Insight: Cool heads will spot the foe

Insight: Cool heads will spot the foe

By John Plender

Published: October 28 2008 17:37 | Last updated: October 28 2008 17:37

In the heat of the financial battle, perceptions and priorities become too easily skewed. Exhibit one, in support of this assertion, is the handwringing of the Group of Seven over the appreciation of the yen, which is perceived to be a new threat to financial stability.

The logic here is surely upside down. The yen has been undervalued for years and the undervaluation has been exacerbated by the activity of carry traders who borrow in the cheap, low-interest Japanese currency (or the derivative market equivalent) to invest in higher-yielding currencies such as the Australian or New Zealand dollar.

True, the surge in the value of the yen, as these carry trades unwind, hurts the export sector on which the Japanese economy has been overdependent for growth. This has knocked the stock market, which in turn shrinks banks’ capital.

Yet as Brian Reading of Lombard Street Research argues, the yen turnround is in reality a boon because it helps reduce the international financial imbalances that are at the root of the present malaise. With almost $1,000bn of foreign currency reserves, the country hardly needs more. Furthermore, the Japanese stock market plunge is putting pressure on the government to ease a fiscal policy that has been too tight for too long. In other words, these market movements are important parts of a necessary adjustment mechanism.

So, too, with the plunge in sterling. It might not be comfortable but it facilitates the rebalancing of an economy where growth has been driven by overindebted households and corporate profits have been too heavily dependent on the financial sector’s dangerous gameplaying. Britain needs the opposite adjustment to Japan. Exporters must now provide more of the growth impetus as households rebuild their savings. Both countries, though, will require activist fiscal policy to do some of the work.

Much the same applies in the US. There, too, banking became an overbloated industry in the credit bubble and now needs to shrink. Yet the sudden re-emergence of the dollar as a safe haven currency threatens to slow down a rebalancing process that ought to be contributing to the unwinding of global financial imbalances.

A real danger lies in the abruptness of the market swings. Such extreme volatility is inevitable after a credit market aberration of extreme proportions. Among other things, it reflects deleveraging across the global financial system as borrowings and the economic leverage inherent in derivative instruments are reduced. This can lead to self-feeding market plunges. It can, however, also serve a purpose by reminding traders of eternal financial verities.

The carry trade, for example, is in reality a high-risk currency mismatch trade. Because of the attenuation of the credit cycle in a period of general monetary laxity, zero interest rates in Japan and excess Asian and petro-currency savings, the risks failed to deter traders who thought they had found a free lunch.

The bill has now come in. Traders in hedge funds and on banks’ proprietary trading desks are being disciplined by a market that is returning to normal. In doing so it will instil better behaviour – for a time.

This line of argument should not be taken too far. In 1929, Andrew Mellon, the US Treasury secretary, declared the crash would have the beneficial effect of purging the system and encouraging people to live a more moral life. That laisser-faire attitude helped turn an economic crisis into a slump.

A similar attitude was shown by Yasushi Mieno, the Bank of Japan governor, after the bursting of the Japanese bubble in 1990.

The other big risk after a bubble is an excessive regulatory response which inhibits bankers’ ability to service the needs of industry and commerce in innovative ways. Re-regulation is now the order of the day but it is too early to know how far it will go. In the end, it is a political question. The critical factor, a central banker suggested to me yesterday, is how far unemployment rises. That is surely right.

John Plender is an FT columnist and chairman of Quintain plc

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World will struggle to meet oil demand

By Carola Hoyos and Javier Blas in London

Published: October 28 2008 23:32 | Last updated: October 28 2008 23:32

Output from the world’s oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term demand. The effort will become even more acute as prices fall and investment decisions are delayed.

The IEA, the oil watchdog, forecasts that China, India and other developing countries’ demand will require investments of $360bn each year until 2030.

The agency says even with investment, the annual rate of output decline is 6.4 per cent.

