Debt crisis spreads to US municipalities
By Aline van Duyn and Michael Mackenzie in New York
Published: February 13 2008 23:39 | Last updated: February 14 2008 01:42
A collapse in confidence in a $330bn corner of the debt market has left US municipalities and student loan providers facing spiralling interest rate costs.
The implosion of the so-called auction-rate securities market – amid worries that bond insurers guaranteeing much of this debt could face rating downgrades – is the latest incarnation of the credit crisis.
The market, heavily used by municipal borrowers and backed by triple-A rated guarantees from bond insurers such as Ambac and MBIA, was until now used as a safe harbour for investors.
The interest rates on such bonds reset either weekly or monthly and a lack of interest from investors can trigger a sharp rise to compensate holders.
The market’s sudden slump has pushed interest rates as high as 20 per cent for entities from the Port Authority of New York & New Jersey to a hospital.
“The auction securities market is falling apart,” said David Cooke, chief financial officer at Park Nicollet Heath Services in Minneapolis.
Municipal borrowers are scrambling to seek letters of credit from banks and other fresh sources of finance.
The auction rate securities market, much like structured investment vehicle and asset-backed commercial paper markets, had been growing fast.
Banks acting as dealers have been propping up the sector, but many pulled back this week amid a realisation that it might not be possible to restore confidence and woo investors back.
“Dealers who would normally pick up a slump are not doing so as their balance sheets are full,” said Jon Schotz, chief investment officer with Saybrook Capital.
The importance of bond insurers to municipal borrowers has prompted regulators to push banks to provide capital or credit lines so that Ambac, MBIA and others can retain their triple-A ratings.
Friday, February 15, 2008
Monolines given five days to find funds
Monolines given five days to find funds
By Aline Van Duyn in Washington and Michael Mackenzie in New York
Published: February 14 2008 14:54 | Last updated: February 15 2008 00:46
Eliot Spitzer, New York governor, gave bond insurers three to five business days to find fresh capital, or face a potential break-up by state regulators who want to safeguard the municipal bond markets.
Mr Spitzer’s warning came shortly before Moody’s Investors Service highlighted concerns about the bond insurers by withdrawing its triple-A credit rating for privately held Financial Guaranty Insurance Company.
However, the sting of Moody’s downgrade was mitigated by its more positive comments about MBIA and Ambac, the two largest bond insurers, which helped send their shares up 8.4 per cent and 12.4 per cent, respectively, in New York trading.
If the bond insurers lose their triple-A credit rating, the bonds and other instruments they insure also would be downgraded. This could trigger more writedowns for banks and other investors that hold such investments and a sharp rise in borrowing costs for local government entities that issue insured bonds.
Monoline meltdown?
Monolines interactive graphic
View our interactive guide on how the ratings decisions affect monolines
Mr Spitzer told the House financial services sub-committee on capital markets in Washington that he believed the crisis involving the credit insurers needed to be resolved in three to five business days. “We will be forced to act sooner rather than later,” Mr Spitzer said.
He said New York regulators were considering a division of the bond insurers into a “good bank, bad bank” structure. Under such proposals, the insurers’ municipal bond businesses would be separated from their riskier activities, such as guaranteeing complex structured securities.
Mr Spitzer did not say what specific steps could be taken by insurance regulators, who operate at the state rather than federal level. But the state regulators have powers to protect policyholders, as well as banks.
The tough tone was echoed by Eric Dinallo, New York’s insurance superintendent, who was appointed by Mr Spitzer and who has been pushing for bond insurers and the banks most exposed to them to discuss new sources of capital. He said his first priority would be to protect the municipal bondholders and issuers.
Mr Dinallo said the regulator would allow bond insurers to split into two companies. Warren Buffett, the billionaire investor, has already offered to take over the municipal portfolios of Ambac, MBIA and FGIC. One has already rejected the offer. Mr Dinallo said other investors were also interested. “If we do not take effective action, this could be a financial tsunami that causes substantial damage throughout our economy.”
Mr Dinallo said he was considering rewriting the rules for bond insurance to prevent companies taking inappropriate risks.
A break-up of the bond insurer model holds grave implications for financial institutions that face writedowns on insurance and derivatives contracts entered into with bond insurers.
By Aline Van Duyn in Washington and Michael Mackenzie in New York
Published: February 14 2008 14:54 | Last updated: February 15 2008 00:46
Eliot Spitzer, New York governor, gave bond insurers three to five business days to find fresh capital, or face a potential break-up by state regulators who want to safeguard the municipal bond markets.
Mr Spitzer’s warning came shortly before Moody’s Investors Service highlighted concerns about the bond insurers by withdrawing its triple-A credit rating for privately held Financial Guaranty Insurance Company.
However, the sting of Moody’s downgrade was mitigated by its more positive comments about MBIA and Ambac, the two largest bond insurers, which helped send their shares up 8.4 per cent and 12.4 per cent, respectively, in New York trading.
If the bond insurers lose their triple-A credit rating, the bonds and other instruments they insure also would be downgraded. This could trigger more writedowns for banks and other investors that hold such investments and a sharp rise in borrowing costs for local government entities that issue insured bonds.
Monoline meltdown?
Monolines interactive graphic
View our interactive guide on how the ratings decisions affect monolines
Mr Spitzer told the House financial services sub-committee on capital markets in Washington that he believed the crisis involving the credit insurers needed to be resolved in three to five business days. “We will be forced to act sooner rather than later,” Mr Spitzer said.
He said New York regulators were considering a division of the bond insurers into a “good bank, bad bank” structure. Under such proposals, the insurers’ municipal bond businesses would be separated from their riskier activities, such as guaranteeing complex structured securities.
Mr Spitzer did not say what specific steps could be taken by insurance regulators, who operate at the state rather than federal level. But the state regulators have powers to protect policyholders, as well as banks.
The tough tone was echoed by Eric Dinallo, New York’s insurance superintendent, who was appointed by Mr Spitzer and who has been pushing for bond insurers and the banks most exposed to them to discuss new sources of capital. He said his first priority would be to protect the municipal bondholders and issuers.
Mr Dinallo said the regulator would allow bond insurers to split into two companies. Warren Buffett, the billionaire investor, has already offered to take over the municipal portfolios of Ambac, MBIA and FGIC. One has already rejected the offer. Mr Dinallo said other investors were also interested. “If we do not take effective action, this could be a financial tsunami that causes substantial damage throughout our economy.”
Mr Dinallo said he was considering rewriting the rules for bond insurance to prevent companies taking inappropriate risks.
A break-up of the bond insurer model holds grave implications for financial institutions that face writedowns on insurance and derivatives contracts entered into with bond insurers.
Banks advised to walk away from big deals
Banks advised to walk away from big deals
By Henny Sender in New York
Published: February 14 2008 22:03 | Last updated: February 14 2008 22:03
Leading banks are being advised that it would be cheaper to walk away from big buy-out deals than incur further losses on their funding commitments, increasing the chances that more high-profile private equity transactions will collapse.
This advice from lawyers contrasts with the conventional wisdom that banks would risk serious damage to their reputations if they were to drop out of deals.
But legal advisers argue that the break-up fees banks would owe in such cases would be far lower than the write-downs they would have to make on their loans, given the current cataclysmic conditions in the capital markets.
“It is the tipping point argument,” said a senior partner at one of the biggest private equity firms, who asked not to be named. “The banks have so many issues with their balance sheets that they are considering a new policy.”
However, such a radical shift could have a dramatic impact on the markets. The presence of private-equity buyers is one factor that has helped boost stock prices.
“If you want to come up with news that could make the Dow drop another 500 or 1,000 points, this would be it,” says one lawyer specialising in private equity issues for a major New York law firm. “But desperate times call for desperate measures.”
Video: Walking away
Henny Sender
Henny Sender on why it may be cheaper for banks to drop their buy-out deals
So far, leveraged buy-outs have usually collapsed when the private-equity firms involved – including Blackstone and Cerberus – have withdrawn from transactions.
Such moves have occurred as banks have been working behind the scenes to persuade private equity firms to abandon deals. Such indirect approaches are designed to prevent target companies from filing suits seeking to make sure deals close.
However, the chances of banks abandoning buy-out deals – such as those for Clear Channel Communications, the radio station owner and outdoor advertising company, and BCE, the Canada-based telecoms group – are growing as the market prices for the leveraged loans used in such transactions continue to fall.
US regulators are pressing banks to account for these loans at market prices while they keep them on their books.
Already, it is understood that one bank has marked down its share of the loan used in the Clear Channel buy-out to 85 cents on the dollar.
By contrast, lawyers are telling the banks that if they walk away from deals, their biggest liability would be equivalent to the so-called reverse break-up fee that private equity firms pay target companies when deals fail to close. These fees usually amount to about 2 per cent of the total value of a deal, or about $500m in a large buy-out.
Lawyers say there could be other costs for the banks, such as covering the expenses buy-out firms incur while doing their homework on bids.
Further, they do not rule out the possibility that banks could have to pay greater damages in litigation.
What is sure is that banks are giving greater thought to dropping out of deals. “We are already there in terms of the economic pain,” said the head of debt capital markets at one major Wall Street firm. “Banks sitting on $30bn of debt for one deal are looking at $4.5bn of losses. That is enough to play hardball.”
By Henny Sender in New York
Published: February 14 2008 22:03 | Last updated: February 14 2008 22:03
Leading banks are being advised that it would be cheaper to walk away from big buy-out deals than incur further losses on their funding commitments, increasing the chances that more high-profile private equity transactions will collapse.
This advice from lawyers contrasts with the conventional wisdom that banks would risk serious damage to their reputations if they were to drop out of deals.
But legal advisers argue that the break-up fees banks would owe in such cases would be far lower than the write-downs they would have to make on their loans, given the current cataclysmic conditions in the capital markets.
“It is the tipping point argument,” said a senior partner at one of the biggest private equity firms, who asked not to be named. “The banks have so many issues with their balance sheets that they are considering a new policy.”
However, such a radical shift could have a dramatic impact on the markets. The presence of private-equity buyers is one factor that has helped boost stock prices.
“If you want to come up with news that could make the Dow drop another 500 or 1,000 points, this would be it,” says one lawyer specialising in private equity issues for a major New York law firm. “But desperate times call for desperate measures.”
Video: Walking away
Henny Sender
Henny Sender on why it may be cheaper for banks to drop their buy-out deals
So far, leveraged buy-outs have usually collapsed when the private-equity firms involved – including Blackstone and Cerberus – have withdrawn from transactions.
Such moves have occurred as banks have been working behind the scenes to persuade private equity firms to abandon deals. Such indirect approaches are designed to prevent target companies from filing suits seeking to make sure deals close.
However, the chances of banks abandoning buy-out deals – such as those for Clear Channel Communications, the radio station owner and outdoor advertising company, and BCE, the Canada-based telecoms group – are growing as the market prices for the leveraged loans used in such transactions continue to fall.
US regulators are pressing banks to account for these loans at market prices while they keep them on their books.
Already, it is understood that one bank has marked down its share of the loan used in the Clear Channel buy-out to 85 cents on the dollar.
By contrast, lawyers are telling the banks that if they walk away from deals, their biggest liability would be equivalent to the so-called reverse break-up fee that private equity firms pay target companies when deals fail to close. These fees usually amount to about 2 per cent of the total value of a deal, or about $500m in a large buy-out.
Lawyers say there could be other costs for the banks, such as covering the expenses buy-out firms incur while doing their homework on bids.
Further, they do not rule out the possibility that banks could have to pay greater damages in litigation.
What is sure is that banks are giving greater thought to dropping out of deals. “We are already there in terms of the economic pain,” said the head of debt capital markets at one major Wall Street firm. “Banks sitting on $30bn of debt for one deal are looking at $4.5bn of losses. That is enough to play hardball.”
UBS predicts ‘another difficult year’
UBS predicts ‘another difficult year’
By Haig Simonian in Zurich
Published: February 14 2008 07:27 | Last updated: February 14 2008 18:25
UBS, the European bank hardest hit by the subprime crisis, offered a gloomy outlook on Thursday, raising questions about how it will handle its exposure to the US residential mortgage market.
Shares in the Swiss bank fell by 8.3 per cent to close at SFr37.46 as investors praised its greater candour but expressed concern about additional holdings of securities not previously revealed.
The bank’s subprime portfolio fell to $27.6bn on December 31 from $29bn on December 10, when UBS issued a profits warning. But the bank on Thursday unveiled a further $26.6bn exposure to higher-rated paper, a $3.8bn subprime-related reference-linked note programme and a $2.9bn link to monoline insurers. Separately, in commercial mortgage-backed securities, UBS held a combined $7.7bn position via its trading book and loans.
Matt Spick of Deutsche Bank said: “We still think further writedowns are likely in at least the first quarter . . . raising the risk of market share losses.”
The revelations came as the bank prepared investors for “another difficult year” after losses in fixed-income trading heavily outweighed earnings in private banking.
UBS reported a SFr4.38bn ($3.98bn) net loss for 2007, and a SFr12.45bn loss in the fourth quarter, when most writedowns were booked. By comparison, the bank made SFr12.26bn after tax in 2006, and SFr3.41bn in the last three months of that year.
Marcel Rohner, chief executive, blamed the troubles on a “me-too strategy in fixed-income, predicated on closing gaps with our competitors”, cheap liquidity from the group’s private banking franchise and the creation of Dillon Read Capital Management, its now closed internal hedge fund.
He stressed action had been taken to curb risk in fixed-income trading, the source of the group’s subprime problems. There had also been improvements in controls and a sharper focus on business for clients, rather than for the bank’s own book.
The balance sheet had been reduced by about SFr200bn, or 9 per cent, between the third and fourth quarters, and would be trimmed further.
Pre-tax losses at the investment bank amounted to SFr15.53bn against pre-tax profits of SFr5.94bn in 2006. Private banking prospered, with pre-tax earnings for global wealth management and business and retail banking in Switzerland climbing to SFr9.48bn from SFr8.14bn in 2006, while pre-tax profits in the fourth quarter hit a record SFr2.51bn.
Net new money inflows were SFr156bn last year, up 37 per cent on 2006. But the SFr31.7bn booked in the final quarter was only marginally up on the SFr30bn for October and November.
December is usually a weak month but the modest rise implied clients might have been reluctant to make new deposits.
By Haig Simonian in Zurich
Published: February 14 2008 07:27 | Last updated: February 14 2008 18:25
UBS, the European bank hardest hit by the subprime crisis, offered a gloomy outlook on Thursday, raising questions about how it will handle its exposure to the US residential mortgage market.
Shares in the Swiss bank fell by 8.3 per cent to close at SFr37.46 as investors praised its greater candour but expressed concern about additional holdings of securities not previously revealed.
The bank’s subprime portfolio fell to $27.6bn on December 31 from $29bn on December 10, when UBS issued a profits warning. But the bank on Thursday unveiled a further $26.6bn exposure to higher-rated paper, a $3.8bn subprime-related reference-linked note programme and a $2.9bn link to monoline insurers. Separately, in commercial mortgage-backed securities, UBS held a combined $7.7bn position via its trading book and loans.
Matt Spick of Deutsche Bank said: “We still think further writedowns are likely in at least the first quarter . . . raising the risk of market share losses.”
The revelations came as the bank prepared investors for “another difficult year” after losses in fixed-income trading heavily outweighed earnings in private banking.
UBS reported a SFr4.38bn ($3.98bn) net loss for 2007, and a SFr12.45bn loss in the fourth quarter, when most writedowns were booked. By comparison, the bank made SFr12.26bn after tax in 2006, and SFr3.41bn in the last three months of that year.
Marcel Rohner, chief executive, blamed the troubles on a “me-too strategy in fixed-income, predicated on closing gaps with our competitors”, cheap liquidity from the group’s private banking franchise and the creation of Dillon Read Capital Management, its now closed internal hedge fund.
He stressed action had been taken to curb risk in fixed-income trading, the source of the group’s subprime problems. There had also been improvements in controls and a sharper focus on business for clients, rather than for the bank’s own book.
The balance sheet had been reduced by about SFr200bn, or 9 per cent, between the third and fourth quarters, and would be trimmed further.
Pre-tax losses at the investment bank amounted to SFr15.53bn against pre-tax profits of SFr5.94bn in 2006. Private banking prospered, with pre-tax earnings for global wealth management and business and retail banking in Switzerland climbing to SFr9.48bn from SFr8.14bn in 2006, while pre-tax profits in the fourth quarter hit a record SFr2.51bn.
Net new money inflows were SFr156bn last year, up 37 per cent on 2006. But the SFr31.7bn booked in the final quarter was only marginally up on the SFr30bn for October and November.
December is usually a weak month but the modest rise implied clients might have been reluctant to make new deposits.
