minister

Hatoyama Quits as Japan’s Premier After Nine Months as Popularity Plunges

June 1, 2010

By Sachiko Sakamaki and Takashi Hirokawa June 2 (Bloomberg) – Japanese Prime Minister Yukio Hatoyama, who ended five decades of single-party rule when he swept to power in August, resigned as public criticism mounted over his handling of U.S. troop deployments in Okinawa. Hatoyama resigned at a meeting of officials from the ruling Democratic Party of Japan. To contact the reporter on this story: Sachiko Sakamaki in Tokyo at ssakamaki1@bloomberg.net

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EU Ministers Back Stiffer Deficit Sanctions, Rule Out Default Mechanism

May 21, 2010

By James G. Neuger and Gregory Viscusi May 22 (Bloomberg) — European Union finance ministers pledged to stiffen sanctions on high-deficit countries and ruled out setting up a mechanism to manage state defaults, saying no euro country will be allowed to renege on its debts. After committing as much as 860 billion euros ($1.1 trillion) to halt a European sovereign debt crisis, the ministers vowed to plug holes in the euro region’s system of penalties for countries with runaway deficits. “We will provide new sanctions, more than is now provided,” EU President Herman Van Rompuy said after the four- hour brainstorming session in Brussels yesterday. “Everyone is ready to go ahead with a strong stability and growth pact.” Concern that the Greece-fueled European fiscal crisis would drag Europe back into recession pushed down European stocks to a six-month low before the Euro Stoxx 50 Index rebounded to gain 0.2 percent. Rates for three-month loans in dollars between banks rose to the highest level in almost 10 months. Deliberations over the revamp of Europe’s economic management came after German Chancellor Angela Merkel won parliamentary backing for Germany’s contribution of as much as 148 billion euros to the EU’s planned 440 billion-euro debt- stabilization fund, the largest single share. Spain, meanwhile, enacted the first public wage cuts since returning to democracy in 1978 and cut its economic growth forecast for next year. Both “financial and non-financial sanctions” are under consideration for repeat violators of the euro area’s deficit cap of 3 percent of gross domestic product, Van Rompuy said. Budget Fines Under the German-inspired Stability and Growth Pact, countries with deficits above the ceiling face fines of as much as 0.5 percent of GDP unless they get the budget back into compliance. No country has been fined during the euro’s 11-year lifespan. Germany and France teamed in 2005 to dilute the rules after overstepping the limits for three years in a row. Greece, which triggered the crisis by piling up a deficit of 13.6 percent last year, said it will be part of a front that opposes German-led calls to strip high-deficit countries of the right to vote on some EU decisions. “There are a lot of reservations about this,” Greek Finance Minister George Papaconstantinou said. “We aren’t the only country with reservations.” The goal is to make legislative proposals by October, with the EU setting no deadline for when the policy changes would take effect. Some proposals may require an overhaul of EU treaties, a process that took eight years for the 27-nation bloc’s current rulebook. ‘Very Quickly’ “Forget the treaty, let’s focus on what we can achieve in the short term,” French Finance Minister Christine Lagarde told reporters. “We are not against change, but let’s see what is deliverable very quickly.” The consultations came before U.S. Treasury Secretary Timothy F. Geithner visits Europe next week to discuss the debt crisis in separate meetings with U.K. Chancellor of the Exchequer George Osborne , European Central Bank President Jean- Claude Trichet and German Finance Minister Wolfgang Schaeuble . Schaeuble’s main contribution to the debate — a call for a way to manage “orderly state insolvencies” in case emergency lending to distressed governments fails — found little backing in the 27-nation meeting, Van Rompuy said. Germany was alone in calling for a default procedure “only in a long-term context” and “in the short term, nobody proposed that kind of scheme,” Van Rompuy said. Instead, the EU stuck to the view, voiced by European commissioner Joaquin Almunia in a Jan. 29 Bloomberg Television interview, that “in the euro area, default does not exist,” Increased Coordination Proposals by the European Commission would also deepen EU coordination during each country’s annual budget-writing process and extend the threat of sanctions to cover countries that fail to push their budgets toward balance during “good economic times.” “Countries that are very lax with budget planning must be able to be rapped on the knuckles,” Austrian Finance Minister Josef Proell said. Germany came with a nine-point plan that amplified the commission’s proposals and added some of its own, including a call for all euro governments to enact a balanced-budget amendment. France, which fought off German calls for automatic fines in the 1990s, feels that the German ideas “go in the right direction,” Lagarde said. Slovakian Finance Minister Jan Pociatek made little headway with his call for the ultimate penalty — expulsion from the euro zone — for countries with persistent deficit overruns. “Sanctions should include a death penalty for countries that would seek to abuse the system and not play by the rules,” Pociatek said in a May 20 interview in Bratislava. To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net ; Gregory Viscusi in Brussels at gviscusi@bloomberg.net

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European Ministers Vow to Avoid Continent-Wide Austerity Amid Debt Crisis

May 18, 2010

By James G. Neuger and Stephanie Bodoni May 18 (Bloomberg) — European finance ministers said Greece’s debt crisis won’t unleash a continent-wide austerity drive with the potential to tip the economy back into a recession and further undercut the euro. Only high-deficit countries including Spain and Portugal will be ordered to make additional deficit cuts, while budget policies will remain untouched in better-off nations such as Germany and Finland. “Not everyone will accelerate consolidation in a very uniform way,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters early today in Brussels after a meeting of ministers from the 16 euro countries. “That would lead to a very restrictive fiscal stance for the euro area as a whole, which would risk depressing economic growth .” Concern that tight fiscal policies would choke the economy contributed to the euro’s 3.4 percent drop against the dollar in the week since euro leaders offered a 750 billion-euro ($925 billion) rescue package for debt-burdened governments. The meeting resumed at 9 a.m. with all 27 European Union finance ministers set to adopt a draft law to tighten hedge-fund regulations that has drawn objections from the U.K. and the U.S. The euro fell today to its lowest level against the dollar since April 2006, slipping as much as 0.7 percent to $1.2315. It was unchanged at $1.2395 as of 8:20 a.m. in London. ‘Technical Details’ The core of the loan package, a 440 billion-euro fund backed by national guarantees that would buy distressed countries’ bonds, will be set up with the help of the European Investment Bank and will operate under Luxembourg law. The euro-area ministers will meet again on May 21 to work on “a certain number of technical details” of the unprecedented emergency lending mechanism, said Luxembourg Prime Minister Jean-Claude Juncker , who chaired last night’s Brussels meeting. The euro-area economy expanded 0.2 percent in the first quarter, faster than the 0.1 percent forecast by economists, as a global recovery boosted exports, offsetting consumers’ reluctance to increase spending. The International Monetary Fund said last month that the region’s economy may expand only 1 percent this year, even as the Washington-based IMF raised its global growth forecast for this year to 4.2 percent from 3.9 percent, citing a faster expansion in emerging economies including China. ‘Credible Currency’ Finance chiefs said there is no reason for global investors to desert the euro, touting the European Central Bank’s record in keeping inflation close to its 2 percent ceiling during the currency’s first 11 years. “The euro is a credible currency,” Juncker said. “Price stability has been fully maintained in the euro area over 11 years and will equally be maintained in the years to come. This is a major feature of the euro and a major asset for investors.” Spain unveiled on May 14 the biggest budget cuts in at least 30 years to bring down a deficit estimated by the EU at 9.8 percent of gross domestic product this year, more than three times the bloc’s 3 percent limit. Portugal followed a day later, pledging to slash wages and raise taxes to pare its projected 8.5 percent shortfall. “Every time you do some cuts in the budget it is possible to have a small contraction in the economy,” Spanish Economy Minister Elena Salgado said. “But we think this moment the balance has to be on the fiscal consolidation side.” Financial Backstop Juncker hailed the “courageous measures” and said the finance ministers will pass judgment on them on June 7. Italian officials said on May 16 that the government may make an extraordinary reduction in a deficit projected by the EU to hit 5.3 percent of GDP this year. France, heading for an 8 percent deficit, is slated to submit its latest spending and tax plans to the EU this week. In a first discussion of improvements to Europe’s economic management, the ministers concluded that proposals for better coordination of national budgets, speedier penalties for violators and stricter monitoring of high-debt countries “go in the right direction,” Juncker said. Under the euro’s German-inspired Stability and Growth Pact, countries with deficits above the 3 percent limit face fines as high as 0.5 percent of GDP unless they get the budget back into compliance. No country has been fined during the euro’s 11-year lifespan. Germany and France teamed in 2005 to dilute the rules after overstepping the limits for three years in a row. Sanctions Proposals by the European Commission would extend the threat of sanctions to cover countries that fail to push their budgets toward balance during “good economic times,” even if the deficit is below the threshold. Rehn also called for cutting off EU development-aid funds from the euro region’s poorest countries more quickly to penalize any deficit overruns. Currently six euro countries — Cyprus, Greece, Malta, Portugal, Slovakia and Slovenia — are eligible for the “cohesion” fund, available to countries with GDP per capita less than 90 percent of the EU average. To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net ; Stephanie Bodoni in Brussels at sbodoni@bloomberg.net @bloomberg.net.

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U.S. Stock Futures Gain as Europe Pledges Fund to Prevent Spread of Crisis

May 9, 2010

By Jeff Kearns May 10 (Bloomberg) — Standard & Poor’s 500 Index futures advanced on speculation that a 720-billion euro ($928 billion) emergency-loan fund to support debt-laden European countries will keep the region’s credit crisis from spreading. June contracts on the S&P 500 increased 2.3 percent to 1,132 at 9:58 a.m. in Tokyo, while Dow Jones Industrial Average futures climbed 1.9 percent. U.S. stocks fell the most in 14 months last week , erasing their 2010 advance, as concern about Greece’s finances and a breakdown in U.S. market systems spurred the most volatile trading in a quarter century. Stocks around the world have been battered this month amid concern European leaders won’t do enough to keep indebted nations from defaulting. Finance ministers have pledged an unprecedented loan package to make 440 billion euros available with 60 billion euros more from the EU’s budget, Spanish Economy Minister Elena Salgado at a press conference in Brussels today. The International Monetary Fund may provide a further 220 billion euros, she said. “The positive is that everyone’s working together,” said Chris Rich , head options strategist at JonesTrading Institutional Services LLC in Chicago. “The market’s responding well to this, and it may fix things for now.” The MSCI Asia Pacific Index rose for the first time in six days, adding 0.4 percent to 118.88. European stocks had tumbled the most in 18 months last week. A measure of bank stocks slumped the most since March 2009. Bond yields surged across the region’s southern periphery, threatening to undermine the single currency. May 6 Rout Waves of electronic selling helped push the Dow Jones Industrial Average down as much as 9.2 percent on May 6, the biggest drop since the crash of 1987, before paring losses. The VIX, the benchmark index for U.S. stock options, surged 86 percent to 40.95 for the biggest weekly gain in its history. The selloff “was a warning sign that things are not as great as they think,” said Stephen Davis , a portfolio manager at Alpine Woods Capital Investors LLC, which oversees $7 billion in Purchase, New York. “I don’t think it means you need to panic, but you need to think about the stocks you’re holding and why.” Concern about Europe’s debt overshadowed the biggest jump for U.S. payrolls in four years. The increase of 290,000 jobs exceeded the median estimate of economists surveyed by Bloomberg News, led by gains in private employment that indicate the economy is weaning itself from government support. The jobless rate rose to 9.9 percent from 9.7 percent as thousands of jobseekers entered the workforce. To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net ;

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EU Crafts $962 Billion Show of Force to Support Euro, Halt Global Crisis

May 9, 2010

By James G. Neuger and Meera Louis May 10 (Bloomberg) — European finance ministers put together an unprecedented loan package that may be worth 720 billion euros ($928 billion) for debt-swamped governments in a bid to restore faith in the euro and prevent Greece’s fiscal woes from unleashing a global crisis. Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro governments pledged to make 440 billion euros available, with 60 billion euros more from the EU’s budget, said Spanish Economy Minister Elena Salgado at a press conference in Brussels today. The International Monetary Fund may provide a further 220 billion euros, she said. “We are placing considerable sums in the interests of stability in Europe,” Salgado told reporters in Brussels after chairing the 14-hour meeting. Under pressure from the U.S. and Asia to stabilize markets, the European governments gambled that the show of financial force would prevent a sovereign-debt crisis and muffle speculation that the 11-year-old euro might break apart. The European Central Bank will announce “intervention” in financial markets, Luxembourg Finance Minister Luc Frieden told reporters, without giving further details. Europe’s failure to contain Greece’s fiscal crisis triggered a 4.1 percent drop in the euro last week, the biggest weekly decline since the aftermath of Lehman Brothers Holdings Inc.’s collapse. It prompted President Barack Obama to call German Chancellor Angela Merkel and French President Nicolas Sarkozy yesterday to urge “resolute steps” in Europe to prevent the crisis from cascading around the world. To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net ; Meera Louis in Brussels at Mlouis1@bloomberg.net