The decline will not necessarily be felt in the next few years because demand is slowing down, but with the expected slowdown in investment the eventual effect will be magnified, oil executives say.

“The future rate of decline in output from producing oilfields as they mature is the single most important determinant of the amount of new capacity that will need to be built globally to meet demand,” the IEA says.

The watchdog warned that the world needed to make a “significant increase in future investments just to maintain the current level of production”.

The battle to replace mature oilfields’ output could even offset the decline in demand growth, which has given the industry – already struggling to find enough supply to meet needs, especially from China – a reprieve in the past few months.

The IEA predicted in its draft report, due to be published next month, that demand would be damped, “reflecting the impact of much higher oil prices and slightly slower economic growth”.

It expects oil consumption in 2030 to reach 106.4m barrels a day, down from last year’s forecast of 116.3m b/d.

The projections could yet be revised lower because the draft report was written a month ago, before the global financial crisis deepened after the collapse of Lehman Brothers.

All the increase in oil demand until 2030 comes from emerging countries, while consumption in developed countries declines.

As a result, the share of rich countries in global demand will drop from last year’s 59 per cent to less than half of the total in 2030.

This is the clearest indication yet that the focus of the industry on the demand – not just the supply – side is moving away from the US, Europe and Japan, towards emerging nations.

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Why Asia stays calm in the storm

By Kishore Mahbubani

Published: October 28 2008 19:37 | Last updated: October 28 2008 19:37

What does the Asian silence on the financial crisis really mean? Does it mean silent gloating, with a heavy dose of schadenfreude? Does it signify terror that Asian economies will also be blown away? Or does it reflect a sober calculation that calm and steady heads are required in such a storm? Amazingly, in the thousands of words spun in the incestuous western discourse on this crisis, little attention has been paid to Asian views, even though the calm and steady responses of China, India and Japan, the three anchor Asian economies, provide hope that there may be some pillars of stability in the swirling storm.

There is little gloating in Asia, even though some would be justified. In many ways, US and European policymakers are doing the opposite of what they advised Asian policymakers to do in 1997-98: do not rescue failing banks, raise interest rates, balance your budget. Millions of Indonesians and Thais would have been better off if their governments had been permitted to do what western governments are doing now. An apology from the west to Asia would not be inappropriate.

Nor are the Asians terrified. They learnt many valuable lessons from their financial crisis in 1998: do not liberalise the financial sector too quickly, borrow in moderation, save in earnest, take care of the real economy, invest in productivity, focus on education. Hence, while America was busy creating a financial house of cards, Asians focused on their real economies. This explains why the latest International Monetary Fund growth rate estimates for 2008 and 2009 for China are 9.7 and 9.3 per cent; and for India, 7.9 and 6.9 per cent respectively.

Equally importantly, Asian minds have never been captured by the strange ideological belief that markets know best and government should step aside. Most Asian policymakers are puzzled by former US president Ronald Reagan’s statement: “Government is not a solution to our problem, government is the problem.” Alan Greenspan, former US Federal Reserve chairman, only recently admitted the folly of his ways when he acknowledged that lending institutions could not regulate themselves. By contrast, virtually all Asian governments believe that the virtues of the “invisible hand” in the market have to be balanced by the “visible hand” of good governance. This Asian emphasis on good governance may serve as a real asset in the storm.

In the past, Asian governments expected western counterparts to be role models of good governance. One story illustrates how times have changed. This year, a European banker consulted the Reserve Bank of India to learn how to get a banking licence in India. He was briefed on the conditions and told that the Indian authorities would also assess his regulator. The European banker smiled and said: “No problem. We have excellent regulation.” The Indian officer replied: “After subprime, we are not sure of US regulation; after Northern Rock, British regulation; after Société Générale, French regulation and after UBS, Swiss regulation.” In short, the gold standard that the west assumed it had in the field of regulation has vanished. Asians realise that they must forge their own standard. Fortunately, there will be no rush to overregulate. Tony Tan from the Government of Singapore Investment Corporation said: “We should guard against overregulation and protectionism and a retreat from globalisation.”

