugstore! Get medicine! Print 100 pictures for only $1.00! While you’re there, load up on toys, nostrums and personal care products! The holidays are almost here! Hit the department store for panty hose, shoes, perfume, purses, and those fabulous studded denims you’ve had your eye on — they’re all on sale today only! On your way home, stop by your local American automobile dealership and nab a new Ford, Chevy or Chrysler! Terms are great! Quality has never been better! If you’re an investment banker, kick the tires on an underperforming entity! You’ll be glad you did! Somewhere out there in this great, shining land of ours, there’s a product, service or asset waiting for you! We’ve been in the doldrums far too long! Make Black Friday lead to Black Saturday and then Black Sunday and then a tsunami of Black Weekdays! Get out there and express your love of all that’s good and strong about our nation! Let’s commerce ring!

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Philippines Prosecutors Prepare Murder Charges Against Mayor in 57 Deaths

November 26, 2009

By Francisco Alcuaz Jr. Nov. 27 (Bloomberg) — Philippine prosecutors are preparing to file murder charges today against a mayor allegedly linked to the killing of at least 57 people on the southern island of Mindanao, the nation’s worst act of election-related violence. “I believe we have a very strong case,” Justice Secretary Agnes Devanadera told reporters in Manila after escorting Andal Ampatuan Jr., mayor of the town of Datu Unsay, from the Mindanao province of Maguindanao to the National Bureau of Investigation in the capital. The Ampatuan clan controls the province, the scene of the Nov. 23 massacre in which about 100 gunmen ambushed and killed backers of a politician intending to challenge the family for the post of provincial governor in elections next year. Journalists traveling with the group were among the dead. The Ampatuans helped President Gloria Arroyo win election in 2004, when she took more than 75 percent of the vote in the province. The charges will be filed in Cotabato City in Maguindanao, the justice secretary said late yesterday. She asked the Supreme Court for the trial to be held in Manila for security reasons. “The tension in the area is very high,” Local Government Secretary Ronaldo Puno said yesterday. Ampatuan turned himself in to authorities yesterday, according to officials. He denied involvement in the killings. After he was flown to Manila, traffic was stopped as he was taken to the National Bureau of Investigation in a speeding motorcade. He was shown on television inside the building, sometimes smiling. Militiamen Held Authorities detained 347 Maguindanao militiamen for questioning about their possible involvement in the killings and suspended civilians’ permits to carry firearms in the province, officials said at a briefing in Manila. “Why wasn’t this done before the massacre happened?” said Rey Trillana , a fellow at the Center for Civic Education and Democracy in Manila. “It’s common knowledge that warlords like the Ampatuans have hordes of bodyguards. Ever since the massacre happened the government has been in reactionary mode.” While militias are armed to help police and the army fight Muslim and communist insurgents, they are often used by local leaders as private security forces in feuds with rivals. Muslim rebel groups are waging a separatist war in Mindanao and the al-Qaeda-linked militant group Abu Sayyaf is active in the region. The communist New People’s Army has been fighting the state in several parts of the country, including Mindanao, since the late 1960s. ‘Fawning’ Meeting The Makati Business Club yesterday described as “fawning” a meeting of a representative of Arroyo and members of the Ampatuan clan, whom it described as “staunch” allies of the president. The magnitude of the crime is a result of “the warlord politics the current administration allowed to flourish in Maguindanao and exploited for its political ends,” the Manila- based association of the nation’s biggest businesses said in a statement. In 2007, while all except three of Arroyo’s 12 candidates for the national Senate lost, they swept the vote in Maguindanao. “That is the root of the political debt of the president to the Ampatuans,” Trillana said. It took four days to arrest Ampatuan in part because Maguindanao militiamen surrounded the main government building in the province, said Puno, the local government secretary. “The capitol was becoming a garrison,” he said. “The military and police had to prepare. We had to make sure that in addressing this crime, we won’t lose control of the area. They are political allies but we were directed to uphold the law.” Politician Unharmed The ambushed convoy was mostly made up of supporters of Buluan City Vice Mayor Esmael Mangudadatu, on their way to file his candidacy for Maguindanao governor. Mangudadatu, who wasn’t in the convoy, told local media his wife and two sisters were among the dead and that some of the women in the group were raped before they were murdered and buried in mass graves. Eleven bodies were recovered two days ago, two of them inside vehicles that were also buried. A backhoe with provincial government markings was found at the site, local media reported. Arroyo on Nov. 24 put Maguindanao and neighboring Sultan Kudarat province under a state of emergency to prevent further violence in the region. The helicopter that transported Ampatuan was shot at on its way to pick up the mayor, Puno said. Police are on alert for “spillover attacks” on the homes of Ampatuan and Mangudadatu family members outside the province, including Manila, said Andres Caro, national police operations chief. Philippine elections are often marred by bloodshed. About 126 candidates and supporters were killed in the months leading to the 2007 elections and 186 in 2004, according to the Philippine Daily Inquirer . To contact the reporter on this story: Francisco Alcuaz Jr . in Manila at falcuaz@bloomberg.net .

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Four Seasons Hotel Sweeps Michelin 3-Star Restaurant Awards in Hong Kong

November 26, 2009

By Mark McCord Nov. 26 (Bloomberg) — The Michelin Guide gave top honors to three restaurants in Hong Kong and Macau, all housed in top- tier hotels, in the sophomore edition of the annual review of the southern Chinese cities’ eateries. French restaurant Caprice added one star this year to score the best-possible three-star rating, joining Cantonese eatery Lung King Heen at the Four Seasons Hotel as Michelin’s top- ranked Hong Kong restaurants in the guide’s 2010 edition. Veteran chef Joel Robuchon retained his five Michelin stars, including three for his Galera a Robuchon in Macau, based in the casino haven’s Hotel Lisboa. Awarding top honors to hotel restaurants showed the “mentality of the business in Hong Kong, where named chefs are not found in stand-alone street restaurants, like in North America or Europe,” said Allan Zeman , chairman of Lan Kwai Fong Holdings Ltd., which manages properties in Hong Kong’s largest bar and nightlife district. “Reviewers from overseas tend to gravitate first to restaurants in the hotels they stay in. If you really get into the local culture you will find that Hong Kong has the best Chinese restaurants in the world.” This edition reviewed 245 restaurants and 53 in Macau, 86 more than its debut publication, and awarded nine establishments with two-star awards and 39 with one-star gongs, compared to eight and 18, respectively, in the 2009 debut edition. Expanded Review The expanded review comes after Hong Kong emerged from a yearlong recession in the second quarter when the economy grew 3.3 percent. The city’s benchmark Hang Seng Index is also climbing, spurred by China’s record lending and its 4 trillion yuan ($586 billion) stimulus package. Two-thirds of the 51 star-rated venues in Hong Kong and Macau are housed in hotels or high-end shopping centers and just over half serve Cantonese cuisine. Among the new inclusions in Macau are Lei Garden in Las Vegas Sands Corp.’s sprawling 3,000- room Venetian Macau Resort-Hotel, and Wing Lei in Wynn Resorts Ltd.’s Wynn Macau casino and hotel. Zeman said he hoped that as the Michelin Guide became more established in the cities, it would include more local restaurants. “Last year’s guide attracted criticism from managers of Chinese restaurants who said not enough were included,” Zeman said. “Until it gets recognized by the Chinese-restaurant community, a Michelin award will remain just another award.” Three Asian Editions After launching its first Asian guide in Tokyo in 2007, Michelin now publishes three Asian editions, the Osaka/Kyoto version launched this year being the newest. The 2010 guide to Tokyo, published Nov. 17, established the Japanese capital as the most-starred city, with 11 three-star restaurants, overtaking Paris, whose 2010 edition will be published in March. The guide’s top-rated venues bring to 82 the number of eateries worldwide awarded Michelin’s highest accolade. Caprice is the newest addition to the exclusive club after it won two stars last year. It serves modern French cuisine, with dishes such as Duck Foie Gras Terrine and Normandy Sole Fillet with Baby Artichoke and Winkle Fricassee. Main courses cost upward of HK$400 ($52). Michelin says it rates restaurants for their food and drink based on a set of “unpublished criteria.” One star indicates a very good restaurant, two means excellent cuisine worthy of a detour, while three denotes exceptional cuisine deserving of a “special journey,” Michelin says. Michelin & Cie., the world’s largest tiremaker, has been publishing its restaurant and hotel guides since 1900, at the start of the automotive era. Distributed for free until 1920, the guide was originally meant for chauffeurs and included tips on using and repairing tires. To contact the reporters on this story: Mark McCord in Hong Kong at Mmcord2@bloomberg.net

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Yakuza Bosses Sell Sex, Drugs, Finagle U.S. Liver Transplants: Book Review

November 24, 2009

Review by Rocky Swift Nov. 25 (Bloomberg) — For the opening scene of a book, it’s hard to beat a hardened gangster calmly threatening to liquidate the main character, who’s furiously smoking clove cigarettes as he ponders his strategy. That’s how Jake Adelstein starts “ Tokyo Vice ,” his memoir of working as a police reporter for Japan’s Yomiuri Shimbun , the world’s largest newspaper, and how his snooping landed him in hot water with a particularly violent faction of the yakuza. The story follows Adelstein through 12 years covering everything from roadside shakedowns to serial murder as the only American member of the Tokyo Metropolitan Police Department’s press club. “Tokyo Vice” is bookended by Adelstein’s investigations into how a sickly crime boss named Tadamasa Goto and three other yakuza managed to get lifesaving liver transplants in the U.S., abetted by U.S. authorities. This story turned out to be the reporter’s savior, since once he published it Adelstein became too high profile to kill. Before he was “pissing off yakuza,” Adelstein was a student at Sophia University , a Jesuit-affiliated school in the center of Tokyo. On a whim, the Missouri native took a battery of tests to join the Yomiuri, a media leviathan that also owns a television network, a theme park and the Giants baseball team, Japan’s equivalent to the New York Yankees. Very Organized Crime Adelstein’s first glimpse into the world of organized crime comes from a mob boss worried that the local police won’t drink tea at his offices anymore. “Tokyo Vice” is a primer on such complicated relationships between Japan’s cops and criminals. The yakuza emphasize the “organized” in organized crime, earning toleration from the authorities and public by keeping violence low and providing the prostitution and drugs that some parts of society secretly desire. In the years Adelstein worked the crime beat, the yakuza evolved from extortion, prostitution and drugs to high finance, orchestrating real estate scams and manipulation of the stock market. Even now, the Tokyo Stock Exchange obliquely acknowledges the yakuza’s meddling in markets, calling them “antisocial” forces in official documents. The most famous case detailed in the book is that of Lucie Blackman , a British citizen found partially dismembered near the home of a man later convicted of multiple rapes. She had come to Tokyo to work as a hostess in Tokyo’s Roppongi entertainment district, and investigating the case drew Adelstein deep into the rabbit hole of Japan’s sex industry. Through it all, Adelstein was able to use his otherness as an advantage. Fear among the yakuza that a crackdown might result from wiping out an American probably saved his life, he writes, as did the mistaken suspicion that he was an undercover agent for the CIA or — because of his Jewish heritage — Israel’s Mossad. Backhanded Compliments Much of the book is made up of reconstructed, movie-like dialogue, with a jarring number of backhanded compliments for Adelstein, as when a thug says the American is “stupid, obtuse, stubborn and reckless,” but “I guess that’s what makes a good journo.” While his tale is gripping, it shows the strain of a writer rushing to the finish line. The Goto transplant saga, the most compelling part of the book, is teased in the beginning and doesn’t return for some 250 pages. Goto’s priest says the gangster has renounced his former ways to study Buddhism, Adelstein reports with skepticism. Still, that might be enough to rest a little easier in Tokyo. “Tokyo Vice: An American Reporter on the Police Beat in Japan” is published by Pantheon (335 pages, $26). It will be published by Kodansha in the U.K. on Jan. 1. To buy this book in North America, click here . ( Rocky Swift writes for Bloomberg News. The opinions expressed are his own.) To contact the writer on the story: Rocky Swift in Tokyo at rswift5@bloomberg.net .