輸入小麦価格、30％引き上げ・農水省４月から
輸入小麦価格、30％引き上げ・農水省４月から
農林水産省は15日、政府が輸入し国内製粉会社に売り渡す小麦の価格を4月から30％引き上げることを決めた。途上国の経済発展などで需給が逼迫（ひっぱく）し、調達コストが上昇していることが背景。引き上げは昨年4月、10月に続き3回連続。
インドや中国などの経済発展や世界的な人口増に伴い小麦需要が増加し、国際価格は3年間でほぼ3倍に高騰している。調達コストが上昇し、30％の値上げが必要と判断した。
農林水産省は15日、政府が輸入し国内製粉会社に売り渡す小麦の価格を4月から30％引き上げることを決めた。途上国の経済発展などで需給が逼迫（ひっぱく）し、調達コストが上昇していることが背景。引き上げは昨年4月、10月に続き3回連続。
インドや中国などの経済発展や世界的な人口増に伴い小麦需要が増加し、国際価格は3年間でほぼ3倍に高騰している。調達コストが上昇し、30％の値上げが必要と判断した。
そろそろ主役を降りたら？ベービー・ブーマー
そろそろ主役を降りたら？ベービー・ブーマー
いまアメリカが大きく変わっています。
最近、よく目にするようになったコメントは：
「Move over Baby Boomers, your time is over!（邪魔なんだよ、あんたたち、ベービー・ブーマーさん達よ。）」
というものです。
日本からアメリカを眺めていると最近のアメリカで起こっている事は「アメリカの覇権の凋落だ」という風に映るかもしれません。この場合、気をつけないといけないのは日本人が意見交換するアメリカ人は今の米国の政治や実業界で実権を握っているシニアな人達が多いという点です。この人達はいま若い層からの「突き上げ」に遭っています。だから凋落しているのはアメリカそのものではなくて、今まで「持てる者」として君臨してきた「金持ち父さん」層なのです。
この状況は喩えて言えば1960年代の『いちご白書』や『サマー・オブ・ラブ』に匹敵するような世代間の巨大な地殻変動（upheaval）だと形容できるかも知れません。つまり若いムーブメントが、慢心して、怠惰で、既得権益にしがみついている中年ブーマーたちを内側から喰い潰しにかかっている、、、そういう構図なのです。
では「具体的に何処にそのupheavalの証拠があるのだ？」と皆さん思うでしょうね。
そのひとつの例が民主党の大統領予備選挙です。皆さんもご承知のようにバラク・オバマ候補がいまとても勢いをつけはじめています。アメリカではヒラリー・クリントン候補は「ポリティシャン１．０」、バラク・オバマ候補は「ポリティシャン２．０」などと形容され、オバマ候補の新人類ぶりが若者や教養の高い層を中心に熱烈に支持されています。その一方でヒラリー・クリントン候補はベービー・ブーマー世代の既得権益の擁護者とみなされており、支持層を拡大できていません。
こうした違いは例えば両候補の支持者の選挙活動の展開方法にも如実に現れています。オバマ候補を支持するミュージシャンや俳優たちはオバマ候補の演説をリミックスしたミュージック・ビデオを作って支持を表明しています。これをＹｏｕｔｕｂｅでガンガン流されたら、どんなにテレビ広告のスポットを流しても焼け石に水でしょうね。
これまで政治に余り関心の無かった若者が大挙して投票所に押しかけ、投票用紙が足らなくなって投票時間を延長するという州が続出していることからもこのムーブメントが尋常でないことを示唆していると思うのです。
オバマ候補に批判的な人は「彼は聞き手を高揚させるようなメッセージだけを繰り返し、具体的な実績や経歴や政策の話には全然入って行かない」ことを指摘しています。その意味でオバマ候補の演説は主に聞き手の情緒に訴えるものであると言えるでしょう。
それでは何故オバマ候補のそういう掴みどころの無い、ムード重視の演説がこれほどまでにウケるのか？、、、
これは実は結構、根の深い問題だと僕は思うのです。
先ず第一に我々の生きる現代という社会はとても複雑だし、いろいろな利害が交錯しています。すると或るひとつの「正解」というものを提示しようと一生懸命努力してもどうしても一部の人間の気に入らない、或いは彼らを疎外してしまうような政策なり意見にならざるを得ないという事です。情報ひとつを例にとっても今はインターネットがあるので情報の収集のコストはガクンと下がっています。その分、相反するさまざまな情報がワンサと集まってしまって、それを咀嚼するちからの方が情報を丹念に集めるちからより重要になってくるわけです。すると全体を俯瞰して、大掴みに形勢を判断できる人間の方がコツコツ情報を集めて加工する人間より重宝されるようになるわけです。
別の言い方をすればそれは「知的労働者（ナリッジ・ワーカー）の時代」が曲がり角に差し掛かっていることを意味すると思うのです。もっと言えば1980年頃に日本がアメリカにどんどん鉄鋼を輸出したおかげで、クリーブランドとかベツレヘムの米国の製鉄所の従業員がどんどんレイオフされた、あの光景が今、弁護士や会計士や銀行マンやＩＴスペシャリストなどの米国の知的労働者へも波及しているということです。これはナリッジ・ワーカーのコモディタイゼーションを意味します。そしてそういう仕事は海底ケーブルを通じて今、どんどんバンガロールに転出してしまっているのです。
日本の皆さんは多分知らないと思いますけど、つい先日までハリウッドの脚本家組合はストライキを敢行していました。『デスパレット・ハウスワイフ』などのテレビ・ドラマを制作している、創造的な仕事をしている筈の人達ですら、自動車工場の工員さんや鉄鋼メーカーの作業員さんと同じノリでピケを張っている光景、、、これには僕も深く考えさせられました。
その流れで言えば、例えば日本で今話題になっている「ハケン」さんですか？、これなんかもホワイトカラーの仕事のコモディタイゼーションのひとつの証のような気がするわけです。
こうしたコモディタイゼーションの流れに抗する、ひとつのやり方が、『金持ち父さん』のロバート・キヨサキの提唱した、「オーナーになる」という生き方です。つまり社員になるのではなく株主になれ、テナントになるのではなく、大家さんになれ、、、そういうビジネスのオーナーシップを通じて蓄財を実現してゆく生き方ですね。
しかしこの方法には根本的に間違っている点があります。それは「そうすれば皆がリッチになれる」というのは幻想に過ぎず、実際には「デマンド・カーヴの前半部分で乗った人＝前期ベービー・ブーマー」は後から来る人が相場を押し上げてくれるのでそうやって蓄財出来るけど、後から来て高値を買わされる後期ベービー・ブーマーならびにベービー・バスト世代はこの方法ではリッチになれないという問題です。
最近、アメリカで起こっているサブプライム問題も、見方によってはこの「誰もがリッチに」という幻想を極限まで延長戦に持ち込もうとした咎めが出て、おかしなことになってしまったとも言えるわけです。
ナリッジ・ワーカーがどんどん「ただの労働者」に成り下がってゆく過程で、それではどんな人間が上に行けるのでしょうか？。
ダニエル・ピンクはこれからの時代はそういう雑多な情報をテキパキ加工、咀嚼した上で皆にわかりやすい形で再提示できるような人間がこれからは大事になるという意味のことを主張しています。そしてデザインとかストーリーとか同情するこころとか、そういう物が今後どんどん大切になってゆくと言っています。
そう考えてみれば、例えばアップルのスティーブ・ジョブスなんかはデザインやエモーショナルな商品を作ることにこだわっているし、前の日本の小泉首相なんかもわかりやすいひとこと（quip）で国民を納得させちゃうワザでは抜群でした。その意味では彼も「新人類」だったのかも知れない、、、。
ジョブスやオバマや小泉前首相などに共通する点はいずれも極めて優秀なオーレーター（話し手=表現者）であるという点ではないでしょうか？。
聞き手と瞬時にこころがつながる、、、そういう能力が今の時代はとても要求されている気がします。
これは何もスピーチに限らず、あらゆる生活の場面で既に起こり始めていることです。ＹｏｕｔｕｂｅなどのＷｅｂ２．０のツールはそういう表現者の時代にターボ・チャージをかける道具であるという風にも考えられると思うのです。
われわれがどんなに頑張っても例えば三桁×三桁の暗算が出来るインド人とかには勝てないと思うんです。
教育学のサー・ケン・ロビンソンが言うようにこれからの時代、「リテラシーも大事だけど、それよりクリエイティビティーの方が大事になる」という意味が最近、ようやくわかりはじめた気がします。
いまアメリカが大きく変わっています。
最近、よく目にするようになったコメントは：
「Move over Baby Boomers, your time is over!（邪魔なんだよ、あんたたち、ベービー・ブーマーさん達よ。）」
というものです。
日本からアメリカを眺めていると最近のアメリカで起こっている事は「アメリカの覇権の凋落だ」という風に映るかもしれません。この場合、気をつけないといけないのは日本人が意見交換するアメリカ人は今の米国の政治や実業界で実権を握っているシニアな人達が多いという点です。この人達はいま若い層からの「突き上げ」に遭っています。だから凋落しているのはアメリカそのものではなくて、今まで「持てる者」として君臨してきた「金持ち父さん」層なのです。
この状況は喩えて言えば1960年代の『いちご白書』や『サマー・オブ・ラブ』に匹敵するような世代間の巨大な地殻変動（upheaval）だと形容できるかも知れません。つまり若いムーブメントが、慢心して、怠惰で、既得権益にしがみついている中年ブーマーたちを内側から喰い潰しにかかっている、、、そういう構図なのです。
では「具体的に何処にそのupheavalの証拠があるのだ？」と皆さん思うでしょうね。
そのひとつの例が民主党の大統領予備選挙です。皆さんもご承知のようにバラク・オバマ候補がいまとても勢いをつけはじめています。アメリカではヒラリー・クリントン候補は「ポリティシャン１．０」、バラク・オバマ候補は「ポリティシャン２．０」などと形容され、オバマ候補の新人類ぶりが若者や教養の高い層を中心に熱烈に支持されています。その一方でヒラリー・クリントン候補はベービー・ブーマー世代の既得権益の擁護者とみなされており、支持層を拡大できていません。
こうした違いは例えば両候補の支持者の選挙活動の展開方法にも如実に現れています。オバマ候補を支持するミュージシャンや俳優たちはオバマ候補の演説をリミックスしたミュージック・ビデオを作って支持を表明しています。これをＹｏｕｔｕｂｅでガンガン流されたら、どんなにテレビ広告のスポットを流しても焼け石に水でしょうね。
これまで政治に余り関心の無かった若者が大挙して投票所に押しかけ、投票用紙が足らなくなって投票時間を延長するという州が続出していることからもこのムーブメントが尋常でないことを示唆していると思うのです。
オバマ候補に批判的な人は「彼は聞き手を高揚させるようなメッセージだけを繰り返し、具体的な実績や経歴や政策の話には全然入って行かない」ことを指摘しています。その意味でオバマ候補の演説は主に聞き手の情緒に訴えるものであると言えるでしょう。
それでは何故オバマ候補のそういう掴みどころの無い、ムード重視の演説がこれほどまでにウケるのか？、、、
これは実は結構、根の深い問題だと僕は思うのです。
先ず第一に我々の生きる現代という社会はとても複雑だし、いろいろな利害が交錯しています。すると或るひとつの「正解」というものを提示しようと一生懸命努力してもどうしても一部の人間の気に入らない、或いは彼らを疎外してしまうような政策なり意見にならざるを得ないという事です。情報ひとつを例にとっても今はインターネットがあるので情報の収集のコストはガクンと下がっています。その分、相反するさまざまな情報がワンサと集まってしまって、それを咀嚼するちからの方が情報を丹念に集めるちからより重要になってくるわけです。すると全体を俯瞰して、大掴みに形勢を判断できる人間の方がコツコツ情報を集めて加工する人間より重宝されるようになるわけです。
別の言い方をすればそれは「知的労働者（ナリッジ・ワーカー）の時代」が曲がり角に差し掛かっていることを意味すると思うのです。もっと言えば1980年頃に日本がアメリカにどんどん鉄鋼を輸出したおかげで、クリーブランドとかベツレヘムの米国の製鉄所の従業員がどんどんレイオフされた、あの光景が今、弁護士や会計士や銀行マンやＩＴスペシャリストなどの米国の知的労働者へも波及しているということです。これはナリッジ・ワーカーのコモディタイゼーションを意味します。そしてそういう仕事は海底ケーブルを通じて今、どんどんバンガロールに転出してしまっているのです。
日本の皆さんは多分知らないと思いますけど、つい先日までハリウッドの脚本家組合はストライキを敢行していました。『デスパレット・ハウスワイフ』などのテレビ・ドラマを制作している、創造的な仕事をしている筈の人達ですら、自動車工場の工員さんや鉄鋼メーカーの作業員さんと同じノリでピケを張っている光景、、、これには僕も深く考えさせられました。
その流れで言えば、例えば日本で今話題になっている「ハケン」さんですか？、これなんかもホワイトカラーの仕事のコモディタイゼーションのひとつの証のような気がするわけです。
こうしたコモディタイゼーションの流れに抗する、ひとつのやり方が、『金持ち父さん』のロバート・キヨサキの提唱した、「オーナーになる」という生き方です。つまり社員になるのではなく株主になれ、テナントになるのではなく、大家さんになれ、、、そういうビジネスのオーナーシップを通じて蓄財を実現してゆく生き方ですね。
しかしこの方法には根本的に間違っている点があります。それは「そうすれば皆がリッチになれる」というのは幻想に過ぎず、実際には「デマンド・カーヴの前半部分で乗った人＝前期ベービー・ブーマー」は後から来る人が相場を押し上げてくれるのでそうやって蓄財出来るけど、後から来て高値を買わされる後期ベービー・ブーマーならびにベービー・バスト世代はこの方法ではリッチになれないという問題です。
最近、アメリカで起こっているサブプライム問題も、見方によってはこの「誰もがリッチに」という幻想を極限まで延長戦に持ち込もうとした咎めが出て、おかしなことになってしまったとも言えるわけです。
ナリッジ・ワーカーがどんどん「ただの労働者」に成り下がってゆく過程で、それではどんな人間が上に行けるのでしょうか？。
ダニエル・ピンクはこれからの時代はそういう雑多な情報をテキパキ加工、咀嚼した上で皆にわかりやすい形で再提示できるような人間がこれからは大事になるという意味のことを主張しています。そしてデザインとかストーリーとか同情するこころとか、そういう物が今後どんどん大切になってゆくと言っています。
そう考えてみれば、例えばアップルのスティーブ・ジョブスなんかはデザインやエモーショナルな商品を作ることにこだわっているし、前の日本の小泉首相なんかもわかりやすいひとこと（quip）で国民を納得させちゃうワザでは抜群でした。その意味では彼も「新人類」だったのかも知れない、、、。
ジョブスやオバマや小泉前首相などに共通する点はいずれも極めて優秀なオーレーター（話し手=表現者）であるという点ではないでしょうか？。
聞き手と瞬時にこころがつながる、、、そういう能力が今の時代はとても要求されている気がします。
これは何もスピーチに限らず、あらゆる生活の場面で既に起こり始めていることです。ＹｏｕｔｕｂｅなどのＷｅｂ２．０のツールはそういう表現者の時代にターボ・チャージをかける道具であるという風にも考えられると思うのです。
われわれがどんなに頑張っても例えば三桁×三桁の暗算が出来るインド人とかには勝てないと思うんです。
教育学のサー・ケン・ロビンソンが言うようにこれからの時代、「リテラシーも大事だけど、それよりクリエイティビティーの方が大事になる」という意味が最近、ようやくわかりはじめた気がします。
モノライン：９社で計１３兆円 サブプライム保証
モノライン：９社で計１３兆円 サブプライム保証
【ワシントン斉藤信宏】米連邦準備制度理事会（ＦＲＢ）は１４日、米国の金融保証保険会社（モノライン）９社が、低所得者向け高金利住宅ローン（サブプライムローン）を組み込んだ住宅ローン担保証券を計１２５０億ドル（約１３兆４０００億円）保証していることを明らかにした。ＦＲＢの調査統計局が議会証言で明らかにした。
モノライン９社の昨年９月末時点の保証の総額は約２兆５０００億ドルにのぼり、このうち約１兆５０００億ドルが地方自治体などの発行する地方債だという。住宅ローン担保証券を含む債務担保証券（ＣＤＯ）の保証は計４２５０億ドルにのぼる。
モノラインをめぐっては、米格付け会社ムーディーズが１４日、モノライン大手ＦＧＩＣの格付けを最上級から６段階引き下げるなど格下げの動きが相次いでいる。モノライン格下げで、保証対象の証券も格付けが下がるため、地方債の発行金利が上昇するなど金融市場に影響が広がっている。
【ワシントン斉藤信宏】米連邦準備制度理事会（ＦＲＢ）は１４日、米国の金融保証保険会社（モノライン）９社が、低所得者向け高金利住宅ローン（サブプライムローン）を組み込んだ住宅ローン担保証券を計１２５０億ドル（約１３兆４０００億円）保証していることを明らかにした。ＦＲＢの調査統計局が議会証言で明らかにした。
モノライン９社の昨年９月末時点の保証の総額は約２兆５０００億ドルにのぼり、このうち約１兆５０００億ドルが地方自治体などの発行する地方債だという。住宅ローン担保証券を含む債務担保証券（ＣＤＯ）の保証は計４２５０億ドルにのぼる。
モノラインをめぐっては、米格付け会社ムーディーズが１４日、モノライン大手ＦＧＩＣの格付けを最上級から６段階引き下げるなど格下げの動きが相次いでいる。モノライン格下げで、保証対象の証券も格付けが下がるため、地方債の発行金利が上昇するなど金融市場に影響が広がっている。
東京・足立の４人死傷：民放２局に手紙 不動産トラブル示唆
東京・足立の４人死傷：民放２局に手紙 不動産トラブル示唆
東京都足立区の工作機械販売業、佐々木亨さん（５２）方で佐々木さん夫妻ら一家４人が死傷した事件で、佐々木さんが書いたとみられる手紙が日本テレビ（東京都港区）とテレビ朝日（同）に届いていたことが１４日分かった。無理心中をにおわせているが、不動産トラブルに巻き込まれたことを示唆する内容があった。警視庁は、動機につながる可能性もあるとみている。
日本テレビによると、手紙は宅配便で１４日の日付指定で届いた。事件が起きた１１日に発送されたもので、送り主の欄には佐々木さんの名前が記されていた。佐々木さん方の土地の借地権売買に関する書類も同封されていたという。
手紙（原文）は手書きで「欲に目が眩（くら）んだ自分の責任です」「死んでお詫（わ）びします」などと記されていた。
また、「二度と私のようなバカを出さない為（ため）にも調べて頂けないでしょうか」などと取材を求める内容だった。
警視庁によると、佐々木さんは事件前、親類に預金通帳や印鑑を送っていたという。同庁は、佐々木さんが何らかのトラブルに巻き込まれていた可能性もあるとみている。
東京都足立区の工作機械販売業、佐々木亨さん（５２）方で佐々木さん夫妻ら一家４人が死傷した事件で、佐々木さんが書いたとみられる手紙が日本テレビ（東京都港区）とテレビ朝日（同）に届いていたことが１４日分かった。無理心中をにおわせているが、不動産トラブルに巻き込まれたことを示唆する内容があった。警視庁は、動機につながる可能性もあるとみている。
日本テレビによると、手紙は宅配便で１４日の日付指定で届いた。事件が起きた１１日に発送されたもので、送り主の欄には佐々木さんの名前が記されていた。佐々木さん方の土地の借地権売買に関する書類も同封されていたという。
手紙（原文）は手書きで「欲に目が眩（くら）んだ自分の責任です」「死んでお詫（わ）びします」などと記されていた。
また、「二度と私のようなバカを出さない為（ため）にも調べて頂けないでしょうか」などと取材を求める内容だった。
警視庁によると、佐々木さんは事件前、親類に預金通帳や印鑑を送っていたという。同庁は、佐々木さんが何らかのトラブルに巻き込まれていた可能性もあるとみている。
「ノーパンしゃぶしゃぶ客」…経産次官が新潮社に抗議
「ノーパンしゃぶしゃぶ客」…経産次官が新潮社に抗議
経済産業省の北畑隆生事務次官は１４日の記者会見で、週刊誌の「週刊新潮」（新潮社）最新号に掲載された「経産省次官は『ノーパンしゃぶしゃぶ』の客」と題する記事が名誉を傷つけたとして、新潮社に対して訂正記事掲載を求める抗議文を送ったことを明らかにした。
経産省は広報室長名の抗議文で、北畑次官が風俗店に「１度も行ったことも誘いを受けたこともない」と反論した。新潮社の回答次第では、法的措置も検討するという。
記事は、新宿にあった風俗店の顧客名簿がネット上などに流出し、北畑氏の名前が掲載されていると指摘。同氏が風俗店の客であったと受け取れる内容だった。
週刊新潮編集部は「顧客名簿に名前が載っていたのは事実であり、記事内容には自信を持っている」と話している。
講演で個人投資家を軽視する発言をした問題では、北畑次官は「デイトレーダーの方に失礼な表現をした。誠に申し訳ない」と述べた。
経済産業省の北畑隆生事務次官は１４日の記者会見で、週刊誌の「週刊新潮」（新潮社）最新号に掲載された「経産省次官は『ノーパンしゃぶしゃぶ』の客」と題する記事が名誉を傷つけたとして、新潮社に対して訂正記事掲載を求める抗議文を送ったことを明らかにした。
経産省は広報室長名の抗議文で、北畑次官が風俗店に「１度も行ったことも誘いを受けたこともない」と反論した。新潮社の回答次第では、法的措置も検討するという。
記事は、新宿にあった風俗店の顧客名簿がネット上などに流出し、北畑氏の名前が掲載されていると指摘。同氏が風俗店の客であったと受け取れる内容だった。
週刊新潮編集部は「顧客名簿に名前が載っていたのは事実であり、記事内容には自信を持っている」と話している。
講演で個人投資家を軽視する発言をした問題では、北畑次官は「デイトレーダーの方に失礼な表現をした。誠に申し訳ない」と述べた。
南極渡航の事前届け出、周知不足認める・鴨下環境相
南極渡航の事前届け出、周知不足認める・鴨下環境相
鴨下一郎環境相は15日の閣議後記者会見で、今年1月に日本人女性で初めて南極点に到達した続素美代さん（40）と、南極大陸最高峰の「ビンソンマシフ」（4897メートル）に登頂した石川富康さん（71）の登山家2人が、環境省に届け出ずに渡航していたことについて、「（周知不足と言われれば）その通り。今回の件を機に、国民に分かっていただけるようアピールしていきたい」と述べた。
日本人が南極に渡る場合は、「南極条約議定書」（1991年採択）の締結国からの許可に加え、南極環境保護法に基づき、同省に活動内容などを事前に届け出る義務がある。今回のケースでは2人は帰国後まで届け出について「知らなかった」としており、利用した海外の代理店も日本の制度を認識していなかった可能性がある。
鴨下環境相は「2人とも悪意はなさそう。本人から事情を聴いたうえで、始末書などを頂くかもしれない」と話した。
鴨下一郎環境相は15日の閣議後記者会見で、今年1月に日本人女性で初めて南極点に到達した続素美代さん（40）と、南極大陸最高峰の「ビンソンマシフ」（4897メートル）に登頂した石川富康さん（71）の登山家2人が、環境省に届け出ずに渡航していたことについて、「（周知不足と言われれば）その通り。今回の件を機に、国民に分かっていただけるようアピールしていきたい」と述べた。
日本人が南極に渡る場合は、「南極条約議定書」（1991年採択）の締結国からの許可に加え、南極環境保護法に基づき、同省に活動内容などを事前に届け出る義務がある。今回のケースでは2人は帰国後まで届け出について「知らなかった」としており、利用した海外の代理店も日本の制度を認識していなかった可能性がある。
鴨下環境相は「2人とも悪意はなさそう。本人から事情を聴いたうえで、始末書などを頂くかもしれない」と話した。
学校給食の衛生管理基準、改正する方針・文科相表明
学校給食の衛生管理基準、改正する方針・文科相表明
渡海紀三朗文部科学相は15日午前の閣議後記者会見で、中国製冷凍ギョーザによる中毒問題を受け、文部科学省が定めている「学校給食衛生管理の基準」を改正する方針を明らかにした。加工食品の管理や調理時の留意点を新たに規定し、安全性を高める考え。専門家による検討会議を発足し、詳細を詰める。
これまで衛生管理の基準には、生鮮食品の食中毒対策として「洗浄の仕方」や「加熱の必要性の有無の判断」などを盛り込んでいたが、加工食品に細かな規定はなかった。
渡海文科相は「場合によっては『これを使うな』といった規制も含めて考えていきたい」と述べ、調達方法のあり方なども見直す可能性を示した。「学校給食衛生管理の基準」は努力義務として、学校や給食センターが調理する給食の安全面での留意点を定めている。
渡海紀三朗文部科学相は15日午前の閣議後記者会見で、中国製冷凍ギョーザによる中毒問題を受け、文部科学省が定めている「学校給食衛生管理の基準」を改正する方針を明らかにした。加工食品の管理や調理時の留意点を新たに規定し、安全性を高める考え。専門家による検討会議を発足し、詳細を詰める。
これまで衛生管理の基準には、生鮮食品の食中毒対策として「洗浄の仕方」や「加熱の必要性の有無の判断」などを盛り込んでいたが、加工食品に細かな規定はなかった。
渡海文科相は「場合によっては『これを使うな』といった規制も含めて考えていきたい」と述べ、調達方法のあり方なども見直す可能性を示した。「学校給食衛生管理の基準」は努力義務として、学校や給食センターが調理する給食の安全面での留意点を定めている。
ギョーザ中毒、組合員の脱退止まず・生協、復権へ躍起
ギョーザ中毒、組合員の脱退止まず・生協、復権へ躍起
「食の安全」を標榜（ひょうぼう）してきた生協が中国製冷凍ギョーザの中毒事件に揺れている。殺虫剤が混入した商品が流通する“舞台”となり、公表が遅れたことへの不満もくすぶり、組合員の脱退が止まらない。各地の生協は店頭での商品検査の強化に乗り出したり、相談窓口を拡充するなど対応に懸命だが、信頼回復への明確な道筋は見えない。
冷凍食品などの包装袋に穴やベタつきがないか、店頭の棚に並べる前に入念に点検する――。東京都西東京市の「コープとうきょう」ひばりが丘店は事件発覚後、店内の検査項目を増やした。
「食の安全」を標榜（ひょうぼう）してきた生協が中国製冷凍ギョーザの中毒事件に揺れている。殺虫剤が混入した商品が流通する“舞台”となり、公表が遅れたことへの不満もくすぶり、組合員の脱退が止まらない。各地の生協は店頭での商品検査の強化に乗り出したり、相談窓口を拡充するなど対応に懸命だが、信頼回復への明確な道筋は見えない。
冷凍食品などの包装袋に穴やベタつきがないか、店頭の棚に並べる前に入念に点検する――。東京都西東京市の「コープとうきょう」ひばりが丘店は事件発覚後、店内の検査項目を増やした。
道路特定財源でマッサージチェアも購入
道路特定財源でマッサージチェアも購入
冬柴鉄三国土交通相は5日の閣議後の記者会見で、道路特定財源を使って、道路事業関連の職員が使用するマッサージチェアを過去に購入していた事例があったことを明らかにした。同相によると、2002年までに地方整備局で計23台を購入していた。03年以降の購入実績はないが、国交相は「国民から不相応という疑念を受けるようなものはやめる」と強調した。
道路財源の使途を巡っては先にスポーツ用具の購入に充てていたことが判明。批判が強まったことから、娯楽費への支出の中止を決めた。その際、国交相は「電動マッサージ機のような過大なものはどうかと思うが、保険料などでぜいたくな物を買った社会保険庁とは全然違う」と説明していた。
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道路財源からアロマテラピー器具購入に支出
国土交通省の国道事務所が揮発油税（ガソリン税）などの道路特定財源を使い、アロマテラピー（芳香療法）の器具を購入していたことが分かった。民主党の長妻昭氏が14日の衆院予算委員会で指摘した。道路整備の必要性を宣伝するミュージカルの公演費用（約5億2600万円）を道路財源から支出していたことも社民党の保坂展人氏が追及。冬柴鉄三国交相は今後両件への支出を取りやめる意向を示した。
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道路特定財源：啓発ミュージカル公演も 国交省の地方機関
揮発油（ガソリン）税などの道路特定財源を使って、国土交通省の地方整備局が道路整備への理解を広めるため、啓発ミュージカルの公演を行っていたことが、１４日の衆院予算委員会で取り上げられた。経費として、０３年度からの３年間に約５億３０００万円が支出されており、冬柴鉄三国交相は「過大だという評価なら、こういうことはやめさせる」と答弁した。保坂展人氏（社民）の質問に答えた。
ミュージカルは、近畿、中部両地方整備局などが民間の劇団に依頼したオリジナル作品で、３年間に約８０回上演された。無料で参加者を募集し、家族連れらが各回数百人で観賞することが多かったという。
保坂氏は「国民動員型のイベントで、子供の時から『道路は大切だ』と（すり込むと）いうやり方は非常におかしい。見直すべきだ」と指摘。冬柴国交相は「０８年度予算案でも実施するか調査し、国民に不快感を与えるものはやめさせる」と述べた。
また、質疑では、中部地方整備局が同財源から、室内に香りを漂わせるアロマテラピー（芳香療法）用器具２点を４万６３９０円で購入していたことも分かった。
冬柴鉄三国土交通相は5日の閣議後の記者会見で、道路特定財源を使って、道路事業関連の職員が使用するマッサージチェアを過去に購入していた事例があったことを明らかにした。同相によると、2002年までに地方整備局で計23台を購入していた。03年以降の購入実績はないが、国交相は「国民から不相応という疑念を受けるようなものはやめる」と強調した。
道路財源の使途を巡っては先にスポーツ用具の購入に充てていたことが判明。批判が強まったことから、娯楽費への支出の中止を決めた。その際、国交相は「電動マッサージ機のような過大なものはどうかと思うが、保険料などでぜいたくな物を買った社会保険庁とは全然違う」と説明していた。
-----------------
道路財源からアロマテラピー器具購入に支出
国土交通省の国道事務所が揮発油税（ガソリン税）などの道路特定財源を使い、アロマテラピー（芳香療法）の器具を購入していたことが分かった。民主党の長妻昭氏が14日の衆院予算委員会で指摘した。道路整備の必要性を宣伝するミュージカルの公演費用（約5億2600万円）を道路財源から支出していたことも社民党の保坂展人氏が追及。冬柴鉄三国交相は今後両件への支出を取りやめる意向を示した。
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道路特定財源：啓発ミュージカル公演も 国交省の地方機関
揮発油（ガソリン）税などの道路特定財源を使って、国土交通省の地方整備局が道路整備への理解を広めるため、啓発ミュージカルの公演を行っていたことが、１４日の衆院予算委員会で取り上げられた。経費として、０３年度からの３年間に約５億３０００万円が支出されており、冬柴鉄三国交相は「過大だという評価なら、こういうことはやめさせる」と答弁した。保坂展人氏（社民）の質問に答えた。
ミュージカルは、近畿、中部両地方整備局などが民間の劇団に依頼したオリジナル作品で、３年間に約８０回上演された。無料で参加者を募集し、家族連れらが各回数百人で観賞することが多かったという。
保坂氏は「国民動員型のイベントで、子供の時から『道路は大切だ』と（すり込むと）いうやり方は非常におかしい。見直すべきだ」と指摘。冬柴国交相は「０８年度予算案でも実施するか調査し、国民に不快感を与えるものはやめさせる」と述べた。
また、質疑では、中部地方整備局が同財源から、室内に香りを漂わせるアロマテラピー（芳香療法）用器具２点を４万６３９０円で購入していたことも分かった。
新宿駅で東西自由通路を建設・新宿区、国やＪＲ東日本と
新宿駅で東西自由通路を建設・新宿区、国やＪＲ東日本と
東京都新宿区は14日、ＪＲ新宿駅で東日本旅客鉄道（ＪＲ東日本）や国とともに駅の東口と西口を結ぶ自由通路を建設すると発表した。現在の改札内通路を拡幅し、2016年度以降に東西を自由に往来できるようにする。
区は08年度予算案に設計費にあてるため1億6000万円を盛り込んだ。新宿駅では10―16年度に、幅17メートルの通路を幅25 メートルに拡幅する工事を実施する。完成までの総事業費は118億円になる見込み。このうち新宿区は3分の1近い約35億5000万円を負担する。「（新宿の東西を結び）歩行者空間を充実させる」（中山弘子区長）考え。
区の08年度一般会計予算案は前年度比1.8％増の1208億円。
東京都新宿区は14日、ＪＲ新宿駅で東日本旅客鉄道（ＪＲ東日本）や国とともに駅の東口と西口を結ぶ自由通路を建設すると発表した。現在の改札内通路を拡幅し、2016年度以降に東西を自由に往来できるようにする。
区は08年度予算案に設計費にあてるため1億6000万円を盛り込んだ。新宿駅では10―16年度に、幅17メートルの通路を幅25 メートルに拡幅する工事を実施する。完成までの総事業費は118億円になる見込み。このうち新宿区は3分の1近い約35億5000万円を負担する。「（新宿の東西を結び）歩行者空間を充実させる」（中山弘子区長）考え。
区の08年度一般会計予算案は前年度比1.8％増の1208億円。
「外出控え」外食・スーパーに影響・宅配や値下げで対抗
「外出控え」外食・スーパーに影響・宅配や値下げで対抗
スーパー、外食、娯楽施設では車による来店客の減少などガソリン高の影響が出始めている。スーパーでは宅配サービスやインターネット注文できる「ネットスーパー」が人気で、外食では値下げなどに取り組んでいる。食品値上げや中国製冷凍ギョーザの中毒事件など逆風が吹くなか、各社は消費停滞を跳ね返そうと頭を悩ませている。
イトーヨーカ堂が約180店全店で実施している商品宅配「きいろい楽だ」は昨秋ごろから利用者が前年同期比2―3割増で推移。料金は1回100―315 円で、自転車や徒歩で来店し、買い物後は手ぶらで帰れる。「ネットスーパー」も1カ月前に比べ売り上げが3割増えている。