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Greek Quarantine Tested as Spain Vows to Combat Euro Contagion `Madness’

May 4, 2010

By Emma Ross-Thomas and Natalie Weeks May 5 (Bloomberg) — Investors are already testing the euro region’s efforts to contain the Greek crisis. Greek bond yields yesterday rose above their level before the government agreed on a European Union-led bailout on May 2 as escalating protests cast doubt on its ability to drive through austerity measures. Spanish and Portuguese bonds also renewed last week’s slide as investors question their ability to cut budget deficits that are among the highest in the euro area. “If the execution of the announced measures in Greece faltered it would certainly make it more difficult to bring the sovereign debt markets of Spain and Portugal into calmer waters,” said Kommer van Trigt , who helps oversee 140 billion euros ($183 billion) at Robeco Group in Rotterdam. “We want to see more evidence that measures are really being implemented.” European governments are hoping that Greece’s 110 billion- euro bailout will stop a crisis that Nobel Prize-winning economist Joseph Stiglitz says threatens the currency’s survival. Investors are speculating that Spain and Portugal may also eventually need assistance, prompting Spanish Prime Minister Jose Luis Rodriguez Zapatero to dismiss such talk as “complete madness.” That didn’t stop a selloff in Spanish bonds yesterday. The extra yield that investors demand to buy its debt over German bunds rose 21 basis points to a 14-month high of 117.8 points. Spain’s benchmark IBEX Index, the euro region’s worst performer after Greece, fell 5.4 percent to the lowest since July. Portugal’s spread rose 40 basis points to 247 yesterday. The euro weakened 1.4 percent to $1.3011, the lowest in more than a year. Flights Greek unions plan their third general strike of the year today after workers yesterday occupied the Acropolis and shut down schools and hospitals at the start of a 48-hour walk-out. Aegean Airlines SA , a Greek carrier, has canceled all flights. Workers are protesting against the 30 billion euros of austerity measures agreed to by Prime Minister George Papandreou in return for the bailout from the euro region and the International Monetary Fund. Protesters will meet at Pedio tou Areos Park in central Athens and will march through Constitution Square, where the Parliament is situated. “We will continue with action as long as these measures, which go against workers and are anti-social, continue to be demanded,” Stathis Anestis, a spokesman for the GSEE union, said in a telephone interview, predicting “massive participation.” The yield on Greece’s 10-year bond climbed 90 basis points to 9.84 percent yesterday compared with 9.343 percent on April 30. Greek Opposition More than 51 percent of Greeks said they won’t accept new austerity measures before the rescue deal, according to a poll of 1,000 people by ALCO for Proto Thema newspaper. That compared with 33 percent who would accept them. No margin of error was given for the poll, which was conducted from April 27 to April 29. Unions have had some success influencing policy in the past. In 2001 they forced then-Prime Minister Costas Simitis to dilute proposals such as raising the retirement age. In 1985, unions successfully opposed a government proposal to cut spending and boost tax revenue, prompting Simitis, who was economy minister at the time, to resign two years later. Some economists say the terms are too harsh for the country to bear. Greece expects its economy to shrink 4 percent this year and 2.6 percent in 2011. “The economic pain that such belt tightening will bring suggests that it would be unwise to rule out a default further down the line,” Ben May , an economist at Capital Economics in London, said in a note. Wrangling The danger for the euro region is that failure to fix the Greece crisis after three months of wrangling by EU leaders will prompt investors to shift attention to the deficits of Portugal and Spain and dump their bonds too. Spain’s budget deficit was the third-highest in the euro region last year, at 11.2 percent of GDP. Portugal’s shortfall was the fourth at 9.4 percent of output. The IMF yesterday published a statement denying speculation that Spain had asked for a bailout. “These rumors can increase the interest-rate differential compared with German bonds and damage our national interests,” Zapatero told a news conference in Brussels yesterday. “This is simply intolerable and I can tell you that we will certainly combat it.” Ireland had the highest deficit at 14.3 percent and Greece’s was 13.6 percent. While the Greek rescue “may work for a little while, in the long run the fundamental institutional problems are there, speculators are aware of these problems,” said Stiglitz, a Columbia University professor, in an interview with BBC Radio 4 yesterday. “The future of the euro may be limited.” To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net Natalie Weeks in Athens nweeks2@bloomberg.net

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VIX Rises With VStoxx on Concern Debt Crisis to Spread to Portugal, Spain

May 4, 2010

By Julie Cruz and Jeff Kearns May 4 (Bloomberg) — The benchmark index for U.S. stock options jumped to the highest intraday level since February and Europe’s gauge closed at a 10-month high on concern that the European debt crisis is spreading to Spain and Portugal. The VIX , as the Chicago Board Options Exchange Volatility Index is known, gained 21 percent to 24.49 at 12:14 p.m. New York time. The index measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index , which lost 2.2 percent. Europe’s VStoxx Index, which gauges the cost of using options to protect against declines in the Euro Stoxx 50 Index, rose 15 percent to 33.15. U.S. and European shares tumbled today amid concern that Greece’s debt crisis will spread through the region. Greece’s financial aid is intended to help service debt only until the nation can tap capital markets and may not cover its needs after 2012, German Economy Minister Rainer Bruederle said. “The fear is, do you have to bail out Spain and Portugal?” said Chris Rich , head options strategist at JonesTrading Institutional Services LLC in Chicago. “People are afraid, and every day you’re seeing larger and larger ranges in the stock indexes.” VIX futures also advanced. July contracts rose 5.2 percent to 25.15 and September’s gained 4.5 percent to 26.38. The VIX hasn’t closed above 26 for three months. The most-active VIX options were May 30 calls, which almost doubled to 85 cents and accounted for about a fifth of all calls changing hands today. May 37.50 calls more than doubled to 33 cents for the biggest gain among options on the index. The volatility gauge hasn’t closed above that level for a year. “Volatility will continue to be very high and I wouldn’t be surprised to see S&P or DAX volatility going up to 30 again,” said Michael Brauburger , a senior derivatives sales trader at Newedge Group in Frankfurt. The euro’s drop against the dollar boosted volatility gauges, in addition to speculation that more nations face credit downgrades, he said. Germany’s VDAX, a gauge of options on the country’s benchmark DAX Index, gained 13 percent to close at 23.43. The stock index lost 2.6 percent. The euro traded below $1.31 for the first time since April 2009 on concern the region’s debt crisis will spread. The common currency fell 1.2 percent to $1.3043 at 12:14 p.m. in New York and touched $1.3037, the least since April 28, 2009. To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net .

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Greece, EU, IMF Poised to Sign Rescue Package as Protests Mount in Athens

May 1, 2010

By Jonathan Stearns and Natalie Weeks May 2 (Bloomberg) — Greece is poised to announce an agreement with euro-region allies and the International Monetary Fund on a 120 billion-euro ($159 billion) bailout as protests mount against budget cuts that are a condition for the rescue of the debt-stricken nation. Prime Minister George Papandreou called a special Cabinet meeting at 9:30 a.m. Athens time today. Euro-area finance ministers will meet in Brussels at 4 p.m. to approve their part of the three-year lifeline to be financed with the IMF. With national debt of almost 300 billion euros and its credit rating cut to junk status, Greece faces a fiscal mess that has begun to spread to Spain and Portugal, forcing the European Union to orchestrate the rescue. At stake is the future of the euro 11 years after its creators gave the European Central Bank responsibility for interest rates while leaving fiscal policy in national capitals. “I hope the aid package is enough,” Finnish Economy Minister Mauri Pekkarinen said yesterday on the opening day of the World Expo in Shanghai. “It’s very important for our common currency that they manage their problems.” As talks with the EU and IMF on the terms of the loans wound down in Athens, more than 15,000 demonstrators took to the streets of the capital yesterday, turning traditional May Day celebrations into protests against austerity measures that will accompany the aid. Papandreou, who needs the funds to avoid default, said April 29 Greece’s very survival was at stake. Wage Cuts Papandreou has already raised taxes, cut wages and reduced government spending in a bid to tame a deficit that reached 13.6 percent of gross domestic product last year, more than four times the EU limit. Those measures prompted the euro region to commit to making 30 billion euros available to Greece in the first year of the package, with the IMF due to provide another 15 billion euros initially. That austerity plan also triggered a wave of strikes and protests across Greece. Unions plan another general strike for May 5. Papandreou’s government may have agreed to additional budget cuts worth 24 billion euros, or around 10 percent of GDP, to secure the second and third year of the aid, Greece’s NET Radio said. Measures may include a three-year wage freeze for public workers and the elimination of two of their 14 annual salary payments, the ADEDY union said after a briefing with Papandreou on the talks. ‘Unprecedented’ Measures Finance Minister George Papaconstantinou said in an April 30 speech that Greeks must brace themselves for “unprecedented” austerity and that they face “a critical point in the history of our country.” Most Greeks feel anger and fear rather than relief over the bailout, an opinion poll showed. Just 14.8 percent of the 1,256 people surveyed by Kappa Research for the poll published yesterday in To Vima newspaper felt relief or hope after Papandreou’s April 23 decision to request aid, compared with 31 percent who answered “anger,” 30.6 percent who said “disappointment or fear” and 22.8 percent who responded “shame.” As the talks with the EU and IMF dragged on, Greece’s fiscal crisis rippled through Europe, sending the euro to its lowest in a year on April 28 and leading to a surge in the borrowing costs of other high-deficit countries. On April 27, the same day Standard & Poor’s cut Greece’s credit rating to below investment grade, the company also downgraded Portugal and followed the next day by cutting Spain. Maturities Looming Disbursing the funds quickly is critical as the government faces 8.5 billion euros in maturing bonds this month. The surge in Greek yields — its two-year note yielded more than 20 percent last week — has made tapping financial markets unsustainable. Markets rebounded late in the week on signs an agreement to disburse the aid was near. Greece’s ASE benchmark general index rose 2.2 percent on April 30, extending a 7 percent gain the previous day. The yield on Greek 10-year government bonds, which jumped to 11.406 percent on April 28, slipped to 9.45 percent. The euro, which has lost more than 7 percent this year as the Greek crisis tested the single currency’s credibility, also gained 0.5 percent to $1.3294. French Finance Minister Christine Lagarde said in Paris yesterday she was confident there would be a final agreement today on a three-year aid package worth 100 billion euros to 120 billion euros. The euro area has said it would fund two-thirds of the total. National Approval Once the Greek government and euro-region finance ministers sign off, a further test will come when some euro-area countries push for domestic approval of the loans. Public opposition to the Greek bailout is running high in Germany, which will have to put up 8.4 billion euros in the first year, almost 30 percent of the euro-region total for 2010. Even if the package does spare Greece having to tap the markets for funds, the austerity measures will deepen a recession, complicating efforts to trim the deficit by more than 10 percentage points of GDP and reduce debt. Greece’s debt was 115 percent of GDP last year, second highest in the EU after Italy. “There is a very real possibility that at the end of two or three years, Greece will still have an unsustainable debt and will have to restructure because it will have a deep, deep recession in the meantime,” said Barry Eichengreen , economics professor at the University of California, Berkeley. To contact the reporters on this story: Jonathan Stearns in Athens at jstearns2@bloomberg.net ; Natalie Weeks in Athens nweeks2@bloomberg.net

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Greeks Protest `Unprecedented’ Cuts Amid Negotiations on $159 Billion Aid