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Andrew Reinbach: More Pain For You And Me: The Economy’s About To Stumble

November 23, 2009

It’s semi-official: The economy is about to take the second leg down in a so-called W-shaped recession — down, up, then down again — and delicious as it may be to reflect that this disaster has its roots in the administration of George W. Bush, the result for you and me won’t be much fun. Warnings are popping up all over the place. But here’s some of what Fed Chairman Ben Bernanke had to say November 16th to the Economics Club of New York: “Significant economic challenges remain. The flow of credit remains constrained, economic activity weak and unemployment much too high. Future setbacks are possible.” “Banks’ reluctance to lend will limit the ability of some businesses to expand and hire,” “Jobs are likely to remain scarce for some time, keeping households cautious about spending,” “The unemployment rate likely will decline only slowly if economic growth remains moderate, as I expect.” “The fallout for banks from commercial real estate could slow that progress, however.” Translation: Seventy-two percent of America’s economy is consumer-based, and since a lot of people are out of work and not buying stuff, and banks aren’t lending to businesses that want to hire, the economy will remain slow, unemployment will remain high, corporate earnings will remain weak, and the best we can hope for is that nothing bad will happen. But good luck with that. People aren’t buying stuff, so the companies that sell it don’t need all the office space, warehouses, and glitzy mall stores they rented when times were good. This is making life hell for the owners of America’s commercial real estate, and in fact, the most prestigious real estate trade group, the Urban Land Institute, predicts the sector is heading for a “bloodbath.” That is why Mr. Bernanke’s last caveat about commercial real estate throws cold water over any hopes we’ll muddle through; a recent report from CalPERS (the California Public Employees’ Retirement System) says that about half — some $750 billion — of the nation’s commercial mortgage debt will default over the next four years. That debt, says the report, is already worth only fifty cents on the dollar and is simply not fully recoverable. But left out of that projection is that there’s another $750 billion dollar’s worth of credit default swaps associated with that debt; when the defaults kick in, separate, full-value payments — over and above the mortgage debt — will be made from one party to another. So the real losses are more like $1.5 trillion. This is amount similar to the commercial real estate losses in the early 1990s, when like today, the defaults almost drove us off a cliff. The difference is that the 1990s property was financed with conventional, mortgage-based debt, so that when push came to shove, taking control — and liquidating — the property was a fairly straightforward matter. Not today. Like the home loans that almost destroyed us last year, most of the commercial mortgages now facing default were sold off and turned into bonds. As a result, the liquidation of these debts will drag on for years. There are all sorts of unpleasant reasons for that. For one thing, commercial real estate ain’t beanbag; all the parties have plenty of lawyers, lots of money, and in negotiations, don’t worry much about hurting somebody’s feelings. Even better: In a bankruptcy, any bondholder can derail any settlement, meaning the the most unreasonable party has the whip hand. To illustrate the problems, consider the $559 million mortgage bond issue connected to the redevelopment of New York’s Drake Hotel, formerly one of the glories of Manhattan hospitality, but now a vacant lot on the corner of Park Avenue and 56th Street. That mortgage was sliced into 21 separate pieces and sold to eight institutional investors. And in the bare-knuckle world of New York real estate Harry Macklowe, the developer, is not widely known for his sensitive, retiring nature; among the many lawsuits associated with the failed development are his allegations of fraud against the lender. No serious observers would say that this cage fight has any prospects of a quick, tidy ending. But it should be considered that the country’s other developers, lenders, and bondholders are as unlikely as Mr. Macklowe to fold at the first harsh words. The result will be prolonged wars that will drag down the earnings of the banks, big or small, connected to them. That in turn will do nothing to encourage said banks to lend to businesses for, for instance, expanded payrolls. Already, big banks have cut back on their commercial lending–a trend that’s accelerating; total loan originations in September at Bank of America fell 6 percent, or $53.6 billion, from a month earlier, according to a Treasury Department, while new loans at Wells Fargo & Co. dropped 14 percent to $47.4 billion. And this is a well-established trend. In other words, business may live on credit, but so what? Banks aren’t making loans. So businesses can’t hire, the unemployment rate rises, and the consumer-driven economy falls. Meanwhile, the Fed’s most recent Senior Loan Officer’s Survey indicates that what loans are being made are being made by smaller banks–the very ones that underwrote many of the commercial mortgages we’ve been talking about. These are the banks that on the one hand, are least able to withstand a sudden flood of bad loans, and on the other, are the least likely to be bailed out by the government if, in fact, the government — or the public — had any appetite for bailing them out. And it doesn’t. The obvious result will be a new spate of bank failures on Main Street. This has already been widely predicted, and estimated by some observers to eventually total another 400, or about 8 percent of America’s banks. And it’s these smaller banks that make loans to your local hardware store, since the top ten banks can’t be bothered with that side of the business. Even if this wonderful scenario was completely untrue, the fact remains that you and I are just not using our houses as ATMs anymore, need $300 jeans, or in general, expect our careers, the economy, or the stock market to rise forever. We accept now that the bubble burst; it was a real shock, but Americans have since grown up some and are acting more rationally than they did in 2006, when the Fed statistics said we were spending more than we had. The consumer economy, in other words, is a thing of the past. But if the consumer economy is kaput, the American economy has to switch to a more solid and sensible model in order to stabilize for the long term. What that means exactly is for smarter people than I am to say; but it will obviously mean less whimsical spending, and, probably selling more stuff to other countries instead of to ourselves. That will mean plenty of change in our daily lives, and even more dislocation in the jobs picture. Since the likelihood of more federal stimulus packages is low — unless they’re called something like a “jobs bill” — this will mean more pain and an even slower economy. Anybody waiting for things to get back to “normal” — meaning 2005-2006 — had better change to sweats and rent a bunch of movies; they’ve got a wait in their hands.

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‘Please Give My Dad A Job,’ Writes Twelve-Year-Old In Oregon

November 23, 2009

As part of its Bearing Witness 2.0 project, the Huffington Post is rounding up a few of the best local stories of the day. A 12-year-old girl in Eugene, Ore., wrote a letter pleading for an employer to hire her father who had been out of work for half a year, writes Bob Welch for the local Register-Guard . Andy Hess has been doing odd jobs off and on at Oregon Motorcoach, and his daughter, Cheyenne, was desperate for him to get hired full time. She wrote the boss, Ed Read, a letter. Her letter: Dear Ed Reed, Please give my Dad a job at Oregon Motorcoach. He has been out of a job since December 2008 and he deserves this job and you deserve such a great painter, he has a great painting skill. He has painted cars, coaches and he always has a good attitude about what he has to do. He has always been a good Dad, painter and lovely husband and friend. If you hire him you would be getting a good deal and a lot of new customers for life. My Dad has never been rude to anyone so you won’t have to worry about having meetings with him. So please, please, please hire him. He always has great ideas at meetings and never needs an assistant. Sincerely, Cheyenne Hess. Find out what happened . ********* The United Way discontinued Arkansas’s 211 service last week because of insufficient funding, reports Marla Cantrell of Fort Smith’s City Wire . The system connected needy callers to social services, from employment help to finding the nearest food bank or after-school programs. Every other state in the nation has a 211 service. Private donations have slowed in recent months , despite the service’s popularity in the state. “I’ve put these systems up in other states and I’ve never seen people gravitate toward it like they have in Arkansas,” said State Director Nathan Cook. The United Way attempted to push legislation to pay for 211 with government money, but the state maintained it did not have the funding. ********* A free clinic in Greensboro, N.C., that caters to the local Muslim population has been overwhelmingly popular, reports Nancy H. McLaughlin of the News & Record . The Al-Aqsa clinic operates twice a month in a donated office space and provides primary and prenatal care for low-income and uninsured patients. The clinic is bilingual in English and Arabic, and provides services to a niche community that might otherwise be overlooked. All of the health professionals are volunteers, and organizers are concerned about how long they can continue to operate with a demand so large and a supply so small. “One of the things we are running up against is that the demand for services… outstrips the ability for the network to meet that need,” said Brian Ellerby, chairman of a local network of care services. ********* Over the last year, food assistance programs in Rhode Island have served 30 percent more meals than the year before, reports the Providence Journal ‘s Paul Davis . Because of the recent economic collapse, about 123,000 people across the state live in poverty and a third of them are children. HuffPost readers: Seen a compelling local story? Have a neighbor going to bizarre lengths to get through the recession? Tell us about it! Email jmhattem@gmail.com .

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Vacancy rate for medical office buildings remains stable (Las Vegas Sun)

November 20, 2009

The medical office market, even though it is slumping, is outperforming the rest of the local commercial sector because it doesn’t have the same level of distressed properties facing foreclosures, industry analysts said.

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Vietnam to Offer $1 Billion of Bonds for Energy, First Sale in Four Years

November 18, 2009

By Beth Thomas and Nguyen Dieu Tu Uyen Nov. 19 (Bloomberg) — Vietnam plans to fund energy projects with a $1 billion bond, its first since an inaugural sale in 2005, Deputy Prime Minister Nguyen Sinh Hung said. The government is pushing ahead with the offering after a delay of two years amid signs of improving markets. “We are aiming at $1 billion for the sale, however, it will be decided based on specific projects,” Hung, 63, said in an interview yesterday in Hanoi. The government, as part of a two-decade-old reform process known as ‘doi moi,’ or renovation, is raising funds to build roads and power plants as Vietnam’s population is set to expand 40 percent to 120 million by 2050. Annual economic growth may quicken to as much as 8 percent from 2011, Hung said. “It’s a good time for an issuer like Vietnam to come to the market,” said Pierre Naim , owner of Nassau, Bahamas-based Rainbow Advisory Services, a hedge fund that oversees about $80 million, mostly in emerging-market bonds. “Vietnam is not necessarily seen as one of Asia’s top-quality issuers, but people are looking for yield.” Vietnam in October 2005 raised $750 million by selling 10- year bonds, then lent the proceeds to Vietnam Shipbuilding Industry Corp., known as Vinashin. Emerging-market companies and governments have sold $555 billion of bonds this year, 70 percent more than last year and greater than the previous record of $367 billion in 2007, according to Bloomberg data. 12-Month Decline The average yield on emerging-market government debt has dropped about 270 basis points to 6.514 percent this year, heading for the biggest 12-month decline since JPMorgan Chase & Co. started tracking the data in 1998. A basis point is 0.01 percentage point. Qatar received $28 billion of orders for a $7 billion bond sale on Nov. 17, the largest offering from an emerging-market government on record, Barclays Capital said. Hung declined to say if funds from the latest sale would be loaned to Electricity of Vietnam, the national power utility, or Vietnam Oil & Gas Group, known as PetroVietnam. Electricity of Vietnam said in June it bought power from China to meet demand. Dollar Shortage The funds raised from Vietnam’s second bond may help ease a shortage of dollars in the country, Hung said. “This bond sale will help our local currency to some extent, since the proceeds will be in the U.S. dollar and part of it will be converted into dong to spend domestically, so it will increase supply of foreign exchange,” Hung said. Vietnam’s foreign-exchange reserves fell to about $16.5 billion as of August, from $23 billion at the end of 2008, because of moves by Vietnam’s central bank to try to stabilize the currency, the World Bank said in a semi-annual report this month. The dong has weakened 2.2 percent this year, and yesterday reached a record low of 17,875 against the dollar. The bond sale will also “develop a new channel to raise funds for companies as the government will set an example for businesses to go abroad for corporate bond issuance,” said Hung, who has been deputy premier since June 2006. PetroVietnam said in June it may sell at least $1 billion of bonds abroad next year. Vinashin is also planning an overseas bond sale of as much as $400 million to build ships and ports. More Debt Sales? Hung oversaw Vietnam’s first overseas bond sale as finance minister under Prime Minister Phan Van Khai’s administration, when Vietnam opened a stock market and increased privatizations of state-owned companies. The 6.875 percent securities traded at 3.26 percentage points more than equivalent-maturity Treasuries as of Nov. 17, according to data compiled by Bloomberg. The bonds were issued at 2.56 percentage points more than U.S. government debt. Vietnam is rated Ba3 by Moody’s Investors Service, three levels below investment grade. Vietnam aims to sell $1 billion of securities by early 2010, Nguyen Thanh Do , head of the external financing and debt administration department at the Ministry of Finance, said on Nov. 3. Prime Minister Nguyen Tan Dung asked the Ministry of Finance to choose an “appropriate timing” for the sale. “Their window of opportunity is quite narrow, I would say within the next six months,” Rainbow Advisory’s Naim said. “We’re going to see higher inflation and interest rates, so if the Vietnamese government wants to borrow cheaply, now is the time to do it.” Pressure on Interest Rates Pressure is mounting on State Bank of Vietnam Governor Nguyen Van Giau to raise the benchmark interest rate , which he’s held at 7 percent since February. Consumer prices increased 2.99 percent in October from a year earlier, up from 2.42 percent in September and 1.97 percent in August. The government raised rates as high as 14 percent in June 2008, the most in Asia at the time, to curb inflation, which accelerated to as much as 28.3 percent in August that year. “It took us about a year to deal with the economic slowdown and inflation and we will still see economic growth of more than 5 percent for this year,” Hung said. “Between 2011 and 2020, the economy will resume its pace of expansion, at 7 to 8 percent a year as it was before the global crisis.” The government is targeting growth of at least 5 percent this year, and 6.2 percent to 6.5 percent next year. The $91 billion economy expanded 6.2 percent last year, after growing at a 10-year high of 8.5 percent in 2007, the year Vietnam joined the World Trade Organization. To contact the reporters on this story: Beth Thomas in Hanoi at bthomas1@bloomberg.net ; Nguyen Dieu Tu Uyen at uyen1@bloomberg.net