スーパー、外食、娯楽施設では車による来店客の減少などガソリン高の影響が出始めている。スーパーでは宅配サービスやインターネット注文できる「ネットスーパー」が人気で、外食では値下げなどに取り組んでいる。食品値上げや中国製冷凍ギョーザの中毒事件など逆風が吹くなか、各社は消費停滞を跳ね返そうと頭を悩ませている。
イトーヨーカ堂が約180店全店で実施している商品宅配「きいろい楽だ」は昨秋ごろから利用者が前年同期比2―3割増で推移。料金は1回100―315 円で、自転車や徒歩で来店し、買い物後は手ぶらで帰れる。「ネットスーパー」も1カ月前に比べ売り上げが3割増えている。
日航増資、14社応諾へ・主力4行・商社など1500億円程度に
日航増資、14社応諾へ・主力4行・商社など1500億円程度に
経営再建中の日本航空が計画している優先株による増資を主力取引銀行、大手商社、石油元売りの合計14社が引き受ける見通しとなった。個別の引受額についてはなお詰めているものの、日航は1500億円程度を確保できる見込み。最大の課題であった資本増強にメドがつくことで、業績回復基調に入った同社の再建が前進する。
増資を引き受けるのは日本政策投資銀行、みずほコーポレート銀行、三菱ＵＦＪフィナンシャル・グループ、三井住友フィナンシャルグループの主力4行のほか、事業会社では三菱商事や三井物産、双日、丸紅、伊藤忠商事、住友商事の商社6社と新日本石油、ジャパンエナジー、出光興産、コスモ石油の石油元売り4 社。
経営再建中の日本航空が計画している優先株による増資を主力取引銀行、大手商社、石油元売りの合計14社が引き受ける見通しとなった。個別の引受額についてはなお詰めているものの、日航は1500億円程度を確保できる見込み。最大の課題であった資本増強にメドがつくことで、業績回復基調に入った同社の再建が前進する。
増資を引き受けるのは日本政策投資銀行、みずほコーポレート銀行、三菱ＵＦＪフィナンシャル・グループ、三井住友フィナンシャルグループの主力4行のほか、事業会社では三菱商事や三井物産、双日、丸紅、伊藤忠商事、住友商事の商社6社と新日本石油、ジャパンエナジー、出光興産、コスモ石油の石油元売り4 社。
Largest Northern Rock holder says aid plan flawed
Largest Northern Rock holder says aid plan flawed
Reuters - Thursday, February 14 07:44 pm
LONDON (Reuters) - Hedge fund SRM, the largest shareholder of Northern Rock , argued on Thursday a financial aid plan provided by the Bank of England and the Treasury to the stricken bank is flawed.
Its response comes a day after the government asked two suitors competing to rescue Northern Rock to improve their offers or it would nationalise Britain's fifth-largest mortgage lender.
SRM said in a statement on Thursday that the European State Aid regime had been misapplied to Northern Rock, which owes taxpayers 25 billion pounds since it became Britain's biggest casualty of the global credit squeeze in September.
"The government incorrectly conceded that measures were state aid ... and has not made any appeal of the Commission's decision. As a consequence, the criteria set out by the Treasury for continued liquidity support are flawed," the fund said.
"It would be a mistake for the government to take a decision on private sector bids and the future of Northern Rock without revisiting the question of state aid and the appropriateness of its criteria."
On Wednesday, Britain picked a consortium led by billionaire Richard Branson's Virgin group as a front-runner in the race to rescue Northern Rock, ahead of a rival "in-house" offer led by the bank's management team and supported by SRM.
Reuters - Thursday, February 14 07:44 pm
LONDON (Reuters) - Hedge fund SRM, the largest shareholder of Northern Rock , argued on Thursday a financial aid plan provided by the Bank of England and the Treasury to the stricken bank is flawed.
Its response comes a day after the government asked two suitors competing to rescue Northern Rock to improve their offers or it would nationalise Britain's fifth-largest mortgage lender.
SRM said in a statement on Thursday that the European State Aid regime had been misapplied to Northern Rock, which owes taxpayers 25 billion pounds since it became Britain's biggest casualty of the global credit squeeze in September.
"The government incorrectly conceded that measures were state aid ... and has not made any appeal of the Commission's decision. As a consequence, the criteria set out by the Treasury for continued liquidity support are flawed," the fund said.
"It would be a mistake for the government to take a decision on private sector bids and the future of Northern Rock without revisiting the question of state aid and the appropriateness of its criteria."
On Wednesday, Britain picked a consortium led by billionaire Richard Branson's Virgin group as a front-runner in the race to rescue Northern Rock, ahead of a rival "in-house" offer led by the bank's management team and supported by SRM.
Bordeaux wine futures under attack
Bordeaux wine futures under attack
AFP
By Sophie Kevany AFP - Friday, February 15 03:57 am
BORDEAUX, France (AFP) - Bordeaux's upcoming wine futures campaign -- known as the primeurs -- is ruffling more feathers than ever this year, with French detractors attacking a pricing system that is pushing some bottles out of the reach of most wine lovers.
"Are they going to try and sell us bottles at 500 euros (730 dollars)?" asked Alain-Dominique Perrin, former head of the world¹s second biggest luxury group, Richemont, in an interview this month with one of France¹s most popular wine magazines.
"If there is a moral in this wine world all the top ones must go back down to 100 euros," he said of the 2007 Bordeaux vintage, which will be tasted by critics in the first week of April and sold in the following months.
The Bordeaux primeur system, which offers wine for sale two years before it is bottled, is unique in the wine world and has always attracted much attention, both positive and negative.
In the last two years, prices paid for top wines have reached record wholesale prices of 400 to 500 euros per bottle, as demand exploded, with customers paying per bottle retail prices of up to 1,000 euros for a few of the most sought after wines like Petrus, Ausone and Cheval Blanc.
The president of the Union des Grands Crus de Bordeaux, which organises the annual primeur tastings, Patrick Maroteaux, described Perrin¹s comments as bitter. He said his take on the wines of 2007, which included calling them wet and mediocre, was wrong.
"He will be very surprised when he tastes them seriously," he said.
Given that Perrin is from outside Bordeaux, and owns several wine estates in other parts of France, notably in Cahors where winemakers can only dream of matching top Bordeaux pricing, his comments could be dismissed as jealousy.
However another critic, this time from Bordeaux, the now retired winemaker at Chateau Petrus, one of the most famous Bordeaux wines, also weighed in against the primeurs this month.
Jean Claude Berrouet, who worked at Petrus from 1964 to 2007, told another magazine that wines had been hijacked by a system that encouraged speculative investors to buy now at relatively reduced prices and sell later at higher ones.
"We have taken wine hostage and we need to set it free," he said.
Berrouet also said the primeurs tastings were too frenzied, and that wines needed to be judged over time, not in a great rush as currently happens.
For his part, Perrin, now executive administrator for Richemont (owner of Cartier, Montblanc and Van Cleef and Arpels), also said top wines were over-priced in relation to production costs.
"To make a bottle of Chateau Mouton Rothschild or similar, all payments included, it comes to between 10 and 12 euros at most," he said.
Consumers were therefore paying about 80 times cost of production for the most sought-after wines, when the highest expected in the luxury industry is only 17 times cost of production, Perrin said.
There has been little response to his outburst among top Bordeaux owners.
"It is evident the costs of production are higher than that," said Paul Pontallier of Chateaux Margaux, one of only five chateaux in Bordeaux with the coveted ranking of "premier cru," meaning first growth.
Asked for an estimate, Pontallier said it was impossible. "It depends so much on the vintage, the proportions of first, second and third wines, the treatments, on what costs we include. I cannot give a number without giving a three-page explanation," Pontallier said. "Some vintages cost twice or three times another."
Other Bordeaux winemakers said Perrin¹s estimates were correct but denied there was any moral issue.
"It's about right, 15 euros would be the maximum," said Jean Christophe Mau, owner of Chateau Brown in Pessac Leognan, and Chateau Preulliac in the Medoc. His own costs were between eight and 10 euros a bottle, he said.
"But pricing has nothing to do with morals, and everything to do with supply and demand," Mau said.
Basile Tesseron of Chateau Lafon Rochet pointed out that Bordeaux producers were limited to selling one product, once a year, and were unable to increase sales volumes in any significant way.
Tesseron also said that the top chateaux represented only a microscopic part of Bordeaux¹s overall production, or less than 2.0 percent.
"There are about 7,000 chateaux in Bordeaux, and most do not reach retail prices of 10 euros," he said.
AFP
By Sophie Kevany AFP - Friday, February 15 03:57 am
BORDEAUX, France (AFP) - Bordeaux's upcoming wine futures campaign -- known as the primeurs -- is ruffling more feathers than ever this year, with French detractors attacking a pricing system that is pushing some bottles out of the reach of most wine lovers.
"Are they going to try and sell us bottles at 500 euros (730 dollars)?" asked Alain-Dominique Perrin, former head of the world¹s second biggest luxury group, Richemont, in an interview this month with one of France¹s most popular wine magazines.
"If there is a moral in this wine world all the top ones must go back down to 100 euros," he said of the 2007 Bordeaux vintage, which will be tasted by critics in the first week of April and sold in the following months.
The Bordeaux primeur system, which offers wine for sale two years before it is bottled, is unique in the wine world and has always attracted much attention, both positive and negative.
In the last two years, prices paid for top wines have reached record wholesale prices of 400 to 500 euros per bottle, as demand exploded, with customers paying per bottle retail prices of up to 1,000 euros for a few of the most sought after wines like Petrus, Ausone and Cheval Blanc.
The president of the Union des Grands Crus de Bordeaux, which organises the annual primeur tastings, Patrick Maroteaux, described Perrin¹s comments as bitter. He said his take on the wines of 2007, which included calling them wet and mediocre, was wrong.
"He will be very surprised when he tastes them seriously," he said.
Given that Perrin is from outside Bordeaux, and owns several wine estates in other parts of France, notably in Cahors where winemakers can only dream of matching top Bordeaux pricing, his comments could be dismissed as jealousy.
However another critic, this time from Bordeaux, the now retired winemaker at Chateau Petrus, one of the most famous Bordeaux wines, also weighed in against the primeurs this month.
Jean Claude Berrouet, who worked at Petrus from 1964 to 2007, told another magazine that wines had been hijacked by a system that encouraged speculative investors to buy now at relatively reduced prices and sell later at higher ones.
"We have taken wine hostage and we need to set it free," he said.
Berrouet also said the primeurs tastings were too frenzied, and that wines needed to be judged over time, not in a great rush as currently happens.
For his part, Perrin, now executive administrator for Richemont (owner of Cartier, Montblanc and Van Cleef and Arpels), also said top wines were over-priced in relation to production costs.
"To make a bottle of Chateau Mouton Rothschild or similar, all payments included, it comes to between 10 and 12 euros at most," he said.
Consumers were therefore paying about 80 times cost of production for the most sought-after wines, when the highest expected in the luxury industry is only 17 times cost of production, Perrin said.
There has been little response to his outburst among top Bordeaux owners.
"It is evident the costs of production are higher than that," said Paul Pontallier of Chateaux Margaux, one of only five chateaux in Bordeaux with the coveted ranking of "premier cru," meaning first growth.
Asked for an estimate, Pontallier said it was impossible. "It depends so much on the vintage, the proportions of first, second and third wines, the treatments, on what costs we include. I cannot give a number without giving a three-page explanation," Pontallier said. "Some vintages cost twice or three times another."
Other Bordeaux winemakers said Perrin¹s estimates were correct but denied there was any moral issue.
"It's about right, 15 euros would be the maximum," said Jean Christophe Mau, owner of Chateau Brown in Pessac Leognan, and Chateau Preulliac in the Medoc. His own costs were between eight and 10 euros a bottle, he said.
"But pricing has nothing to do with morals, and everything to do with supply and demand," Mau said.
Basile Tesseron of Chateau Lafon Rochet pointed out that Bordeaux producers were limited to selling one product, once a year, and were unable to increase sales volumes in any significant way.
Tesseron also said that the top chateaux represented only a microscopic part of Bordeaux¹s overall production, or less than 2.0 percent.
"There are about 7,000 chateaux in Bordeaux, and most do not reach retail prices of 10 euros," he said.
Greenspan Says U.S. Economy Is `On the Edge' of a Recession
Greenspan Says U.S. Economy Is `On the Edge' of a Recession
By Vivien Lou Chen
Enlarge Image/Details
Feb. 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. economy is on the verge of its first recession in six years as falling home values hurt consumer spending.
``We are clearly on the edge,'' Greenspan told a group of energy-industry executives yesterday at the Cambridge Energy Research Associates' 27th annual CERAWeek conference in Houston. He reiterated comments from last month that the odds of an economic contraction are ``50 percent or better.''
Greenspan's view has evolved from a year ago, when he saw a one-in-three chance of a recession, citing slowing profit growth and becoming one of the first economists to warn of the risk. Now, Wall Street firms including Merrill Lynch & Co. and Goldman Sachs Group Inc. are forecasting a contraction in the aftermath of the worst housing downturn in a quarter century.
Fed Chairman Ben S. Bernanke, Greenspan's successor, acknowledged ``downside'' risks to the expansion yesterday, while telling lawmakers he expects growth to pick up later this year. He reiterated the central bank is prepared to take ``timely'' action to aid the economy as needed.
``While we are at stall speed in the U.S. at the moment, we haven't yet seen the discontinuity that characterizes recession,'' Greenspan said during a question-and-answer session yesterday. ``American business was in such extra-good shape before this problem hit. Otherwise we would be talking about how long and how deep. We are not there yet.''
Credit Availability
The lack of available credit ``hasn't been a major problem yet for American business,'' he added. Among consumers, though, spending has been slowed by falling home values, which leaves homeowners with less capital to borrow against, Greenspan said.
``Home prices will continue to weaken,'' the 81-year-old former Fed chief said. ``When a bubble breaks, you go to primordial fear.''
Separately, the former chairman, a Republican, gave a nod toward Republican presidential candidate John McCain, comparing him with ex-President Ronald Reagan. He made the remarks after his predecessor at the Fed's helm, Paul Volcker, last month endorsed Democratic candidate Barack Obama, the Illinois senator.