May 1, 2010

By Jonathan Stearns and Natalie Weeks May 1 (Bloomberg) — Greeks protested “unprecedented” budget cuts as euro-region countries and the International Monetary Fund move toward agreement on a 120 billion-euro ($159 billion) bailout package for the debt-stricken nation. Thousands of demonstrators in Athens used the May Day holiday to call for job security and the defense of worker rights, prompting the deployment of riot police around government buildings including the finance ministry. Isolated clashes took place, some involving tear gas. Greece faces “unprecedented” austerity and must brace itself for “very demanding tasks” as the government wraps up talks with the European Union and IMF on conditions for a three- year financial rescue, Finance Minister George Papaconstantinou said yesterday. “We are at a critical point in the history of our country,” he said. European finance ministers plan to meet tomorrow to approve their share of loans aimed at stopping the biggest crisis in the euro’s 11-year history. While Greek stocks and bonds rebounded after German Chancellor Angela Merkel said the EU must speed up its response, the crisis rippled through countries sharing the European currency. Standard & Poor’s downgraded Greece to junk this week and followed with cuts to Portugal and Spain. The government may agree to budget cuts worth 24 billion euros, or around 10 percent of gross domestic product, in return for the aid, Greece’s NET Radio said. Measures may include a three-year wage freeze for public workers and the elimination of two of their 14 annual salary payments, the ADEDY union said. Celebration, Protests Unions called on Greeks to turn the May Day celebration into a day of protest against the “coming storm.” Groups of protesters in public squares contrasted with traditional holiday crowds strolling, chatting, eating and drinking in the sun. Referring to Croesus, the ancient king renowned for his wealth, the unions used a slogan that read: “The Croesus-es should pay for the crisis.” Clashes between a group of self-styled anarchists and police broke out near the capital’s Constitution Square and the nearby neighborhood of Omonia. The demonstrators burned trash cans, smashed bus stops and hurled objects at officers, who responded with tear gas. Prime Minister George Papandreou is caught between investors, who want faster deficit reductions, and voters and unions, who are already chafing at existing austerity measures. Elected in October on pledges to raise wages for public workers, Papandreou has been forced to cut salaries, curb spending and increase taxes to reduce a deficit that was more than four times the EU limit last year. More Taxes Other steps will include increasing sales tax and raising the cap on the number of workers who can be fired to 4 percent from 2 percent, Kathimerini newspaper reported, without saying where it got the information. “Huge doubts remain about the ability of the Greek government to implement these policy changes amid mounting signs of discontent within the population,” Michael Saunders and other economists at Citigroup Inc. said in an e-mailed note. “Even in the event of a successful implementation of the measures, risks remain of a vicious spiral between tighter fiscal policy and collapsing real growth.” Details of the EU-IMF loan conditions will emerge when the Athens talks conclude. Nearing Agreement Indications that negotiations will end as soon as today prompted Luxembourg Prime Minister Jean-Claude Juncker , who leads the group of euro-area finance ministers, to schedule a meeting to ratify the agreement at 4 p.m. in Brussels tomorrow. Papandreou announced he’ll chair a meeting of his Cabinet tomorrow at 9:30 a.m. in Athens. French Finance Minister Christine Lagarde said today in Paris that she expects a final agreement tomorrow on a package of 100 billion euros to 120 billion euros. The euro area aims to contribute two-thirds of the total aid for Greece and disbursing that share, including as much as 30 billion euros in 2010, requires the unanimous approval of the region’s national governments. Finance ministers intend to ratify at least the first year of contributions tomorrow. “I hope the aid package is enough,” Finnish Economy Minister Mauri Pekkarinen said today at the opening day of the World Expo in Shanghai. “It’s very important for our common currency that they manage their problems.” Stocks, Bonds Fall Stocks and bonds fell this week after Merkel’s initial reluctance to approve disbursing funds to Greece stoked concerns about a default. The extra yield that investors demand to hold Greek debt over bunds exceeded 800 basis points on April 28. The spreads on Portuguese, Spanish and Irish debt also jumped, with the premium on Portugal’s 10-year bonds rising as high as 299 basis points on April 28. Signs of a renewed drive to tackle Greece’s troubles then helped spark a recovery. European Central Bank President Jean- Claude Trichet on April 29 said policy makers must create a “sense of direction” to help overcome the fiscal crisis. Greece’s ASE benchmark general index rose 2.2 percent yesterday, extending a 7 percent gain the previous day. The yield on Greek 10-year government bonds, which surged to 11.406 percent on April 28, was at 9.45 percent. To contact the reporters on this story: Jonathan Stearns in Athens at jstearns2@bloomberg.net ; Natalie Weeks in Athens nweeks2@bloomberg.net

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Greeks Protest Budget Cuts as Bailout Package Nears

May 1, 2010

By Jonathan Stearns and Natalie Weeks May 1 (Bloomberg) — Greeks protested “unprecedented” budget cuts as euro-region countries and the International Monetary Fund move toward agreement on a 120 billion-euro ($159 billion) bailout package for the debt-stricken nation. Thousands of demonstrators in Athens used the May Day holiday to call for job security and the defense of worker rights, prompting the deployment of riot police around government buildings including the finance ministry. Isolated clashes took place, some involving tear gas. Greece faces “unprecedented” austerity and must brace itself for “very demanding tasks” as the government wraps up talks with the European Union and IMF on conditions for a three- year financial rescue, Finance Minister George Papaconstantinou said yesterday. “We are at a critical point in the history of our country,” he said. European finance ministers plan to meet tomorrow to approve their share of loans aimed at stopping the biggest crisis in the euro’s 11-year history. While Greek stocks and bonds rebounded after German Chancellor Angela Merkel said the EU must speed up its response, the crisis rippled through countries sharing the European currency. Standard & Poor’s downgraded Greece to junk this week and followed with cuts to Portugal and Spain. The government may agree to budget cuts worth 24 billion euros, or around 10 percent of gross domestic product, in return for the aid, Greece’s NET Radio said. Measures may include a three-year wage freeze for public workers and the elimination of two of their 14 annual salary payments, the ADEDY union said. Celebration, Protests Unions called on Greeks to turn the May Day celebration into a day of protest against the “coming storm.” Groups of protesters in public squares contrasted with traditional holiday crowds strolling, chatting, eating and drinking in the sun. Referring to Croesus, the ancient king renowned for his wealth, the unions used a slogan that read: “The Croesus-es should pay for the crisis.” Clashes between a group of self-styled anarchists and police broke out near the capital’s Constitution Square and the nearby neighborhood of Omonia. The demonstrators burned trash cans, smashed bus stops and hurled objects at officers, who responded with tear gas. Prime Minister George Papandreou is caught between investors, who want faster deficit reductions, and voters and unions, who are already chafing at existing austerity measures. Elected in October on pledges to raise wages for public workers, Papandreou has been forced to cut salaries, curb spending and increase taxes to reduce a deficit that was more than four times the EU limit last year. More Taxes Other steps will include increasing sales tax and raising the cap on the number of workers who can be fired to 4 percent from 2 percent, Kathimerini newspaper reported, without saying where it got the information. “Huge doubts remain about the ability of the Greek government to implement these policy changes amid mounting signs of discontent within the population,” Michael Saunders and other economists at Citigroup Inc. said in an e-mailed note. “Even in the event of a successful implementation of the measures, risks remain of a vicious spiral between tighter fiscal policy and collapsing real growth.” Details of the EU-IMF loan conditions will emerge when the Athens talks conclude. Nearing Agreement Indications that negotiations will end as soon as today prompted Luxembourg Prime Minister Jean-Claude Juncker , who leads the group of euro-area finance ministers, to schedule a meeting to ratify the agreement at 4 p.m. in Brussels tomorrow. Papandreou announced he’ll chair a meeting of his Cabinet tomorrow at 9:30 a.m. in Athens. French Finance Minister Christine Lagarde said today in Paris that she expects a final agreement tomorrow on a package of 100 billion euros to 120 billion euros. The euro area aims to contribute two-thirds of the total aid for Greece and disbursing that share, including as much as 30 billion euros in 2010, requires the unanimous approval of the region’s national governments. Finance ministers intend to ratify at least the first year of contributions tomorrow. “I hope the aid package is enough,” Finnish Economy Minister Mauri Pekkarinen said today at the opening day of the World Expo in Shanghai. “It’s very important for our common currency that they manage their problems.” Stocks, Bonds Fall Stocks and bonds fell this week after Merkel’s initial reluctance to approve disbursing funds to Greece stoked concerns about a default. The extra yield that investors demand to hold Greek debt over bunds exceeded 800 basis points on April 28. The spreads on Portuguese, Spanish and Irish debt also jumped, with the premium on Portugal’s 10-year bonds rising as high as 299 basis points on April 28. Signs of a renewed drive to tackle Greece’s troubles then helped spark a recovery. European Central Bank President Jean- Claude Trichet on April 29 said policy makers must create a “sense of direction” to help overcome the fiscal crisis. Greece’s ASE benchmark general index rose 2.2 percent yesterday, extending a 7 percent gain the previous day. The yield on Greek 10-year government bonds, which surged to 11.406 percent on April 28, was at 9.45 percent. To contact the reporters on this story: Jonathan Stearns in Athens at jstearns2@bloomberg.net ; Natalie Weeks in Athens nweeks2@bloomberg.net

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Video: Papandreou’s Popularity Falls as Greeks Face Debt Crisis

April 26, 2010

April 26 (Bloomberg) — Bloomberg’s Nicole Itano reports from Athens on the public reaction to the Greek debt crisis and its willingness to accept tougher austerity measures from Greek Prime Minister George Papandreou. (Source: Bloomberg)

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Video: France’s Lagarde Discusses Proposed Global Bank Tax: Video

April 23, 2010

April 23 (Bloomberg) — French Finance Minister Christine Lagarde talks with Bloomberg’s Susan Roberts about Greece’s fiscal crisis and the issue of a proposed global bank tax to help pay for future bailouts of the industry. They talk at the meeting of Group of 20 finance ministers and central bankers in Washington. (Source: Bloomberg)

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Thai Security Forces Surround Hotel in Bangkok to Arrest Protest Suspects

April 15, 2010

By Supunnabul Suwannakij April 16 (Bloomberg) — Thai security forces surrounded a Bangkok hotel where suspects in last weekend’s deadly clashes between protesters and soldiers are staying, Deputy Prime Minister Suthep Thaugsuban told reporters. The government plans to arrest protest leaders and “terrorists” staying at SC Park hotel in Bangkok, he said. Another 60 suspects have been told to report themselves to security forces, Suthep said in Bangkok. To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

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Van Rompuy Said to Seek Greek Accord Before Start of European Union Summit

March 23, 2010

By James G. Neuger March 23 (Bloomberg) — European Union President Herman Van Rompuy is seeking to strike an agreement on an aid mechanism for Greece before the start of a meeting of all 27 EU leaders this week, a European diplomat said. Van Rompuy wants to bridge differences over a possible aid package before the officials gather at 5 p.m. March 25 for the two-day meeting in Brussels, said the EU diplomat, who declined to be named because the consultations aren’t public. The impasse over how to help Greece overcome Europe’s biggest budget deficit deepened today as Greek Finance Minister George Papaconstantinou pushed back against suggestions that the International Monetary Fund provide loans and German Economy Minister Rainer Bruederle repeated his reluctance to put his taxpayers’ funds at risk. Conflicting signals before the EU summit triggered three days of declines in Greek debt that drove the yield on 10-year bonds to 6.44 percent yesterday, the highest since Feb 25. The surge in financing costs led Prime Minister George Papandreou to say on March 19 that Greece, which needs to sell about 10 billion euros ($14 billion) of bonds in coming weeks, is one step away from not being able to borrow. The 10-year yield today narrowed to 6.30 percent, more than double the yield on Germany’s 10-year notes. “There shouldn’t be any subsidy element, no concessionary element” in a potential loan to Greece, ECB President Jean- Claude Trichet told lawmakers in Brussels yesterday. German Chancellor Angela Merkel said in Berlin that there’s no need for European Union leaders to make any “concrete decisions” on Greek aid this week. Trichet, Merkel Trichet’s demand for stringent terms and Merkel’s call for sanctions against nations that breach deficit limits heightened the chance that Greece will leave the summit empty-handed. That could force Greek leaders to decide whether to make good on a threat to turn instead to the IMF. Papaconstantinou said today that he expected “positive” results from the summit and preferred a European solution to any potential aid for Greece. “We want to borrow with better rates and believe this will happen with the implementation of the deficit plan,” Papaconstantinou said at a conference in Athens. Greece won’t figure on the formal summit agenda, the EU diplomat said. Van Rompuy pursued a similar strategy last month, when he delayed the start of the Feb. 11 summit to broker an accord in principle “to take determined and coordinated action if needed to safeguard financial stability in the euro area as a whole.” To contact the reporter on this story: James Neuger in Brussels at jneuger@bloomberg.net

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Video: Russian Billionaire Pugachyov’s Son Revamps French Daily

March 19, 2010

March 19 (Bloomberg) — Bloomberg’s Ryan Chilcote reports on the purchase of the French daily newspaper France-Soir by the son of a Russian billionaire. Alexander Pugachyov, a 25-year-old whose billionaire father Sergey is a close friend of Russian Prime Minister Vladimir Putin, bought the paper last year and relaunched it this week, according to Bloomberg BusinessWeek. Bloomberg’s Mark Barton also speaks.