His comments reflect an Asian concern: that the Americans and Europeans, hitherto the custodians of the liberal international economic order, will retreat into protectionism. Asian societies also know they are becoming the biggest beneficiaries of globalisation and must assume greater responsibility in stabilising the economic system.

As the world’s greatest emerging economic power, China has acted remarkably responsibly in this crisis. It has received with polite dignity the western bankers coming cap in hand to seek money. It did not remind them that barely a year ago many of the same bankers had castigated it for its conservatism in opening its financial sector. That caution has been vindicated. More importantly, China has continued to buy US Treasury bills at a steady pace to reassure the market it has not lost faith in them.

The Asian governments demonstrated their calm at the Asia-Europe meeting in Beijing last weekend. The premiers of China and India, Wen Jiabao and Manmohan Singh, gave thoughtful speeches. Sadly, the western media barely reported them. Mr Wen emphasised the development of the real economy; Mr Singh said: “In this age of globalisation we have a global economy but it is not supported by a global polity to provide effective governance.” Asian leaders have good ad­vice to offer. The west should pay heed.

While the US and European publics are losing faith in free trade, Asian economies continue to work on free trade agreements. Few westerners are aware China and the Association of South East Asian Nations have concluded an agreement that will create the world’s largest FTA, with 1.7bn people. Japan and India have similar FTAs with Asean. This growing interdependence will act as a pillar of stability and growth for the global economy.

The really good news is that few Asians have lost their optimism about the future. They have no illusions about the crisis but are confident that they remain on the right trajectory to deliver the Asian century. This is why the key Asian economies will react calmly in this storm. Confidence in the future is a great asset in such times.

The writer, dean of the Lee Kuan Yew School of Public Policy (National University of Singapore), has just published The New Asian Hemisphere: The Irresistible Shift of Global Power to the East

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Web guidelines aim at repressive governments

By Mure Dickie in Beijing and Richard Waters in Los Angeles

Published: October 29 2008 04:22 | Last updated: October 29 2008 04:22

Google, Microsoft and Yahoo have signed up to a set of voluntary guidelines that are designed to reduce the risk that their actions lead to human rights abuses in China and other countries. The principles, written in conjunction with two human rights groups, are a reaction to the fierce public criticism that all three faced two years ago for bowing to various degrees to Chinese internet controls.

The guidelines call for internet and communication companies to comply with censorship and other strictures only when they have received a formal legal request. Beijing currently bases its censorship regime on vaguely worded regulations that encourage local internet companies to be conservative in their self-censorship and leave officials with wide latitude to punish companies and individuals who fail to fall in line.

By forcing adherence to legal rules, the principles are designed to increase transparency and could eventually narrow the range of censorship and other abuses, Microsoft said. However, critics said that the guidelines are not binding, and would have little force if other internet and communications companies do not also sign up to them.

Rebecca MacKinnon, an assistant professor at the Journalism & Media Studies Centre of the University of Hong Kong who participated in the drafting of the initiative, said it reflected an awareness among internet companies of the impact on their global reputations of their conduct in markets such as China.

”What they are recognising is that you are only seen [by users] as trustworthy as the least trustworthy thing you have ever done,” Ms MacKinnon said.

If widely implemented, the initiative could pose a challenge to China’s broadly successful effort to ”manage” the internet by barring access to content judged politically or socially suspect and by monitoring users and cracking down on those deemed to be trying to challenge to the dominance of the ruling Communist party.

Chinese censors will pay particular attention to the pledge by participating companies to ”protect” users who are ”confronted with government demands, laws and regulations to suppress freedom of expression, remove content or otherwise limit access to information and ideas in a manner inconsistent with internationally recognised laws and standards”.