``John McCain has the same roots as Reagan, being a Goldwater Republican,'' Greenspan said. McCain, like the late Barry Goldwater, is a senator from Arizona. McCain ``is a conservative and has many of the same characteristics that Reagan did.''
Bernanke, 54, told the Senate Banking Committee yesterday that Fed officials lowered their forecasts for growth after the U.S. lost jobs in January, and declining home and stock values threatened consumer spending.
Growth Forecast
Economists predict economic growth will slow to a 0.5 percent pace in the first quarter from the annualized rate of 0.6 percent recorded in the previous three months, according to a Bloomberg News survey this month.
Traders anticipate the Fed will cut the benchmark interest rate by half a point, to 2.5 percent, by March 18, after 2.25 percentage points of reductions since September. Last month, policy makers reduced rates by 1.25 percentage point, the fastest easing of monetary policy in two decades.
Some Fed officials, such as Dallas Fed President Richard Fisher and Philadelphia Fed chief Charles Plosser, warned that the central bank must also monitor inflation as it lowers rates. Fisher said this month that rate cuts can have the potential to ``juice up inflation.''
Faster inflation, combined with slower growth, is a condition known as stagflation, which throttled the U.S. economy in the 1970s.
No `Stagflation'
``Stagflation is too strong a term for what we are on the edge of,'' Greenspan said yesterday. ``I trust we have enough sense to come up with policies to avoid that.''
He also told the group of energy-industry executives that a mandatory cap on carbon emissions ``will lead to lower levels of economic activity and significantly higher unemployment.''
Greenspan left the Fed in January 2006 after almost two decades at the helm. He has returned to his role as a private economic forecaster, speaking at conferences and to groups of bankers and investors, while consulting for clients such as Deutsche Bank AG.
During a Jan. 24 speech in Vancouver, the former chairman said he's worried that an ``inevitable'' global recession will create a backlash that forces countries to retreat from world markets. He then put the probability of a U.S. recession at ``50 percent or more, but we're not there yet.''
In November, he told a Sao Paulo, Brazil, audience that the odds of a recession were less than 50 percent.
By Vivien Lou Chen
Enlarge Image/Details
Feb. 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. economy is on the verge of its first recession in six years as falling home values hurt consumer spending.
``We are clearly on the edge,'' Greenspan told a group of energy-industry executives yesterday at the Cambridge Energy Research Associates' 27th annual CERAWeek conference in Houston. He reiterated comments from last month that the odds of an economic contraction are ``50 percent or better.''
Greenspan's view has evolved from a year ago, when he saw a one-in-three chance of a recession, citing slowing profit growth and becoming one of the first economists to warn of the risk. Now, Wall Street firms including Merrill Lynch & Co. and Goldman Sachs Group Inc. are forecasting a contraction in the aftermath of the worst housing downturn in a quarter century.
Fed Chairman Ben S. Bernanke, Greenspan's successor, acknowledged ``downside'' risks to the expansion yesterday, while telling lawmakers he expects growth to pick up later this year. He reiterated the central bank is prepared to take ``timely'' action to aid the economy as needed.
``While we are at stall speed in the U.S. at the moment, we haven't yet seen the discontinuity that characterizes recession,'' Greenspan said during a question-and-answer session yesterday. ``American business was in such extra-good shape before this problem hit. Otherwise we would be talking about how long and how deep. We are not there yet.''
Credit Availability
The lack of available credit ``hasn't been a major problem yet for American business,'' he added. Among consumers, though, spending has been slowed by falling home values, which leaves homeowners with less capital to borrow against, Greenspan said.
``Home prices will continue to weaken,'' the 81-year-old former Fed chief said. ``When a bubble breaks, you go to primordial fear.''
Separately, the former chairman, a Republican, gave a nod toward Republican presidential candidate John McCain, comparing him with ex-President Ronald Reagan. He made the remarks after his predecessor at the Fed's helm, Paul Volcker, last month endorsed Democratic candidate Barack Obama, the Illinois senator.
``John McCain has the same roots as Reagan, being a Goldwater Republican,'' Greenspan said. McCain, like the late Barry Goldwater, is a senator from Arizona. McCain ``is a conservative and has many of the same characteristics that Reagan did.''
Bernanke, 54, told the Senate Banking Committee yesterday that Fed officials lowered their forecasts for growth after the U.S. lost jobs in January, and declining home and stock values threatened consumer spending.
Growth Forecast
Economists predict economic growth will slow to a 0.5 percent pace in the first quarter from the annualized rate of 0.6 percent recorded in the previous three months, according to a Bloomberg News survey this month.
Traders anticipate the Fed will cut the benchmark interest rate by half a point, to 2.5 percent, by March 18, after 2.25 percentage points of reductions since September. Last month, policy makers reduced rates by 1.25 percentage point, the fastest easing of monetary policy in two decades.
Some Fed officials, such as Dallas Fed President Richard Fisher and Philadelphia Fed chief Charles Plosser, warned that the central bank must also monitor inflation as it lowers rates. Fisher said this month that rate cuts can have the potential to ``juice up inflation.''
Faster inflation, combined with slower growth, is a condition known as stagflation, which throttled the U.S. economy in the 1970s.
No `Stagflation'
``Stagflation is too strong a term for what we are on the edge of,'' Greenspan said yesterday. ``I trust we have enough sense to come up with policies to avoid that.''
He also told the group of energy-industry executives that a mandatory cap on carbon emissions ``will lead to lower levels of economic activity and significantly higher unemployment.''
Greenspan left the Fed in January 2006 after almost two decades at the helm. He has returned to his role as a private economic forecaster, speaking at conferences and to groups of bankers and investors, while consulting for clients such as Deutsche Bank AG.
During a Jan. 24 speech in Vancouver, the former chairman said he's worried that an ``inevitable'' global recession will create a backlash that forces countries to retreat from world markets. He then put the probability of a U.S. recession at ``50 percent or more, but we're not there yet.''
In November, he told a Sao Paulo, Brazil, audience that the odds of a recession were less than 50 percent.
Australia and US agree open-skies pact
Australia and US agree open-skies pact
By Reuters in Canberra
Australia and the United States have agreed to drop restrictions on lucrative trans-Pacific flight routes between the two countries, Australia’s government said on Friday.
Transport Minister Anthony Albanese said talks with U.S. officials in Washington had reached agreement on an open-skies pact, which could see more U.S. carriers fly to Australia via ports in Asia, such as Tokyo.
”This agreement will remove restrictions on competition for the benefits of Australian jobs and consumers,” Albanese said in a statement.
The deal helps clear the way for Australian airline Virgin Blue Holdings Ltd to begin flights to the United States on its carrier V Australia by the end of this year, edging open one of the world’s most lucrative and protected long-haul routes.
But shares in Australia’s flag-carrier Qantas Airways Ltd slumped by 3.6 percent to A$4.58 at 0147 GMT on expectations the airline will face tougher competition on the prized cross-Pacific route, on which it has a near-monopoly.
United Airlines is currently the only competitor to Qantas in non-stop flights to the United States. It runs 14 flights a week to Australia.
Qantas operates 48 flights a week and reportedly generates as much as 20 percent of its profits from the route.
A 2006 report for Singapore Airlines said Qantas charged 38 percent more for flights from Sydney to Los Angeles than on the competitive ”kangaroo route” from Sydney to London.
The open-skies deal replaces an aviation treaty between Australia and the United States under which airlines based in either country were capped at four weekly flights on the route in the first year.
Virgin’s V Australia, which is 62 percent owned by Toll Holdings Ltd, has asked the U.S. Transportation Department for 10 weekly flights, having already placed an order for six long-range Boeing 777-300ERs with options to buy another six.
Australia’s former conservative government rejected repeated requests from Singapore Airlines for permission to fly from Australia to the United States.
Albanese’s centre-left Labor government, elected in November, has not yet said if it supports the entry of Singapore Airlines on the route. Singapore wants access to new markets to help offset competition from low-cost carriers in Asia.
Singapore Airlines estimates that opening the Pacific route to more competition could increase the number of travellers between the United States and Australia by up to 8 percent.
By Reuters in Canberra
Australia and the United States have agreed to drop restrictions on lucrative trans-Pacific flight routes between the two countries, Australia’s government said on Friday.
Transport Minister Anthony Albanese said talks with U.S. officials in Washington had reached agreement on an open-skies pact, which could see more U.S. carriers fly to Australia via ports in Asia, such as Tokyo.
”This agreement will remove restrictions on competition for the benefits of Australian jobs and consumers,” Albanese said in a statement.
The deal helps clear the way for Australian airline Virgin Blue Holdings Ltd to begin flights to the United States on its carrier V Australia by the end of this year, edging open one of the world’s most lucrative and protected long-haul routes.
But shares in Australia’s flag-carrier Qantas Airways Ltd slumped by 3.6 percent to A$4.58 at 0147 GMT on expectations the airline will face tougher competition on the prized cross-Pacific route, on which it has a near-monopoly.
United Airlines is currently the only competitor to Qantas in non-stop flights to the United States. It runs 14 flights a week to Australia.
Qantas operates 48 flights a week and reportedly generates as much as 20 percent of its profits from the route.
A 2006 report for Singapore Airlines said Qantas charged 38 percent more for flights from Sydney to Los Angeles than on the competitive ”kangaroo route” from Sydney to London.
The open-skies deal replaces an aviation treaty between Australia and the United States under which airlines based in either country were capped at four weekly flights on the route in the first year.
Virgin’s V Australia, which is 62 percent owned by Toll Holdings Ltd, has asked the U.S. Transportation Department for 10 weekly flights, having already placed an order for six long-range Boeing 777-300ERs with options to buy another six.
Australia’s former conservative government rejected repeated requests from Singapore Airlines for permission to fly from Australia to the United States.
Albanese’s centre-left Labor government, elected in November, has not yet said if it supports the entry of Singapore Airlines on the route. Singapore wants access to new markets to help offset competition from low-cost carriers in Asia.
Singapore Airlines estimates that opening the Pacific route to more competition could increase the number of travellers between the United States and Australia by up to 8 percent.
China’s property market prepares for shake-up
China’s property market prepares for shake-up
By Geoff Dyer in Shanghai and Tom Mitchell in Shenzhen
Published: February 14 2008 17:40 | Last updated: February 15 2008 02:12
A real estate agency closing hundreds of branches while the owner of another absconds; property developers cancelling fundraisings and debt spreads widening dramatically; house prices slumping – these sound like recent tales from the US housing market.
Yet these events have happened in the past three months in China, as some parts of the country’s housing market have shown signs of real stress.
Shares in many of China’s largest listed property developers have fallen more than 50 per cent from their highs of last year in the face of investor fears that some developers might be forced into bankruptcy.
After a couple of years of rapid investment, Chinese developers have been caught between two forces – government efforts to slow economic growth and the global credit crunch. The authorities have taken unusually strong measures to limit credit growth and have promised to introduce a tough new policy to reduce developers’ holdings of unused land.
Planned share listings have had to be shelved, but the most worrying signals have come from the debt market. According to BNP Paribas, both China Agile Property and Greentown China have seen the spreads on credit default swaps (which allow investors to buy insurance against default) more than double since October to more than 1,000 basis points this month, indicating a high level of investor uncertainty.
Partly as a result of these measures, the volume of property transactions has fallen sharply since November and, in the two main cities in southern China, Shenzhen and Guangzhou, prices have also slumped.
Real estate agents are already feeling the pain. Shenzhen-based Chuanghui, which had been one of the largest in the country, has closed more than half of its 1,800 branches. “We are doing our best to get cash,” says Zhang Min, a planning manager at the company’s headquarters. “We have closed many outlets and got the rental deposits back.”
In November, another Shenzhen-based agency, Zhongtian, closed most of its branches amid reports that its chief executive had gone into hiding. Analysts say it is no surprise that markets in southern China have been hardest hit. Partly as a result of its proximity to Hong Kong, the region has seen much more speculative buying than anywhere bar Shanghai.
Moreover, while northern Chinese housebuyers like to pay in cash, mortgages are much more common in the south, which makes the market more vulnerable to credit restrictions and slowing growth.
“Developers with a bigger presence in the south are much more at risk,” says Eric Wong, a property analyst at UBS in Hong Kong.
The question is whether all these developments will add up to a series of defaults. Most observers think that unlikely. For a start, although individual cities such as Shenzhen have seen unsustainable price surges, economists argue that the national housing market is relatively stable and that prices have actually become more affordable.
According to Andy Rothman at brokerage CLSA in Shanghai, the average price of houses in 70 cities rose nearly 8 per cent last year, while real urban incomes accelerated by 12 per cent. “If there are problems in the property market, then they are likely to be very local ones,” he says.
Rapid urbanisation and a growing middle class will continue to underpin housing demand. Moreover, the market is much less leveraged than the US, with banks asking for substantial initial down-payments from mortgage customers.
“People in China will grin and bear it, even if they bought the property at the very peak of the market,” says Mr Wong at UBS.
“The situation is not like the US. If the market does fall, it will be a correction in an upward secular trend,” he adds.
Many of the companies feeling financial pressure have other options. While those listed in mainland China need regulatory approval to sell new shares, the Hong Kong-listed companies can quickly organise placements at steep discounts if they need to. There are also plenty of private equity firms that have raised funds in recent years and are looking for Chinese projects to invest in.
Short-term credit problems could also encourage more takeovers in a sector still dominated by a large number of relatively small companies.
“The next phase for the sector is consolidation, rather than bankruptcy,” says Mark Lo, a credit analyst at BNP Paribas in Hong Kong. “The better names will simply buy projects from, or enter joint ventures with, the companies that have liquidity problems.”
By Geoff Dyer in Shanghai and Tom Mitchell in Shenzhen
Published: February 14 2008 17:40 | Last updated: February 15 2008 02:12
A real estate agency closing hundreds of branches while the owner of another absconds; property developers cancelling fundraisings and debt spreads widening dramatically; house prices slumping – these sound like recent tales from the US housing market.
Yet these events have happened in the past three months in China, as some parts of the country’s housing market have shown signs of real stress.
Shares in many of China’s largest listed property developers have fallen more than 50 per cent from their highs of last year in the face of investor fears that some developers might be forced into bankruptcy.
After a couple of years of rapid investment, Chinese developers have been caught between two forces – government efforts to slow economic growth and the global credit crunch. The authorities have taken unusually strong measures to limit credit growth and have promised to introduce a tough new policy to reduce developers’ holdings of unused land.
Planned share listings have had to be shelved, but the most worrying signals have come from the debt market. According to BNP Paribas, both China Agile Property and Greentown China have seen the spreads on credit default swaps (which allow investors to buy insurance against default) more than double since October to more than 1,000 basis points this month, indicating a high level of investor uncertainty.
Partly as a result of these measures, the volume of property transactions has fallen sharply since November and, in the two main cities in southern China, Shenzhen and Guangzhou, prices have also slumped.
Real estate agents are already feeling the pain. Shenzhen-based Chuanghui, which had been one of the largest in the country, has closed more than half of its 1,800 branches. “We are doing our best to get cash,” says Zhang Min, a planning manager at the company’s headquarters. “We have closed many outlets and got the rental deposits back.”
In November, another Shenzhen-based agency, Zhongtian, closed most of its branches amid reports that its chief executive had gone into hiding. Analysts say it is no surprise that markets in southern China have been hardest hit. Partly as a result of its proximity to Hong Kong, the region has seen much more speculative buying than anywhere bar Shanghai.
Moreover, while northern Chinese housebuyers like to pay in cash, mortgages are much more common in the south, which makes the market more vulnerable to credit restrictions and slowing growth.
“Developers with a bigger presence in the south are much more at risk,” says Eric Wong, a property analyst at UBS in Hong Kong.
The question is whether all these developments will add up to a series of defaults. Most observers think that unlikely. For a start, although individual cities such as Shenzhen have seen unsustainable price surges, economists argue that the national housing market is relatively stable and that prices have actually become more affordable.
According to Andy Rothman at brokerage CLSA in Shanghai, the average price of houses in 70 cities rose nearly 8 per cent last year, while real urban incomes accelerated by 12 per cent. “If there are problems in the property market, then they are likely to be very local ones,” he says.
Rapid urbanisation and a growing middle class will continue to underpin housing demand. Moreover, the market is much less leveraged than the US, with banks asking for substantial initial down-payments from mortgage customers.
“People in China will grin and bear it, even if they bought the property at the very peak of the market,” says Mr Wong at UBS.
“The situation is not like the US. If the market does fall, it will be a correction in an upward secular trend,” he adds.
Many of the companies feeling financial pressure have other options. While those listed in mainland China need regulatory approval to sell new shares, the Hong Kong-listed companies can quickly organise placements at steep discounts if they need to. There are also plenty of private equity firms that have raised funds in recent years and are looking for Chinese projects to invest in.
Short-term credit problems could also encourage more takeovers in a sector still dominated by a large number of relatively small companies.
“The next phase for the sector is consolidation, rather than bankruptcy,” says Mark Lo, a credit analyst at BNP Paribas in Hong Kong. “The better names will simply buy projects from, or enter joint ventures with, the companies that have liquidity problems.”
NY Times to slash 100 editorial jobs
NY Times to slash 100 editorial jobs
By Joshua Chaffin in New York
Published: February 15 2008 02:00 | Last updated: February 15 2008 02:00
The New York Times is planning to eliminate about 100 editorial positions this year, underlining the quickening pace of lay-offs at newspapers as the economy slows and advertising comes under pressure.
Bill Keller, the Times's executive editor, informed employees of the planned cuts at a meeting yesterday and said they would come through a combination of attrition, buy-outs, and possibly lay-offs. The Times noted that its current editorial staff - 1,332 - was the highest in its history.
While the cuts are small compared with other papers, they are significant because the Times has typically invested to add staff, even as rivals have cut back.
The Times's reductions come a day after the Tribune Company announced that it would cut as many as 500 jobs, including up to 150 at the Los Angeles Times.
Newspapers in general have seen revenue growth stall in recent years as readers and advertisers have migrated to the internet. The problem is now being exacerbated by a slowing economy, which is also weighing on advertising. The Times Company last month reported a 13 per cent drop in advertising sales for December.
Sam Zell, who led an $8bn buy-out of Tribune that was completed in December, had pledged in a recent company-wide roadshow that the media group had to find ways to increase revenue and not just cut staff.
Mr Zell reiterated that theme in a memo to staff earlier this week. Yet he also acknowledged the weight of the company's debt load and the difficult advertising environment. "While I will do everything in my power to drive, pull and drag this company forward, I can't promise we won't see additional position eliminations in the future, if we continue at our current rate of cash flow decline," Mr Zell wrote.
Meanwhile, the Los Angeles Times, whose editor resigned last month after refusing to make staff cuts, named a replacement yesterday, Russ Stanton.
Mr Stanton had previously served as the Times's innovation editor and business editor, and is expected to add greater urgency to its online expansion.
By Joshua Chaffin in New York
Published: February 15 2008 02:00 | Last updated: February 15 2008 02:00
The New York Times is planning to eliminate about 100 editorial positions this year, underlining the quickening pace of lay-offs at newspapers as the economy slows and advertising comes under pressure.
Bill Keller, the Times's executive editor, informed employees of the planned cuts at a meeting yesterday and said they would come through a combination of attrition, buy-outs, and possibly lay-offs. The Times noted that its current editorial staff - 1,332 - was the highest in its history.
While the cuts are small compared with other papers, they are significant because the Times has typically invested to add staff, even as rivals have cut back.
The Times's reductions come a day after the Tribune Company announced that it would cut as many as 500 jobs, including up to 150 at the Los Angeles Times.
Newspapers in general have seen revenue growth stall in recent years as readers and advertisers have migrated to the internet. The problem is now being exacerbated by a slowing economy, which is also weighing on advertising. The Times Company last month reported a 13 per cent drop in advertising sales for December.
Sam Zell, who led an $8bn buy-out of Tribune that was completed in December, had pledged in a recent company-wide roadshow that the media group had to find ways to increase revenue and not just cut staff.
Mr Zell reiterated that theme in a memo to staff earlier this week. Yet he also acknowledged the weight of the company's debt load and the difficult advertising environment. "While I will do everything in my power to drive, pull and drag this company forward, I can't promise we won't see additional position eliminations in the future, if we continue at our current rate of cash flow decline," Mr Zell wrote.
Meanwhile, the Los Angeles Times, whose editor resigned last month after refusing to make staff cuts, named a replacement yesterday, Russ Stanton.
Mr Stanton had previously served as the Times's innovation editor and business editor, and is expected to add greater urgency to its online expansion.
Outsourcing blip predicted for India
Outsourcing blip predicted for India
By Joe Leahy in Mumbai
Published: February 14 2008 17:32 | Last updated: February 14 2008 17:32
Executives in India’s information technology outsourcing industry expect slower growth in the first two quarters of the year because of uncertainty in the US economy, but most believe business will return to normal in the second half.
If they are right, these forecasts will be greeted with relief by the Indian government, as outsourcing is one of the main growth engines of the economy, employing nearly 2m middle-class professionals and creating millions of ancillary jobs.
“In the short term there is concern about the US economy but, in the medium to long term, the value proposition [stemming from outsourcing] is still there,” S. Gopalakrishnan, chief executive officer of Infosys, told the Financial Times on Thursday.
The outsourcing industry, which provides services ranging from developing software for overseas clients to managing back office processing of mortgages, has risen to become one of India’s main export earners.
The sector is forecasting that export revenue for the year ending in March will reach $40bn (€27bn, £20bn) and rise 50 per cent to $60bn by 2010.
But recent local media reports have speculated that the US slowdown is beginning to affect the industry’s hiring policies.
One report cited a move by Tata Consultancy Services, India’s biggest outsourcer, to sack 500 staff for underperformance as evidence that business was getting tougher. Executives in Mumbai said that while they regularly weeded out underperformers, hiring was proceeding normally.