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Hedge Fund Rules Aren’t Dead, Minister Says – New York Times (blog)

March 18, 2010

Hedge Fund Rules Aren’t Dead, Minister Says New York Times (blog) Hedge funds and private equity may have won a short reprieve after European Union finance ministers agreed to delay a decision on new rules for the industry … EU Hedge Fund Reprieve Won’t Last Wall Street Journal E.U. ministers delay vote on hedge – fund rules MarketWatch UK Won’t Delay Hedge Fund Rules Long, Lawmakers Say BusinessWeek Reuters

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EU Lays Groundwork for Greek Lifeline to Bolster Euro

March 16, 2010

By James G. Neuger and Stephanie Bodoni March 16 (Bloomberg) — European finance ministers laid the groundwork for a financial lifeline to debt-stricken Greece, breaking a taboo against aid to cash-strapped governments in order to avert a crisis for the euro. Officials from the 16 countries using the currency worked out a strategy for emergency loans in case Greece’s plan for 4.8 billion euros ($6.6 billion) in tax increases and wage cuts fails to stave off fiscal disaster. “We clarified the technical arrangements that would enable us to take coordinated action which could be swiftly put into place in the event it is necessary,” Luxembourg Prime Minister Jean-Claude Juncker told reporters late yesterday after leading a meeting of euro-area finance officials in Brussels. With the euro undergoing the harshest test in its 11-year history, the unprecedented pledge reflected concern that Greece’s budget woes could spread, poisoning investor confidence and aggravating the currency’s 10 percent decline against the dollar since November. The meetings resumed at 9 a.m. today with all 27 EU finance ministers. The agenda also includes proposals to clamp down on hedge funds and credit-default swaps. Aid to Greece would probably come through governments pooling funds to extend direct loans, said a European official who asked not to be named. The meeting didn’t resolve the size of future loans, which countries would offer them or how long they would last and cost. Financial Stability “The objective would not be to provide financing at average euro-zone interest rates, but to safeguard financial stability in the euro area as a whole,” the ministers said in a statement. Greek bonds gained, pushing the 10-year yield down 4 basis points to 6.17 percent. The 10-year German yield rose 1 basis point to 3.16 percent. That trimmed the extra yield on Greek over German bonds to 300 basis points, the lowest since March 5. “The clear hope is that the mere promise of support will reassure investors enough to bring Greek bond yields down further,” said Ben May , an economist at Capital Economics Ltd. in London. “But if this does not happen, euro-zone governments will come under greater pressure to provide further details.” What would trigger the lending also was left open. Loan guarantees wouldn’t be part of the package, Juncker said. Final decisions will be up to EU leaders, though not necessarily at their next scheduled summit on March 25-26, he said. ‘Effective Premium’ “There is no loan facility at the moment,” Spanish Economy Minister Elena Salgado said before today’s session. “If this is the case, I’m sure all the euro countries will be there.” Dutch Finance Minister Jan Kees de Jager said any contribution from the Netherlands would require “an effective premium on top of the cost of funding so that there will be also an incentive for Greece to refinance through the markets.” Appeals for aid to Greece have raised hackles in Germany, the country behind the low-debt, anti-inflation policies that make the euro what the German high court said must be a “community of stability.” German Finance Minister Wolfgang Schaeuble , who last week called for the expulsion of uncompetitive, debt-prone countries from the euro, quit his hospital bed two weeks after undergoing surgery to attend the meeting. He didn’t speak to reporters yesterday. ‘Tricky Game’ “It’s a very tricky game for politicians right now,” said Carsten Brzeski , an economist at ING Group in Brussels who used to work at the European Commission . “They have to play for time.” While Greece this month sold 5 billion euros in bonds, it faces more than 20 billion euros in debt redemptions in April and May. Doubts that Greece will tame Europe’s largest deficit on its own contributed to declines in German bonds last week amid concern that Europe’s largest economy will bear the bulk of the costs of a rescue package. “What will happen if necessary, and we’re still convinced it won’t be necessary, is that we’ll reach an agreement in the euro zone to offer bilateral aid in a coordinated form,” Juncker said. The euro weakened 0.7 percent to $1.3677 yesterday on concern that a protracted battle over a financial backstop for Greece would expose the flaws in how Europe manages the $12 trillion economy. It traded at $1.3673 at 9:20 a.m. Brussels time today. ‘Excessive’ Drop “The euro is certainly not in danger,” European Central Bank President Jean-Claude Trichet told Euronews. “But we must not be complacent.” The currency will rebound from the “excessive” drop as concern ebbs that Greece will default, JPMorgan Chase & Co. analysts including Jan Loeys , global head of market strategy in London, wrote in a March 12 research note. The euro may rally to $1.42 in the “short term,” they predicted. Greek Prime Minister George Papandreou’s bid to cut the deficit to 8.7 percent of gross domestic product in 2010 from 12.7 percent last year hinges on quelling the unrest that led last week to the year’s second general strike. More than 60 percent of Greeks back the austerity plans, while more than 52 percent doubt they’ll work, according to a Marc poll published this week in To Ethnos newspaper. Greece’s Deficit Greece’s deficit for the first two months of this year dropped 77 percent to 903 million euros, the Finance Ministry said on March 12. Greece’s belt-tightening steps won the EU’s seal of approval, with Economic and Monetary Affairs Commissioner Olli Rehn hailing the “very bold and ambitious package of measures.” The risk that Greece will be unable to repay its bond investors may be exaggerated, according to Standard & Poor’s. “Capital markets have been overshooting relative to Greece’s fundamentals,” Moritz Kraemer , Frankfurt-based managing director of European sovereign ratings at S&P, said yesterday. “Greece’s default is very unlikely.” To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net ; Stephanie Bodoni in Brussels at sbodoni@bloomberg.net .

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Greece Gets EU Financial Lifeline Pledge

March 16, 2010

By James G. Neuger and Stephanie Bodoni March 16 (Bloomberg) — European finance ministers laid the groundwork for a financial lifeline to debt-stricken Greece, breaking a taboo against aid to cash-strapped governments in order to avert a crisis for the euro. Officials from the 16 countries using the currency worked out a strategy for emergency loans in case Greece’s plan for 4.8 billion euros ($6.6 billion) in tax increases and wage cuts fails to stave off fiscal disaster. “We clarified the technical arrangements that would enable us to take coordinated action which could be swiftly put into place in the event it is necessary,” Luxembourg Prime Minister Jean-Claude Juncker told reporters late yesterday after leading a meeting of euro-area finance officials in Brussels. With the euro undergoing the harshest test in its 11-year history, the unprecedented pledge reflected concern that Greece’s budget woes could spread, poisoning investor confidence and aggravating the currency’s 10 percent decline against the dollar since November. The meetings resumed at 9 a.m. today with all 27 EU finance ministers. The agenda also includes proposals to clamp down on hedge funds and credit-default swaps. Aid to Greece would probably come through governments pooling funds to extend direct loans, said a European official who asked not to be named. The meeting didn’t resolve the size of future loans, which countries would offer them or how long they would last and cost. Financial Stability “The objective would not be to provide financing at average euro-zone interest rates, but to safeguard financial stability in the euro area as a whole,” the ministers said in a statement. Greek bonds gained, pushing the 10-year yield down 4 basis points to 6.17 percent. The 10-year German yield rose 1 basis point to 3.16 percent. That trimmed the extra yield on Greek over German bonds to 300 basis points, the lowest since March 5. “The clear hope is that the mere promise of support will reassure investors enough to bring Greek bond yields down further,” said Ben May , an economist at Capital Economics Ltd. in London. “But if this does not happen, euro-zone governments will come under greater pressure to provide further details.” What would trigger the lending also was left open. Loan guarantees wouldn’t be part of the package, Juncker said. Final decisions will be up to EU leaders, though not necessarily at their next scheduled summit on March 25-26, he said. ‘Effective Premium’ “There is no loan facility at the moment,” Spanish Economy Minister Elena Salgado said before today’s session. “If this is the case, I’m sure all the euro countries will be there.” Dutch Finance Minister Jan Kees de Jager said any contribution from the Netherlands would require “an effective premium on top of the cost of funding so that there will be also an incentive for Greece to refinance through the markets.” Appeals for aid to Greece have raised hackles in Germany, the country behind the low-debt, anti-inflation policies that make the euro what the German high court said must be a “community of stability.” German Finance Minister Wolfgang Schaeuble , who last week called for the expulsion of uncompetitive, debt-prone countries from the euro, quit his hospital bed two weeks after undergoing surgery to attend the meeting. He didn’t speak to reporters yesterday. ‘Tricky Game’ “It’s a very tricky game for politicians right now,” said Carsten Brzeski , an economist at ING Group in Brussels who used to work at the European Commission . “They have to play for time.” While Greece this month sold 5 billion euros in bonds, it faces more than 20 billion euros in debt redemptions in April and May. Doubts that Greece will tame Europe’s largest deficit on its own contributed to declines in German bonds last week amid concern that Europe’s largest economy will bear the bulk of the costs of a rescue package. “What will happen if necessary, and we’re still convinced it won’t be necessary, is that we’ll reach an agreement in the euro zone to offer bilateral aid in a coordinated form,” Juncker said. The euro weakened 0.7 percent to $1.3677 yesterday on concern that a protracted battle over a financial backstop for Greece would expose the flaws in how Europe manages the $12 trillion economy. It traded at $1.3673 at 9:20 a.m. Brussels time today. ‘Excessive’ Drop “The euro is certainly not in danger,” European Central Bank President Jean-Claude Trichet told Euronews. “But we must not be complacent.” The currency will rebound from the “excessive” drop as concern ebbs that Greece will default, JPMorgan Chase & Co. analysts including Jan Loeys , global head of market strategy in London, wrote in a March 12 research note. The euro may rally to $1.42 in the “short term,” they predicted. Greek Prime Minister George Papandreou’s bid to cut the deficit to 8.7 percent of gross domestic product in 2010 from 12.7 percent last year hinges on quelling the unrest that led last week to the year’s second general strike. More than 60 percent of Greeks back the austerity plans, while more than 52 percent doubt they’ll work, according to a Marc poll published this week in To Ethnos newspaper. Greece’s Deficit Greece’s deficit for the first two months of this year dropped 77 percent to 903 million euros, the Finance Ministry said on March 12. Greece’s belt-tightening steps won the EU’s seal of approval, with Economic and Monetary Affairs Commissioner Olli Rehn hailing the “very bold and ambitious package of measures.” The risk that Greece will be unable to repay its bond investors may be exaggerated, according to Standard & Poor’s. “Capital markets have been overshooting relative to Greece’s fundamentals,” Moritz Kraemer , Frankfurt-based managing director of European sovereign ratings at S&P, said yesterday. “Greece’s default is very unlikely.” To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net ; Stephanie Bodoni in Brussels at sbodoni@bloomberg.net .

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China’s Price Inflation Is Mild and Controllable, Commerce Official Says

March 12, 2010

By Bloomberg News March 13 (Bloomberg) — China’s price increases are mild and controllable, Assistant Commerce Minister Fang Aiqin said at a briefing in Beijing today. International commodity price increases will “gradually” be imported into the nation, Fang said. To contact the reporter on this story: Judy Chen in Shanghai at xchen45@bloomberg.net

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Nakheel Bonds Advance as JPMorgan Says Creditors May Be Paid at Face Value