Shi Tao, a Chinese journalist, was jailed for 10 years in 2005 for ”leaking state secrets” after he made public details of a propaganda department effort to tighten media censorship around the anniversary of a crackdown on demonstrators in Beijing’s Tiananmen Square.

Mr Shi was tracked down by Chinese authorities with the help of information supplied by Yahoo, the US internet portal.

It is unclear whether the initiative would prevent repetition of such cases, given the difficulty of insisting that China-based staff defy what remains an authoritarian government. Yahoo’s China business is now run by Yahoo-invested local internet group Alibaba, which has in the past made clear that privacy issues would not stop it cooperating fully with any future investigations into users of its email services. Alibaba declined to comment on Tuesday.

However, Ms MacKinnon said that the initiative would at least make international companies more aware of the human rights issues raised by operating in countries such as China, while also exposing their conduct to regular public review.

”The proof will, of course, be in the implementation,” Ms MacKinnon said.

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Warsaw to speed euro adoption

By Jan Cienski in Warsaw

Published: October 29 2008 02:00 | Last updated: October 29 2008 02:00

Poland's government yesterday spelled out the country's path to adopting the euro by 2012, part of a series of moves designed to help calm spooked investors who have been retreating from the Polish zloty as emerging market currencies are buffeted by the global financial crisis.

The plan calls for the government to begin talks on amending the constitution by early next year - the current document allows only Poland's central bank to set monetary policy. Later in 2009, Poland would enter the ERM-2 European exchange rate mechanism, and the final exchange rate between the euro and the zloty would be set in the summer of 2011. Poland would be admitted to the common currency by January 1 2012.

"We want to retain an ambitious calendar of readying Poland by the end of 2011. We realise we will need the co-operation of the opposition in order to change the constitution," said Donald Tusk, the prime minister.

Without the support of the opposition Law and Justice party, Mr Tusk lacks the necessary two-thirds vote in parliament to amend the constitution. Mr Tusk held an unusually cordial meeting on Monday with Jaroslaw Kaczynski, the euro sceptical leader of Law and Justice, who said he was still not persuaded of the need for a speedy adoption of the common currency, but would back a referendum on the question.

Yesterday Mr Tusk's cabinet met with Lech Kaczynski, Poland's president, and the prime minister said that for the first time he had heard "words which allow me to believe that this project will be accepted, or at least be seriously treated by the president."

Mr Kaczynski, who has not been enthusiastic about an early entry into the euro zone, said it was a matter worthy of "deep consideration". The two leaders, who have spent the better part of the last year sniping at each other, were remarkably polite.

The Kaczynski twins have warned in the past that joining the euro would push up prices, especially for the pensioners and poor who form an important part of the party's supporters, and could slow economic growth.

However, the impact of the financial crisis, which saw the zloty dive in tandem with the troubled Hungarian forint in spite of protests from Polish politicians that economic conditions were very different in Poland, seems to have concentrated minds. A recent poll shows 70 per cent of voters favouring the common currency.

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Hungary gets $25.1 bn rescue package

WASHINGTON, October 28 – The International Monetary Fund, the European Union and World Bank on Tuesday agreed to a $25.1bn economic rescue package for Hungary to bolster confidence in its economy hit by the global financial crisis.

The IMF said it had reached an agreement with Hungary for a $15.7bn (€12.5bn) loan programme, while the European Union stood ready with an additional $8.1bn in financing and the World Bank another $1.3bn. The IMF loan will be disbursed over 17 months.

It is the biggest international rescue package for an emerging market economy since the start of the current global crisis and is the first for an EU-member country. Last week the IMF approved a $2.1bn deal for Iceland and a $16.5bn programme for Ukraine.

The IMF said its board could approve the Hungary deal in early November under emergency rapid-response procedures activated earlier this month as the credit market crisis spread from the United States and Western Europe.