Some US financial clients, which normally finalise their IT budgets for the year ahead in January, had delayed making decisions because of the uncertainty in the industry. But most Indian outsourcing executives believed business would resume as normal in the second half once the outlook for the US economy became clearer.
And few US clients were expected to reduce their expenditure on outsourcing, which remained a lower cost option than keeping functions onshore.
“My worry is that people are talking about this slowdown so much they’re starting to believe it,” said Azim Premji, chairman of Wipro, India’s third largest outsourcer.
By Joe Leahy in Mumbai
Published: February 14 2008 17:32 | Last updated: February 14 2008 17:32
Executives in India’s information technology outsourcing industry expect slower growth in the first two quarters of the year because of uncertainty in the US economy, but most believe business will return to normal in the second half.
If they are right, these forecasts will be greeted with relief by the Indian government, as outsourcing is one of the main growth engines of the economy, employing nearly 2m middle-class professionals and creating millions of ancillary jobs.
“In the short term there is concern about the US economy but, in the medium to long term, the value proposition [stemming from outsourcing] is still there,” S. Gopalakrishnan, chief executive officer of Infosys, told the Financial Times on Thursday.
The outsourcing industry, which provides services ranging from developing software for overseas clients to managing back office processing of mortgages, has risen to become one of India’s main export earners.
The sector is forecasting that export revenue for the year ending in March will reach $40bn (€27bn, £20bn) and rise 50 per cent to $60bn by 2010.
But recent local media reports have speculated that the US slowdown is beginning to affect the industry’s hiring policies.
One report cited a move by Tata Consultancy Services, India’s biggest outsourcer, to sack 500 staff for underperformance as evidence that business was getting tougher. Executives in Mumbai said that while they regularly weeded out underperformers, hiring was proceeding normally.
Some US financial clients, which normally finalise their IT budgets for the year ahead in January, had delayed making decisions because of the uncertainty in the industry. But most Indian outsourcing executives believed business would resume as normal in the second half once the outlook for the US economy became clearer.
And few US clients were expected to reduce their expenditure on outsourcing, which remained a lower cost option than keeping functions onshore.
“My worry is that people are talking about this slowdown so much they’re starting to believe it,” said Azim Premji, chairman of Wipro, India’s third largest outsourcer.
Norway’s sovereign fund sets an ethical example
Norway’s sovereign fund sets an ethical example
By Kristin Halvorsen
Published: February 14 2008 19:50 | Last updated: February 14 2008 19:50
The role of sovereign wealth funds in the capital markets has become the focus of one of the most continuous economic debates. Key concerns relate to a lack of transparency and possible non-financial objectives for the investments.
This is not the case with the Norwegian Government Pension Fund – Global. Instead the fund has a high degree of transparency in all aspects of its operation, including its role as an investor with non-strategic holdings, its explicit aim to maximise financial returns and the clear lines of responsibility between political authorities and the management of the fund. Managers aim for international best practice and the exercise of ownership rights is based on internationally accepted principles such as the United Nations Global Compact and the Organisation for Economic Co-operation and Development guidelines on corporate governance and multinational enterprises.
We believe that our fund has the potential to influence positively financial markets through enhancing market liquidity and resource allocation. Typical characteristics of SWFs are: long-term investment horizons, no leverage and no demands for the imminent withdrawal of funds. SWFs have a strong risk-bearing capacity and ability to accommodate short-term volatility.
We believe transparency is a key tool in building trust. Domestically it helps build public support and trust in the management of Norway’s petroleum wealth. Openness about the fund’s management can contribute to stable financial markets and exert a disciplinary pressure on managers.
We support the work of the International Monetary Fund and the OECD in studying the effects of SWFs. Work on developing a voluntary set of best practices for SWFs should be carried out by the IMF with the collaboration of relevant partners. However, we see no need for regulations that would restrict the present investment activities of our fund or any regulation imposing restrictions on SWFs over and above those applying to non-SWF investors.
The fund is not an instrument for political posturing or one that makes politicised investment decisions. Two years ago the fund drew criticism from Iceland’s prime minister, when Norges Bank, our manager, expressed an investment view on some Icelandic securities. This was an example of how a recipient country wanted to introduce politics into the investment process, not proof of a politicised investment decision.
The fund was set up to manage Norway’s petroleum wealth in a sustainable manner. This helps us meet the challenge of rising pensions and health expenditures. The fund, now valued at more than $350bn , has become an influential investor. Greater influence means greater responsibility in deciding how the fund is invested.
We wish to be responsible investors and have therefore established ethical guidelines for the fund. We have two main ethical obligations: first, to ensure financial returns so that future generations benefit from the oil wealth. Second, to respect fundamental rights of those who are affected by the companies in which the fund invests. Since we think long-term returns benefit from adherence to generally accepted norms of ethical behaviour, we see no contradiction between these two goals.
What are these accepted norms? The conventions laid down by organisations such as the UN, the OECD and the International Labour Organisation set out a consensus defining what should, in the least, be required by companies regarding fundamental rights and the protection of the environment, human life and health.
We promote the ethical foundation by exercising ownership rights and excluding companies from the fund. In cases where it is possible to encourage a company to put in place systems that reduce the risk of ethical infringements, the use of ownership rights is the preferred option. In cases with no hope of changing unethical practices, the exclusion mechanism is a defensive measure to avoid a situation where the fund runs the risk of being complicit in unacceptable practices. The guidelines are applied in a totally transparent way, with full disclosure of the criteria and how they are applied in individual cases.
I am pleased to see that the ethical guidelines, and our enforcement of them, are being noticed and in some cases copied by other funds both domestically and internationally. This gives me confidence that ethics will become a permanent and vital part of fund management across borders and that investors may mutually inspire each other in this pursuit.
The writer is minister of finance, Norway
By Kristin Halvorsen
Published: February 14 2008 19:50 | Last updated: February 14 2008 19:50
The role of sovereign wealth funds in the capital markets has become the focus of one of the most continuous economic debates. Key concerns relate to a lack of transparency and possible non-financial objectives for the investments.
This is not the case with the Norwegian Government Pension Fund – Global. Instead the fund has a high degree of transparency in all aspects of its operation, including its role as an investor with non-strategic holdings, its explicit aim to maximise financial returns and the clear lines of responsibility between political authorities and the management of the fund. Managers aim for international best practice and the exercise of ownership rights is based on internationally accepted principles such as the United Nations Global Compact and the Organisation for Economic Co-operation and Development guidelines on corporate governance and multinational enterprises.
We believe that our fund has the potential to influence positively financial markets through enhancing market liquidity and resource allocation. Typical characteristics of SWFs are: long-term investment horizons, no leverage and no demands for the imminent withdrawal of funds. SWFs have a strong risk-bearing capacity and ability to accommodate short-term volatility.
We believe transparency is a key tool in building trust. Domestically it helps build public support and trust in the management of Norway’s petroleum wealth. Openness about the fund’s management can contribute to stable financial markets and exert a disciplinary pressure on managers.
We support the work of the International Monetary Fund and the OECD in studying the effects of SWFs. Work on developing a voluntary set of best practices for SWFs should be carried out by the IMF with the collaboration of relevant partners. However, we see no need for regulations that would restrict the present investment activities of our fund or any regulation imposing restrictions on SWFs over and above those applying to non-SWF investors.
The fund is not an instrument for political posturing or one that makes politicised investment decisions. Two years ago the fund drew criticism from Iceland’s prime minister, when Norges Bank, our manager, expressed an investment view on some Icelandic securities. This was an example of how a recipient country wanted to introduce politics into the investment process, not proof of a politicised investment decision.
The fund was set up to manage Norway’s petroleum wealth in a sustainable manner. This helps us meet the challenge of rising pensions and health expenditures. The fund, now valued at more than $350bn , has become an influential investor. Greater influence means greater responsibility in deciding how the fund is invested.
We wish to be responsible investors and have therefore established ethical guidelines for the fund. We have two main ethical obligations: first, to ensure financial returns so that future generations benefit from the oil wealth. Second, to respect fundamental rights of those who are affected by the companies in which the fund invests. Since we think long-term returns benefit from adherence to generally accepted norms of ethical behaviour, we see no contradiction between these two goals.
What are these accepted norms? The conventions laid down by organisations such as the UN, the OECD and the International Labour Organisation set out a consensus defining what should, in the least, be required by companies regarding fundamental rights and the protection of the environment, human life and health.
We promote the ethical foundation by exercising ownership rights and excluding companies from the fund. In cases where it is possible to encourage a company to put in place systems that reduce the risk of ethical infringements, the use of ownership rights is the preferred option. In cases with no hope of changing unethical practices, the exclusion mechanism is a defensive measure to avoid a situation where the fund runs the risk of being complicit in unacceptable practices. The guidelines are applied in a totally transparent way, with full disclosure of the criteria and how they are applied in individual cases.
I am pleased to see that the ethical guidelines, and our enforcement of them, are being noticed and in some cases copied by other funds both domestically and internationally. This gives me confidence that ethics will become a permanent and vital part of fund management across borders and that investors may mutually inspire each other in this pursuit.
The writer is minister of finance, Norway
Kazakhstan to take back resources
Kazakhstan to take back resources
By Isabel Gorst in Moscow
Published: February 14 2008 19:08 | Last updated: February 14 2008 19:08
Kazakhstan will this year nationalise all natural resource projects where investors have breached contracts, Karim Massimov, prime minister, said on Thursday.
Mr Massimov also said no new natural resource contracts would be negotiated until a new tax code enabling the government to squeeze more revenues out of oil and gas investors was finalised this autumn.
His remarks came a week after Nursultan Nazarbayev, Kazakhstan’s authoritarian president, called for the state to strengthen its control over the oil and gas sector in his annual address to the nation.
“Your instruction to return fields held by unscrupulous natural resource users to the state will be fulfilled during the course of this year,” Mr Massimov told a government meeting chaired by Mr Nazarbayev.
Kazakhstan claims that many of the investors that scooped up natural resource licences in chaotic tenders in the 1990s have failed to fulfill their commitments. The government expects to uncover violations at over half the 834 licences being investigated, but has not released details of which projects are under scrutiny.
KazMunaigas, Kazakhstan’s increasingly assertive state oil company, is expected to inherit confiscated oil licences.
Julia Nanay, a senior director at PFC Energy, said: “This initiative is designed to further Kazakhstan’s goal to build up KazMunaigas as the dominant oil industry player in the republic.”
Regulations entitling KazMunaigas to pre-empt the sale of onshore oilfields helped the company boost production by more than 29 per cent last year to 16.7m tonnes, more than a quarter of the republic’s total output.
A new law introduced last October empowering the government to annul oil contracts deemed harmful to the national interest has not yet been invoked.
However, it intensified pressure on an international oil group led by Eni of Italy to settle a dispute about delayed production and ballooning costs at the Kashagan field that ended when investors allocated a larger share in the flagship Caspian Sea project to KazMunaigas.
Mr Massimov said a new tax code now being formulated would “define precise rules of the game for natural resource users and increase the [government] take from the raw materials sector”.
“Until the new tax code is adopted all negotiations with natural resource users will be stopped,” he added.
Officials are discussing an increase in both oil production and export levies and are considering applying the new rules to existing as well as future projects.
Increased oil tax collection will allow the government to reduce the tax burden on other sectors, stimulating diversification of the economy away from natural resources.
By Isabel Gorst in Moscow
Published: February 14 2008 19:08 | Last updated: February 14 2008 19:08
Kazakhstan will this year nationalise all natural resource projects where investors have breached contracts, Karim Massimov, prime minister, said on Thursday.
Mr Massimov also said no new natural resource contracts would be negotiated until a new tax code enabling the government to squeeze more revenues out of oil and gas investors was finalised this autumn.
His remarks came a week after Nursultan Nazarbayev, Kazakhstan’s authoritarian president, called for the state to strengthen its control over the oil and gas sector in his annual address to the nation.
“Your instruction to return fields held by unscrupulous natural resource users to the state will be fulfilled during the course of this year,” Mr Massimov told a government meeting chaired by Mr Nazarbayev.
Kazakhstan claims that many of the investors that scooped up natural resource licences in chaotic tenders in the 1990s have failed to fulfill their commitments. The government expects to uncover violations at over half the 834 licences being investigated, but has not released details of which projects are under scrutiny.
KazMunaigas, Kazakhstan’s increasingly assertive state oil company, is expected to inherit confiscated oil licences.
Julia Nanay, a senior director at PFC Energy, said: “This initiative is designed to further Kazakhstan’s goal to build up KazMunaigas as the dominant oil industry player in the republic.”
Regulations entitling KazMunaigas to pre-empt the sale of onshore oilfields helped the company boost production by more than 29 per cent last year to 16.7m tonnes, more than a quarter of the republic’s total output.
A new law introduced last October empowering the government to annul oil contracts deemed harmful to the national interest has not yet been invoked.
However, it intensified pressure on an international oil group led by Eni of Italy to settle a dispute about delayed production and ballooning costs at the Kashagan field that ended when investors allocated a larger share in the flagship Caspian Sea project to KazMunaigas.
Mr Massimov said a new tax code now being formulated would “define precise rules of the game for natural resource users and increase the [government] take from the raw materials sector”.
“Until the new tax code is adopted all negotiations with natural resource users will be stopped,” he added.
Officials are discussing an increase in both oil production and export levies and are considering applying the new rules to existing as well as future projects.
Increased oil tax collection will allow the government to reduce the tax burden on other sectors, stimulating diversification of the economy away from natural resources.
Business as usual in Brazilian credit markets
Business as usual in Brazilian credit markets
By Jonathan Wheatley in São Paulo
Published: February 12 2008 22:34 | Last updated: February 12 2008 22:34
Brazil’s credit markets are shrugging off the effects of the US subprime mortgage debacle and maintaining business largely as usual – another sign say analysts of emerging markets “decoupling” from developed ones.
“Very little has changed in Brazil’s as a result of the crisis,” says Antonio Quintella, head of Credit Suisse’s Brazilian operation in São Paulo. “Of course conditions are somewhat more difficult, spreads are up and the pace of business is slower but, overall, credit markets are calm.”
Brazil’s capital markets as a whole have been far from immune from global instability. The São Paulo Stock Exchange (Bovespa), which since 2004 has seen a flood of companies coming to market after years of inactivity, has again ground to a halt. Last year, 64 companies floated on the main market of the Bovespa, raising R$55.5bn ($31.9bn). This year, not one has floated.
Carlos Alberto Rebello, head of listings at the CVM, Brazil’s securities commission, says 15 companies have suspended requests for share issues with a combined value of about R$7.7bn. Another 14 have failed to launch roadshows for offers worth another R$6bn. A further 14 issues worth about R$10bn are due between February and April. “I doubt very much if they will stick to their timetables,” Mr Rebello says.
Those companies that floated last year have been particularly badly hit by falls in stock prices this year, falling much further than the main Bovespa index.Some 75 per cent of their shares were sold to foreign investors, who have turned to the Bovespa’s liquid market to raise cash to cover losses elsewhere.
But Mr Quintella says companies have found it relatively easy to raise capital from other sources.
Bank lending is the biggest, and the most visible example is Vale, the Brazilian mining giant, which has reportedly had little difficulty raising a loan of $50bn for itsbid for Xstrata, its Anglo-Swiss rival. It is understood that JPMorgan offered Vale $10bn that it did not need.
In Brazil, companies have benefited from a steady expansion of available credit. Brazil’s total stock of credit, at about 35 per cent of gross domestic product, is still much smaller than in many other markets. Brazilian companies have much less debt than many foreign competitors so their situation, says Mr Quintella, “is still relatively comfortable”.
Some analysts have warned that, because Brazilian banks raise some of their capital overseas, the credit that has driven recent growth on Brazil’s domestic market is bound to dry up. But Mr Quintella disputes this, pointing out that the steady advance in savings in Brazil has been driven by investments in fixed income instruments that are, in effect, closed to foreigners by taxation. “Our sources of credit are essentially domestic,” he says.
Most economists believe Brazil is bound to be hurt by the expected slowdown in the US and global economies this year. But many companies are betting on the domestic market to make up the difference. For them, investment capital is still available.
By Jonathan Wheatley in São Paulo
Published: February 12 2008 22:34 | Last updated: February 12 2008 22:34
Brazil’s credit markets are shrugging off the effects of the US subprime mortgage debacle and maintaining business largely as usual – another sign say analysts of emerging markets “decoupling” from developed ones.
“Very little has changed in Brazil’s as a result of the crisis,” says Antonio Quintella, head of Credit Suisse’s Brazilian operation in São Paulo. “Of course conditions are somewhat more difficult, spreads are up and the pace of business is slower but, overall, credit markets are calm.”
Brazil’s capital markets as a whole have been far from immune from global instability. The São Paulo Stock Exchange (Bovespa), which since 2004 has seen a flood of companies coming to market after years of inactivity, has again ground to a halt. Last year, 64 companies floated on the main market of the Bovespa, raising R$55.5bn ($31.9bn). This year, not one has floated.
Carlos Alberto Rebello, head of listings at the CVM, Brazil’s securities commission, says 15 companies have suspended requests for share issues with a combined value of about R$7.7bn. Another 14 have failed to launch roadshows for offers worth another R$6bn. A further 14 issues worth about R$10bn are due between February and April. “I doubt very much if they will stick to their timetables,” Mr Rebello says.
Those companies that floated last year have been particularly badly hit by falls in stock prices this year, falling much further than the main Bovespa index.Some 75 per cent of their shares were sold to foreign investors, who have turned to the Bovespa’s liquid market to raise cash to cover losses elsewhere.
But Mr Quintella says companies have found it relatively easy to raise capital from other sources.
Bank lending is the biggest, and the most visible example is Vale, the Brazilian mining giant, which has reportedly had little difficulty raising a loan of $50bn for itsbid for Xstrata, its Anglo-Swiss rival. It is understood that JPMorgan offered Vale $10bn that it did not need.
In Brazil, companies have benefited from a steady expansion of available credit. Brazil’s total stock of credit, at about 35 per cent of gross domestic product, is still much smaller than in many other markets. Brazilian companies have much less debt than many foreign competitors so their situation, says Mr Quintella, “is still relatively comfortable”.
Some analysts have warned that, because Brazilian banks raise some of their capital overseas, the credit that has driven recent growth on Brazil’s domestic market is bound to dry up. But Mr Quintella disputes this, pointing out that the steady advance in savings in Brazil has been driven by investments in fixed income instruments that are, in effect, closed to foreigners by taxation. “Our sources of credit are essentially domestic,” he says.
Most economists believe Brazil is bound to be hurt by the expected slowdown in the US and global economies this year. But many companies are betting on the domestic market to make up the difference. For them, investment capital is still available.
Bolivia to squeeze natural gas supply for Brazil
Bolivia to squeeze natural gas supply for Brazil
By Jonathan Wheatley in São Paulo, Andrés Schipani,in La Paz and Jude Webber in Buenos Aires
Published: February 15 2008 02:00 | Last updated: February 15 2008 02:00
Bolivia may place a cap on its natural gas exports to Brazil during the coming southern winter, freeing up production for Argentine consumers facing a renewed energy crunch.
YPFB, Bolivia's state-owned oil and gas group, is expected to increase supplies to Enarsa, its Argentine counterpart, which pays $7 (€4.8, £3.6) per British thermal unit (BTU), the standard measure of thermal value.
Supplies to Petrobras, the Brazilian government-controlled oil group which pays $5.6 per BTU, are likely to be capped.
Luiz Inácio Lula da Silva, Brazil's president, held talks with Álvaro García Linera, Bolivia's vice-president, on Wednesday. Yesterday Mr Garcia Linera also visited Petrobras.
Mr Lula da Silva is expected to meet presidents Evo Morales of Bolivia and Cristina Fernández of Argentina in Buenos Aires at the end of next week to discuss the issue.
"It is probable that there will be an increase in demand in Brazil and Argentina during the winter months," Mr García Linera told reporters. "These new volumes will be discussed by the three presidents. They will reach an agreement to the satisfaction of everybody."
Both Brasília and Buenos Aires import Bolivian natural gas, which is increasingly in demand for Brazilian industry and to make up for shortfalls in Argentine domestic production.
Argentina is already facing severe energy shortages. In Brazil, where most electricity is generated by hydro-electric plants, low rainfall has increased reliance on fossil fuels.
As the southern hemisphere winter approaches, demand from both customers will surge and exceed YPFB's production capacity.
YPFB has contracts to supply up to 30m cubic metres of gas per day to Petrobras and 7.7m to Enarsa. It must also supply about 6m cubic metres per day to meet domestic demand.
But YPFB is only supplying about 27m cubic metres per day to Petrobras and about 3m to Enarsa.
"Bolivia has very limited capacity," said Carlos Alberto Lopez, a former Bolivian hydrocarbons vice-minister. He predicted the talks would go Bolivia's way.
"They won't step on each other's toes," he said. "Brazil wants to win back some of the influence it had over Bolivia, which it has lost to Venezuela."
Petrobras has been unwilling to invest in Bolivia since its assets were seized by Bolivian troops in 2006, when the country's oil and gas industry was nationalised. But a person familiar with the situation said Mr Lula da Silva would overrule Petrobras's objections in favour of Brazil's foreign policy interests, and most likely relieve YPFB of any fines payable for supply shortfalls under its contract.
---------------------
Argentina energy find may relieve crunch
By Jude Webber in Buenos Aires
Published: January 29 2008 18:53 | Last updated: January 29 2008 18:53
Pan American Energy, the second largest oil and gas producer in Argentina, has announced the country’s biggest hydrocarbons discovery in recent years and a $1bn investment programme – music to the ears of a government grappling with serious energy and power shortages.
The company, which is 60 per cent owned by Britain’s BP and 40 per cent by Argentina’s private Bridas Corp, said in a statement the discovery near its existing Cerro Dragón field in the southern province of Chubut, contains 100m barrels of oil equivalent.