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Chinatrust to Buy $660 Million Nan Shan Stake After Losing AIG’s Auction

November 17, 2009

By Cathy Chan and Janet Ong Nov. 18 (Bloomberg) — Chinatrust Financial Holding Co. plans to pay $660 million for a 30 percent stake in Nan Shan Life Insurance Co. after losing its bid to buy the business from American International Group Inc. Chinatrust, Taiwan’s third-biggest financial company by market value, said in a statement that it will acquire the 30 percent investment from China Strategic Holdings Ltd. Primus Financial Holdings Ltd. joined China Strategic in an agreement last month to buy Nan Shan for $2.15 billion. The stake in Taiwan’s second-largest life insurer will help Chinatrust diversify its business to counter stagnant growth in the banking industry. With Nan Shan as part of its main business, Chinatrust may be more attractive for Chinese investors after the two countries signed agreements to ease restrictions on access to each other’s banks, brokerages and insurers, said Fitch Ratings analyst Joyce Huang. “It fits in with their strategy as they’ve got a pretty big ambition to embark into insurance,” Taipei-based Huang said. “Chinatrust has been striving to become a leading regional player and seeking opportunities to expand its franchise beyond a banking-centric group.” China Strategic will buy 1.17 billion Chinatrust shares, or a 9.95 percent stake, for about NT$20.8 billion ($648 million) as part of the deal. The share sale is part of a plan to sell 2.5 billion shares at NT$17.74 apiece through private placements, Chinatrust said. Lazard Asia (Hong Kong) Ltd. is advising Chinatrust on the transaction. Shares of Chinatrust rose 2.7 percent to NT$20.9 today at 11:10 a.m. in Taipei. China Strategic rose 10 percent to 66 Hong Kong cents on the Hong Kong bourse. 4 Million Policyholders “The transaction combines Chinatrust’s distribution network and Nan Shan’s customer base and more than 35,000 agents to boost our competitiveness,” the company said. The deal may be completed by the second quarter of 2010, it said. Nan Shan has about 4 million policyholders. The stake in Nan Shan will enable Taipei-based Chinatrust to boost fee income by increasing policy sales through its bank network. Nan Shan would gain a partner with 145 domestic outlets to help it close the gap with Cathay Financial Holding Co. , the island’s biggest life insurer. “The Nan Shan investment will allow Chinatrust to better utilize its bancassurance channel and boost its wealth management business,” said Chris Lee , an analyst at Taiwan Ratings, the local partner of Standard & Poor’s. Chinatrust is the island’s biggest bancassurance distributor. Increasing Stake The agreement last month by Primus and Hong Kong-based China Strategic to buy Nan Shan was the largest deal struck by AIG since its bailout last year. The New York-based insurer is selling assets to pay down loans included in a $182.3 billion U.S. government rescue. Chinatrust has the right to nominate the chief executive officer of Nan Shan after the transaction. The Taipei-based company also agreed to negotiate to increase its shareholding in Nan Shan within three years from the signing of the agreement, which expires on June 25, China Strategic said in a statement. China Strategic also may be allowed to lift its stake in Chinatrust in the period. Primus, set up in April by Citigroup Inc. ’s former Asia investment banking chief Robert Morse , is building a network of financial-services companies in the region. Chinatrust said in a stock exchange filing on Nov. 3 that it had hired layers to study the sale of Nan Shan to the Primus-led group and was weighing whether to sue AIG. To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net

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GE Enlightening China Regions Embracing Emissions Plants to Curb Pollution

November 17, 2009

By Bloomberg News Nov. 17 (Bloomberg) — The Ordos region of Inner Mongolia, home to one of China’s biggest deserts, is being transformed into the site of a pine forest that will stretch across its low hills as far as the eye can see. The local government’s tree-planting program is part of a plan to “assume our green responsibilities and build a civilized way of life,” Du Zi , the local Communist Party secretary, told energy executives at a conference last month in Beijing. Also on tap: the world’s biggest plant to convert sunlight to electricity, built by First Solar Inc. of Tempe, Arizona, part of a 12-gigawatt wind, solar and biomass power-generating zone. And General Electric Co. is helping China cut wastewater emissions into the Yellow River, which borders the region. “This shows what local leadership can do in China these days,” says Kenneth Lieberthal , head of the Brookings Institution’s China Center in Washington, which hosted Du and other provincial officials at the Oct. 21-23 conference. “They’ve gone flat out.” Regions are vying to outdo each other in a race to develop alternative-energy sources and cut pollution. Western China’s Gansu province is building a wind farm equivalent to about 20 nuclear-power facilities. In the east, Zhejiang province is installing solar panels on roofs. Beijing bans motorcycles from the city center in favor of electric bikes. Greenhouse Gases Their efforts demonstrate that China, the world’s largest producer of the pollution blamed for global warming, will continue to accelerate development of energy from renewable sources, even as it resists binding targets for reducing carbon emissions ahead of a United Nations summit in Copenhagen next month aimed at forging a new treaty to curb greenhouse gases. Some regional officials see environmental projects as a way to boost their economies after decades when companies were allowed to poison the air and water without penalties while expanding output. And First Solar surged $12.94, or 11 percent, to $134.41 on the Nasdaq Stock Market Sept. 8, the day Wu Bangguo , China’s second-ranking leader after President Hu Jintao , visited the company’s headquarters. The next day the company made the Ordos agreement public; it has declined to provide the value of the deal. First Solar has fallen about 11 percent since Dec. 31. Du, 54, cites a list of achievements in Ordos: increasing the portion covered by vegetation to 81 percent last year from 20 percent in 2000, closing 1,200 polluting factories and installing 100 megawatts of wind capacity. Biggest Wind Farm The 20-gigawatt, 120 billion yuan ($17.6 billion) Gansu project, set for completion in 2020, would be the world’s biggest wind farm. The Roscoe Wind Complex in Texas, currently the largest, generates less than one gigawatt — a billion watts — of electricity. China is under pressure from the international community to accelerate its push toward alternative energy. It has refused to accept binding restrictions on carbon pollution, saying controls will crimp economic growth. Instead, China has pledged to cut emissions voluntarily in proportion to gross domestic product, without committing to include the policy in a global agreement. Hu called climate change “a grave challenge to mankind” and pledged to work for “positive outcomes” in Copenhagen during a speech Nov. 15 at the Asia Pacific Economic Cooperation forum in Singapore. Hu-Obama Talks Collaboration between the U.S. and China on alternative energy is on the agenda for talks this week in Beijing between Hu and President Barack Obama . Such ventures are already under way in Ordos, Du says. Fairfield, Connecticut-based GE, the world’s biggest maker of power-plant equipment, is working with Elion Chemical Industry Co. of Ordos City to cut wastewater discharge in a project GE said is slated to be completed next year. The value of the contract isn’t disclosed, said Catherine Stengel , a spokeswoman for the Atlanta-based GE Energy Infrastructure unit, of which the water division is a part. First Solar, the largest U.S. producer of solar modules, is looking for more business following the planned groundbreaking next year of the new photovoltaic facility. Today in Beijing, U.S. Energy Secretary Steven Chu and Chinese Vice Premier Li Keqiang attended a signing ceremony with the company, which confirmed the June 1, 2010 start date for the Ordos project. ‘Very Rapidly’ The Chinese government seems “to be moving very rapidly,” First Solar President Bruce Sohn told reporters in Beijing. “We don’t see any roadblocks to prevent us from starting construction” in June. Sohn said a similar solar plant in the U.S. would cost between $4 billion and $5 billion. In China, the price will probably be “somewhat lower,” he said, without elaborating. The Bloomberg World Energy-Alternate Sources Index has risen 21.5 percent in the last year, compared with a 27 percent rise in the Standard and Poor’s 500 Index . Ordos, among the nation’s wealthiest areas, has the means to push big, government-backed projects. It claims one-sixth of China’s proven coal reserves and one-third of its natural gas, giving the region of 1.6 million people a per-capita income of 102,128 yuan, the third highest of any municipality. Hu is signaling he is serious about changing China’s energy mix. The goal is to produce 15 percent from renewable sources by 2020, according to a 2006 energy law . China will see an even greater push by provinces and cities if the Communist Party begins to reward and promote officials on the basis of their ability to promote alternative energy, says John Thornton , a former co-president of New York-based Goldman Sachs Group Inc. who’s now chairman of Brookings and co-hosted the October conference in Beijing. “China is really quite an impressive, well-oiled machine in its ability to do large-scale things decisively,” he says. — Michael Forsythe . With assistance from Rachel Layne in Boston. Editors: Melinda Grenier , Bill Austin To contact Bloomberg News staff on this story: Michael Forsythe in Beijing at +8610-6649-7580 or mforsythe@bloomberg.net

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Wall Street Lost Fewer Jobs Than Expected, New York State Comptroller Says