“The Hungarian authorities have developed a comprehensive policy package that will bolster the economy’s near-term stability and improve its long-term growth potential,” Dominique Strauss-Kahn, IMF managing director, said.

“At the same time it is designed to restore investor confidence and alleviate the stress experienced in recent weeks in the Hungarian financial markets,” he added.

The IMF financing is more than 10 times Hungary’s IMF quota, above the limit of three times the quota for countries seeking to borrow. Each IMF member is assigned a quota based on its size in the world economy, which determines its financial commitment to the fund, its voting power, and has a bearing on how much it can borrow from the global lender.

Hungary’s economy has been battered by the financial crisis because its banking system is heavily exposed to foreign financing at a time when investors are pulling back from developing economies worldwide.

Mr Strauss-Kahn said the programme should improve Hungary’s fiscal balance and safeguard its financial sector.

“Specifically, the package includes measures to maintain adequate domestic and foreign currency liquidity, as well as strong levels of capital, for the banking system,” he said.

“Important measures in the fiscal area will reduce government-financing needs and ensure longer-term debt sustainability,” Mr Strauss-Kahn added.

Hungary’s financial markets firmed on Tuesday on hopes of the imminent financial help from the IMF, but its prime minister, Ferenc Gyurcsany, warned the central European country is likely to slide into recession next year.

Meanwhile, the World Bank said it was working with Hungary to tackle longer-term structural problems in its economy.

“Proposed World Bank assistance would support the design and implementation of reforms in key areas, such as the financial sector, fiscal management, and social sector reforms,” said Orsalia Kalantzopoulos, World Bank director for Central Europe and Baltic countries.

“These measures would support the country’s longer-term stabilisation and economic restructuring,” she added.

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London faces finance jobs shake-out

By Bob Sherwood, London and South-East Correspondent

Published: October 29 2008 02:00 | Last updated: October 29 2008 02:00

London is set to lose about 194,000 jobs in the next two years as the credit crunch takes its toll on the financial services sector, according to a leading economic consultancy.

Oxford Economics predicts employment in the capital will be hit more than in any other UK region. Employment will plunge by 97,000 next year - a drop of 2.1 per cent - and by a similar amount in 2010, with total London jobs falling from more than 4.71m this year to just over 4.51m.

The report also warns that recovery will be a "slow process" that could be hindered by stricter regulation.

"The escalation of the credit crunch will drive a rapid deterioration in employment prospects over the coming year . . . Financial services will see the deepest job cuts, with losses in the region of 40,000 forecast [in 2009], but most other sectors will be affected," the report says. The consultancy expects employment in business support services to decline in 2009 for the first time in seven years, with further job cuts likely in the following year as the impact of the financial services downturn filters through.

The City will lose more than 35,000 jobs, a decline of more than 10 per cent, with employment in the Square Mile falling from 331,000 to less than 296,000, according to the consultancy.

Tower Hamlets, the borough that includes Canary Wharf, would see more than 18,000 jobs go over the next two years. More than 39,000 new financial services jobs have been created in Tower Hamlets since the start of this decade.

But Oxford Economics says: "With a heavy dependence on financial services, which accounts for a third of the borough's jobs, Tower Hamlets is expected to see a sharp drop in employment of more than 8 per cent over the next two years."

It forecasts that the downturn will also hit retailers, with only the public sector avoiding falling levels of employment.

In recent years London has seen international inflows averaging 76,000 a year of migrant workers, attracted by better employment prospects. But Oxford Economics says that with employment set to fall sharply over the coming two years, potential migrants are likely to be discouraged from coming to the capital.

Meanwhile, the poor prospects for construction, retail and hospitality, which employ many migrant workers, may encourage existing migrants to return home, the consultancy believes.

London is "likely to underperform until 2011", when its predictions show employment starting to rise again.

However, it adds: "With the government taking a stake in several banks there will inevitably be a greater focus - and possibly greater regulation - on the sector, which could impair its ability to replicate its performance over the early part of this decade."