March 9, 2010

By Haris Anwar and Dana El Baltaji March 9 (Bloomberg) — Nakheel PJSC bonds, part of parent Dubai World’s planned $26 billion debt restructuring, climbed the most in two months after JPMorgan Chase & Co. said creditors may get paid face value. The developer’s $750 million sukuk, or Islamic bond, added 5 cents, the most since Jan. 6, to 56.25 cents on the dollar at 4:31 p.m. in Dubai, prices compiled by Bloomberg show. The bond due in January 2011 has climbed from a low of 46.5 cents on Feb. 17 and traded as high as 85.5 cents on Nov. 25, when Dubai World said it may delay debt payments. Nakheel’s debt “may not warrant haircuts, and restructuring may only involve long maturity extensions,” JPMorgan said in a report. United Arab Emirates Economy Minister Sultan bin Saeed al-Mansouri said today he’s confident state- owned holding Dubai World will reach an accord with creditors, while Finance Minister Sheikh Hamdan Bin Rashid Al Maktoum said the seven-emirate U.A.E. stands by Dubai. The bank’s “report is very positive and it gives some clarity,” Louis Gargour , the London-based chief investment officer at hedge fund LNG Capital LLP and a holder of Nakheel debt, said in an interview. “You might have a situation where you have sovereign assistance in paying off at maturities.” Dubai World, one of the emirate’s three main state-owned business groups, said Nov. 25 it would seek to delay repaying debt until at least May 30. The announcement sparked the biggest plunge in developing-nation stocks and the largest increase in emerging-market bond yields over U.S. Treasuries in four weeks, while the cost to protect against a default by Dubai doubled. Neutral Rating Dubai World may propose to creditors excluding Nakheel holders a 20 percent cut in face value, a 10-year extension on maturities and a government repayment guarantee, the bank said. A spokesman for Dubai World declined to comment. JPMorgan maintained its neutral rating on Nakheel’s bonds, citing the “unpredictable nature” of the restructuring and “the small probability that sukuks get paid at par upon stated maturity.” The debt “would also have some potential upside if the government guarantees principal repayment under a restructuring plan that involved little or no haircut,” Zafar Nazim , a London-based analyst at the bank, wrote in the report dated yesterday. Dubai avoided a default in December on $4.1 billion of payments due for Nakheel’s 2009 bond after Abu Dhabi and its banks provided $10 billion of loans. ‘Precedent’ “There was a precedent set in 2009 when Nakheel’s debt was settled,” said Jamil Hallak , head of credit trading at Standard Chartered Plc in Dubai. ’’Investors assume that the same will happen in 2010 and 2011, although it’s less likely that they redeem it in full. I think the default is not a scenario that I expect, and that a rollover is more likely.” Dubai, the second-biggest of seven emirates that make up the U.A.E., and its state-owned companies racked up $109.3 billion of debt during a real-estate boom that ended in 2008, according to International Monetary Fund estimates, as the sheikhdom sought to transform into a tourism, trade and financial services 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 to refinance maturing debt. Swap Option All restructuring options are being considered, including swapping Nakheel’s $1.73 billion bonds with new securities, a person close to the Dubai government said on Feb. 17. Nakheel, a developer of palm-shaped islands, has two outstanding Islamic bonds, a 3.6 billion-dirham ($980 million) floating-rate note due May 13 and a 2.75 percent, $750 million sukuk maturing in January 2011. Moody’s Investors Service estimated last month that U.A.E. banks hold about $15 billion of Dubai World debt. ’’Dubai’s domestic banks’ exposure to Dubai World would be an argument that goes against the government demanding steep haircuts,’’ New York-based JPMorgan said in the report. “Assuming two-thirds or $10 billion of this amount relates to Dubai’s banks, a 40 percent haircut implies provisioning of $4 billion,” the bank said. To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net ;

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Nakheel Bonds Advance as JPMorgan Says Creditors May Be Paid at Face Value

March 9, 2010

By Haris Anwar and Dana El Baltaji March 9 (Bloomberg) — Nakheel PJSC bonds, part of parent Dubai World’s planned $26 billion debt restructuring, climbed the most in two months after JPMorgan Chase & Co. said creditors may get paid face value. The developer’s $750 million sukuk, or Islamic bond, added 5 cents, the most since Jan. 6, to 56.25 cents on the dollar at 4:31 p.m. in Dubai, prices compiled by Bloomberg show. The bond due in January 2011 has climbed from a low of 46.5 cents on Feb. 17 and traded as high as 85.5 cents on Nov. 25, when Dubai World said it may delay debt payments. Nakheel’s debt “may not warrant haircuts, and restructuring may only involve long maturity extensions,” JPMorgan said in a report. United Arab Emirates Economy Minister Sultan bin Saeed al-Mansouri said today he’s confident state- owned holding Dubai World will reach an accord with creditors, while Finance Minister Sheikh Hamdan Bin Rashid Al Maktoum said the seven-emirate U.A.E. stands by Dubai. The bank’s “report is very positive and it gives some clarity,” Louis Gargour , the London-based chief investment officer at hedge fund LNG Capital LLP and a holder of Nakheel debt, said in an interview. “You might have a situation where you have sovereign assistance in paying off at maturities.” Dubai World, one of the emirate’s three main state-owned business groups, said Nov. 25 it would seek to delay repaying debt until at least May 30. The announcement sparked the biggest plunge in developing-nation stocks and the largest increase in emerging-market bond yields over U.S. Treasuries in four weeks, while the cost to protect against a default by Dubai doubled. Neutral Rating Dubai World may propose to creditors excluding Nakheel holders a 20 percent cut in face value, a 10-year extension on maturities and a government repayment guarantee, the bank said. A spokesman for Dubai World declined to comment. JPMorgan maintained its neutral rating on Nakheel’s bonds, citing the “unpredictable nature” of the restructuring and “the small probability that sukuks get paid at par upon stated maturity.” The debt “would also have some potential upside if the government guarantees principal repayment under a restructuring plan that involved little or no haircut,” Zafar Nazim , a London-based analyst at the bank, wrote in the report dated yesterday. Dubai avoided a default in December on $4.1 billion of payments due for Nakheel’s 2009 bond after Abu Dhabi and its banks provided $10 billion of loans. ‘Precedent’ “There was a precedent set in 2009 when Nakheel’s debt was settled,” said Jamil Hallak , head of credit trading at Standard Chartered Plc in Dubai. ’’Investors assume that the same will happen in 2010 and 2011, although it’s less likely that they redeem it in full. I think the default is not a scenario that I expect, and that a rollover is more likely.” Dubai, the second-biggest of seven emirates that make up the U.A.E., and its state-owned companies racked up $109.3 billion of debt during a real-estate boom that ended in 2008, according to International Monetary Fund estimates, as the sheikhdom sought to transform into a tourism, trade and financial services 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 to refinance maturing debt. Swap Option All restructuring options are being considered, including swapping Nakheel’s $1.73 billion bonds with new securities, a person close to the Dubai government said on Feb. 17. Nakheel, a developer of palm-shaped islands, has two outstanding Islamic bonds, a 3.6 billion-dirham ($980 million) floating-rate note due May 13 and a 2.75 percent, $750 million sukuk maturing in January 2011. Moody’s Investors Service estimated last month that U.A.E. banks hold about $15 billion of Dubai World debt. ’’Dubai’s domestic banks’ exposure to Dubai World would be an argument that goes against the government demanding steep haircuts,’’ New York-based JPMorgan said in the report. “Assuming two-thirds or $10 billion of this amount relates to Dubai’s banks, a 40 percent haircut implies provisioning of $4 billion,” the bank said. To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net ;

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EU Sets Clock Ticking on Greek Budget Reduction as Talks With Merkel Near

March 1, 2010

By Simon Kennedy and Jonathan Stearns March 2 (Bloomberg) — The European Union set the clock ticking on Greece’s attempts to cut the bloc’s largest budget deficit. As Prime Minister George Papandreou prepares to meet Germany’s Angela Merkel on March 5, EU Monetary Affairs Commissioner Olli Rehn yesterday said Greece must reveal new measures “in the coming days” to allay officials’ concerns that the current austerity plan falls short. Merkel and other EU leaders want Greece to do more so they can justify any aid package to taxpayers and political opponents who say that it shouldn’t be bailed out after living beyond its means. Failure to satisfy Rehn’s demand before the Berlin talks may dash hopes of a German-led lifeline, spurring investors to reverse yesterday’s rally in Greek bonds. “All the trump cards are with Berlin this week,” said Julian Callow , chief European economist at Barclays Capital in London. “Clearly Greece has a huge financing need in the months ahead and so it will have to do more” before the Merkel meeting. Papandreou addresses his governing Pasok party at 5 p.m. local time today and the cabinet meets tomorrow to discuss further “decisions on the economy,” the government said. The yield on Greece’s 10-year bonds yesterday fell 9 basis points to 6.25 percent, the lowest in two weeks, as investors speculated a deal to help Greece is close. The government needs to raise funds to cover more than 20 billion euros ($27 billion) of bonds and notes maturing in April and May. “It is Greece’s job to do what it has announced, which is to implement the deficit reduction goal,” said Merkel yesterday. Pension Freeze Papandreou’s efforts to give the EU what it wants are being complicated by strikes, a deteriorating economic outlook and higher borrowing costs. Options outlined by the EU include another increase in the fuel levy, raising sales tax and a luxury tax on cars and yachts. It could also raise duties on alcohol and tobacco products again and abolish the “14th wage”, a payment received twice a year that’s equivalent to one month’s wage. Labor Minister Andreas Loverdos said yesterday that Greece will extend a freeze on public-sector pay increases to pensions. “The announcement of cuts is necessary to pave the way to financial assistance,” said Nick Kounis , chief European economist at Fortis Bank Nederland NV in Amsterdam. “Everyone is being tough on Greece and now it has to outline the extra cuts and commit to them.” Wary Finance Minister George Papaconstantinou said yesterday the government will “do anything” to meet its targets, which include lowering the deficit beneath the EU limit of 3 percent of gross domestic product by 2012. This year, the government wants to cut the deficit by 4 percentage points to 8.7 percent. The EU should nevertheless be wary of making Greece do too much too soon, David Mackie , chief European economist at JPMorgan Chase & Co., said in a Feb. 26 research report. He calculates that new cuts amounting to another 2 percentage points of GDP would leave the total at 7 percentage points, which is “getting to the intolerable end of the spectrum.” “It appears that the Greek government has reasonably broad support across the political spectrum and with the population as a whole,” Mackie said. “Too much pressure from the rest of the EU could change this and introduce a political crisis, the consequence of which would be hard to gauge.” The government has already raised the retirement age and frozen salary increases for public-sector workers. Default Risk The yield on Greece’s 10-year debt has stabilized after surging more than two percentage points in three months to as high as 7.15 percent at the end of January as some investors speculated the EU will do whatever is necessary to stave off a default. German lawmakers say euro-area officials are devising a plan to grant Greece about 25 billion euros in aid should the need arise. One option could involve using German state-owned lenders such as the KfW Group to buy its bonds . “We have a number of options before us, including public and public-private ones,” French Finance Minister Christine Lagarde told reporters near Paris yesterday. “All of this is on the condition that Greece meets its commitments.” To contact the reporters on this story: Jonathan Stearns in Athens at jstearns2@bloomberg.net ; Simon Kennedy in Paris at skennedy4@bloomberg.net .

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Video: Mexico’s Werner Says Growth May Beat 3% Forecast in 2010

February 5, 2010

Feb. 5 (Bloomberg) — Mexico’s Deputy Finance Minister Alejandro Werner talks about the outlook for the country’s economy. Werner also discusses the relevance of the Group of Seven nations grouping, which meets in Canada this weekend. He speaks with Bloomberg’s Maryam Nemazee and Rishaad salamat in London.

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Germany Said to Want GM to Boost Opel Restructuring Aid Before State Help

February 2, 2010

By Andreas Cremer Feb. 2 (Bloomberg) — Germany wants General Motors Co. to increase its contribution to the Opel unit’s reorganization before considering whether to provide state aid, according to two people familiar with the matter. Economy Minister Rainer Bruederle is using a two-day U.S. visit, which includes a meeting with Treasury Secretary Timothy F. Geithner in Washington, to express that view, said the people, who declined to be identified because the discussions are confidential. GM has said it will provide 600 million euros ($836 million) for Opel’s restructuring and ask for as much as 2.7 billion euros from European governments. Germany made money available last year to keep Opel afloat and is more cautious about providing aid after GM backed out of an agreement to sell the unit to Magna International Inc. , the bidder favored by Germany, the people said. Detroit-based GM decided in November to retain Opel. The German government expects GM to file a request for state loans by mid-February, they said. GM has said it needs financial support from governments including the U.K., Spain and Poland. The carmaker hasn’t given a breakdown of how much it wants from each country and it’s unclear how much more Germany wants GM to contribute. Opel Chief Executive Officer Nick Reilly reiterated as recently as Jan. 21 GM’s target to seek a total of 2.7 billion euros from European governments. Treasury Response Geithner and Bruederle “discussed the state of the global recovery and their shared commitment to international cooperation around financial reform,” a Treasury spokeswoman, Natalie Wyeth, said in a statement that didn’t indicate whether the officials talked about Opel. Sarah Schneid , a German Economy Ministry spokeswoman, declined to comment. Tom Wilkinson , a GM spokesman in Detroit, also declined to comment and referred questions to GM Europe. Opel plans to put in a request for financial aid once the review is completed as early as this week, said Stefan Weinmann , a spokesman for GM Europe. “The German government has set out a process for how to apply for aid, and we’re following that,” Weinmann said. “Part of the requirement is to have an outside party review the request.” Dusseldorf-based auditing firm Warth & Klein GmbH was hired to evaluate Opel’s cost-savings plan and the results of its study will form the basis of GM’s application, the people said. Other U.S. officials Bruederle is meeting during his visit include Energy Secretary Steven Chu , Commerce Secretary Gary Locke , Trade Representative Ron Kirk and Federal Reserve Board Vice Chairman Donald Kohn , according to a Jan. 29 statement from the German Economy Ministry. Antwerp Closure Bruederle, a deputy leader of the pro-business Free Democrats, took over as economy minister Oct. 28, days before GM decided to keep Opel. The Free Democrats opposed excessive government involvement in Opel and the creation of a trust last June to facilitate the sale of the carmaker to an investor. His predecessor, Karl-Theodor zu Guttenberg , had brokered a sale of Opel with German state financing. Opel said Jan. 21 that it will halt production this year at Antwerp, Belgium, the first restructuring move after more than a year of talks with unions on scaling back the workforce and production capacity. The closure is part of GM’s effort to restore profit at Opel and its U.K. sister brand Vauxhall by eliminating 8,300 jobs and cutting capacity by 20 percent. In addition to seeking state aid, GM is also asking for 265 million euros in cost cuts from labor unions. Workers rejected concessions unless GM offers another form of “collateral” after refusing to extend employees a stake in the company, GM’s European Employee Forum said yesterday in a statement. Reilly, who wants an agreement with workers by mid- February, appealed to labor representatives to cooperate “so that no more time is lost,” he said in a separate statement. To contact the reporter on this story: Andreas Cremer in Berlin at acremer@bloomberg.net .