November 17, 2009

By Henry Goldman Nov. 17 (Bloomberg) — Wall Street is recovering faster than the national economy, with New York City’s four largest investment firms reaping profits of $22.6 billion through Sept. 30 after losing more than $40.3 billion last year, state Comptroller Thomas DiNapoli reported. The numbers, contained in the comptroller’s annual report on the city’s securities industry, found job losses may not exceed 35,000, less than the 47,000 officials predicted when preparing the city’s June financial plan. The six largest U.S. bank holding companies set aside $112 billion for compensation in the first nine months of 2009, and the bonus pool including stock options may be higher than last year, DiNapoli wrote. While the federal government has moved to restrict cash bonuses and defer compensation to future years in an effort to rein in excessive risk-taking, reducing income-tax collections in the short term, the state and city stand to benefit from the financial industry’s increased stability in the long run, DiNapoli’s report concluded. “Wall Street remains the economic engine of both New York State and New York City,” according to the report released today. DiNapoli’s findings come as the Legislature is meeting in the capital of Albany to close an estimated $10 billion budget gap over the next 17 months. Some state Senate Democrats have opposed spending cuts on the theory that higher compensation and bonuses will produce a tax revenue rebound. New York City officials ordered department heads yesterday to find $1.75 billion in cuts over the next 18 months amid a revenue gap projected to reach $5 billion out of a $60 billion budget for fiscal 2011. Executive Compensation Kenneth Feinberg , the Obama administration’s special master for executive compensation, has ordered pay cuts averaging 50 percent for the top 25 executives at Citigroup Inc. , Bank of America Corp., American International Group Inc. and four other companies that took U.S. bailout money. He will rule on pay structures covering the next 75 highest-paid employees at those firms by year-end. The financial industry, which accounted for 20 percent of New York state tax collections two years ago, will produce about 15 percent in the fiscal year ending March 31, the report stated. In New York City, tax collections from Wall Street declined by about 40 percent, or $1.9 billion, in the 2009 fiscal year that ended June 30, the study found. Setbacks Possible The comptroller cautioned that the industry “may still experience setbacks,” should the economic recovery falter. Businesses and consumers still experience difficulty obtaining credit, the report stated. “Although volatility in the U.S. equity markets has subsided markedly in recent months, it still remains above pre- crisis levels,” the comptroller found. The findings summarized an industry in which the financial crisis had “permanently changed the landscape,” with JPMorgan Chase & Co. ’s acquisition of Bear Stearns Cos. in March 2008; the failure of Lehman Brothers Holdings Inc. in September 2008; Bank of America’s purchase of Merrill Lynch & Co. in December; and the conversion of Goldman Sachs Group Inc. and Morgan Stanley into commercial banks from investment banks. The changes required the comptroller’s office to narrow its annual survey of pretax profits to four firms from seven, the report said. As of September 2009, the securities industry lost 28,300 jobs, representing a 15 percent decline from a peak of 189,200 in November 2007, the report stated. Shrinking Industry Employment in the city’s entire financial industry declined by 8.9 percent, or 42,000 jobs, from its November 2007 peak, compared with a 2.4 percent decline, or 6,300 jobs, in the rest of New York state. The comptroller’s office forecast that total job losses in New York City are unlikely to exceed 175,000, which the comptroller’s study said would hurt the local economy, although less than the city’s June 2009 forecast of 328,000 terminated positions. “With severe job losses in the securities industry, Wall Street’s multiplier impact — which had enormous benefit to New York City’s economy during the economic expansion — worked in reverse, leading to job losses in the rest of the city’s economy,” the report stated. “While the pace of Wall Street job losses has slowed considerably, the industry is not yet adding jobs on a sustained basis.” New York Mayor Michael Bloomberg is founder and majority owner of Bloomberg news parent Bloomberg LP. To contact the reporter on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net .

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Tiger Woods Departs With Australian Golf’s Gold Jacket, Leaves Legacy

November 15, 2009

By Dan Baynes Nov. 16 (Bloomberg) — Tiger Woods’s first visit to Australia in 11 years may leave a golf legacy lasting decades. The world’s top-ranked player jetted off last night after claiming his first victory on the continent with a two-shot win at the Australian Masters in Melbourne. His six-day stay, which came with a $3 million appearance fee, will help spur a golf recovery in a nation where club memberships have dropped 8 percent since 2001 and the local tour lost half its tournaments, officials and players said. “When you get an iconic sportsman like Tiger, the best in the world and so dominant, then everybody stands up and looks,” Max Garske, chief executive officer of the PGA of Australia , said in an interview at Kingston Heath Golf Club. “His coming down is a perfect shot in the arm for us.” The game in Australia has gone stale since the heyday of Greg Norman , who won a record six gold jackets as the Australian Masters champion between 1981 and 1990, Garske said. It’s “certainly been on a plateau since 2000,” he added. In 2001, there were eight professional golf tournaments held in Australia. Only the Australian Open, Australian PGA Championship and Australian Masters remain on this year’s schedule, alongside the Moonah Classic. Norman, whose 86 career wins include two British Opens, helped draw fans, sponsors and television to the domestic tour. Bigger prize money on the U.S. and European tours has made it difficult to attract high-profile overseas stars, Garske said. Tempting Top Players The visit of 14-time major champion Woods may help tournaments tempt more top players into making the trip, according to David Rollo, director of golf at IMG Australia, which owns and promotes the Masters. “It will encourage more down here,” Rollo said in an interview. “This was never about a one-off spike for us in bringing Tiger down. There will be great flow-on for us from this year.” More than 95,000 fans attended the tournament’s four days at Kingston Heath, one of eight courses in Melbourne’s so-called Sandbelt. Woods’s arrival by private jet a week ago was televised by Sky News and John Brumby , premier of Victoria state, sat alongside the player at a Nov. 10 media conference that was broadcast live to the nation. Marty Joyce, the head coach of the golf program at the Victorian Institute of Sport, which has produced players including 2006 U.S. Open champion Geoff Ogilvy and U.S. PGA Tour winners Robert Allenby , Stuart Appleby and Aaron Baddeley , is banking on the Woods factor to help attract the next generation of Australian champions. Future Stars “We’re hoping in four or five years there will be a kid that we coach who says he got involved and inspired by Tiger coming out this week and watching him,” Joyce said in an interview. “The whole impact across Australia has been immense.” Officials are guarded against wasting Woods’s first trip to Australia since the 1998 Presidents Cup. Systems have been put in place to assist parents who call up seeking ways to get their children started in the game, Joyce said. The PGA of Australia re-vamped its Web site last week and has embraced social networking sites such as Facebook and Twitter. Having Woods in the field is no guarantee of a lasting legacy. His appearance at the 2002 New Zealand Open was soured by bad weather and mismanagement that reduced the event to “an absolute circus,” said Greg Turner , a former touring professional from New Zealand who won 12 tournaments. “The business plan was to make money and they jacked up the price of tickets tenfold and then some more,” Turner was cited as saying in the Sydney Morning Herald on Nov. 7. “It alienated people.” Sell Out Mindful of the New Zealand experience, organizers priced tickets at A$44 ($41) for the first three days and A$49 during yesterday’s final round, IMG’s Rollo said. The tournament sold out by Oct. 1. Woods’s influence on the Australian golf scene has already started to show. Kingston Heath , where it takes about five years to get full playing membership, has seen a spike in applications and is expecting a rise in the number of interstate and overseas visitors seeking to play the 7,059-yard course, said Gregg Chapple, the 100-year-old club’s general manager. “Golfers now know what the No. 27-ranked course in the world looks like,” Chapple said from his office in the new A$7 million clubhouse, which opened Nov. 7. About an hours’ drive away, the Moonah Links club has also experienced a jump in interest. In the week leading up to the Masters, the course had 1,000 rounds of golf booked compared with 1,300 for the whole of November last year. “Hopefully it really kicks on,” said Ogilvy, who finished 14 shots behind Woods at the Masters. “There are a lot of kids hopefully who are dabbling in golf at the moment who maybe will do more than dabble after this week.” To contact the reporter on this story: Dan Baynes in Sydney dbaynes@bloomberg.net

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BAE Vies With Lockheed as Iran Threats Spark Weapons Spending by Neighbors

November 12, 2009

By Henry Meyer and Sabine Pirone Nov. 12 (Bloomberg) — Most of the world looks at Iran and perceives a growing nuclear threat. Its Persian Gulf neighbors are also focusing on what they call a dangerous conventional weapons buildup. Saudi Arabia and the United Arab Emirates are leading a drive to upgrade their missile-defense, naval and air forces. The spending offers U.S. and European defense companies such as BAE Systems Plc and Lockheed Martin Corp . as much as $40 billion in sales, mostly in the next two to five years, analysts estimate. Some of these deals may be discussed at the Dubai Air Show starting Nov. 15. The buildup is a sign that Iran, suspected by the U.S. and its allies of developing atomic weapons, poses a growing conventional military threat too. It is testing new missiles with a longer-range strike capability and building naval forces capable of hitting neighboring oil facilities, said Sami al- Faraj, director of the Kuwait Center for Strategic Studies, which advises the Kuwaiti government. “We are concerned not just as a government but as a people because geographically Iran is next door to us,” Prince Turki al-Faisal , Saudi intelligence chief from 1977 to 2001 and the brother of the Saudi foreign minister, said in an Oct. 10 interview in Riyadh. Saudi Arabia, the world’s largest oil exporter, may acquire more jets made by Eurofighter Jagdflugzeug GmbH , a venture owned by London-based BAE, Rome-based Finmeccanica SpA and Paris- and Munich-based European Aeronautic, Defence & Space Co., a person familiar with the matter said last week. The country is already buying 72 Eurofighter Typhoon warplanes under a 4.4 billion- pound ($7.25 billion) 2007 contract. Frigate Purchase The Saudi navy is considering buying up to six multipurpose frigates at a cost of 1.5 billion euros ($2.2 billion) from Italian shipbuilder Fincantieri, Trieste-based Fincantieri said in an e-mailed briefing document on Nov. 2. DCNS, a Paris-based state-controlled warship maker, is making a separate proposal, a person familiar with the matter said. The U.A.E., the second-biggest Arab economy, is in talks to buy 60 Rafale jet fighters made by French planemaker Dassault Aviation SA , based near Paris, Dassault spokesman Matthieu Durand said in a phone interview. French President Nicolas Sarkozy will visit Saudi Arabia this month, presidential aides say. Sarkozy told reporters in Abu Dhabi in May that he had discussed the Rafale sale during a visit to open a military base in the U.A.E. The order may be worth as much as 8 billion euros, Le Parisien newspaper reported on May 23, citing an informed person. Missile Defense The U.A.E. is also discussing the purchase of a missile- defense system that is valued at $7 billion in a Pentagon estimate sent to Congress, Bethesda, Maryland-based Lockheed Martin said in a Nov. 11 e-mailed statement. It is made by Lockheed Martin and Waltham, Massachusetts-based Raytheon Co. Chicago-based Boeing Co. , the world’s second-largest planemaker, may sell four C-17 military transport planes to the U.A.E, as well as rotorcraft and fixed wing aircraft in the region, a person close to the matter said. “BAE, Boeing and Lockheed Martin are the main beneficiaries of this trend,” said Nick Cunningham , an analyst at Evolution Securities in London. He has had a “buy” rating on BAE since October 2007. The six U.S.-allied monarchies in the Gulf Cooperation Council hold 40 percent of global oil reserves. Electricity Generation Iranian Supreme Leader Ayatollah Ali Khamenei denied on Oct. 6 that his country represented a danger to Gulf Arab neighbors, and criticized their arms buildup. Iran says its nuclear program is aimed solely at civilian electricity generation. The country demonstrated its potential on Sept. 28 when it test-fired its Shahab-3 missile. The military says it has a range of 2,000 kilometers (1,240 miles), within reach of Israel and the Persian Gulf. Iran is building “an asymmetrical defense capability” that can attack oil production facilities and naval assets in the Gulf with missiles, diesel submarines and mines, said Theodore Karasik , director of research at the Dubai-based Institute for Near East and Gulf Military Analysis . Mohammad Ali Jafari , the head of Iran’s Revolutionary Guard, threatened in July to retaliate against any strike on Iranian nuclear facilities by closing the Strait of Hormuz, through which one-fifth of the world’s crude oil is transported. He said the country would use “blitzkrieg tactics” in the Persian Gulf if it came under attack. Patriot Missiles The U.A.E., the world’s third-largest arms customer from 2004 to 2008 after China and India, according to the Stockholm International Peace Research Institute , is already spending $3.3 billion on a U.S. Patriot air and missile defense system made by Raytheon. The Eurofighter will be on display at the air show, said spokesman Marco Valerio Bonelli. “Qatar, the United Emirates and Oman have shown interest for the warplane,” he said. “We will be at the Dubai Air Show also to demonstrate to the Minister of Defense of the United Arab Emirates that the Eurofighter is the best warplane for the local air force.” Saudi Arabia is also seeking anti-missile defense systems as well as building a stronger navy to defend its 3,000- kilometer-long coast, said Mustafa Alani , a regional security expert at Dubai-based Gulf Research Center . Russia is discussing weapons sales to Saudi Arabia, Russian Foreign Ministry spokesman Alexander Nesterenko said in early September. The Saudis may spend $2 billion on the S-400 missile defense system as well as tanks and helicopters, the Russian state news service RIA-Novosti said Sept. 3. The U.S., which has military bases in several countries in the region, including the headquarters of the Fifth Fleet in Bahrain, is encouraging its allies to boost their defenses. Defense Secretary Robert Gates said in an interview with Al-Jazeera television in early September that a stronger Gulf military capability was essential to counter Iran. “For us, the Iranians are not stopping, they are using every possibility to upgrade their military potential,” said Alani. “For a credible deterrence, we need a credible defense capability.” — With assistance from Helene Fouquet and Andrea Rothman in Paris and Gopal Ratnam in Washington. Editors: Anne Swardson , Peter Hirschberg To contact the reporters on this story: Henry Meyer in Dubai at hmeyer4@bloomberg.net ; Sabine Pirone in London at spirone@bloomberg.net