The research also suggests the unemployment benefit claimant rate will increase from 3 per cent to 4.2 per cent in the same time, although the International Labour Organisation unemployment rate, which covers all of those out of work, at present stands at 7.5 per cent in the capital.

Meanwhile, Oxford Economics pointed to news of job losses over the past six months from banks including Lehman Brothers, Barclays, Credit Suisse, UBS, Citigroup, Merrill Lynch and Royal Bank of Scotland.

It said: "In total these announcements related to just under 3,000 jobs, less than might otherwise be expected given the scale of the problems. But there is significant anecdotal evidence of firms choosing not to replace staff who have resigned, while it is notable that there has been almost a complete lack of news of new job creation."

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High street sales fall in October

By Norma Cohen

Published: October 28 2008 12:22 | Last updated: October 28 2008 12:22

UK high street sales fell in October for the seventh consecutive month, according to the CBI’s latest Distributive Trades Survey, with little improvement expected next month.

Car dealers in particular are facing a tough climate with not one of the firms surveyed reporting a rise in either actual or expected sales or orders. The survey found that 87 per cent of those surveyed had sales volumes below those of last year, with 83 per cent saying that volumes are poor for this time of the year.

Sales of vehicles have been falling steadily since June, the survey showed. Car manufacturers in Britain, faced with a sharp fall-off in demand, have begun placing workers on short hours in a sign of how the credit crunch is spreading through the wider economy.

The broader CBI survey of retailers found a balance of 35 per cent of those surveyed described sales volumes for this time of year as poor.

“Shoppers face competing pressures on their wallets and are spooked by worries over job losses and the slowing economy,” said Andy Clarke, Asda’s retail director who is chairman of the CBI’s distributive trades panel and retail. ”The sector looks to endure a very challenging run-up to Christmas.”

The majority of sectors covered by the survey saw sales delcine compared with those of a year ago. In particular, 80 per cent of specialist food retailers reported lower sales volumes, a sign consumers are shopping at the bargain end of the grocery range. Also, 79 per cent of durable goods retailers – whose products are often purchased in connection with moving house – reported lower sales.

However, some sectors are reporting higher sales. Among these are retailers of footwear and leather goods as well as retailers of hardware, china and DIY goods.

Only 2 per cent of wholesalers said sales volumes were higher, or expected to be higher. Roughly a third said sales volumes are lower and 45 per cent said they expect sales to be lower in November.

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Slump hits London’s richest homeowners

Homeowners in some of London’s wealthiest areas are feeling the full impact of the property slump, data published by the Land Registry yesterday showed. Last month, house prices in Kensington and Chelsea - which were rising at an annualised rate of 33.5 per cent a year ago - fell by 2.0 per cent, having fallen by 1.1 per cent the previous month. Many of the areas now showing declines are those that have been home to high-flying financiers whose careers may be in doubt as leading financial firms cut staff.

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Russian trade body resurrected

By Alex Barker in London and Catherine Belton in Moscow

Published: October 29 2008 03:48 | Last updated: October 29 2008 03:48

A dormant body to promote trade and investment between Russia and the UK was resurrected on Tuesday as London and Moscow attempted to put aside political differences and “open a new chapter” in relations.

Lord Mandelson, business secretary, pledged to reorganise and strengthen the bilateral trade body after attending its first meeting in Moscow since 2002.

“I think there is a real willingness to re-engage,” said Lord Mandelson after talks with Igor Shuvalov, first deputy prime minister, and business representatives.

While acknowledging “political difficulties”, the business secretary predicted that the time had come for the two countries to “turn the page”.

Trade has remained relatively strong between the UK and Russia in spite of tensions over the murder of Alexander Litvinenko, the conflict in Georgia and the dispute over TNK-BP, the joint Russian-UK oil venture.