It also said it was drilling a second well in the northern province of Salta, ”which, if successful, would confirm the existence of a very large gas deposit”, and was looking closely at gas prospects in Tierra del Fuego and offshore.
But it still takes years to bring new discoveries into production. The energy model championed by President Cristina Fernández and her husband, former President Néstor Kirchner - keeping domestic energy prices and utilities tariffs artificially low to boost an economy recovering from a debt and devaluation crisis in 2001-2002 - looks increasingly unsustainable.
The policy has succeeded in delivering growth rates of more than 8 per cent, but it has been a serious disincentive to investment in new reserves and has led to declining production.
In the power sector, that has translated into insufficient extra capacity to keep up with runaway demand fuelled by electricity rates that are about a quarter of international levels. Industrial clients have come under pressure to use less energy in order to avoid politically damaging power cuts for residents when temperatures peak.
In the fuel sector, it has meant shortages, despite refineries working at capacity, higher export tariffs designed to guarantee domestic supplies, and even a temporary ban on fuel exports.
Analysts say some $3bn-$3.5bn a year investment in oil, gas and electricity is needed to keep the economy growing at 5 to 6 per cent. But national oil production hit its lowest level in 2005 since 1998, and gas production, which has been rising steadily, sloped off in 2005 compared with 2004, according to the latest official data.
Ms Fernández’s first month and a half in office has been marred by the spectre of regular power cuts or rationing that a timid energy saving plan she announced last month has failed to banish.
And there is no indication yet when tariff rises expected to start this month will actually materialise, especially against a backdrop of mounting inflation.
This week the La Nación newspaper quoted data from Cammesa, the electricity wholesale market regulator, showing Argentina spent $4bn in the last four years subsidising electricity tariffs, buying fuel oil and diesel, and importing electricity from Uruguay and Brazil – enough to have built six 800MW power stations and to have had a net energy surplus this year. Cammesa had no comment on the figures.
Argentina is moving ahead on plans to build a pipeline costing $1.9bn to import 27.7m cubic metres of gas a day from Bolivia by 2010, but Bolivia needs more investment yet in its own energy sector to meet the ambitious goal.
By Jonathan Wheatley in São Paulo, Andrés Schipani,in La Paz and Jude Webber in Buenos Aires
Published: February 15 2008 02:00 | Last updated: February 15 2008 02:00
Bolivia may place a cap on its natural gas exports to Brazil during the coming southern winter, freeing up production for Argentine consumers facing a renewed energy crunch.
YPFB, Bolivia's state-owned oil and gas group, is expected to increase supplies to Enarsa, its Argentine counterpart, which pays $7 (€4.8, £3.6) per British thermal unit (BTU), the standard measure of thermal value.
Supplies to Petrobras, the Brazilian government-controlled oil group which pays $5.6 per BTU, are likely to be capped.
Luiz Inácio Lula da Silva, Brazil's president, held talks with Álvaro García Linera, Bolivia's vice-president, on Wednesday. Yesterday Mr Garcia Linera also visited Petrobras.
Mr Lula da Silva is expected to meet presidents Evo Morales of Bolivia and Cristina Fernández of Argentina in Buenos Aires at the end of next week to discuss the issue.
"It is probable that there will be an increase in demand in Brazil and Argentina during the winter months," Mr García Linera told reporters. "These new volumes will be discussed by the three presidents. They will reach an agreement to the satisfaction of everybody."
Both Brasília and Buenos Aires import Bolivian natural gas, which is increasingly in demand for Brazilian industry and to make up for shortfalls in Argentine domestic production.
Argentina is already facing severe energy shortages. In Brazil, where most electricity is generated by hydro-electric plants, low rainfall has increased reliance on fossil fuels.
As the southern hemisphere winter approaches, demand from both customers will surge and exceed YPFB's production capacity.
YPFB has contracts to supply up to 30m cubic metres of gas per day to Petrobras and 7.7m to Enarsa. It must also supply about 6m cubic metres per day to meet domestic demand.
But YPFB is only supplying about 27m cubic metres per day to Petrobras and about 3m to Enarsa.
"Bolivia has very limited capacity," said Carlos Alberto Lopez, a former Bolivian hydrocarbons vice-minister. He predicted the talks would go Bolivia's way.
"They won't step on each other's toes," he said. "Brazil wants to win back some of the influence it had over Bolivia, which it has lost to Venezuela."
Petrobras has been unwilling to invest in Bolivia since its assets were seized by Bolivian troops in 2006, when the country's oil and gas industry was nationalised. But a person familiar with the situation said Mr Lula da Silva would overrule Petrobras's objections in favour of Brazil's foreign policy interests, and most likely relieve YPFB of any fines payable for supply shortfalls under its contract.
---------------------
Argentina energy find may relieve crunch
By Jude Webber in Buenos Aires
Published: January 29 2008 18:53 | Last updated: January 29 2008 18:53
Pan American Energy, the second largest oil and gas producer in Argentina, has announced the country’s biggest hydrocarbons discovery in recent years and a $1bn investment programme – music to the ears of a government grappling with serious energy and power shortages.
The company, which is 60 per cent owned by Britain’s BP and 40 per cent by Argentina’s private Bridas Corp, said in a statement the discovery near its existing Cerro Dragón field in the southern province of Chubut, contains 100m barrels of oil equivalent.
It also said it was drilling a second well in the northern province of Salta, ”which, if successful, would confirm the existence of a very large gas deposit”, and was looking closely at gas prospects in Tierra del Fuego and offshore.
But it still takes years to bring new discoveries into production. The energy model championed by President Cristina Fernández and her husband, former President Néstor Kirchner - keeping domestic energy prices and utilities tariffs artificially low to boost an economy recovering from a debt and devaluation crisis in 2001-2002 - looks increasingly unsustainable.
The policy has succeeded in delivering growth rates of more than 8 per cent, but it has been a serious disincentive to investment in new reserves and has led to declining production.
In the power sector, that has translated into insufficient extra capacity to keep up with runaway demand fuelled by electricity rates that are about a quarter of international levels. Industrial clients have come under pressure to use less energy in order to avoid politically damaging power cuts for residents when temperatures peak.
In the fuel sector, it has meant shortages, despite refineries working at capacity, higher export tariffs designed to guarantee domestic supplies, and even a temporary ban on fuel exports.
Analysts say some $3bn-$3.5bn a year investment in oil, gas and electricity is needed to keep the economy growing at 5 to 6 per cent. But national oil production hit its lowest level in 2005 since 1998, and gas production, which has been rising steadily, sloped off in 2005 compared with 2004, according to the latest official data.
Ms Fernández’s first month and a half in office has been marred by the spectre of regular power cuts or rationing that a timid energy saving plan she announced last month has failed to banish.
And there is no indication yet when tariff rises expected to start this month will actually materialise, especially against a backdrop of mounting inflation.
This week the La Nación newspaper quoted data from Cammesa, the electricity wholesale market regulator, showing Argentina spent $4bn in the last four years subsidising electricity tariffs, buying fuel oil and diesel, and importing electricity from Uruguay and Brazil – enough to have built six 800MW power stations and to have had a net energy surplus this year. Cammesa had no comment on the figures.
Argentina is moving ahead on plans to build a pipeline costing $1.9bn to import 27.7m cubic metres of gas a day from Bolivia by 2010, but Bolivia needs more investment yet in its own energy sector to meet the ambitious goal.
Venezuela plays down Exxon’s assets freezes
Venezuela plays down Exxon’s assets freezes
By Benedict Mander in Caracas and Sheila McNulty in Houston
Published: February 8 2008 18:57 | Last updated: February 10 2008 18:23
Rafael Ramirez, Venezuela’s energy minister, on Friday rejected concerns that PDVSA, the state oil company, would be affected by attempts by ExxonMobil to freeze assets worth $12bn.
Exxon won court orders on Thursday in the UK, the Netherlands and the Netherlands Antilles to freeze PDVSA’s global assets in an attempt to secure compensation for operations lost to President Hugo Chavez’s nationalisation drive last year.
“This does not affect our cash flow or our operations at all. We are operating at 100 per cent, and there are no direct consequences for our assets,” said Mr Ramirez, after PDVSA’s dollar-denominated bonds suffered their steepest fall in six months.
Last year, Exxon walked away from projects worth up to $2.3bn in Venezuela’s Orinoco Belt, which is believed to contain the world’s largest deposits of extra-heavy crude oil. This came after the group failed to reach an agreement over its revised contract when PDVSA announced it would increase its stake to a majority.
According to Patrick Esteruelas, an analyst at Eurasia Group, if the court orders are upheld, PDVSA’s ability to raise finance for ambitious investment plans and growing spending obligations could be limited.
PDVSA’s debt jumped from $3bn to $16bn last year amid concerns that it was suffering a cash shortage because of Mr Chavez’s use of its financial resources for political ends.
Exxon’s move could also complicate PDVSA’s strategy of selling overseas refining assets, after it divested some owned by its subsidiary Citgo in the US last year. PDVSA still has stakes in 14 refineries in the US, Europe and the Caribbean worth about $15bn.
The legal challenge will set a precedent for companies seeking compensation from PDVSA over the Orinoco projects. ConocoPhillips abandoned assets worth up to $7.2bn last year, filing for international arbitration in November, shortly after Exxon.
ConocoPhillips said it was continuing to discuss a resolution specific to the assets that were expropriated.
The four other companies operating in the Orinoco – US-based Chevron, the UK’s BP, French group Total and Norway’s StatoilHydro – accepted the revised terms.
--------------------
PDVSA and First Reserve agree deal for Borco
By Sarah Spikes in London and Benedict Mander in Caracas
Published: February 12 2008 02:00 | Last updated: February 12 2008 02:00
PDVSA, Venezuela’s state-owned oil company, has agreed to sell Borco, its Bahamian oil storage business, to First Reserve in a deal understood to be worth about $900m.
The deal for Borco comes at a critical time in an ongoing battle between PDVSA and ExxonMobil over the seizure of Exxon’s stake in a multibillion-dollar Venezuelan oil project as part of President Hugo Chávez’s nationalisation drive last year.
Last week, Exxon won court orders in the UK, the Netherlands and the Netherlands Antilles to freeze PDVSA’s assets.
First Reserve, the world’s largest energy-focused private equity firm, said it was confident that the dispute between PDVSA and Exxon would not affect the Borco transaction, which has already closed.
Exxon’s suit is seen as possibly slowing PDVSA’s plans to sell overseas refining assets. It divested some assets owned by its subsidiary Citgo in the US last year.
PDVSA still has stakes in 14 refineries in the US, Europe and the Caribbean worth about $15bn. The Exxon dispute involves the freezing of $12.3bn of PDVSA’s $90bn in total assets. It is unclear whether Exxon has any plans to ask, or has ever asked, that assets in the Caribbean be frozen.
First Reserve, which recently bought Abbot, the UK oil services company, for £906m ($1.76bn), examined Borco for more than a year. The buy-out firm saw off rival interest from Morgan Stanley, which has a large bunkering business in Florida, and NuStar Energy, a Texas-based pipeline and storage company.
“The fact is that oil majors are spending much of their available capital exploring for new oil, leaving them little left to invest in storage – that’s where we can come in,” said Tom Sikorski, managing director at First Reserve.
Bahamas-based Borco is just 80 miles away from Florida, making it the closest large oil storage facility available to importers into the US.
Shell has already signed an agreement with First Reserve to be its first tenant at Borco.
In June last year Borco was valued at about $400m, based largely on its storage capacity of 20m barrels.
First Reserve, which did not disclose the value of the transaction, said the availability of 300 acres of adjacent land for expansion as well as the possibility of restarting some deactivated parts of the facility gave Borco more value than some initially thought.
By Benedict Mander in Caracas and Sheila McNulty in Houston
Published: February 8 2008 18:57 | Last updated: February 10 2008 18:23
Rafael Ramirez, Venezuela’s energy minister, on Friday rejected concerns that PDVSA, the state oil company, would be affected by attempts by ExxonMobil to freeze assets worth $12bn.
Exxon won court orders on Thursday in the UK, the Netherlands and the Netherlands Antilles to freeze PDVSA’s global assets in an attempt to secure compensation for operations lost to President Hugo Chavez’s nationalisation drive last year.
“This does not affect our cash flow or our operations at all. We are operating at 100 per cent, and there are no direct consequences for our assets,” said Mr Ramirez, after PDVSA’s dollar-denominated bonds suffered their steepest fall in six months.
Last year, Exxon walked away from projects worth up to $2.3bn in Venezuela’s Orinoco Belt, which is believed to contain the world’s largest deposits of extra-heavy crude oil. This came after the group failed to reach an agreement over its revised contract when PDVSA announced it would increase its stake to a majority.
According to Patrick Esteruelas, an analyst at Eurasia Group, if the court orders are upheld, PDVSA’s ability to raise finance for ambitious investment plans and growing spending obligations could be limited.
PDVSA’s debt jumped from $3bn to $16bn last year amid concerns that it was suffering a cash shortage because of Mr Chavez’s use of its financial resources for political ends.
Exxon’s move could also complicate PDVSA’s strategy of selling overseas refining assets, after it divested some owned by its subsidiary Citgo in the US last year. PDVSA still has stakes in 14 refineries in the US, Europe and the Caribbean worth about $15bn.
The legal challenge will set a precedent for companies seeking compensation from PDVSA over the Orinoco projects. ConocoPhillips abandoned assets worth up to $7.2bn last year, filing for international arbitration in November, shortly after Exxon.
ConocoPhillips said it was continuing to discuss a resolution specific to the assets that were expropriated.
The four other companies operating in the Orinoco – US-based Chevron, the UK’s BP, French group Total and Norway’s StatoilHydro – accepted the revised terms.
--------------------
PDVSA and First Reserve agree deal for Borco
By Sarah Spikes in London and Benedict Mander in Caracas
Published: February 12 2008 02:00 | Last updated: February 12 2008 02:00
PDVSA, Venezuela’s state-owned oil company, has agreed to sell Borco, its Bahamian oil storage business, to First Reserve in a deal understood to be worth about $900m.
The deal for Borco comes at a critical time in an ongoing battle between PDVSA and ExxonMobil over the seizure of Exxon’s stake in a multibillion-dollar Venezuelan oil project as part of President Hugo Chávez’s nationalisation drive last year.
Last week, Exxon won court orders in the UK, the Netherlands and the Netherlands Antilles to freeze PDVSA’s assets.
First Reserve, the world’s largest energy-focused private equity firm, said it was confident that the dispute between PDVSA and Exxon would not affect the Borco transaction, which has already closed.
Exxon’s suit is seen as possibly slowing PDVSA’s plans to sell overseas refining assets. It divested some assets owned by its subsidiary Citgo in the US last year.
PDVSA still has stakes in 14 refineries in the US, Europe and the Caribbean worth about $15bn. The Exxon dispute involves the freezing of $12.3bn of PDVSA’s $90bn in total assets. It is unclear whether Exxon has any plans to ask, or has ever asked, that assets in the Caribbean be frozen.
First Reserve, which recently bought Abbot, the UK oil services company, for £906m ($1.76bn), examined Borco for more than a year. The buy-out firm saw off rival interest from Morgan Stanley, which has a large bunkering business in Florida, and NuStar Energy, a Texas-based pipeline and storage company.
“The fact is that oil majors are spending much of their available capital exploring for new oil, leaving them little left to invest in storage – that’s where we can come in,” said Tom Sikorski, managing director at First Reserve.
Bahamas-based Borco is just 80 miles away from Florida, making it the closest large oil storage facility available to importers into the US.
Shell has already signed an agreement with First Reserve to be its first tenant at Borco.
In June last year Borco was valued at about $400m, based largely on its storage capacity of 20m barrels.
First Reserve, which did not disclose the value of the transaction, said the availability of 300 acres of adjacent land for expansion as well as the possibility of restarting some deactivated parts of the facility gave Borco more value than some initially thought.
Gulfsands given go-ahead over Syrian oilfield
Gulfsands given go-ahead over Syrian oilfield
By Toby Shelley
Published: February 5 2008 19:25 | Last updated: February 5 2008 19:25
Gulfsands Petroleum expects to push ahead with production in Syria by the end of the year following approval from the Damascus government of development of the country’s Khurbet East oil field.
The go-ahead from the Syrian government on Tuesday helped boost shares in Gulfsands and Emerald Energy, its partner in the development consortium. Gulfsands share price rose 10¼p to 175¼p on Tuesday while shares in Emerald closed up 7¾p at 218¾p.
An initial production facility will pump about 10,000 barrels a day of crude, half of it attributable to the Aim-listed company. Cash flow from early production will help finance Gulfsands’ share of full development of the field in 2009 as production builds to 40,000 b/d.
Khurbet East, which is estimated to have proven and probable reserves of 66m barrels, of which 11.3m barrels is attributable to each of Gulfsands and Emerald after royalties, taxes and the Syrian government’s share are taken into account.
Further small discoveries have been made in the vicinity and they will be appraised in the second half of the year. Analysts at Seymour Pierce said these were likely to boost the reserves to 80m barrels with further upside possible from nearby prospects.
The cost to Gulfsands and Emerald of the early production system will be a modest $10m (£5.1m) as the development will have access to the pipeline infrastructure of the state-owned Syrian Petroleum Company.
Damascus launched a block tender system for foreign oil companies in 2001 as a means of combating the country’s falling output. From a peak of 590,000 b/d in 1996, output fell to about 400,000 b/d in 2006, threatening the country with becoming an oil importer.
In 2003 Gulfsands became one of the first companies to win a share in a concession. In 2005, the year it listed on Aim, Gulfsands bought out its larger partner, Devon, and took over operational responsibility for the block.
Gulfsands’ current production is running at about 2,500 b/d, generated from US assets. It also has a memorandum of understanding with the Iraqi government to capture and market gas that is currently flared during oil production in part of southern Iraq. Emerald, meanwhile, currently produces about 3,600 b/d in Colombia.
By Toby Shelley
Published: February 5 2008 19:25 | Last updated: February 5 2008 19:25
Gulfsands Petroleum expects to push ahead with production in Syria by the end of the year following approval from the Damascus government of development of the country’s Khurbet East oil field.
The go-ahead from the Syrian government on Tuesday helped boost shares in Gulfsands and Emerald Energy, its partner in the development consortium. Gulfsands share price rose 10¼p to 175¼p on Tuesday while shares in Emerald closed up 7¾p at 218¾p.
An initial production facility will pump about 10,000 barrels a day of crude, half of it attributable to the Aim-listed company. Cash flow from early production will help finance Gulfsands’ share of full development of the field in 2009 as production builds to 40,000 b/d.
Khurbet East, which is estimated to have proven and probable reserves of 66m barrels, of which 11.3m barrels is attributable to each of Gulfsands and Emerald after royalties, taxes and the Syrian government’s share are taken into account.
Further small discoveries have been made in the vicinity and they will be appraised in the second half of the year. Analysts at Seymour Pierce said these were likely to boost the reserves to 80m barrels with further upside possible from nearby prospects.
The cost to Gulfsands and Emerald of the early production system will be a modest $10m (£5.1m) as the development will have access to the pipeline infrastructure of the state-owned Syrian Petroleum Company.
Damascus launched a block tender system for foreign oil companies in 2001 as a means of combating the country’s falling output. From a peak of 590,000 b/d in 1996, output fell to about 400,000 b/d in 2006, threatening the country with becoming an oil importer.
In 2003 Gulfsands became one of the first companies to win a share in a concession. In 2005, the year it listed on Aim, Gulfsands bought out its larger partner, Devon, and took over operational responsibility for the block.
Gulfsands’ current production is running at about 2,500 b/d, generated from US assets. It also has a memorandum of understanding with the Iraqi government to capture and market gas that is currently flared during oil production in part of southern Iraq. Emerald, meanwhile, currently produces about 3,600 b/d in Colombia.
Business urges second look at council levy
Business urges second look at council levy
By Jim Pickard, Political Correspondent
Published: February 15 2008 02:00 | Last updated: February 15 2008 02:00
Business leaders have called on the government ahead of the Budget to rethink a tax that councils will be able to levy on businesses. The Institute of Directors and the British Chambers of Commerce say the supplementary business rate will be the latest in a series of burdens imposed on companies.
The government has seen a backlash to its plans for a new capital gains tax regime and a levy on "non-doms" - rich foreigners who do not pay personal tax - prompting a partial climbdown on both.
Miles Templeman, director-general of the Institute of Directors, said that the SBR would "rock" business because it would be imposed on companies regardless of their profitability.
The levy, to be introduced in 2010, would be used for specific infrastructure pro-jects upon which local business people would have a vote in some circumstances.
With councils facing a financial squeeze, however, there is a suspicion some local authorities might seek to use the new rate to help plug funding gaps. Up to £600m a year could be raised if all authorities implement the levy, according to an estimate from the Local Government Association.
Companies already pay business rates levied at about 44 per cent of the rateable value of a commercial property, usually akin to its annual rental value. The SBR would add a further 2 per cent to this.
Richard Bacon, head of tax at the IoD, said the group was "extremely concerned" because the levy would fall disproportionately on business rather than the public. Although it seemed small, it still amounted to a 5 per cent increase in business rates at a time of increasing economic uncertainty.
David Frost, director-general of the British Chambers of Commerce, said the levy was the latest example of taxes "piling up on business" and it should be introduced if only national tax levels were cut. "With the UK economy facing a downturn, conditions for enterprise worsening and a number of additional business levies already in the pipeline, we are very concerned about the impact the government's proposals on a supplementary business rate could have on business's ability to compete," he said.
The CBI employers' group is more open to the idea of the tax, which could work in a similar way to business improvement districts, which involve companies in the upkeep of their neighbourhoods.