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Access Distressed Commercial Property's "Shadow Market …

November 10, 2009

Your Real Estate Investing Group Your Local Property Association Meeting – such as the local Multifamily Housing Association meeting. In every conversation, let the other person know you are in the market for distressed Commercial …

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Leipzig Becomes Most Modern Making BMWs in Back to Future Since Wall Fell

November 9, 2009

By Tony Czuczka Nov. 9 (Bloomberg) — Leipzig was the scene of protests that spread to Berlin and toppled communist East Germany in 1989. Since then, it has added jobs faster than any German city, east or west, as governments and companies led by Bayerische Motoren Werke AG , Amazon.com Inc. and Deutsche Post AG invested more than $17.8 billion. The city is now home to BMW’s most modern factory , Europe’s only growing cargo airport and a convention center with a 243- meter (800-foot) long glass hall, the world’s largest. At least 60 employers have added jobs in Leipzig in cars, car parts, biotechnology and logistics over the past decade. “Leipzig has advantages that other eastern cities can’t match,” Volker Treier , chief economist at the German Chamber of Commerce and Industry in Berlin, said in an interview. “There’s an industrial tradition. Traffic-wise, you have everything you need. As a city of trade fairs, it has a history of business contacts. This is what lifts Leipzig above the others.” Leipzig added 10,500 jobs between 2003 and 2008, a 7 percent increase that was higher than in any German city, a study by Cologne-based IW Consult said Oct. 9. Its productivity grew faster than in Munich, Stuttgart and Hamburg and the local economy is the second-most “dynamic” among major cities, beaten only by Hamburg. The study’s ranking combines data such as jobs, growth, investment and income. Trade Routes The rebirth since the fall of the Berlin Wall harks back to Leipzig’s history as one of the first centers of commerce in the 12th century, after Slavs settled along trade routes from Paris to Novgorod and from Rome to Bergen between the 7th and 9th centuries. The Leipzig Trade Fair, which started in the Middle Ages, is the oldest continuously operating trade fair in Europe. Today’s Leipzig, which during communism hosted exhibitions of tractors and furniture, is home to the only production site for Munich-based BMW’s X1 compact sport-utility vehicle, which first rolled off the line in September. The local government has developed the airport into an international cargo hub: Leipzig was the only European airport among the world’s top 30 to show an increase in international cargo traffic in the seven months through July, the most recent month available, according to data compiled by Airports Council International in Geneva. Bonn-based Deutsche Post’s DHL delivery service moved its European hub from Brussels last year, opening a 300 million-euro ($445 million) distribution center to serve central Europe and Asia. Seattle-based Amazon , the largest online retailer, runs its main German warehouse a few minutes away. Merkel’s University Local subsidies have lured startup biotech companies to a research park downtown. The city also boasts a renovated campus for the 600-year-old university, where German Chancellor Angela Merkel studied physics in the 1970s, and a remodeled train station handling 1,000 trains and 135,000 travelers a day that ranks among Europe’s largest. A shopping mall there has 140 shops and cafés. As the German economy slumped into its worst recession since World War II, Volkswagen AG’s Audi luxury division started work on a 10 million-euro showroom and distribution center in the north of Leipzig. Construction began on March 27, three weeks after the benchmark DAX Index fell to a 4 1/2-year low. There’s “a new bourgeois elegance,” said Martin Jankowski, a democracy activist in Leipzig during the 1989 protests. “If you go to a restaurant, if you look how the students dress, you can see there is really a new style. In a way, Leipzig is back to its old golden times.” Unemployment Rates Not everyone shares the prosperity. City unemployment, down from 25 percent five years ago, was 14.8 percent in September, exceeding the national average of 8.1 percent in October. Twenty percent of Leipzig’s residents draw welfare benefits and the population is about 15,000 below its 1989 level of 530,000. Eastern German productivity is about 75 percent of the western level, while average household income is 80 percent to 85 percent of the West’s, said a study published Oct. 28 by Klaus Schroeder, a political science professor at Berlin’s Free University. Though then-West German Chancellor Helmut Kohl promised the east “blossoming landscapes” and won the first election in reunited Germany in 1990, the early years were marked by the collapse of markets in countries such as Poland and Hungary, as the switch to the West German deutsche mark brought down the east’s centrally planned economy. Federal Subsidies Nine out of 10 industrial jobs in Leipzig disappeared in the decade after unification, said Thomas Hofmann, executive director at the Chamber of Commerce and Industry, located downtown less than 200 meters (219 yards) from the former local headquarters of the Stasi secret police, as chemical makers, mining companies and manufacturers of electrical goods were unable to adapt to capitalism. About 20 percent of residents fled to the West in search of work. West Germans have provided a net 1.6 trillion euros in aid to the east since 1990, according to Schroeder’s study. About half went for jobless, retirement and health-care benefits; the rest was for improving cities, roads and telecommunications as well as cleaning up the environment and aiding companies. Leipzig’s Maedler Passage shopping mall boasts such stores as Mont Blanc and Swarovski, and a high-speed rail link has cut the travel time to Leipzig from Berlin, the capital, in half to one hour. The trade-fair center, designed by Ian Ritchie Architects, opened in 1996 with the largest glass hall in the world. “Leipzig was the one location with a very ideal place in the middle of Europe with very good traffic connections, including to the up-and-coming markets in eastern Europe,” said BMW spokesman Michael Janssen. Secret Police BMW, the world’s largest maker of luxury cars, opened a 1.3 billion-euro plant in 2005 designed by Pritzker Prize -winning architect Zaha Hadid . It turns out compact models on 208 hectares (513 acres) on the outskirts of Leipzig. Its hub-and- spoke design around a central building is a new approach to car production and makes it BMW’s most modern site, Janssen said. Modernization of the East’s highways, with federal aid, also helped persuade BMW to pick the site from among 250 bidders. The 4,700 jobs make it the city’s biggest employer. Porsche SE , the Stuttgart-based sports-car maker being bought by Volkswagen, builds Cayenne and Carrera GT models at a smaller plant. Like the rest of the east, Leipzig remains dependent on federal aid. Buildings from the late 19th-century industrial boom lie empty. Some neighborhoods remain a patchwork of freshly painted exteriors and decaying, boarded-up apartments. While former activist Jankowski, now a writer , knows the East’s troubles, he says he isn’t nostalgic. Reading his file in the archive of the Stasi secret police , he figured the regime would have thrown him in prison if it had survived. “What we got is 10 times better than what we had before,” he said. “Looking back 20 years, I see all of this as a very lucky chapter in German history.” To contact the reporter on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net .

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India May Lead G20 in Exit From Fiscal Stimulus as Singh Signals Wind Back

November 8, 2009

By Cherian Thomas and Kartik Goyal Nov. 9 (Bloomberg) — India may be among the first Group of 20 nations to begin winding back fiscal stimulus after Prime Minister Manmohan Singh said faster economic growth would allow the measures to be withdrawn. “There are clear signs of an upturn in the economy,” Singh told the India Economic Summit organized by the World Economic Forum in New Delhi yesterday. “Like other countries we resorted to a significant stimulus and we will take appropriate action next year to wind this down.” Singh’s comments are at odds with policy makers from the U.S., Japan, Australia and other Group of 20 nations who said at the weekend it’s too early to withdraw fiscal steps designed to support global recovery. India’s central bank last month began to tighten monetary policy amid concerns that an inflation flare-up may hit the pockets of close to 800 million Indians who live on less than $2 a day. “Demand in India has picked up and a continuation of stimulus may not be necessary next year,” said Arun Duggal , chairman of Shriram Transport Finance Co. Ltd., the nation’s biggest financier of trucks and buses. “Stimulus should remain in developed countries as their economies are in a more fragile state and could tip backward.” Singh said India’s economy may grow 6.5 percent in the year ending March 31, constrained by weak monsoon rains that hurt crop production. With better rainfall in the four-month season starting June 2010, the economy may expand over 7 percent in the year commencing April 1, he said. Wal-Mart India’s economic strides prompted Wal-Mart Stores Inc., the world’s largest retailer that has a wholesaling venture with the local Bharti Group, to open as many as 40 more “cash & carry” stores in the country. Wal-Mart opened its first Indian wholesale store on May 30, with initial plans to start 10 or 15 more outlets during the next three years. Tata Steel Ltd., India’s biggest producer of the alloy, reported October sales rose 38 percent, while sales at Bajaj Auto Ltd., the nation’s second-largest motorcycle maker, gained 46 percent during the month. India began to tighten monetary policy as the central bank forecasts inflation to accelerate to 6.5 percent by March 31 from 1.51 percent. Asset prices have been climbing as well, evidenced by the 68 percent rise in the key Sensitive index on the Bombay Stock Exchange. The Reserve Bank of India on Oct. 27 ordered lenders to keep more cash in government bonds, raising the statutory liquidity ratio to 25 percent from 24 percent. Governor Duvvuri Subbarao said it was appropriate for the central bank to exit monetary stimulus in a “calibrated way.” ‘Quite Appropriate’ Raghuram Rajan , former chief economist at the International Monetary Fund and now a professor at the University of Chicago, said it was “quite appropriate” for the Indian government to think about winding down fiscal stimulus. “I am not saying do it today, but do it over the next year and going forward,” Rajan said in New Delhi yesterday. India’s central bank needs to consider an exit from monetary stimulus as interest-rate policy needs to be conducted with “foresight,” Rajan said. “By the time inflation starts picking up, by the time capacity constraints start showing, its too late to do it with monetary policy.” China also risks faster inflation and asset bubbles as Asia’s second-biggest economy pursues “excessive growth,” Yao Jingyuan , the statistics bureau’s chief economist, said at a forum in Beijing last week. Budget Deficit The Chinese economy is assured of expanding 8 percent in 2009, meeting the government’s target, according to Yao. India may consider rolling back fiscal stimulus early in the year starting April 1, Montek Singh Ahluwalia , deputy chairman of the Planning Commission, said in New Delhi yesterday. This would help reduce a budget deficit estimated to reach a 16- year high of 6.8 percent of gross domestic product this year. “The worst is behind us though the path of global recovery will be long and uncertain,” Prime Minister Singh said yesterday. “India has been able to face the global economic downturn better than most other countries in the world.” The world economy may shrink 1.1 percent in 2009, according to IMF estimates. IMF Managing Director Dominique Strauss-Kahn warned Oct. 23 of the risk of a double-dip recession if countries implement exit strategies too soon. U.S. Treasury Secretary Timothy Geithner told reporters after a meeting of G20 finance ministers in Scotland on Nov. 7 that “it’s too early” to “lean against the recovery.” Japan, Australia Japanese Finance Minister Yoshihiko Noda said it’s too soon to start unwinding measures, saying the recovery in his country “still lacks sustainability.” Australian Treasurer Wayne Swan said yesterday government stimulus shouldn’t yet be retracted as winding up the program would threaten jobs and economic recovery. “The developed countries seem to be very cohesive in thinking that stimulus should continue,” Rana Kapoor , chief executive officer at Mumbai-based Yes Bank Ltd. said in an interview with Bloomberg News yesterday. “Every nation needs to watch out for country-specific conditions and take actions best suited for them, and that’s what India is doing.” Countries should withdraw stimulus too late rather than too early as the global recovery is likely to be “sluggish,” the IMF said in a report prepared for this weekend’s meeting of G20 officials in St. Andrews, Scotland. India’s next budget is due to be released in late February 2010 by Finance Minister Pranab Mukherjee , who attended the weekend meeting of G20 officials. “World demand will pick up only slowly,” Singh said yesterday. “Our strategy therefore must aim at sustaining a high rate of growth on the strength of strong domestic demand.” To contact the reporters on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net Cherian Thomas in New Delhi at cthomas1@bloomberg.net