Lord Mandelson sees the “UK-Russian joint steering committee” as both a formal structure to resolve and address disputes and a regular forum to champion trade and investment.

The body will meet annually, with the deputy prime minister and business secretary attending, while trade ministers will hold more frequent meetings.

Officials said the committee, which has been in abeyance for about six years, had suffered from a heavy bureaucracy and needed to be slimmed down to speed up decision making.

Tuesday’s meeting, attended by a business delegation led by Richard Lambert of the CBI employers’ body, included reassurances over Britain’s openness to Russian investment and an agreement to hold the next meeting in London.

Lord Mandelson’s trip to Russia has come amidst close scrutiny of his dealings with Oleg Deripaska, a Russian metals billionaire. The business secretary strongly denies giving or receiving any favours from Mr Deripaska.

Speaking ahead of the launch of the steering group, Lord Mandelson told the Financial Times that it was “an indication on [Russia’s] part that they don’t want to prolong or exacerbate the tensions between us and they certainly don’t want to interfere with our economic and trade relationship”.

Serious disagreements remain over the death of Mr Litvinenko and Georgia. But one of the main sources of tension in bilateral business relations was resolved earlier this year. BP and its Russian billionaire partners signed off on an amicable agreement in September that aimed to end a battle for control of TNK-BP, which had provoked fears about the UK’s biggest investment in Russia and the overall business climate.

BP conceded a degree of control to its partners but kept its 50 per cent stake in the venture after Robert Dudley, the BP-backed chief executive, was forced to leave Russia blaming “official harassment”.

The two sides agreed to replace Mr Dudley with an independent chief executive, who is expected to be named in December, and to appoint independent directors to the company’s board.

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Volkswagen driven to the top spot by shock share price surge

By Richard Milne and Kate Burgess in London

Published: October 29 2008 02:00 | Last updated: October 29 2008 02:00

Volkswagen briefly became the world's largest company by market capitalisation yesterday after an extraordinary share price surge that raised fears that hedge funds and other traders could collapse after betting on a fall in the stock.

The continued surge - triggered by the revelation on Sunday that Porsche had a much larger interest in the carmaker than many traders had realised - sharpened criticism over the level of disclosure and regulation in German capital markets.

VW's share price rose 82 per cent to €945 following Monday's 147 per cent jump, leaving it with a market capitalisation of about €287bn ($364bn), making it the world's second-largest company ahead of Wal-Mart, General Electric and Microsoft.

At its intra-day peak of €1,005, its market capitalisation exceeded Exxon, the US oil company. This has raised fears over a "squeeze" on traders betting on a fall in Volkswagen shares through short selling - the practice of selling borrowed shares in hope of profiting by buying them back later at a lower price and returning shares to the lender.

A manager at a large hedge fund said: "The losses will be extreme. I don't think it is going to bring down a big fund, but it will probably bring down some small ones."

The head of Germany's largest fund manager accused Porsche - the largest investor in VW - of acting against the interest of other shareholders.

Klaus Kaldemorgen, the head of DWS, which is a shareholder in VW and owned by Deutsche Bank, said: "I criticise heavily that a company like Porsche is manipulating VW shares in an irresponsible manner."

Porsche did not respond to calls asking for comment on Mr Kaldemorgen's statement, but it told Reuters yesterday: "We vehemently reject the accusation of share price manipulation."

There was widespread expectation in the markets that the huge rise would push some fragile hedge funds - who bet on VW's shares falling - to collapse with losses estimated at €20bn-€30bn.

Several hedge funds and banks denied they had any large exposure to VW. Morgan Stanley, whose shares fell 16 per cent yesterday, said it had "virtually no exposure", while people close to Goldman Sachs said rumours the bank had lost money were "unfounded".

Bafin, the German regulator, repeated its comments from last week that it was monitoring the share price movements.