Properties with a rateable value of less than £50,000 will be excluded from the levy, which will fall most heavily on London.
The IoD complained the government had failed to consult before its white paper on the levy, published in October. But the government said it had held discussions with a wide range of groups and the supplement could provide a "valuable new tool for local authorities to help them promote economic development".
By Jim Pickard, Political Correspondent
Published: February 15 2008 02:00 | Last updated: February 15 2008 02:00
Business leaders have called on the government ahead of the Budget to rethink a tax that councils will be able to levy on businesses. The Institute of Directors and the British Chambers of Commerce say the supplementary business rate will be the latest in a series of burdens imposed on companies.
The government has seen a backlash to its plans for a new capital gains tax regime and a levy on "non-doms" - rich foreigners who do not pay personal tax - prompting a partial climbdown on both.
Miles Templeman, director-general of the Institute of Directors, said that the SBR would "rock" business because it would be imposed on companies regardless of their profitability.
The levy, to be introduced in 2010, would be used for specific infrastructure pro-jects upon which local business people would have a vote in some circumstances.
With councils facing a financial squeeze, however, there is a suspicion some local authorities might seek to use the new rate to help plug funding gaps. Up to £600m a year could be raised if all authorities implement the levy, according to an estimate from the Local Government Association.
Companies already pay business rates levied at about 44 per cent of the rateable value of a commercial property, usually akin to its annual rental value. The SBR would add a further 2 per cent to this.
Richard Bacon, head of tax at the IoD, said the group was "extremely concerned" because the levy would fall disproportionately on business rather than the public. Although it seemed small, it still amounted to a 5 per cent increase in business rates at a time of increasing economic uncertainty.
David Frost, director-general of the British Chambers of Commerce, said the levy was the latest example of taxes "piling up on business" and it should be introduced if only national tax levels were cut. "With the UK economy facing a downturn, conditions for enterprise worsening and a number of additional business levies already in the pipeline, we are very concerned about the impact the government's proposals on a supplementary business rate could have on business's ability to compete," he said.
The CBI employers' group is more open to the idea of the tax, which could work in a similar way to business improvement districts, which involve companies in the upkeep of their neighbourhoods.
Properties with a rateable value of less than £50,000 will be excluded from the levy, which will fall most heavily on London.
The IoD complained the government had failed to consult before its white paper on the levy, published in October. But the government said it had held discussions with a wide range of groups and the supplement could provide a "valuable new tool for local authorities to help them promote economic development".
Knock-on effects of UK credit squeeze
Knock-on effects of UK credit squeeze
By Delphine Strauss
Published: February 14 2008 19:37 | Last updated: February 14 2008 19:37
Prophets of doom and gloom for the economy should spend more time outside its finance-focused capital, joked Mervyn King this week as he sought to soften bleak forecasts for growth and inflation in 2008.
“It is very striking that once you get away from London . . . and away from the financial sector . . . the mood music is very different,” said the Bank of England governor. “There is caution and concern, but . . . sentiment is by no means as negative.”
Yet economists warn that the credit squeeze carries the potential for a more widespread downturn than any experienced in the past 30 years.
It would not be the first time that a downturn in the prosperous south had helped the northern regions, less exposed to the vagaries of international markets, catch up with national living standards.
In 2002, when City firms were slashing jobs in the aftermath of the dotcom crash, the north was cushioned by a greater reliance on public-sector jobs and public spending – both rising rapidly under the Labour government.
Cities such as Manchester and Leeds have long shaken off the image of former industrial blackspots, partly because the City’s contribution to tax revenues allowed huge injections of public funding, but also because of growing interest from private investors in regeneration projects.
If its effects remain focused on the international financial sector, and the global economy slows more than domestic demand, then London and the south-east would bear the brunt of the slowdown, according to Andrew Burrell, an economist at Experian.
Neil Gibson, at the consultancy Oxford Economics agreed, saying that if annual gross domestic product growth dropped no lower than 2 per cent in 2008, most regions outside the south-east could feel few ill effects, while even in London, profits – and hence tax receipts – could be hit harder than jobs. If growth slowed dramatically to 1.4 per cent, however, he forecast that London’s economy would contract sharply and several other regions experience job losses or stagnant employment. The very factors that have most buoyed regional economies in recent years – public investment, rapid consumer spending growth and a housing boom – could now make them more vulnerable to a downturn.
First, tight public finances mean there is no prospect of the government bailing out struggling regions, although areas that have a high concentration of public-sector jobs could be in better shape.
Andrew Lewis, the director at the Northern Way grouping of regional development agencies, said private investment was becoming ever more important in funding urban regeneration. With credit conditions worsening, he said: “We have concerns about that being sustained if the availability of private finance tightens.”
Adam Marshall, head of policy at the Centre for Cities think-tank, noted that regions would also suffer from the commercial property slump, as London investors lost confidence and pulled out of projects.
The crucial issue, however, will be the extent to which the housing market slowdown affects consumer confidence and spending.
In the 1990s recession, negative equity was largely confined to the south, Mr Gibson said, but over the past five years, house prices had risen faster relative to average incomes in the regions than in London. So although the level of house prices, and of mortgage debt, remained much higher in the capital and the south-east, “tighter lending practices and spending conditions could hit hard many regions who are less affected by the direct effects of the credit crunch on the banking sector”, he said.
“It really does hinge on how hard a landing the housing sector has,” Mr Burrell said.
Even the Bank of England, sceptical of the links between house prices and high-street spending, this week set out the ways in which a property downturn could exacerbate an economic slowdown.
The Bank expects consumer demand to slow sharply this year, and many regions are now more vulnerable to a consumer slump than they were in the past.
By Delphine Strauss
Published: February 14 2008 19:37 | Last updated: February 14 2008 19:37
Prophets of doom and gloom for the economy should spend more time outside its finance-focused capital, joked Mervyn King this week as he sought to soften bleak forecasts for growth and inflation in 2008.
“It is very striking that once you get away from London . . . and away from the financial sector . . . the mood music is very different,” said the Bank of England governor. “There is caution and concern, but . . . sentiment is by no means as negative.”
Yet economists warn that the credit squeeze carries the potential for a more widespread downturn than any experienced in the past 30 years.
It would not be the first time that a downturn in the prosperous south had helped the northern regions, less exposed to the vagaries of international markets, catch up with national living standards.
In 2002, when City firms were slashing jobs in the aftermath of the dotcom crash, the north was cushioned by a greater reliance on public-sector jobs and public spending – both rising rapidly under the Labour government.
Cities such as Manchester and Leeds have long shaken off the image of former industrial blackspots, partly because the City’s contribution to tax revenues allowed huge injections of public funding, but also because of growing interest from private investors in regeneration projects.
If its effects remain focused on the international financial sector, and the global economy slows more than domestic demand, then London and the south-east would bear the brunt of the slowdown, according to Andrew Burrell, an economist at Experian.
Neil Gibson, at the consultancy Oxford Economics agreed, saying that if annual gross domestic product growth dropped no lower than 2 per cent in 2008, most regions outside the south-east could feel few ill effects, while even in London, profits – and hence tax receipts – could be hit harder than jobs. If growth slowed dramatically to 1.4 per cent, however, he forecast that London’s economy would contract sharply and several other regions experience job losses or stagnant employment. The very factors that have most buoyed regional economies in recent years – public investment, rapid consumer spending growth and a housing boom – could now make them more vulnerable to a downturn.
First, tight public finances mean there is no prospect of the government bailing out struggling regions, although areas that have a high concentration of public-sector jobs could be in better shape.
Andrew Lewis, the director at the Northern Way grouping of regional development agencies, said private investment was becoming ever more important in funding urban regeneration. With credit conditions worsening, he said: “We have concerns about that being sustained if the availability of private finance tightens.”
Adam Marshall, head of policy at the Centre for Cities think-tank, noted that regions would also suffer from the commercial property slump, as London investors lost confidence and pulled out of projects.
The crucial issue, however, will be the extent to which the housing market slowdown affects consumer confidence and spending.
In the 1990s recession, negative equity was largely confined to the south, Mr Gibson said, but over the past five years, house prices had risen faster relative to average incomes in the regions than in London. So although the level of house prices, and of mortgage debt, remained much higher in the capital and the south-east, “tighter lending practices and spending conditions could hit hard many regions who are less affected by the direct effects of the credit crunch on the banking sector”, he said.
“It really does hinge on how hard a landing the housing sector has,” Mr Burrell said.
Even the Bank of England, sceptical of the links between house prices and high-street spending, this week set out the ways in which a property downturn could exacerbate an economic slowdown.
The Bank expects consumer demand to slow sharply this year, and many regions are now more vulnerable to a consumer slump than they were in the past.
Customers’ anger could damage Egg
Customers’ anger could damage Egg
By Jane Croft, Retail Banking Correspondent
Published: February 14 2008 22:05 | Last updated: February 14 2008 22:05
The withdrawal of 161,000 credit cards in the UK by Egg, the internet bank, could lead to a rise in arrears and non-payments among customers disgruntled by the move, according to a rating agency.
Egg, which is owned by the US bank Citigroup, outraged customers last month when it said cards would be withdrawn from those deemed to be a high credit risk.
Nigel Griffiths, the Labour MP and former consumer affairs minister, is due to meet the bank’s executives next week to discuss customers’ concerns.
Fitch, the rating agency, believes Egg’s actions could lead to an increase in defaults and write-offs among those customers affected. It said in a note there was “an increased likelihood, given the current difficult economic environment for UK personal finances, that this action could lead to increases in delinquencies and charge-offs”.
Overindebted Egg cardholders might decide to repay other credit card debts first, it added, rather than pay off debts on a card they could no longer use.
“It is possible that the change in financial relationship between Egg and these borrowers might lead them to prioritise payments to other creditors ahead of Egg.” Fitch monitors the Pillar Trust, a securitisation vehicle that is used by Egg to raise money against £2.2bn of its credit card assets. The 161,000 withdrawn cards represent a sizeable chunk of the trust by assets.
Pillar, which was set up in 2002, has already shown signs of stress because of rising bad debts. The securitisation vehicle was forced to buy back a large chunk of assets last November after a number of credit card loans went into arrears.
It sought permission from the Financial Services Authority, the regulator, to remove 46,000 accounts in arrears from the securitisation vehicle, which meant that bad debt levels within the trust were reduced.
Egg caused controversy two years ago when it put struggling customers on a reduced minimum payment plan that would help them clear their debts over 10 years. At the time the rating agencies said it artificially reduced the level of write-downs in the loan book.
The struggling customers were being charged no more interest and had had their minimum monthly payments cut from 2 per cent to 0.83 per cent of outstanding balance. Egg’s policy was reversed in early 2007.
Citigroup, which acquired Egg last year from Prudential, the life assurer, said that its decision to withdraw cards from higher-risk customers came after an extensive review of its acquisition. “We do not anticipate that bad debts will increase significantly as a result of this action,” it said on Thursday.
Citigroup said those customers affected had a blemished credit record – for example, they had previously missed payments or had gone over their credit card limit.
Many are customers already close to their credit card limits and pay off the minimum payment by direct debit each month.
Egg is thought to have started to introduce risk-based pricing for customers only shortly before its acquisition by Citigroup. This is common practice among card issuers globally.
Risk-based pricing allows credit card issuers to assess each customer and then offer them a variety of annual percentage rates according to their riskiness.
By Jane Croft, Retail Banking Correspondent
Published: February 14 2008 22:05 | Last updated: February 14 2008 22:05
The withdrawal of 161,000 credit cards in the UK by Egg, the internet bank, could lead to a rise in arrears and non-payments among customers disgruntled by the move, according to a rating agency.
Egg, which is owned by the US bank Citigroup, outraged customers last month when it said cards would be withdrawn from those deemed to be a high credit risk.
Nigel Griffiths, the Labour MP and former consumer affairs minister, is due to meet the bank’s executives next week to discuss customers’ concerns.
Fitch, the rating agency, believes Egg’s actions could lead to an increase in defaults and write-offs among those customers affected. It said in a note there was “an increased likelihood, given the current difficult economic environment for UK personal finances, that this action could lead to increases in delinquencies and charge-offs”.
Overindebted Egg cardholders might decide to repay other credit card debts first, it added, rather than pay off debts on a card they could no longer use.
“It is possible that the change in financial relationship between Egg and these borrowers might lead them to prioritise payments to other creditors ahead of Egg.” Fitch monitors the Pillar Trust, a securitisation vehicle that is used by Egg to raise money against £2.2bn of its credit card assets. The 161,000 withdrawn cards represent a sizeable chunk of the trust by assets.
Pillar, which was set up in 2002, has already shown signs of stress because of rising bad debts. The securitisation vehicle was forced to buy back a large chunk of assets last November after a number of credit card loans went into arrears.
It sought permission from the Financial Services Authority, the regulator, to remove 46,000 accounts in arrears from the securitisation vehicle, which meant that bad debt levels within the trust were reduced.
Egg caused controversy two years ago when it put struggling customers on a reduced minimum payment plan that would help them clear their debts over 10 years. At the time the rating agencies said it artificially reduced the level of write-downs in the loan book.
The struggling customers were being charged no more interest and had had their minimum monthly payments cut from 2 per cent to 0.83 per cent of outstanding balance. Egg’s policy was reversed in early 2007.
Citigroup, which acquired Egg last year from Prudential, the life assurer, said that its decision to withdraw cards from higher-risk customers came after an extensive review of its acquisition. “We do not anticipate that bad debts will increase significantly as a result of this action,” it said on Thursday.
Citigroup said those customers affected had a blemished credit record – for example, they had previously missed payments or had gone over their credit card limit.
Many are customers already close to their credit card limits and pay off the minimum payment by direct debit each month.
Egg is thought to have started to introduce risk-based pricing for customers only shortly before its acquisition by Citigroup. This is common practice among card issuers globally.
Risk-based pricing allows credit card issuers to assess each customer and then offer them a variety of annual percentage rates according to their riskiness.
Collateral for ECB funds soars to €215bn
Collateral for ECB funds soars to €215bn
By Ralph Atkins in Frankfurt
Published: February 15 2008 02:26 | Last updated: February 15 2008 02:26
Eurozone banks increased sharply their use of mortgage-backed debt and similar structured bonds last year in order to raise money from the European Central Bank, helping to avoid liquidity problems in financial markets.
The volume of asset-backed securities pledged as collateral in ECB market operations to provide funding to banks reached €215bn ($315bn) by the end of last September, the bank said in data released on Thursday. This took the proportion of such debt being used up to 17 per cent of all collateral pledged, up from 12 per cent in 2006.
However, European banks are known to have rapidly increased their use of mortgage-backed debt to raise funding from the ECB in the final three months of the year, especially those in Spain and Holland.
The increasing use of such debt has raised eyebrows in financial markets in recent weeks but Jean-Claude Trichet, ECB president, has denied that the bank is helping to bail out markets, arguing that – unlike other central banks – it has not changed its rules since the financial market turmoil erupted last year.
In its monthly bulletin on Thursday, the ECB went further, arguing that the “wide acceptance of high-quality collateral” in eurozone central banks’ credit operations “has probably helped indirectly to mitigate liquidity problems in a number of market segments”.
Marco Annunziata, chief economist at Unicredit, argued that the ECB’s broad-based collateral system had proved “brilliant” during the recent crisis, but risked creating the wrong incentives for banks, encouraging them to build up stocks of asset-backed securities.
He said: “Looking forward, the ECB should ask itself: is this something we want to maintain?”
The ECB acknowledged that it had had misgivings about the wide variety of collateral it accepted – the product of different systems inherited from national central banks prior to the launch of the euro in 1999.
In 2006, it had tightened its rules because it “did not feel comfortable” with features of some instruments it was accepting, the bulletin article revealed. The new rules tightened the criteria on which kinds of securities would be accepted and from which countries.
But the ECB also said that, compared with other central banks, it accepted a high volume of what it called “private label” asset-backed securities.
By contrast, the US Federal Reserve in its temporary open market operations did not accept mortgage-backed securities without a guarantee from a government agency.
By Ralph Atkins in Frankfurt
Published: February 15 2008 02:26 | Last updated: February 15 2008 02:26
Eurozone banks increased sharply their use of mortgage-backed debt and similar structured bonds last year in order to raise money from the European Central Bank, helping to avoid liquidity problems in financial markets.
The volume of asset-backed securities pledged as collateral in ECB market operations to provide funding to banks reached €215bn ($315bn) by the end of last September, the bank said in data released on Thursday. This took the proportion of such debt being used up to 17 per cent of all collateral pledged, up from 12 per cent in 2006.
However, European banks are known to have rapidly increased their use of mortgage-backed debt to raise funding from the ECB in the final three months of the year, especially those in Spain and Holland.
The increasing use of such debt has raised eyebrows in financial markets in recent weeks but Jean-Claude Trichet, ECB president, has denied that the bank is helping to bail out markets, arguing that – unlike other central banks – it has not changed its rules since the financial market turmoil erupted last year.
In its monthly bulletin on Thursday, the ECB went further, arguing that the “wide acceptance of high-quality collateral” in eurozone central banks’ credit operations “has probably helped indirectly to mitigate liquidity problems in a number of market segments”.
Marco Annunziata, chief economist at Unicredit, argued that the ECB’s broad-based collateral system had proved “brilliant” during the recent crisis, but risked creating the wrong incentives for banks, encouraging them to build up stocks of asset-backed securities.
He said: “Looking forward, the ECB should ask itself: is this something we want to maintain?”
The ECB acknowledged that it had had misgivings about the wide variety of collateral it accepted – the product of different systems inherited from national central banks prior to the launch of the euro in 1999.
In 2006, it had tightened its rules because it “did not feel comfortable” with features of some instruments it was accepting, the bulletin article revealed. The new rules tightened the criteria on which kinds of securities would be accepted and from which countries.
But the ECB also said that, compared with other central banks, it accepted a high volume of what it called “private label” asset-backed securities.
By contrast, the US Federal Reserve in its temporary open market operations did not accept mortgage-backed securities without a guarantee from a government agency.
Freddie Mac alters rules for private insurers
Freddie Mac alters rules for private insurers
By Stacy-Marie Ishmael in New York
Published: February 14 2008 19:06 | Last updated: February 14 2008 19:06
Freddie Mac, the government-sponsored mortgage financier, said on Thursday it had changed some of its rules relating to private mortgage insurers in a bid to support the troubled sector.
Private mortgage insurance provides cover in the event of a homeowner default, and is typically required if the initial downpayment is less than 20 per cent of the value of the loan.
Without such insurance, Freddie Mac and its counterpart Fannie Mae would be unable to buy the loans.
The mortgage insurance sector has been badly hit by the crisis in the US housing market, which has led to record payouts and historic losses at the major insurers – Radian, PMI and MGIC.
“We’re trying to help the mortgage insurers,’’ Freddie Mac said.
The lender will change its rules on so-called captive reinsurance deals, in which the mortgage insurer gives a portion of its premiums to a special trust set up to share the risk of losses on loans.
As of June 1 this year, Freddie will require mortgage insurers to retain more of their premiums to pay current claims and rebuild their capital base, the lender said. Freddie will also be prepared to accept policies written by lower-rated insurers whose claims-paying ability is less certain.
Previously, an insurer that was downgraded below AA- would not have been eligible to write policies for Freddie. Under the new rules, a downgraded insurer might be able to retain its eligibility if Freddie approves its “remediation plan”, which must be submitted within 90 days of the downgrade.
Freddie reserved the right to impose further restrictions on lower-rated insurers.
The move will force Freddie to increase its own loan-loss reserves, since the risk of a payment default by lower-rated insurance companies is higher, analysts said.
By Stacy-Marie Ishmael in New York
Published: February 14 2008 19:06 | Last updated: February 14 2008 19:06
Freddie Mac, the government-sponsored mortgage financier, said on Thursday it had changed some of its rules relating to private mortgage insurers in a bid to support the troubled sector.
Private mortgage insurance provides cover in the event of a homeowner default, and is typically required if the initial downpayment is less than 20 per cent of the value of the loan.
Without such insurance, Freddie Mac and its counterpart Fannie Mae would be unable to buy the loans.
The mortgage insurance sector has been badly hit by the crisis in the US housing market, which has led to record payouts and historic losses at the major insurers – Radian, PMI and MGIC.
“We’re trying to help the mortgage insurers,’’ Freddie Mac said.
The lender will change its rules on so-called captive reinsurance deals, in which the mortgage insurer gives a portion of its premiums to a special trust set up to share the risk of losses on loans.
As of June 1 this year, Freddie will require mortgage insurers to retain more of their premiums to pay current claims and rebuild their capital base, the lender said. Freddie will also be prepared to accept policies written by lower-rated insurers whose claims-paying ability is less certain.
Previously, an insurer that was downgraded below AA- would not have been eligible to write policies for Freddie. Under the new rules, a downgraded insurer might be able to retain its eligibility if Freddie approves its “remediation plan”, which must be submitted within 90 days of the downgrade.
Freddie reserved the right to impose further restrictions on lower-rated insurers.
The move will force Freddie to increase its own loan-loss reserves, since the risk of a payment default by lower-rated insurance companies is higher, analysts said.
EU copyright plan to benefit musicians
EU copyright plan to benefit musicians
By Nikki Tait in Brussels
Published: February 14 2008 17:53 | Last updated: February 14 2008 17:53
European singers and musicians could reap significant financial rewards under plans put forward to extend copyright protection for performers of musical works from 50 to 95 years.
Charlie McCreevy, the internal markets commissioner, said on Thursday he intended formally to propose an extension to the protection enjoyed by performers of musical works by the end of July – a move that, if adopted, would bring Europe into line with the US.
“I have not seen a convincing reason why a composer of music should benefit from a term of copyright which extends to the composer’s life and 70 years beyond, while the performer should only enjoy 50 years, often not even covering his lifetime,” he said.