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Energy-Trading Group Proposes Disclosures to Improve EU Electricity Market

November 6, 2009

By Lars Paulsson Nov. 6 (Bloomberg) –The European Federation of Energy Traders , the lobby group with members including Goldman Sachs Group Inc. and E.ON AG, proposed rules for power-plant data to make buying and selling wholesale electricity more fair. The Amsterdam-based group got a mandate this year to advise the European Commission on how to increase transparency in Europe’s power and gas markets, Peter Styles , chairman of the group’s electricity committee, said yesterday in an interview. Proposed measures include real-time disclosure of availability for plants generating more than 100 megawatts, he said. “There is no reason why all generators in all markets should not be asked to comply with this standard with immediate effect,” Styles said. The group’s board agreed to recommend the measures on Aug. 28 “after much debate,” he said. The proposals were presented to the European Commission on Oct. 27. Generation data is important because prices hinge on how much power is being produced at any given time. Electricity, unlike other commodities, can’t be stored, so unexpected supply cuts in one country may mean soaring prices in another part of Europe’s interconnected markets. “It sounds like a really good initiative,” Konstantin Lenz , head of German analysis at Berlin-based Markedskraft Deutschland GmbH, said about the power group’s proposal. “If it comes true, it would be great progress, but the resistance will be great, of course.” ‘Catch Up’ The most transparent markets are in the Nordic region, the U.K. and Spain, “leaving the rest to catch up,” Styles said. Nordic plant availability is disclosed as much as three years ahead by the local exchange. Some of the group’s utility members are disclosing power plant data voluntarily. In Germany, Europe’s biggest power market, E.ON, RWE AG and Vattenfall AB publish data on a plant- by-plant basis in near real-time. The companies started to publish aggregated data together with EnBW Energie Baden- Wuerttemberg AG in 2006. Paris-based Electricite de France SA, the world’s biggest operator of reactors, has yet to follow peers in Germany, citing the commercial sensitivity of the information. Individual plant data is available via recorded phone lines, while aggregated generation availability is published daily via the company’s grid unit Reseau de Transport d’Electricite. “The current voluntary initiatives with aggregated data have been disappointing,” Markedskraft’s Lenz said yesterday in a phone interview. The information is unreliable and updates occur only once a day, he said. EDF Chief Operating Officer Jean-Louis Mathias said in July the company may publish more data this year. Disclosure should include public notification of unplanned outages “as soon as they become apparent,” Styles said. “No trading to cover a shortfall should take place prior to the notification.” The European Federation of Energy Traders was formed in 1999 and has more than 90 members including EDF’s London-based trading unit, Morgan Stanley and Barclays Capital. To contact the reporter on this story: Lars Paulsson in London at lpaulsson@bloomberg.net

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New Jersey, Virginia Choose Governors as Palin Campaigns in New York Race

November 3, 2009

By Heidi Przybyla Nov. 3 (Bloomberg) — Governor’s races today in Virginia and New Jersey have been anticipated as barometers of next year’s midterm congressional elections . A U.S. House race in upstate New York may prove more meaningful. The New Jersey campaign has been a referendum on the Democratic incumbent, Governor Jon Corzine , 62, and his record on property taxes, roads and other local issues. In Virginia, where Republican Bob McDonnell , 55, leads Democrat Creigh Deeds , 51, the race has turned on traditional concerns of taxes and transportation. The New York election, in contrast, is a window onto a battle between moderate and conservative Republicans over the party’s future. Republicans including former House Majority Leader Dick Armey and former Vice Presidential candidate Sarah Palin endorsed Doug Hoffman , a Conservative, over the choice of local party leaders, Dede Scozzafava , 49. Scozzafava, who was criticized for her support for abortion rights, dropped out over the weekend, leaving Hoffman to face Bill Owens , 60, the Democratic candidate. Scozzafava endorsed Owens. Hoffman’s rise also reflects the emerging ability of grassroots activists to push a candidate that is more aligned with conservative positions on fiscal and social issues. “Within the Republican Party it remains quite clear the strategy is to remain on the right,” said Julian Zelizer , a politics expert at Princeton University in New Jersey. ‘Don’t Move To The Center’ “The GOP sends a strong signal to other candidates ahead of 2010 with this: don’t move to the center,” Zelizer said. At the same time, he said, “New Jersey and Virginia are like any off-year election; it’s very hard to see what the meaning is.” Also in New York, Mayor Michael Bloomberg has a 12 percentage-point lead over the Democratic candidate, William C. Thompson Jr ., according to a poll by Hamden, Connecticut-based Quinnipiac University released Nov. 2. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. Voters in Boston, Houston, Miami, Detroit, Seattle and Atlanta also will select mayors. In Maine and Washington state, opponents of same-sex marriages will attempt to roll back rights extended to gay and lesbian couples. Voters will decide whether to reject marriage laws that granted the same rights to gays as those given to heterosexual marriages. Proxy Battle The New York congressional seat held by Republican Representative John McHugh since 1993 became empty when he was named Army secretary. Scozzafava, a state Assemblywoman chosen by local Republican leaders to compete in the special election, also was targeted because of her support for same-sex marriage and President Barack Obama’s stimulus plan. Former House Speaker Newt Gingrich endorsed her, saying the party needed to be more inclusive. Palin and former Minnesota Governor Tim Pawlenty lined up behind Hoffman. David Carney , a former political director for President George H.W. Bush, said Scozzafava was pressured out by voters, not party leaders. “The political elite missed the point,” he said. “It’s the voters having a say.” The Virginia race has centered primarily on local concerns, not Obama, said Stuart Rothenberg , editor of the nonpartisan Rothenberg Political Report in Washington. In a Washington Post poll conducted Oct. 22-25, 70 percent of Virginia voters said Obama, who has campaigned for Deeds, wouldn’t determine their vote. McDonnell has led every poll of Virginia voters since July. New Jersey’s race is much closer, according to a Quinnipiac poll released Nov. 1. “It’s going to be cliffhanger,” said Ross Baker , a political science professor at Rutgers University in New Brunswick, New Jersey. ‘Thumbs Down’ The Virginia contest has been regarded as the most likely to reflect national sentiment, with no incumbent running on a previous record. The state also has a 30-year history of electing governors from the party outside the White House. “For whatever reason, they always vote thumbs down on the president’s party,” said Rhodes Cook , editor of a nonpartisan political newsletter in Virginia. Deeds, a state senator, has been criticized by White House officials frustrated with his strategy, which they said focused too much on a thesis paper McDonnell wrote in graduate school in which he called working women “detrimental” to the family. Obama campaigned for Deeds last week in Virginia and the president’s grassroots campaign network, Organizing for America, also is working for the Democratic candidate. New Jersey “These turnout efforts obviously depend on enthusiasm for the candidate himself,” said Jennifer Duffy , an analyst at the nonpartisan Cook Political Report in Washington. In New Jersey, Corzine in the final weeks of the campaign has closed a polling deficit with Republican Christopher Christie , who had an initial lead of as much as 12 percent in a July 12 Quinnipiac poll. Christopher Daggett , an independent, is running third. Obama traveled to the state on three occasions to stump for Corzine, including a Nov. 1 trip that included appearances at voter rallies in Camden and Newark. Patrick Murray , a professor of political science and pollster at West Long Branch, New Jersey-based Monmouth University, said Christie’s support dropped as he was unable to convince voters he was a credible alternative to the incumbent. A Republican last won a statewide election in New Jersey in 1997, when incumbent Governor Christine Whitman defeated challenger James McGreevey . To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net .

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Australia Raises Key Interest Rate to 3.5%, Second Increase in Four Weeks

November 3, 2009

By Jacob Greber Nov. 3 (Bloomberg) — Australia raised its benchmark interest rate by a quarter percentage point for the second time in four weeks, becoming the first nation to increase borrowing costs twice this year as the global economy recovers. Reserve Bank Governor Glenn Stevens increased the overnight cash rate target to 3.5 percent from 3.25 percent in Sydney today, as forecast by 18 of 22 economists surveyed by Bloomberg News. The rest expected a half-point move. Australia’s dollar and bond yields fell as traders pared bets on the size of future interest-rate increases after Stevens said policy makers judge it’s “prudent” to “gradually” boost borrowing costs. The governor also said the currency’s 29 percent gain this year may hurt exports from the world’s biggest shipper of iron ore, and cool inflation. “Today’s move strikes a nice balance — it edges the cash rate back to more normal levels without threatening the economic recovery,” said Craig James , a senior economist at Commonwealth Bank of Australia. “It is far from certain that rates will rise again in December.” The Australian dollar fell to 90.15 U.S. cents at 3:54 p.m. in Sydney from 90.88 cents just before the decision was released, The two-year government bond yield dropped 17 basis points to 4.56 percent. A basis point is 0.01 percentage point. Economic growth in Australia, which side-stepped the global recession, will accelerate “close to trend” over the year ahead, driven by rising consumer confidence and Chinese demand for iron ore and coal, Stevens said today. Changed Outlook Treasurer Wayne Swan said yesterday the economy will expand faster than he previously forecast, growing 1.5 percent in the 12 months to June 30, 2010. In May, he forecast a 0.5 percent contraction. GDP will accelerate to 2.75 percent the following fiscal year, he said yesterday. The economy grew 1 percent in the first six months of this year. “The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead,” Stevens said today. “The board noted that the rise in the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures,” he said. Investors, hungry for China’s economic growth, have been betting the Australian dollar is headed toward parity with the U.S. currency for the first time, buying into the world’s biggest exporter of iron ore used in making steel. Hedge Funds Citigroup Inc., Calyon, Barclays Capital and National Australia Bank Ltd. forecast it will trade at 1 U.S. dollar next year, implying an additional 11 percent gain. Hedge funds and other large traders have more bets than any time since July 15, 2008, that the rally will continue, data from the Washington- based Commodity Futures Trading Commission show. Stevens has tempered his comments on the pace of rate increases and their effect on the currency, after last month signaling he was prepared to keep raising borrowing costs and tolerate further appreciation in the local dollar, the best- performing in the past 12 months of 171 currencies tracked by Bloomberg, as it “may help contain inflation.” The central bank’s measure of core inflation, the so-called weighted median index of consumer prices, rose 3.8 percent in the third quarter from a year earlier, holding above the top of Governor Stevens’s target range of between 2 percent and 3 percent for a ninth straight quarter, a report showed on Oct. 28. Stevens also raised the rate by a quarter point on Oct. 6. The only other countries to increase borrowing costs this year are Israel and Norway. By contrast, the U.S. Federal Reserve has kept its benchmark rate close to zero for almost a year. The European Central Bank and Bank of England benchmark rates are at record lows of 1 percent and 0.5 percent respectively. ‘Key Word’ “The absence of more assertive rhetoric in today’s statement signals clearly that the Reserve Bank will remove the policy accommodation ‘gradually’, a key word that once again was prominent in today’s statement,” said Stephen Walters , chief economist at JPMorgan Chase & Co. in Sydney. Stevens also dropped references in today’s statement, last made in the minutes of the bank’s October meeting, that the “very expansionary setting” of monetary policy was “possibly imprudent.” “A subtle shift in the tone of the commentary hints that officials are inclined to take each meeting on its merits,” Walters said. Australia’s economy is growing faster and generating more jobs than Treasurer Swan and Prime Minister Kevin Rudd forecast six months ago, helped by A$20 billion ($18 billion) in government cash handouts to consumers and Stevens’s record interest-rate cuts between September 2008 and April, when he slashed the benchmark rate by 4.25 percentage points to a half- century low of 3 percent. Jobless Peak Unemployment is expected to peak at 6.75 percent in the second quarter of next year, well below the 8.5 percent rate Swan forecast in May for the three months through June 30, 2011, the government said yesterday. Today’s interest-rate increase will do nothing to resolve the nation’s housing shortage, said Housing Industry Association Chief Economist Harley Dale . “It would be prudent for the Reserve Bank to sit on its hands,” Dale said. The boost will add A$50 to monthly repayments on an average A$300,000 home loan. Australia & New Zealand Banking Group Ltd. and Commonwealth Bank raised their variable mortgage rates by a quarter point after today’s announcement. Reports published in recent days show bank lending unexpectedly fell in September for the first time in nine months amid weaker demand for business credit, and manufacturing growth slowed in October. Stevens should have waited longer before raising borrowing costs this year because the economy is “still fragile,” Mike Smith, head of ANZ Bank, said last week. “It wouldn’t have been a bad idea just to let Christmas wash through and then see what needed to happen in the new year,” he said Oct. 29. To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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Clinton `Broke the Ice’ With Pakistanis Angry Over U.S. Actions in Region