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Bank of Japan May See Rising Pressure as Kan Seeks to Whip Deflation Now

January 14, 2010

By Toru Fujioka and Mayumi Otsuma Jan. 15 (Bloomberg) — Japan’s central bank may see escalating political pressure to act against deflation as the government seeks to remove the threat of a recession relapse before a parliamentary election in July. Finance Minister Naoto Kan , in his second week in office after replacing Hirohisa Fujii , said yesterday that “there are still various policy measures that could be taken” by the Bank of Japan. He also praised the BOJ’s Dec. 1 introduction of a 10 trillion yen ($109 billion) loan program that came days after he expected more “monetary support” from the bank. He was economy minister at the time. “BOJ policy makers will feel more pressure to take action with Kan in the position,” said Hiromichi Shirakawa , a former central bank official who’s now chief economist at Credit Suisse Group AG in Tokyo. “Kan probably wants the central bank to give more stimulus to the economy as he’s much more political than Fujii and nervous about the government’s falling approval rating ahead of the upcoming election.” Among the bank’s options: Expand the credit program, increase its monthly purchases of government bonds, or specify a timeframe for keeping the benchmark interest rate near zero, economists said. The spark for action may be another surge in the yen that could undermine the export-led recovery. The Democratic Party of Japan’s popularity has slid since it came to power for the first time four months ago promising to end 20 years of economic stagnation. Prime Minister Yukio Hatoyama ’s approval rating was at 56 percent this month, compared with 75 percent when he took office, the Yomiuri newspaper said on Jan. 11, without giving a margin of error. Weaker Yen Kan said in his inaugural speech on Jan. 7 that he will work with the BOJ to keep the yen at an “appropriate” level, adding that he wants it to weaken “a bit more.” He said on Dec. 8 that the loan program “had considerable impact” in cheapening the currency and bolstering the stock market. The yen traded at 91.93 per dollar late yesterday in Tokyo, about 8 percent weaker than the 14-year high of 84.83 reached on Nov. 27. The Nikkei 225 Stock Average has rallied 20 percent since then, and climbed 1.6 percent yesterday. “I want to make sure we communicate with each other thoroughly,” Kan said yesterday, referring to the central bank. “The government and Bank of Japan are cooperating very well.” Governor Masaaki Shirakawa and his colleagues may consider further action should the yen resume its advance and approach 85, said Hideo Kumano , a former Bank of Japan official. Recession Risk “The risk of a double-dip recession will surge if overseas economies deteriorate, which will probably make the currency market volatile and strengthen the yen,” said Kumano, chief economist of Dai-Ichi Life Research Institute in Tokyo. He said the policy board’s most likely option is to increase the size of the credit program and extend the period of the loans beyond three months. Alternatively, he added, the bank might increase its monthly purchases of government bonds from the current 1.8 trillion yen if Hatoyama decides to sell more of the securities to fund any further stimulus spending. Japan’s fiscal condition is deteriorating: The Finance Ministry forecasts bond sales will exceed taxes as the main source of funding in the year ending March. Hatoyama unveiled a record 92.3 trillion yen budget and a 7.2 trillion yen stimulus package last month. The spending plans “will require the Bank of Japan to make a comprehensive re-entry into quantitative easing,” Glenn Maguire , chief Asia-Pacific economist at Societe Generale in Hong Kong, wrote in a note published Jan. 8. Buy More Bonds Morgan Stanley, Goldman Sachs Group Inc. and Pacific Investment Management Co. analysts also said this month the BOJ may step up its liquidity injections through purchases of government bonds to combat consumer-price declines. Another choice may be specifying a period for keeping the key rate at 0.1 percent, said Credit Suisse’s Shirakawa, who isn’t related to the governor. “Influencing expectations of market participants is probably the least costly step for the central bank,” he said. The bank edged toward such a pledge last month by saying it “does not tolerate a year-on-year rate of change in the consumer-price index equal to or below zero percent.” Its understanding of price stability is inflation of up to 2 percent. Inflation Target The range “can almost be taken as inflation target,” Keisuke Tsumura , one of Kan’s top two economic advisers, said in an interview yesterday. “We’re now at a stage where we can evaluate the impact of the bank’s policy.” Tsumura said Kan “will respect the bank’s autonomy,” a stance that economists including Shirakawa and Masaaki Kanno question. “Kan isn’t seeking a traditional relationship with the BOJ,” said Kanno, chief economist at JPMorgan Chase & Co. in Tokyo, who also used to work at the central bank. “It looks like he wants to create something different to keep them under control as far as the law allows and the bank can keep face.” The Bank of Japan is unlikely to bow to pressure if the government wants further monetary easing to help fund fiscal spending, said Martin Schulz , senior economist at Fujitsu Research Institute in Tokyo. The central bank will only act “when it sees that there is a responsible and sustainable policy at the Ministry of Finance concerning the public debt ,” Schulz said. “Kan needs to be expansionary, he needs to look responsible and he needs to get along well with the BOJ. If he does so, there is a very good chance that deflation finally will be over next year. That will be a major, major political achievement.” To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net ; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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LOOKING AHEAD TO 2010: Property players upbeat on signs of economic recovery (Business Times (Malaysia))

December 24, 2009

PROPERTY developers are upbeat about their business outlook for 2010 as the Malaysian economy is set to recover. The economy is expected to contract by 3 per cent this year but has been forecast to expand by up to 3 per cent in 2010. Prime Minister Datuk Seri Najib Razak has said he wants to do better and aim for a 5 per cent growth. Ireka Development Management Sdn Bhd president and chief …

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Greece Sells 2 Billion Euros of Bonds Due 2015 to Five Banks, Bankers Say

December 15, 2009

By Anna Rascouet and Christos Ziotis Dec. 16 (Bloomberg) — Greece sold 2 billion euros ($2.9 billion) of floating-rate notes to five banks in a so-called private placement, two bankers familiar with the deal said, as the government seeks to shore up its ailing finances. The securities, maturing in February 2015, were offered to yield 250 basis points more than the six-month euro interbank offered rate, or Euribor, they said. The participating banks were National Bank of Greece SA, Alpha Bank AE, EFG Eurobank Ergasias SA, Piraeus Bank SA and Sanpaolo IMI SpA, they said. Greek bonds and stocks have tumbled in the past week on concern the government may struggle to meet its debt obligations as its budget deficit swells. Prime Minister George Papandreou appealed two days ago to unions and employer groups to help undertake “radical” action to combat the crisis. Finance Minister George Papaconstantinou said yesterday there are no discussions about a possible bailout for the country. “Against a background of greater market sensitivity to government debt levels and deficits more generally, markets are likely to remain nervous over Greece’s fiscal outlook in the near term,” a team of analysts at BNP Paribas SA including London-based Luigi Speranza wrote in a note yesterday. “The available policy options are all, in their own way, difficult.” The yield on the Greek two-year note soared 28 basis points to 3.39 percent yesterday, its highest level since March 11. The premium, or spread, investors demand to hold Greek 10-year bonds instead of German bunds rose 21 basis points to 250 basis points, the highest since April 2, based on closing prices. ‘Painful’ Choices “In the next three months we will take those decisions which weren’t taken for decades,” Papandreou said in his speech in Athens. He said many choices will be “painful,” though he promised to protect poorer and middle-income Greeks. Papandreou’s “unconvincing speech” prompted investors to increase bets against the country, according to Puneet Sharma , head of credit strategy at Barclays Capital in London. “Poor sentiment was driven by the failure of the Greek Prime Minister to clearly outline how his new government would reduce the fiscal deficit,” he said. Credit-default swaps on Greece rose 25.5 basis points to 245.5 yesterday, according to CMA DataVision. Elected in October on a platform of higher spending and wages, Papandreou is trying to shore up confidence in Greece. The nation’s credit was downgraded by Fitch Ratings last week. Government measures will help calm financial markets as they are introduced over the coming months, Finance Minister Papaconstantinou said. “The implementation of these measures over the next few months will be what convinces the markets that there is a very serious effort to reduce the deficit,” Papaconstantinou told reporters in Berlin yesterday before holding talks with German Finance Minister Wolfgang Schaeuble . Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a 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. To contact the reporters on this story: Anna Rascouet in London at arascouet@bloomberg.net ; Christos Ziotis in Athens at cziotis@bloomberg.net

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Papandreou Says ECB’s Trichet, Juncker See No Possibility of Greek Default

December 11, 2009

By Jonathan Stearns and Leon Mangasarian Dec. 11 (Bloomberg) — Greek Prime Minister George Papandreou said that European Central Bank President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker see “no possibility” of a Greek default. Papandreou was speaking to reporters at a European Union summit in Brussels. “There is no possibility of a default for Greece,” Papandreou said today. He also said there was no possibility of Greece leaving the euro area. Greece plans to tackle its budget deficit in part by reducing the number of government layers to three from five, said Papandreou, who called this “a major revolution for Greece.” “We’re absolutely aware of the problem,” he said. “We’re not hiding the problem.” Papandreou also said Greece plans more transparency in the tax system. “We’re not asking for any gifts,” he said. “We will live up to our obligations.”

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Japan Announces $81 Billion Stimulus as Recovery, Hatoyama’s Approval Wane

December 8, 2009

By Keiko Ujikane and Toru Fujioka Dec. 8 (Bloomberg) — The Japanese government unveiled a 7.2 trillion yen ($81 billion) economic stimulus package amid signs the recovery and Prime Minister Yukio Hatoyama ’s popularity are waning. Hatoyama’s first stimulus plan includes 3.5 trillion yen to help regions, 600 billion yen for employment and 800 billion yen on environmental initiatives, the Cabinet said today in a statement in Tokyo. The measures had been delayed because of haggling within the coalition government. The Democratic Party of Japan, which took office in September pledging to support households battered by two decades of economic stagnation, is grappling with a slide in prices and a surging yen. The government will say third-quarter economic growth was slower than initially reported in revised figures tomorrow, according to economists surveyed by Bloomberg News. “It’s a necessary step,” said Martin Schulz , senior economist at Fujitsu Research Institute in Tokyo. “Without another stimulus package, it’s very likely that the economy will fall back into recession. The government simply can’t risk this right now.” The yen has weakened since climbing to a 14-year high of 84.83 against the dollar on Nov. 27. The Japanese currency traded at 89.07 at 11:41 a.m. in Tokyo from 88.99 before the announcement. The Nikkei 225 Stock Average fell 0.5 percent. Deflation Risk “Risk factors include a deterioration in employment conditions, sluggish demand because of deflationary pressure, a rise in long-term interest rates and movements in the currency markets,” the statement said. “Excessive and disorderly movements in foreign-exchange rates can inflict considerable adverse impact on the economic recovery and the government will watch movements sternly.” Japanese policy makers are adding stimulus measures just as their counterparts around the world consider how to withdraw them as the global economy recovers. The Bank of Japan released a 10 trillion yen credit program last week, satisfying government calls for it to do more to fight declining prices. Under the program, the central bank will offer three-month loans to commercial banks at 0.1 percent interest. In a meeting with central bank Governor Masaaki Shirakawa last week, Hatoyama applauded the move and refrained from pushing for further monetary easing. Kamei’s Call The People’s New Party, a junior coalition member headed by Financial Services Minister Shizuka Kamei , blocked the stimulus plan last week, calling for a larger package to defeat deflation. Coalition parties agreed to boost the size of the measures by 100 billion yen to accommodate those requests. That increase will need to be funded with so-called construction bonds, Motohisa Furukawa , a vice minister at the Cabinet Office, told reporters late yesterday. The government said some of the package will be paid for with funds frozen from the previous administration’s extra budget. It wants to avoid selling new bonds “as much as possible,” the statement said. Japan has the world’s largest public debt , with liabilities that are approaching twice the size of the economy. Bond Sales Finance Minister Hirohisa Fujii said bond sales for the current fiscal year will exceed tax revenue for the first time in the postwar period. The government will sell 53.5 trillion yen in bonds, more than the 44 trillion yen budgeted in April, he said. Tax revenue will slump to 36.9 trillion yen, less than the 46 trillion yen projected. Today’s package includes 3 trillion yen in tax grants to local governments to make up for a revenue shortfall. Heizo Takenaka , who was economy minister under former Prime Minister Junichiro Koizumi, yesterday attacked the government for lacking policy direction. “There’s no control tower in the policy-making system,” he said in an interview in Seoul. The premier’s sliding popularity may hurt his party’s momentum ahead of upper house elections in July 2010. His approval rating fell below 60 percent for the first time, declining to 59 percent from last month’s 63 percent, the Yomiuri newspaper reported yesterday. Exports Improve Japan’s exports fell at the slowest pace in a year in October as worldwide government spending spurred demand for the nation’s products, a Finance Ministry report showed today. That helped the trade surplus expand 42.7 percent from a year earlier to 1.4 trillion yen. Other reports show the expansion may be weakening. Industrial production advanced at the slowest pace in eight months in October, wages slid for a 17th month, and consumer prices fell a near-record 2.2 percent. Gross domestic product rose at an annual 2.8 percent rate in the three months ended Sept. 30, according to the median estimate of 17 economists surveyed by Bloomberg News ahead of tomorrow’s revised figures. That would be slower than the 4.8 percent the Cabinet Office initially reported, reflecting figures last week that showed companies cut capital spending at a record pace in the period. The world’s second-largest economy will probably shrink 5.4 percent this year, more than a 4.2 percent contraction in the euro area and a 2.7 percent drop in the U.S., the International Monetary Fund forecast in October. To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net ; Keiko Ujikane in Tokyo at kujikane@bloomberg.net