If Mr McCreevy’s proposal is endorsed by the Commission, an amendment to the existing 50-year term – currently standard in the EU – would then need the backing of a majority of member states and the European parliament before becoming mandatory across the bloc.
Thursday’s outline proposal – which also envisages a special fund reserving copyright income for session musicians – was applauded by both recording companies and performers.
The British Phonographic Institute, which represents music companies in the UK, said it would “restore fairness to the copyright system and be a very positive step for the development of the creative economy in Britain and Europe”.
However, the question of extended protection has been controversial in the recent past. It was considered in the UK by the Gowers review into intellectual property rights two years ago – and recommendation for a change were rejected in spite of pleas from performers such as Sir Cliff Richard.
The review concluded that there would be a direct cost to consumers, who would pay higher prices for longer. It was also concerned that older recordings, which no longer generated income, would simply become “locked up”.
The McCreevy plan, however, envisages a specific provision that would permit performers to move to another label if the original company was unwilling to re-release a performance during the extended term.
Mr McCreevy batted away the notion of negative price implications. He said studies showed “the price of sound recordings that are out of copyright is not necessarily lower than that of sound recordings in copyright”.
Brussels officials also argued that bringing the EU into line with the US would have benefits in competitive terms and dissuade European artists from concentrating heavily on ”Anglo-Saxon” material which could be marked to a US audience in order to benefit from extended protection.
By Nikki Tait in Brussels
Published: February 14 2008 17:53 | Last updated: February 14 2008 17:53
European singers and musicians could reap significant financial rewards under plans put forward to extend copyright protection for performers of musical works from 50 to 95 years.
Charlie McCreevy, the internal markets commissioner, said on Thursday he intended formally to propose an extension to the protection enjoyed by performers of musical works by the end of July – a move that, if adopted, would bring Europe into line with the US.
“I have not seen a convincing reason why a composer of music should benefit from a term of copyright which extends to the composer’s life and 70 years beyond, while the performer should only enjoy 50 years, often not even covering his lifetime,” he said.
If Mr McCreevy’s proposal is endorsed by the Commission, an amendment to the existing 50-year term – currently standard in the EU – would then need the backing of a majority of member states and the European parliament before becoming mandatory across the bloc.
Thursday’s outline proposal – which also envisages a special fund reserving copyright income for session musicians – was applauded by both recording companies and performers.
The British Phonographic Institute, which represents music companies in the UK, said it would “restore fairness to the copyright system and be a very positive step for the development of the creative economy in Britain and Europe”.
However, the question of extended protection has been controversial in the recent past. It was considered in the UK by the Gowers review into intellectual property rights two years ago – and recommendation for a change were rejected in spite of pleas from performers such as Sir Cliff Richard.
The review concluded that there would be a direct cost to consumers, who would pay higher prices for longer. It was also concerned that older recordings, which no longer generated income, would simply become “locked up”.
The McCreevy plan, however, envisages a specific provision that would permit performers to move to another label if the original company was unwilling to re-release a performance during the extended term.
Mr McCreevy batted away the notion of negative price implications. He said studies showed “the price of sound recordings that are out of copyright is not necessarily lower than that of sound recordings in copyright”.
Brussels officials also argued that bringing the EU into line with the US would have benefits in competitive terms and dissuade European artists from concentrating heavily on ”Anglo-Saxon” material which could be marked to a US audience in order to benefit from extended protection.
Pension funds face a shortfall of billions
Pension funds face a shortfall of billions
By Norma Cohen
Published: February 14 2008 22:06 | Last updated: February 14 2008 22:06
UK companies face having to add billions of pounds to their pensions liabilities under plans to be unveiled by the regulator to force them to use more realistic projections of how long workers will live after they retire.
The standard the Pensions Regulator is to propose next week is tougher than that used by 99.5 per cent of UK schemes and will increase stated liabilities for companies by 6 to 8 per cent, even for those already adopting the most prudent standard now in use. For roughly a third of all schemes, the increase in disclosed liabilities will be as much as 15 to 20 per cent and could force them to set aside more cash to fill shortfalls.
The regulator has the power to order weak companies to increase contributions to their final salary scheme. It also has the power to intervene on behalf of trustees if the regulator feels that companies are not putting in enough money to close gaps in their pension schemes.
The regulator is concerned that companies making insurance-like promises are ignoring scientific evidence showing longer lives at older ages. As a result, insurers and employers may not be putting away enough cash to pay annuities and pensions in full.
Last summer, the actuarial regulator and a key insurance industry group warned that the most conservative standard now used by pension schemes for forecasting life expectancy, a table known as PA92 Medium Cohort, had fallen so out of line with actual experience that it could no longer be viewed as prudent.
“What we are saying is that while longevity is impossible to predict, we do believe that schemes are underestimating how longevity will continue to improve in the future,” said Charlie Massey, executive director at the Pensions Regulator.
The regulator is to issue a discussion document suggesting that scheme funding plans will “trigger” special scrutiny if they use a mortality assumption less prudent than one known as PA92 Long Cohort – which at present would add about two years to assumptions of male life expectancy.
It will also expect schemes to use forecasts that assume life expectancy improvements will not suddenly stop short at some point in the future, but will continue, albeit at a slower rate.
Officials have indicated that though it is a consultation document, they expect to drive it through with only limited changes.
In general terms, the proposed standard for those retiring today at 65 assumes that men – the overwhelming majority of those in final salary schemes – will live to at least age 89, roughly two years longer than the presumption in more than half of current UK company schemes.
Every additional year of life expectancy increases liabilities by 3 to 4 per cent.
Mr Massey says the regulator believes that by issuing new guidance it will help trustees to better understand how life expectancy is forecast because it proposes that each scheme actuary present information in a common way.
By Norma Cohen
Published: February 14 2008 22:06 | Last updated: February 14 2008 22:06
UK companies face having to add billions of pounds to their pensions liabilities under plans to be unveiled by the regulator to force them to use more realistic projections of how long workers will live after they retire.
The standard the Pensions Regulator is to propose next week is tougher than that used by 99.5 per cent of UK schemes and will increase stated liabilities for companies by 6 to 8 per cent, even for those already adopting the most prudent standard now in use. For roughly a third of all schemes, the increase in disclosed liabilities will be as much as 15 to 20 per cent and could force them to set aside more cash to fill shortfalls.
The regulator has the power to order weak companies to increase contributions to their final salary scheme. It also has the power to intervene on behalf of trustees if the regulator feels that companies are not putting in enough money to close gaps in their pension schemes.
The regulator is concerned that companies making insurance-like promises are ignoring scientific evidence showing longer lives at older ages. As a result, insurers and employers may not be putting away enough cash to pay annuities and pensions in full.
Last summer, the actuarial regulator and a key insurance industry group warned that the most conservative standard now used by pension schemes for forecasting life expectancy, a table known as PA92 Medium Cohort, had fallen so out of line with actual experience that it could no longer be viewed as prudent.
“What we are saying is that while longevity is impossible to predict, we do believe that schemes are underestimating how longevity will continue to improve in the future,” said Charlie Massey, executive director at the Pensions Regulator.
The regulator is to issue a discussion document suggesting that scheme funding plans will “trigger” special scrutiny if they use a mortality assumption less prudent than one known as PA92 Long Cohort – which at present would add about two years to assumptions of male life expectancy.
It will also expect schemes to use forecasts that assume life expectancy improvements will not suddenly stop short at some point in the future, but will continue, albeit at a slower rate.
Officials have indicated that though it is a consultation document, they expect to drive it through with only limited changes.
In general terms, the proposed standard for those retiring today at 65 assumes that men – the overwhelming majority of those in final salary schemes – will live to at least age 89, roughly two years longer than the presumption in more than half of current UK company schemes.
Every additional year of life expectancy increases liabilities by 3 to 4 per cent.
Mr Massey says the regulator believes that by issuing new guidance it will help trustees to better understand how life expectancy is forecast because it proposes that each scheme actuary present information in a common way.
US takes aim at falling spy satellite
US takes aim at falling spy satellite
By Demetri Sevastopulo in Washington
Published: February 15 2008 01:52 | Last updated: February 15 2008 01:52
The Pentagon plans to shoot down a falling spy satellite before it enters the atmosphere because of concerns that it could harm humans.
General James Cartwright, vice-chairman of the joint chiefs of staff, on Thursday said the navy would have roughly one week to target the satellite, starting several days from Friday. The satellite was launched in December 2006 but its communications system went dead after reaching orbit. The US announced it had started falling to earth last month.
While many old satellites fall to earth without causing significant damage, administration officials said George W. Bush had ordered the Pentagon to attempt to intercept the satellite out of concern that its hydrazine fuel could harm humans.
“The likelihood of the satellite falling in a populated area is small, and the extent and duration of toxic hydrazine in the atmosphere would be quite limited,” said James Jeffrey, deputy national security adviser.
“Nevertheless, if the satellite did fall in a populated area, there is a possibility of death or injury to human beings beyond that associated with the fall of satellites and other space objects normally.”
The Pentagon is to fit an Aegis destroyer with three medium-range missiles. Officials would say only that the attempt to hit the satellite would come from somewhere in the northern Pacific Ocean. Gen Cartwright said there was a “reasonably high opportunity for success”.
However, Geoffrey Forden, an expert at the Massachusetts Institute of Technology, said the Pentagon would face challenges because of the speed of the satellite.
“The only things they have going for them are that the satellite’s trajectory is going to be very well known, and that the satellite is going to be much brighter than they are used to dealing with in missile defence tests,” said Mr Forden.
Gen Cartwright said the the ship’s interceptors would attempt to hit the satellite just before it entered the earth’s atmosphere to reduce the amount of debris remaining in space.
After receiving a briefing from the Pentagon, Ike Skelton, the Democratic chairman of the House armed services committee, said: “I am satisfied that the destruction of the malfunctioning satellite is the best option available to protect public safety.”
However, Michael Krepon, an expert at the Stimson Center, said the rationale for the plans to shoot the satellite were “threadbare”.
By Demetri Sevastopulo in Washington
Published: February 15 2008 01:52 | Last updated: February 15 2008 01:52
The Pentagon plans to shoot down a falling spy satellite before it enters the atmosphere because of concerns that it could harm humans.
General James Cartwright, vice-chairman of the joint chiefs of staff, on Thursday said the navy would have roughly one week to target the satellite, starting several days from Friday. The satellite was launched in December 2006 but its communications system went dead after reaching orbit. The US announced it had started falling to earth last month.
While many old satellites fall to earth without causing significant damage, administration officials said George W. Bush had ordered the Pentagon to attempt to intercept the satellite out of concern that its hydrazine fuel could harm humans.
“The likelihood of the satellite falling in a populated area is small, and the extent and duration of toxic hydrazine in the atmosphere would be quite limited,” said James Jeffrey, deputy national security adviser.
“Nevertheless, if the satellite did fall in a populated area, there is a possibility of death or injury to human beings beyond that associated with the fall of satellites and other space objects normally.”
The Pentagon is to fit an Aegis destroyer with three medium-range missiles. Officials would say only that the attempt to hit the satellite would come from somewhere in the northern Pacific Ocean. Gen Cartwright said there was a “reasonably high opportunity for success”.
However, Geoffrey Forden, an expert at the Massachusetts Institute of Technology, said the Pentagon would face challenges because of the speed of the satellite.
“The only things they have going for them are that the satellite’s trajectory is going to be very well known, and that the satellite is going to be much brighter than they are used to dealing with in missile defence tests,” said Mr Forden.
Gen Cartwright said the the ship’s interceptors would attempt to hit the satellite just before it entered the earth’s atmosphere to reduce the amount of debris remaining in space.
After receiving a briefing from the Pentagon, Ike Skelton, the Democratic chairman of the House armed services committee, said: “I am satisfied that the destruction of the malfunctioning satellite is the best option available to protect public safety.”
However, Michael Krepon, an expert at the Stimson Center, said the rationale for the plans to shoot the satellite were “threadbare”.
Putin maps strategy to retain power
Putin maps strategy to retain power
By Catherine Belton in Moscow
Published: February 14 2008 19:50 | Last updated: February 14 2008 19:50
Vladimir Putin has mapped out how he would retain a powerful political role as prime minister in tandem with Dmitry Medvedev, his preferred successor as Russian president, but insisted he was not addicted to power.
In his last press conference before elections in March, after which he will step down, Mr Putin made clear he had taken the lead in drafting Russia’s development strategy for the next 12 years. The president said he would stay on as prime minister as long as he could implement the strategy he had “formulated”.
“The premiership is not a transitional post. If I can see that in this capacity I can fulfil these goals, I will work as long as possible. There is no other answer,” he said.
In a marathon question and answer session for four hours and 40 minutes in front of more than 1,000 journalists, Mr Putin seemed reluctant to step down from the Kremlin tribune, as he relished peppering his comments with rumbustious attacks on the US over foreign policy and typical salty language.
He said the post of prime minister would give him sufficient power to plot the country’s economic course, control the budget and create conditions to ensure national defence. He saw no grounds for conflict with Mr Medvedev, with whom he said he had built a “personal chemistry” and trusted.
Analysts believe Mr Medvedev, a 42-year-old former lawyer from St Petersburg who currently serves as first deputy prime minister, will initially remain in Mr Putin’s shadow. But they fear the combination of Mr Putin as prime minister and Mr Medvedev as president, who according to the constitution should wield more power, could eventually deteriorate into an inherently unstable system of dual power.
Mr Putin, however, insisted he would not have picked Mr Medvedev if he believed he would need “coddling or advice on current matters”. “In more than 15 years of work together we have become used to listening to each other,” he said.
Mr Medvedev’s economic programme, which he is due to present at a forum in Siberia on Friday, would not oppose his own plan for Russia’s development up to 2020, but would “complement it”.
Mr Putin made clear he would not subordinate himself in future to his protégé, saying he would not hang Mr Medvedev’s portrait in his office as the country’s president as other officials could. “I have been president for eight years and worked pretty well. I won’t need to hang his portrait. We have other means of building relations,” he said.
He poured scorn on speculation in the western press that he had built up an enormous personal fortune while in power, saying the reports had been “picked out of their noses and then smeared all over the papers”.
He said: “I am the richest person not only in Europe but also in the world. I collect emotions. And I am rich because the Russian people twice entrusted me with the leadership of such a great country as Russia. I think this is my greatest fortune.”
By Catherine Belton in Moscow
Published: February 14 2008 19:50 | Last updated: February 14 2008 19:50
Vladimir Putin has mapped out how he would retain a powerful political role as prime minister in tandem with Dmitry Medvedev, his preferred successor as Russian president, but insisted he was not addicted to power.
In his last press conference before elections in March, after which he will step down, Mr Putin made clear he had taken the lead in drafting Russia’s development strategy for the next 12 years. The president said he would stay on as prime minister as long as he could implement the strategy he had “formulated”.
“The premiership is not a transitional post. If I can see that in this capacity I can fulfil these goals, I will work as long as possible. There is no other answer,” he said.
In a marathon question and answer session for four hours and 40 minutes in front of more than 1,000 journalists, Mr Putin seemed reluctant to step down from the Kremlin tribune, as he relished peppering his comments with rumbustious attacks on the US over foreign policy and typical salty language.
He said the post of prime minister would give him sufficient power to plot the country’s economic course, control the budget and create conditions to ensure national defence. He saw no grounds for conflict with Mr Medvedev, with whom he said he had built a “personal chemistry” and trusted.
Analysts believe Mr Medvedev, a 42-year-old former lawyer from St Petersburg who currently serves as first deputy prime minister, will initially remain in Mr Putin’s shadow. But they fear the combination of Mr Putin as prime minister and Mr Medvedev as president, who according to the constitution should wield more power, could eventually deteriorate into an inherently unstable system of dual power.
Mr Putin, however, insisted he would not have picked Mr Medvedev if he believed he would need “coddling or advice on current matters”. “In more than 15 years of work together we have become used to listening to each other,” he said.
Mr Medvedev’s economic programme, which he is due to present at a forum in Siberia on Friday, would not oppose his own plan for Russia’s development up to 2020, but would “complement it”.
Mr Putin made clear he would not subordinate himself in future to his protégé, saying he would not hang Mr Medvedev’s portrait in his office as the country’s president as other officials could. “I have been president for eight years and worked pretty well. I won’t need to hang his portrait. We have other means of building relations,” he said.
He poured scorn on speculation in the western press that he had built up an enormous personal fortune while in power, saying the reports had been “picked out of their noses and then smeared all over the papers”.
He said: “I am the richest person not only in Europe but also in the world. I collect emotions. And I am rich because the Russian people twice entrusted me with the leadership of such a great country as Russia. I think this is my greatest fortune.”
Thursday, February 14, 2008
South Korea wins Kurdistan oil contract
South Korea wins Kurdistan oil contract
By Anna Fifield in Seoul
Published: February 14 2008 09:13 | Last updated: February 14 2008 09:13
South Korea on Thursday signed a deal to explore and develop four oil fields in Kurdistan, an agreement that would give it a foothold in the untapped northern region of Iraq.
The deal comes as Korea, the world’s fourth biggest oil importer, aggressively steps up its resource diplomacy. But it could be a political and legal minefield – the deal is with the Kurdish regional government so is likely to be disputed by the Iraqi national government.
A consortium led by the Korea National Oil Corp signed a memorandum of understanding with Nechirvan Barzani, the Kurdish prime minister, allowing the Korean group to develop energy projects in the Kurdish autonomous region.
Mr Barzani was in Seoul to see president-elect Lee Myung-bak, who will take office on February 25. Korea has troops stationed near Arbil in Kurdistan, overseeing security and development in the area.
According to the deal, the consortium – which also includes SK Energy and Daesung Industrial – will have the right to explore and develop four oil fields in Kurdistan, thought to contain reserves of at least 1bn barrels. That would be a fifth more than Korea’s annual oil consumption of 800m barrels.
“We want to expand our exploration and production projects in the Kurdish area,” said Jun Byung-hyup, an executive at the Korea National Oil Corp. The details of the agreement have still to be finalised.
But the pact also requires Korean construction companies to help develop the infrastructure in Kurdistan, including a $2.1bn highway and “social infrastructure” worth another $10bn.
Mr Jun said there was still some uncertainty surrounding the regional government’s authority to issue such contracts, and said “we know” that the national government was not happy about these deals.
“There are many things that are uncertain but we expect that uncertainty to clear soon,” he said.
Mr Lee, the incoming president, on Thursday asked Mr Barzani for “special support” to allow Korean businesses participate more actively in development projects, including oil development, in Kurdistan, his spokesman said after the meeting.
Mr Lee has specifically charged Han Seung-soo, his nominee for prime minister, with the task of securing resource deals once he takes office at the end of this month.
Korean companies and the ministry of commerce, industry and energy plan to accelerate their quest for new energy supplies this year, launching a “Korean caravan” to move through emerging markets for new oil and gas deals.
“The Korean business community will dispatch a big delegation to emerging markets so we can enter those markets and get access to their resources,” said Park Dae-shik of the Federation of Korean Industry, which is involved with the “caravan”.
The delegation would target Iraq, Central Asia and Russia, and would be looking for both immediate oil supplies and investment opportunities, he said.
“Traditional oil fields have almost been depleted by western oil majors so we are looking for niche markets,” Mr Park said.
By Anna Fifield in Seoul
Published: February 14 2008 09:13 | Last updated: February 14 2008 09:13
South Korea on Thursday signed a deal to explore and develop four oil fields in Kurdistan, an agreement that would give it a foothold in the untapped northern region of Iraq.
The deal comes as Korea, the world’s fourth biggest oil importer, aggressively steps up its resource diplomacy. But it could be a political and legal minefield – the deal is with the Kurdish regional government so is likely to be disputed by the Iraqi national government.
A consortium led by the Korea National Oil Corp signed a memorandum of understanding with Nechirvan Barzani, the Kurdish prime minister, allowing the Korean group to develop energy projects in the Kurdish autonomous region.
Mr Barzani was in Seoul to see president-elect Lee Myung-bak, who will take office on February 25. Korea has troops stationed near Arbil in Kurdistan, overseeing security and development in the area.
According to the deal, the consortium – which also includes SK Energy and Daesung Industrial – will have the right to explore and develop four oil fields in Kurdistan, thought to contain reserves of at least 1bn barrels. That would be a fifth more than Korea’s annual oil consumption of 800m barrels.
“We want to expand our exploration and production projects in the Kurdish area,” said Jun Byung-hyup, an executive at the Korea National Oil Corp. The details of the agreement have still to be finalised.
But the pact also requires Korean construction companies to help develop the infrastructure in Kurdistan, including a $2.1bn highway and “social infrastructure” worth another $10bn.
Mr Jun said there was still some uncertainty surrounding the regional government’s authority to issue such contracts, and said “we know” that the national government was not happy about these deals.
“There are many things that are uncertain but we expect that uncertainty to clear soon,” he said.
Mr Lee, the incoming president, on Thursday asked Mr Barzani for “special support” to allow Korean businesses participate more actively in development projects, including oil development, in Kurdistan, his spokesman said after the meeting.
Mr Lee has specifically charged Han Seung-soo, his nominee for prime minister, with the task of securing resource deals once he takes office at the end of this month.
Korean companies and the ministry of commerce, industry and energy plan to accelerate their quest for new energy supplies this year, launching a “Korean caravan” to move through emerging markets for new oil and gas deals.
“The Korean business community will dispatch a big delegation to emerging markets so we can enter those markets and get access to their resources,” said Park Dae-shik of the Federation of Korean Industry, which is involved with the “caravan”.
The delegation would target Iraq, Central Asia and Russia, and would be looking for both immediate oil supplies and investment opportunities, he said.
“Traditional oil fields have almost been depleted by western oil majors so we are looking for niche markets,” Mr Park said.
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