October 31, 2009

By Indira A.R. Lakshmanan Oct. 31 (Bloomberg) — Secretary of State Hillary Clinton ended a three-day visit to Pakistan in which she confronted intense anti-American sentiment in a nuclear-armed country that has become a central front for violent extremists. Wielding the celebrity she enjoys in Pakistan as a former first lady who first visited in 1995, Clinton tried to close the trust deficit that strains U.S.-Pakistani ties. She appeared on live television and in newspaper pages pledging to support democracy and development and praising the military for its five-month campaign against Taliban strongholds. Clinton “broke the ice” by risking her security to visit Lahore and Islamabad, two cities that have suffered terrorist attacks, and listening to “suspicion, anger and aggression” from Pakistani audiences, Jugnu Mohsin, publisher of the Lahore- based Friday Times newspaper group, said in an interview. Meetings with hundreds of Pakistani students, professionals, community leaders and journalists exposed Clinton to public ire over the use of air strikes on suspected terrorist hideouts in Pakistan’s tribal areas and over perceived heavy- handed conditions attached to billions of dollars of U.S. aid. Clinton’s willingness to hear out the tirades and try to explain the U.S. point of view won her respect, said Mohsin, who was among leading editors invited to air their opinions. “Whether the charm offensive works,” she added, “will depend on how consistent America’s commitment is to impact peoples’ livelihood.” $7.5 Billion In her remarks, Clinton sought to highlight the $7.5 billion in aid the U.S. has authorized for upgrading roads, electricity, education and other projects. The top American diplomat’s efforts to dispel the view that the U.S. is dictating to Pakistan and doesn’t care about its people or prosperity proved an uphill battle. An August survey by the Washington-based Pew Research Center showed 64 percent of Pakistanis regard the U.S. as an enemy. On chairs arranged on red tribal carpets at an arts center in Islamabad yesterday, Clinton listened to leaders from border areas caught in the cross-fire between government and Taliban forces. Faiysal Alikhan, a community organizer in Dera Ismail Khan, an area hard hit by extremist violence, praised Clinton for holding a meeting in the circular format typical of a tribal council. “The way she interacted, looked everyone in the eye, her body language demonstrated a level of trust,” he said in an interview. A larger gathering that followed with female professionals was “a sort of hostile environment,” he said, “and she handled that in a very honest and straightforward way.” Terror Attacks At the forum hosted by women television anchors, Clinton sought to deflect criticism over what Pakistan’s government says have been 528 civilian deaths in an unspecified period from missile strikes on suspected terrorist targets by U.S. remote- controlled drone aircraft. Clinton told women who critiqued such strikes as an infringement on Pakistani sovereignty that al-Qaeda “is in league with the people who are attacking Pakistan.” Suicide bombings and commando raids by Taliban guerrillas have killed at least 280 people in the country this month. Just hours after Clinton arrived in Islamabad on Oct. 27, a car bomb shattered a crowded market in the northwestern city of Peshawar, killing at least 117 people, many of them women and children, in the deadliest attack since October 2007. Sixty others are still missing. Some Praise After the forum, Begum Salma Ahmed, the founding president of the Women’s Chamber of Commerce and Industry, said she felt Clinton’s “visit has gone down better than any by a U.S. official.” Clinton didn’t mince words when challenged about why the war on terror focuses so much on Pakistan. Clinton told editors in the eastern city of Lahore that al-Qaeda has a safe haven in Pakistan and she found “it hard to believe that nobody in your government knows where they are and couldn’t get them if they really wanted to.” Pakistan’s army has launched its largest offensive yet against Taliban who control parts of the rugged, autonomous tribal zone along the Afghan border. The campaign is concentrated in South Waziristan, the base of the Taliban faction that Pakistan blames for 80 percent of terrorist attacks in the country. U.S. Spending Clinton asked her audience at the women’s forum how many knew that the U.S. had spent $300 million so far to help Pakistanis uprooted by their army’s assaults on the Taliban. Neither that contribution nor recently passed legislation to authorize $1.5 billion annually for economic development in Pakistan seems to have been taken in the cooperative spirit it was intended, she said. “We feel like we’re doing things and we are not getting through,” she said. One tribal leader complained to Clinton that Pakistan was “fighting your war.” Speaking in Pashto, Mufti Kifayatullah , a member of the local assembly in the North West Frontier Province, complained “the blood spilled is ours.” Talks, not military assaults, are needed, he urged. “I certainly hope there will be an opportunity for negotiations,” Clinton said, reminding him that the U.S. had tried to avert war in 2001 by urging the Afghan Taliban to hand over the al-Qaeda leaders who perpetrated the Sept. 11 attacks. To contact the reporter on this story: Indira Lakshmanan in Islamabad at ilakshmanan@bloomberg.net .

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Norb Vonnegut: The $21.2 Billion Halloween Mask

October 29, 2009

It’s that time of year. Costume shops are jamming as folks hunt for outfits. Twitter is buzzing with “trick or tweets” about Halloween. On Saturday little goblins will sweep through neighborhoods and fill their bags with time bombs for the waist line. The season makes me wonder: What does it take to become a Halloween mask? One no-fail way is to get elected as President of the United States. Nixon, Clinton, and Obama are just a few of the faces you can wear this weekend. As best as I can tell, party affiliation makes no difference to mask manufacturers. They offer equal opportunities to Democrats and Republicans. Or you can star in a horror movie. Who can forget Michael Myers, the lead character in Halloween ? And there’s Leather-face, the guy with the bad nose and prominent stitching from The Texas Chainsaw Massacre. How about something less gory? Well, you could steal $21.2 billion through a Ponzi scheme that spans decades. The scariest face this Halloween may be the Madoff mask, available online and at your local costume shop. Let’s face it. The Bernard Madoff mask exists because of the size and scope of his fraud. He inflated customer accounts to show an aggregate value of $65 billion. The New York Times reported that actual cash losses from his scam now total $21.2 billion. The total of cash losses by investors in Bernard L. Madoff’s giant Ponzi scheme has climbed to $21.2 billion, the court-appointed trustee overseeing victim claims said Wednesday. That is significantly higher than the tally of about $13 billion provided to the court by federal prosecutors when Mr. Madoff was sentenced for his crimes at the end of June, The New York Times’s Diana B. Henriques reports. The fraud is so big that SIPC has agreed to advance $534.25 million to investors, which is more than the combined liquidations of all brokerage liquidations since 1970. SIPC has “slightly more that $1 billion” in reserves, which makes me wonder whether anything will be left when the Madoff case is settled. The fraud was so mesmerizing that it endured until December 11, 2008. It endured even though Harry Markopolis gift wrapped a lawsuit with his testimony to the SEC in 2005. And now four years later, the government has yet to separate money managers from their custodians. Two reports to clients, one from the custodian and one from the money manager, would stymie similar frauds. We lack checks and balances, though, which is one reason I was able to write Top Producer and turn fact into fiction. Unfortunately, Madoff — money manager, custodian, and a guy who understood the system’s flaws — was all too real. Talk about scary stories.

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Edward Wytkind: Time to Change the Game for Airline and Railroad Workers

October 29, 2009

The deck is stacked against airline and railroad workers when it comes to union elections. That’s why airline CEOs are working so hard to defend current election procedures that count all workers who sit out elections as “no” votes. Americans are accustomed to elections where a simple majority of those voting decides the outcome — whether they’re voting for PTA president or U.S. Senator. Not so for airline and railroad workers — who must first ensure that turnout exceeds 50 percent. How can we justify imposing higher turnout standards on airline and railroad union elections than we do in elections for the highest office of our land? We can’t. Let’s take a moment to consider typical voter turnout data. The 2008 presidential election had the highest turnout in decades; nearly 57 percent of this country’s eligible voters participated. While our presidential elections manage to draw just over half the country’s eligible voters, mid-term elections bring out less than 40 percent. In fact, in every mid-term election since 1930 the national turnout was below 50 percent. What happens to eligible voters who choose not to vote in our local and national elections? The answer, of course, is that they do not factor into the election outcome. The “majority rules” concept for elections is grounded in American democratic principles. But what if we arbitrarily assigned meaning to a voter who doesn’t participate? Imagine if not voting was tabulated as a vote for or against something, such as “every non-vote counts as a vote for Obama,” or conversely, “every non-voter must have intended to vote for McCain.” Not only would this policy significantly skew election results, but it would nullify the expressed intent and incite outrage among those who actually voted. Although it defies logic, this is the system aviation and rail workers must abide by for union elections. It makes no sense, and it is well beyond time for a change. That’s why the Transportation Trades Department, AFL-CIO has asked the National Mediation Board (NMB), the federal agency that oversees these matters, to reform its election procedures to conform to the norms of American democracy: the majority of those casting a vote will decide the outcome and those who do not vote are not counted. Think about this. Even when more than 90 percent of those who vote choose a union, they are routinely denied representation by those who didn’t vote. It’s a “veto by silence” principle at work. Other than airline CEOs and their lobbyists, no one else can defend this system. I wonder if some of the U.S. Senators who are carrying the airline industry’s water would support an amendment to the U.S. Constitution or to the election law in their state that forces them to face the voters under such onerous rules? I doubt it because in most of their elections, they would have lost. Unionization in the airline industry has slowed in recent years. Why? Union-busting campaigns are alive and well — because the current election policy encourages and rewards employer-run voter suppression campaigns. For example, almost 100 percent of Delta flight attendants voted in favor of unionization in 2008. But thanks to Delta’s campaign to discourage its employees from voting (the company called it “Give a Rip” and was essentially instructing employees to destroy government-issued ballots), turnout was below 50 percent and the overwhelming support for a union was nullified. Shockingly, the Bush NMB saw no evil in Delta’s unlawful conduct and voted 2-1 to refuse to even investigate more than 100 charges of illegal interference and coercion. Some call our request for fairness an effort to circumvent the law. Nice try. The law does not require that elections be run this way at all. Voting procedures are set by the NMB, which has the authority to change its policies. In fact, the Supreme Court has said that the law does not require a majority of the entire workforce to vote in union elections for results to be valid. Airline management is arguing against our request, insisting that “the rules are being changed in the middle of the game” because some union elections may get scheduled on some future date. But there are always going to be potential or expected union elections. For the airlines, it will never be a convenient time to change a status quo that favors them so heavily. But for the workers, who have been facing an unfair standard for decades, change cannot come soon enough. It’s time to let those who actually come out and vote decide the outcome of union elections in the airline and railroad industries. The airlines are essentially arguing against a voting system that has been the law of the land for more than 200 years in American democracy.