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Takenaka Says Government Lacks Policy `Control Tower’ as Coalition Bickers

December 7, 2009

By Seyoon Kim Dec. 7 (Bloomberg) — Heizo Takenaka , a former Japanese economy minister credited with securing the country’s longest postwar expansion, attacked the coalition government for lacking policy direction as it haggles over a stimulus package. “The decision-making system in the current government is very messy,” Takenaka, who served in cabinet posts under Junichiro Koizumi from 2001 to 2006, said in an interview today on the sidelines of a seminar in Seoul. “There’s no control tower in the policy-making system.” Prime Minister Yukio Hatoyama’s first economic aid package will be completed tomorrow, the government’s top spokesman said, after it was blocked last week by a junior coalition party. The delay threatens to undermine the premier’s leadership in reviving the world’s second-largest economy, which faces deflation and a yen that reached a 14-year high last month. Lack of leadership was cited as one reason why Hatoyama’s approval rating fell to 59 percent from last month’s 63 percent, according to a Yomiuri newspaper survey published today. The report didn’t provide a margin of error. Takenaka said the decision by the Democratic Party of Japan-led government to replace the country’s economic advisory panel with a national strategy bureau has made decision making “messy.” He said the smaller coalition members have “very strong bargaining power” and may succeed in increasing the size of the stimulus package. Hatoyama had been preparing spending of as much as 4 trillion yen ($46 billion), Finance Ministry officials familiar with the matter said last week. Chief Cabinet Secretary Hirofumi Hirano said today that the government is “putting on the finishing touches” in time for the package to be considered by the cabinet tomorrow. To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

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Russia May Cut Planned Bond Sale in Half on Higher Oil Price, Klepach Says

December 1, 2009

By Denis Maternovsky and Agnes Lovasz Dec. 1 (Bloomberg) — Russia may reduce next year’s planned debt sale by as much as 50 percent because higher oil prices are raising revenue for the world’s biggest energy supplier, Deputy Economy Minister Andrei Klepach said. The government’s official target represents “an extreme frontier and the actual figure will be much more modest,” Klepach said in an interview in London today. The government may limit debt sales to $8 billion to $10 billion, compared with an official target of $18 billion, Klepach said. The reduced borrowing need is based on an assumption that oil will average about $60 to $65 a barrel, he said, adding the figures were based on his own calculations. Russia’s need for international funding to plug its budget deficit is ebbing after Urals crude, the country’s main export, surged 86 percent this year. The country will post a budget deficit equivalent to about 6.2 percent to 6.5 percent of gross domestic product in 2010, Klepach said today. That compares with an official government estimate of 6.8 percent. Next year’s bond sale will be Russia’s first since its 1998 default on $40 billion of domestic debt. Russia’s return to international debt markets will allow the government to “improve the flexibility of its debt policy,” Klepach said. The government’s official budget forecast assumes an oil price of $58 a barrel in 2010, rising to $60 in 2012. Klepach’s estimate adds detail to comments made by Deputy Finance Minister Dmitry Pankin , who in a Nov. 3 interview said the country may need to sell “considerably” less than first announced. Ruble Appreciation A higher oil price is also boosting the ruble, and will force the central bank to purchase currency worth $70 billion to $90 billion a year to cap the ruble’s gains, Klepach said earlier today at the Adam Smith conferences’ Russian Banking Forum. The central bank will continue to cut the key interest rate from a record low 9 percent in an effort to stem speculative flows, Bank Rossii First Deputy Chairman Alexei Ulyukayev said today at the same conference. The country will see net capital inflows in the fourth quarter and in 2010 that will push the ruble higher, Klepach said in the interview. A ruble appreciation of about 4 percent to 5 percent would be “comfortable,” though the currency is likely to strengthen more than that, he said. Russia won’t resort to a tax on capital flows in an effort to curb the national currency’s advance, Klepach said in the interview. “The central bank and the government have no plan to introduce something like a Tobin tax,” Klepach said. “We don’t think such a type of restriction would be effective.” To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net

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German Minister Jung Resigns Amid Flap Over Afghan Air-Strike Disclosure

November 27, 2009

By Patrick Donahue Nov. 27 (Bloomberg) — German Labor Minister Franz Josef Jung , the former defense minister, resigned a day after the opposition accused him of withholding information on an air strike in Afghanistan that killed as many as 142 people. “I take political responsibility,” Jung, 50, told reporters in Berlin today. He served as defense minister in Chancellor Angela Merkel’s first government from November 2005 and held the labor job for less than a month. He’s the first minister to leave Merkel’s cabinet for policy reasons. Lawmakers called for Jung’s resignation yesterday after a report leaked to the Bild newspaper suggested the minister had early access to information about civilian casualties. For days after the Sept. 4 attack, Jung insisted that only Taliban militants had been killed in the operation. The strike, ordered by a German commander, was aimed at two immobilized tanker trucks ferrying fuel near Kunduz for a possible attack on German troops. A NATO report found that civilians were among the as many as 142 people killed. Defense Minister Karl-Theodor zu Guttenberg , who succeeded Jung on Oct. 28, confirmed to German lawmakers yesterday that information had been withheld and announced the resignation of Germany’s top general, Wolfgang Schneiderhan , and Deputy Defense Minister Peter Wichert . Guttenberg, who this month justified the grounds for the air strike, said he would re-assess the attack. The events overshadowed a debate in Germany’s lower house of parliament, or Bundestag, which was to focus on the country’s military involvement in Afghanistan. Germany, which has the third-biggest troop contingent in Afghanistan after the U.S. and U.K., must renew a parliamentary mandate each year for its upper limit of 4,500 troops. Secret Report Jung raised further hackles late yesterday when he told lawmakers that he had received the secret report, though hadn’t read it before handing it off to NATO. “I didn’t receive concrete information from this report,” Jung told lawmakers. “Jung’s resignation isn’t the consequence of an attack on a tanker in Kunduz, but the consequence of his own fear over telling people the truth,” said Jan Techau , an analyst at the German Council of Foreign relations. A member of Merkel’s Christian Democratic Union, Jung moved up through the ranks in the western state of Hesse, maintaining ties with state premier and Merkel ally Roland Koch . As defense minister, he oversaw a more expansive German military, which participated in missions such as on the Horn of Africa, the coast of Lebanon as well as Kosovo. Germany has come under pressure to deploy additional troops to Afghanistan. NATO Secretary General Anders Fogh Rasmussen met with Merkel yesterday in Berlin and urged alliance members to follow President Barack Obama’s lead and supply extra troops Merkel, British Prime Minister Gordon Brown and French President Nicolas Sarkozy have called for North Atlantic Treaty Organization allies to discuss the future of the Afghanistan mission at a conference in January. To contact the reporter on this story: Patrick Donahue in Berlin at at pdonahue1@bloomberg.net .

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Fujii Says He’ll Contact U.S., Europe on Currencies If Needed as Yen Jumps

November 26, 2009

By Toru Fujioka Nov. 27 (Bloomberg) — Japanese Finance Minister Hirohisa Fujii said he will contact authorities in the U.S. and Europe about currencies if necessary. He was speaking to reporters in Tokyo today. To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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OPEC not to change production levels — Minister of Oil

November 17, 2009

OPEC not to change production levels — Minister of Oil

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Blair’s Fading EU Presidency Chances Spur Race for Top Post in New Treaty

October 30, 2009

By James G. Neuger Oct. 30 (Bloomberg) — Tony Blair’s fading chances to be picked as the first European Union president opened the gates to new candidates as the EU cleared the final obstacles to creating the high-level post. EU leaders voiced growing doubts about the former U.K. prime minister, shifting the speculation to figures with a lower global profile such as Dutch Prime Minister Jan Peter Balkenende or former Finnish Prime Minister Paavo Lipponen . “I’d like there to be more candidates,” Spanish Prime Minister Jose Luis Rodriguez Zapatero , a socialist allied with Blair’s Labour party, said yesterday at an EU summit in Brussels. EU leaders surmounted the key remaining hurdle to creating the job by bowing to the Czech Republic’s demands for an exemption to treaty provisions that Czech leaders feared would grant property rights to ethnic Germans expelled after World War II. The concession was Czech President Vaclav Klaus’s price for abandoning his campaign to sabotage the Lisbon Treaty, which overhauls the EU’s half-century-old decision-making apparatus. Climate change and the economy are on the agenda for the summit’s final sessions, which end around 1 p.m. With EU leaders setting a Jan. 1 target for starting the new governing arrangements, the next step is a ruling due next week by the Czech supreme court, which has already backed the treaty once. “Let me assure you that, provided that the constitutional court rules on Nov. 3 that the Lisbon Treaty is in line with the constitution, there will be nothing standing in the way of completing the ratification,” Czech Prime Minister Jan Fischer said last night. Klaus “does not have a problem” with the deal, he added. Emerging Campaign The breakthrough forces into the open what had been the behind-the-scenes jockeying for the posts of EU president and foreign-policy chief. The powers of the president, with a 2 ½ year-term renewable once, remain to be fleshed out and debate has centered on whether the EU leaders who will make the choice want a globally recognized name like Blair or a lesser-known consensus-seeker. Lipponen, 68, put himself in the latter camp. Writing in the Financial Times yesterday, Lipponen, now a consultant to the Nord Stream AG gas pipeline, said the president’s principal job is “to listen to the member governments and deal with possible problems as a troubleshooter.” Balkenende, 53, would also fit into the EU tradition of picking representatives of smaller states for top posts. The first president of the European Central Bank in 1998 was a fellow Dutchman, Wim Duisenberg . Iraq Links Blair, the biggest-name candidate, hit fresh headwinds at the summit when he failed to win the backing of his EU socialist allies, partly due to his support for George W. Bush’s invasion of Iraq in 2003. “There will remain a link for the coming generation between Iraq, Bush and Tony Blair,” Luxembourg Foreign Minister Jean Asselborn said yesterday. “In politics you have to show you can bring things together and not divide them. There are better candidates than Tony Blair on these points.” U.K. Prime Minister Gordon Brown sought to defuse the controversy, pitching his predecessor as an “excellent candidate” who would advance the EU’s interests on the economy, trade and climate change. “What are the issues we in Europe are going to be discussing these next few years?” Brown said. “It’s not Iraq.” Zapatero’s Call Zapatero, who pulled Spain’s forces from Iraq in one of his first acts after his 2004 election, appealed for “a pro- European president, a president with a great European commitment.” The leaders of the two biggest EU nations aren’t giving Blair much comfort. French President Nicolas Sarkozy has voiced concerns over appointing a Briton to the union’s top position, saying the U.K.’s failure to adopt the euro is a “problem.” Frenchmen currently lead the European Central Bank, World Trade Organization and International Monetary Fund. While German Chancellor Angela Merkel has said she’ll wait until the Lisbon Treaty is ratified before making known her preference for the post of president, she is “unenthusiastic” about a Blair candidacy, the Munich-based Sueddeutsche Zeitung reported today, citing anonymous government sources. EU leaders have no “shortlist” for president, though they will have to make the appointment quickly once the treaty is ratified, Austrian Chancellor Werner Faymann said. “The shortlist hasn’t been put together yet,” Faymann told reporters at the EU summit. Once the treaty is passed “we’ll have to act quickly and show we’re capable of acting.” Lithuanian President Dalia Grybauskaite recalled “very tough times” negotiating the EU budget with Blair in 2005, though she has “impressive memories” of him. She also called former Latvian President Vaira Vike-Freiberga , 71, a viable candidate. Also stepping forward was former Irish Prime Minister John Bruton , the EU’s ambassador to the U.S. Bruton, 62, announced his bid in a letter to European governments, the Irish Times reported, citing the letter. To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

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Tsvangirai Is `Disengaging’ From Zimbabwe’s Unity Government With Mugabe

October 16, 2009

By Brian Latham Oct. 16 (Bloomberg) — Zimbabwean Prime Minister Morgan Tsvangirai said his Movement for Democratic Change will be “disengaging” from the unity government “until outstanding issues are resolved.” The party is not “pulling out of the unity government,” he said in a phone interview from the capital Harare today. To contact the reporter on this story: Brian Latham in Johannesburg at blatham@bloomberg.net

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UPDATE: UK Brown Earmarks GBP3 Billion In Asset Sales (Nasdaq)

October 11, 2009

LONDON -(Dow Jones)- U.K. Prime Minister Gordon Brown is expected to spell out plans Monday for some GBP3 billion in asset sales, while warning that opposition promises to cut public spending in the near-future would risk a Japan style lost decade.

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Video: Tony Blair For EU President

October 2, 2009

Former British Prime Minister, Tony Blair gets the top rank for the E.U. Presidency. (Bloomberg News)

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Arctic Oil Tempts Norway to Push Its Drilling Frontier to `Gates of Hell’

September 25, 2009

By Marianne Stigset Sept. 25 (Bloomberg) — Norway started a push to explore for oil and natural gas in more remote regions like its Arctic volcanic island of Jan Mayen, as the country seeks to reverse almost a decade of dwindling North Sea output. “We’ve explored an increasingly large part of the Norwegian shelf,” Oil Minister Terje Riis-Johansen said in an interview on a trip to the barren outpost on Sept. 23. “If we now wish to develop Norway as an oil and gas nation, it will have to be in other areas.” Diminishing access to traditional reserves is prompting countries to turn to unconventional sources such as oil sands and shale-rock formations to meet demand. Russia, Canada, the U.S. and Iceland are vying for a stake of the Arctic, which may hold as much as 50 percent of the world’s undiscovered oil, according to BP Plc. Crude output from Norway, the world’s fifth-biggest oil exporter, peaked between 2000 and 2001 and may fall 9.7 percent this year, according to the Petroleum Directorate. Norway gets almost a 25 percent of its economic output from oil and gas, which has made it the world’s second-richest nation and financed its cradle-to-grave welfare system. The minister held a seminar and trip for unions, business groups and environmentalists on the potential for exploration off the glacier-clad island north of Iceland, dominated by the world’s most northerly active volcano, Beerenberg. ‘Gates of Hell’ Jan Mayen is reputed to have been discovered by the Irish monk Brendan in the 6th century, who sailed past it during volcanic activity and thought he had found the “gates of hell,” according to a hand-out by the oil ministry. “This is extreme exploration,” Bente Nyland , head of the Norwegian Petroleum Directorate, said in an interview on the island on Sept. 23. “You’re in an area where you have very little control, so you need to have a lot more knowledge before you can start any activity.” BP, Europe’s second-largest oil company, estimates the Arctic Ocean may hold around 200 billion barrels of oil equivalent, or 25 percent to 50 percent of the world’s undiscovered hydrocarbons. The U.S. Geological Survey last year estimated the area to hold 90 billion barrels of oil. “For 15 years we have indeed made many discoveries, but almost without exception small discoveries,” Per Terje Vold , head of the Norwegian Oil Industry Association , said. “Hence, the industry’s desire for new areas to explore.” Island Annexed Norway and Iceland last year signed an agreement clarifying an accord from 1981 on exploring for oil and gas between Iceland and Jan Mayen, which was annexed by Norway in 1926. Iceland has a head start and started offering licenses this year in the southern part of the so-called Jan Mayen Ridge, for which only two companies applied. Results will be announced in October. Iceland offered about 100 licenses covering an area of about 40,000 square kilometers at depths of as much as 1,800 meters. Iceland has no estimates of the potential reserves in the area under licensing. Norway and Iceland conducted joint seismic surveys in 1985 and 1988 and Wavefield Inseis ASA , a Norwegian oilfield surveyor, made independent seismic surveys in 2006 and in 2008, according to Iceland’s Energy Authority. “We have very little data coverage, so it’s not possible to give an estimate for any petroleum resources, but we can’t discard the potential,” Nyland said at a seminar on Sept. 21. “Some people have spoken of finds the size of Troll.” Troll is Norway’s largest field with about 60 percent of Norway’s natural-gas reserves. Government Planning The directorate wants to drill a shallow well outside of Jan Mayen to assess geological structures of the so-called microcontinent. Nyland said she doesn’t anticipate drilling in the area until 2020, should petroleum reserves be proven. Riis- Johansen said he hoped to present a plan for the area to parliament during the current session, which ends in 2013. The cost entailed due to the technological challenges caused by Jan Mayen’s distance to mainland Norway would require a significant find for any exploration activity to be initiated, the minister said. The island is 900 kilometers (560 miles) west of Norway and 550 kilometers north of Iceland. “The find would probably have to bigger than anything we’ve seen in the past 10 years, should exploration be considered, otherwise the costs involved in operating so far out would be too high,” the minister said. Terje Hagevang , the chief executive officer of Oslo-based Sagex Petroleum ASA , one of two bidders for Iceland’s licenses, said he’s convinced the area has potential and technological hurdles can be overcome. Floating Unit “We have indications that there can be oil and gas here,” Hagevang said on the phone from Oslo Sept. 22, adding that a floating production unit can be used. “It may be a problem if we find lots of gas because it’s more difficult to bring to a floater, but work is being done on that.” Environmentalists are skeptical about how nature will fare should oil and gas be found. “The dollar signs light up in the eyes of the politicians, and then it gets to be really hard to be a seabird on Jan Mayen,” said Ingeborg Gjaerum, head of the environmentalist group Natur og Ungdom, at the Sept. 21 seminar. The last major eruption of the island’s 2,277-meter (7,470 feet) volcano was in 1970, followed by a lesser one in 1985, and earthquakes shake the island regularly, including on Sept. 21. Fog and heavy winds can make landing on the island impossible for as long as a week, while reefs limit access by sea. “I think these people should come spend a year here before they decide to do anything,” said Ingar Stenslet, an engineer on Jan Mayen. He’s one of 18 people stationed on the island for six months to a year at a time, who work for the Norwegian Armed Forces and the meteorological institute. To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

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Karzai Distances Himself From Aide’s Claim No Runoff Needed in Afghan Vote

August 25, 2009

By James Rupert Aug. 25 (Bloomberg) — Afghanistan President Hamid Karzaiâ€™s campaign distanced itself from claims by a cabinet minister that he won re-election on Aug. 20 without needing a run-off ballot against his closest challenger Abdullah Abdullah . Finance Minister Hazrat Omar Zakhilwal said a report given to cabinet members showed Karzai capturing 68 percent of the vote, the New York Times reported, citing a meeting the minister held with journalists in Kabul yesterday. Karzai won 3 million votes, compared with 1.5 million for Abdullah, with 450,000 ballots still to be counted, Zakhilwal said. Karzaiâ€™s campaign is â€œnot able to confirm the figures from Mr. Zakhilwal,â€ said Jaafar Rasuly , an official at the presidentâ€™s headquarters.â€ We are not sure why he mentioned this. Itâ€™s outside his responsibility and we have to wait for the official results from the Independent Election Commission .â€ The commission, which plans to release partial results later today, told candidates on Aug. 22 to stop making victory claims. Abdullah has accused Karzai supporters of widespread fraud to ensure the president garners the 50 percent of votes he needs to avoid a second round of voting. The dispute threatens to undermine public confidence in an election that was designed to legitimize the next Afghan administration as it fights Taliban militants. Electoral Complaints Commission head Grant Kippen said 35 of 225 complaints about irregularities were â€œmaterial to the outcomeâ€ of the election. His agency can order recounts or a repeat of voting where it finds fraud. Karzaiâ€™s Rule Over eight years, Karzai and his international backers have failed to keep Afghanistanâ€™s war from spreading or improve the lot of most of its people. Measured by income, life expectancy and literacy, Afghanistan is the worldâ€™s fifth-poorest country , according to a 2007 report by the Afghan government and the United Nations. Abdullah said Karzaiâ€™s campaign is massively rigging the vote with help from local officials, including commission members. Karzaiâ€™s team has denied the allegation. Karzai won election in 2005 with 55 percent of ballots and has seen his popularity decline since then. Two opinion surveys conducted last month by U.S.-based research groups indicated he would get 40 to 44 percent of the vote. To contact the reporter on this story: James Rupert in Kabul at jrupert3@ bloomberg.net.

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Karzai Distances Himself From Aide’s Claim of Outright Victory in Election

August 25, 2009

By James Rupert Aug. 25 (Bloomberg) — Afghanistan President Hamid Karzaiâ€™s campaign distanced itself from claims by a cabinet minister that he won re-election on Aug. 20 without needing a run-off ballot against his closest challenger Abdullah Abdullah . Finance Minister Hazrat Omar Zakhilwal said a report given to cabinet members showed Karzai capturing 68 percent of the vote, the New York Times reported, citing a meeting the minister held with journalists in Kabul yesterday. Karzai won 3 million votes, compared with 1.5 million for Abdullah, with 450,000 ballots still to be counted, Zakhilwal said. Karzaiâ€™s campaign is â€œnot able to confirm the figures from Mr. Zakhilwal,â€ said Jaafar Rasuly , an official at the presidentâ€™s headquarters.â€ We are not sure why he mentioned this. Itâ€™s outside his responsibility and we have to wait for the official results from the Independent Election Commission .â€ The commission, which plans to release partial results later today, told candidates on Aug. 22 to stop making victory claims. Abdullah has accused Karzai supporters of widespread fraud to ensure the president garners the 50 percent of votes he needs to avoid a second round of voting. The dispute threatens to undermine public confidence in an election that was designed to legitimize the next Afghan administration as it fights Taliban militants. Electoral Complaints Commission head Grant Kippen said 35 of 225 complaints about irregularities were â€œmaterial to the outcomeâ€ of the election. His agency can order recounts or a repeat of voting where it finds fraud. Karzaiâ€™s Rule Over eight years, Karzai and his international backers have failed to keep Afghanistanâ€™s war from spreading or improve the lot of most of its people. Measured by income, life expectancy and literacy, Afghanistan is the worldâ€™s fifth-poorest country , according to a 2007 report by the Afghan government and the United Nations. Abdullah said Karzaiâ€™s campaign is massively rigging the vote with help from local officials, including commission members. Karzaiâ€™s team has denied the allegation. Karzai won election in 2005 with 55 percent of ballots and has seen his popularity decline since then. Two opinion surveys conducted last month by U.S.-based research groups indicated he would get 40 to 44 percent of the vote. To contact the reporter on this story: James Rupert in Kabul at jrupert3@ bloomberg.net.

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Taiwan’s Vice Foreign Minister Quits Over Handling of Typhoon Relief Aid

August 17, 2009

By Tim Culpan Aug. 18 (Bloomberg) — Taiwanâ€™s Deputy Foreign Minister Andrew Hsia yesterday tendered his resignation over his ministryâ€™s miscommunication to foreign offices about accepting aid following Typhoon Morakot. â€œIf we caused any misunderstanding, itâ€™s because of me. So I resigned,â€ Hsia said in a telephone interview. To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

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Rio Tinto Executive Hu May Face Charges in China, Australia’s Smith Says

July 19, 2009

By Jacob Greber July 19 (Bloomberg) — Chinaâ€™s arrest of Rio Tinto Group â€™s Stern Hu is related to a criminal probe into iron-ore price talks, not espionage, and the probe may result in a decision to charge the executive, according to Australiaâ€™s foreign minister.

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