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Hong Kong’s Family-Run Banks Are Takeover Targets, ICBC Asia’s Wong Says

October 28, 2009

By Kelvin Wong Oct. 29 (Bloomberg) — Hong Kong’s publicly traded family- run banks are “very likely” to be bought by larger competitors as the cost of operating in the city rises, said a senior banker at the local unit of China’s biggest lender . The companies are attractive to cash-rich Chinese lenders who seek a platform for expansion in Asia, and to overseas banks aiming to push into China, said Stanley Wong , deputy general manager of Industrial & Commercial Bank of China Asia Ltd. He declined to say whether his bank’s parent is in talks to buy a Hong Kong lender. “The fixed cost in running a bank in Hong Kong has become very high regardless of size,” said Wong, who headed Standard Chartered Plc’s China unit before joining ICBC in 2004, in an Oct. 27 interview. “A lot of these smaller family-run banks are thinking of selling out. They’re waiting for the right price.” Family banks including Wing Hang Bank Ltd. and Chong Hing Bank Ltd. saw costs increase last year even as revenue dropped, squeezing profits. Wing Hang, run by the family of Chairman Patrick Fung , said last month it had received “informal and unsolicited” approaches, a year after China Merchants Bank Ltd. beat ICBC to acquire Hong Kong’s Wing Lung Bank Ltd. The number of listed family-run banks in Hong Kong, which serves as a hub for goods traveling to and from China, has been reduced to four from six a decade ago as Wing Lung and Asia Financial Holding Ltd.’s banking unit were acquired. The remaining ones — Wing Hang, Chong Hing, Dah Sing Banking Group Ltd. and Bank of East Asia Ltd. — have a combined market value of $12 billion, compared with $253 billion for ICBC. Beijing-based ICBC owns 70.2 percent of the ICBC Asia. Fewer Bargains Wing Hang’s cost to income ratio jumped to 53.4 percent in the first half from 38.8 percent a year earlier, while Chong Hing’s rose 4.9 percentage points to 57.35 percent, according to their earnings statements. The ratio at Hang Seng Bank Ltd., controlled by HSBC Holdings Plc, was 30.4 percent. ICBC, the world’s most profitable bank last year, is the Chinese lender showing the most interest in acquiring Wing Hang, two bankers scouting for buyers for the lender said in September, declining to be identified. This year’s stock market rally has made it tougher to negotiate a takeover as sellers are likely to demand higher prices, Wong said. The Hang Seng Finance Index , which tracks performance of 11 banks traded in Hong Kong, has gained 56 percent this year and last week reached a 14-month high. “Right now, both sellers and buyers are back on equal footing,” said Wong. “Whereas a few months ago it would have been much easier for buyers to find a good bargain.” Finance Center Bank shares fell today amid a global decline in equities. Bank of East Asia dropped 2 percent to HK$27.45 at 11:22 a.m. Wing Hang lost 1.5 percent to HK$75.25, while Dah Sing fell 1.9 percent to HK$10.58. The three lenders have advanced at least 69 percent in Hong Kong trading this year. Last year, when ICBC was competing for Wing Lung Bank, the China Banking Regulatory Commission barred the lender from paying more than 3 times book value, people familiar with the matter said at the time. Merchants Bank eventually paid 3.1 times book value, making it the most expensive bank acquisition in Hong Kong in seven years by that measure. Norman Chan , the head of Hong Kong’s central bank , said last month he wants to consolidate the city’s role as an international finance center and expand the city’s role in helping China promote the yuan’s use for commerce and investment abroad. Yuan Bonds His comments came after the Chinese government sold yuan- denominated bonds for the first time in the city, tapping the 56.7 billion yuan ($8.3 billion) in yuan deposits at Hong Kong banks. The city is also taking part in a trial program allowing the currency’s use in trade settlement with the mainland. China Construction Bank Corp. , the nation’s second-largest, in December 2006 bought Bank of America Corp.’s Hong Kong and Macau unit for HK$9.7 billion ($1.3 billion), at the time the biggest acquisition by a Chinese bank outside the country. ICBC in 2000 paid HK$1.8 billion for control of Union Bank of Hong Kong and renamed it ICBC (Asia) Ltd. Four years later, it completed the purchase of Fortis Bank’s unit in the city for HK$2.53 billion. To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

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AMR Said to Seek Deeper Ties With Japan Airlines to Keep Oneworld Together

October 28, 2009

By Chris Cooper and Mary Jane Credeur Oct. 28 (Bloomberg) — American Airlines , the world’s second-largest carrier, has proposed a deepening of ties with Japan Airlines Corp. as it seeks to keep the Asian company in the Oneworld alliance, a person with knowledge of the plan said. Fort Worth, Texas-based American Airlines has urged Japan Air , or JAL, to seek antitrust immunity to collaborate on schedules and pricing as soon as a U.S.-Japan “open skies” aviation treaty is concluded, according to the person, who asked not to be identified because the discussions aren’t public. American is seeking similar immunity with British Airways Plc and Spain’s Iberia Lineas Aereas de Espana SA to compete on trans-Atlantic flights with Delta Air Lines Inc. , which already has such an arrangement with Air France-KLM . Collaboration on timetables, pricing and routes would give Japan Air and American most of the benefits of a merger without the associated costs. “JAL is a very important part of Oneworld so they’ll think of a way of keeping them in the alliance,” said Hunter Keay , an analyst at Stifel, Nicolaus & Co. in Baltimore with a “hold” recommendation” on AMR stock. “The company also requires a lot of money, but most of that has to come from the Japanese government. I don’t think airlines have the resources.” Japan Air spokeswoman Sze Hunn Yap and Richard Hedges at American, a unit of AMR Corp., declined to say whether the carriers are discussing an application for antitrust immunity. Tokyo Talks The Japanese and U.S. governments began four days of talks in Tokyo this week to discuss liberalizing aviation agreements between the countries as the capital’s Haneda and Narita airports are set to increase their capacity in 2010. Haneda, Asia’s busiest airport, will offer 60,000 overseas flights a year and start 24-hour operations after opening a fourth runway next October. Narita, Japan’s busiest international gateway, will boost capacity by 10 percent to 220,000 slots annually from March. Japan Air joined Oneworld in 2007 and has had tie-ups with American Airlines for more than 10 years, with the two airlines codesharing on flights between Tokyo and Dallas. JAL’s domestic rival All Nippon Airways Co. is in the Star Alliance along with UAL Corp. ’s United Airlines and Deutsche Lufthansa AG . Antitrust immunity lets carriers coordinate more closely than traditional marketing alliances that limit airlines to selling seats on each other’s flights through codesharing and dividing some of the revenue. The new alliance could be approved as early as June, assuming completion of the treaty in December and an application for regularity approval in January, the person said. Stake Sale Japan Airlines, which has requested a fourth state bailout since 2001, is also considering the sale of a stake to American or Delta , a member of the SkyTeam group. Atlanta-based Delta, the world’s largest carrier, is the No. 1 overseas airline at Narita and doesn’t have a Japanese codeshare partner. JAL , due to announce quarterly results next month, posted a 99 billion-yen ($1.1 billion) loss in the first quarter, the most in six years, as business and leisure travel plummeted during the country’s worst postwar recession. Asia’s biggest carrier received a 100 billion-yen loan from state-owned Development Bank of Japan and other local lenders in June. The carrier last week asked banks to write off or convert 250 billion yen into equity, according to a person familiar with the matter who declined to be identified because the talks are private. JAL’s new restructuring plan is due to be submitted to the government by the end of this month, Transport Minister Seiji Maehara said last week. To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net ; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

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Flood Evacuees Form New Community As Neighbors

October 27, 2009

As part of its Bearing Witness 2.0 project, the Huffington Post is rounding up a few of the best local stories of the day. Thirteen families displaced by flooding in the Southeastern United States in September are now living as neighbors in an apartment complex, reports Mark Davis of the Atlanta Journal-Constitution . The families, some of whom escaped their old homes only with what they could carry, originally met at the local Cobb County Civic Center, which was operating as an emergency shelter. They have since formed a tight-knit community, doing favors for each other and cooking meals together. “It was the Lord who brought us together,” said Marla Jackson. Many of the families are in their new homes with the help of non-profits like Hosea Feed the Hungry & Homeless , who help with rent and food. ****** Rosemary Ponnekanti of the Washington News Tribune writes about musicians in the Pacific Northwest who are giving up their passions for paychecks. “I’ve been doing this since 1997,” said Anne deMille Flood, whose color pencil drawings of local landmarks have made her a local stalwart, “and at the peak in 2007 I’d be selling around 15 originals a year, at around $500 each.” Since then her sales — and her income — have dropped 60 percent, and she is looking for another job. “I hate to give it up,” she said “but…I gave it my best shot. I hope the economy will recover, and I’ll get back to it.” ****** Shannon McGinnis, a single mother of two recovering from lymphoma cancer, earns just $485 a month as a nanny. But her bills are much more than that, and she depends on the Colville Food and Resource Center , reports Sophia Aldous of the Eastern Washington Statesman Examiner . She credits the food bank with keeping her family together: “They’re not just a food bank. They help me with the electricity bill, school supplies for my kids…I know they are here for me,” she said. The Food and Resource Center supports over 1,200 people a month — about half of them minors — and, like many food banks and shelters, is gearing up to serve even more people during the holiday season. ****** In Lafayette, Ind., Amanda Hamon of the Journal and Courier reports that 67 crumbling houses and buildings have been demolished by the city Hearing Authority. The department, established in 2006, identifies unsafe buildings and seeks to either refurbish them or tear them down. A rise in foreclosure rates has sent many homes into disrepair, and the city receives several calls a day because of blighted property. HuffPost readers: Seen a good local story? Heard about a heroic judge, neighbor, or doctor helping people stay in their homes? Tell us about it! Email jmhattem@gmail.com .

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California Board Pays Record Premium on $250 Million Build America Issue

October 22, 2009

By Jeremy R. Cooke Oct. 22 (Bloomberg) — California’s Public Works Board sold taxable Build America Bonds with the highest coupon interest rate on an issue larger than $100 million since the federal subsidy program began, data compiled by Bloomberg show. The board, borrowing to fund projects on prisons, office buildings, veterans’ homes and mental hospitals in the most populous U.S. state, sold $250 million of 8.361 percent securities due in October 2034. The revenue bonds, backed by state lease payments, are rated lower than California’s general obligations: A- by Standard & Poor’s, Baa2 by Moody’s Investors Service and BBB- by Fitch Ratings. The California agency agreed to pay 412.5 basis points more than AAA U.S. Treasuries due in 2039 and 154.5 basis points more than corporate bonds with comparable credit ratings. A basis point is 0.01 percentage point. A Bank of America Merrill Lynch index of U.S. company debt with an average Baa2 rating due in 15 years or more had a so-called spread of 258 basis points. Federal taxpayers bear 35 percent of the interest under the Build America stimulus initiative, which has produced $43.5 billion in deals across the U.S. since mid-April, according to Bloomberg totals. States and municipalities have been attracted by net borrowing costs lower than they would otherwise obtain on bonds that pay interest exempt from federal income taxes. Several Build America Bond issues smaller than $100 million, by Oakland Unified School District and other local California borrowers, have come to market with interest rates as high as 9.5 percent, Bloomberg data show. Before the latest deal, the highest taxable coupon on a Build America security of more than $100 million was the 7.942 percent on a water revenue bond from Stockton, California, set to mature in 2038. The Public Works Board sold a total of $807.4 million of bonds this week, the rest in tax-exempt bonds with yields as high as 5.83 percent for the October 2030 maturity, which the state can buy back beginning in 2019. To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net .

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Fidelity Offers Clients Online Equity Trading for International Shares

October 22, 2009

By Josh Fineman Oct. 22 (Bloomberg) — Fidelity Investments, the world’s largest mutual fund manager, is offering online trading for international stocks as it advises investors to keep as much as 30 percent of their equity holdings outside the U.S. Individual investors can use the system to trade in 12 foreign markets in eight currencies, James Burton , president of Fidelity’s retail brokerage business, said in an interview. Broker/dealers and financial advisers will have access to 25 foreign markets and 16 currencies. Previously, individual investors had to do international trades over the phone. BlackRock Inc. Chief Executive Officer Laurence Fink said this week that clients are increasingly looking outside the U.S. for investments. BlackRock is the biggest publicly traded U.S. asset manager. Boston-based Fidelity recommended clients willing to hold on to stock investments for more than five years allocate almost a third to international shares. “Investors generally in the marketplace have some frustrations they’ve told us around lack of availability of information about companies abroad, and it’s not very convenient and they don’t have easy access,” Burton said. “We’ve built this to address these frustrations and gaps.” Fidelity will give investors the choice to settle foreign trades with U.S. dollars or the local currency. The 12 markets available to retail investors are Australia, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Norway, Portugal and the U.K. To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net

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