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Shortenfreude

Published: October 28 2008 19:50 | Last updated: October 28 2008 19:50

Schadenfreude more than sympathy is likely to greet the plight of short sellers caught on the wrong end of a bet about the direction of Volks­wagen’s share price. Their scramble to cover losses sent the European carmaker’s price so high that on Tuesday morning it was – briefly but still ridiculously – the largest company in the world by market capitalisation. Some hedge funds may fail because they have incurred such big losses, but not many people will be weeping at that. The real cause for concern is the opacity of the German stock market.

The immediate cause of the problem was Sunday’s revelation that Porsche, which has been engaged in a creeping takeover of VW for the past three years, controlled not just 35 per cent of the group as had been known, but 74.1 per cent, through an equity stake of 42.6 per cent and 31.5 per cent in cash-settled options, which it did not have to disclose. Taken with the 20.1 per cent owned by the state of Lower Saxony, that left a free float of just 5.8 per cent, barely above the 5 per cent required for the company to remain in Germany’s blue-chip Dax index.

Porsche said it had revealed the extent of its control both directly and through derivatives so that hedge funds could unwind their positions “in an orderly manner”. But there can be no orderliness in a system of financial regulation that allows investors in general to operate on the basis of such misleading information for so long. The volatility of the VW share price shows that clearly enough: from Friday’s close of about €210, it touched €1,005 on Tuesday morning before finishing the day at about €800.

The episode has exposed a woeful lack of transparency in the German market. For Bafin, the financial regulator, to talk about looking at VW share price movements is to miss the point. The broader question is the ability of any investor to build up a significant stake in a publicly quoted company without having to inform the market. In July, the privately owned car parts company Schaeffler mounted a hostile take­over of its bigger rival Continental, on the back of a derivative-based stake of 36 per cent acquired while no one noticed.

Several European markets are reviewing their rules about the use of covert stake-building in take­overs. Disclosure of derivative positions above 1 per cent in a company that is subject to a bid is the route the UK has adopted. Different takeover regimes will require different answers. But they must all be based on the principle that investors deserve transparency – and the knowledge that if they think it is lacking they will trade elsewhere.

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The Short View: Market power

By John Authers

Published: October 28 2008 23:30 | Last updated: October 28 2008 23:30

Sometimes markets give governments no choice. Traders judged that last week’s savage sell-off of all world currencies against the yen left the Japanese currency far higher than policymakers could stand.

They heard the G7 announce that it was concerned by volatility in the yen, and heard a clear hint that intervention was possible. They heard Japanese regulators announce that they were bringing forward to this week rules that would make it harder to sell stocks short. They saw reports in the Japanese press that the Bank of Japan could act directly by cutting interest rates on Friday.

And so, simultaneously, without a clear trigger, traders piled out of the yen and into stocks. Overlay a graph of yesterday’s moves in the S&P 500, which gained more than 10 per cent, with a graph showing the number of yen to the euro, which rose by more than 11 per cent at one point, and it is hard to tell the difference. Every downtick for the yen was matched by a rise in US stocks.

A rate cut would help Japanese stocks. A strong yen is damaging for exporters, while lower rates, even though they start at only 0.5 per cent, should aid the stock market.

Does this rebound signal that the stocks are ready to stage a true bear market rally? The low for the S&P of 839.8, set on October 10, has held for 12 trading days. It was nearly breached before yesterday’s bounce. That could mean a bottom has been hit for now.

But forex volatility this extreme is unhealthy. It obstructs functioning markets.

A test may come with the Federal Reserve’s meeting on monetary policy on Wednesday afternoon. The market expects that the Fed will cut the target Fed Funds rate by half a percentage point to 1 per cent. Anything else would be a nasty shock. If the Fed delivers as hoped, the reaction will give a strong clue on whether the rally can continue.

-------------------------
Japan may follow Fed in rate cuts

Reuters Hideyuki Sano and Jason Subler

Japan signalled on Wednesday it could follow the United States in cutting interest rates this week to protect the world's two largest economies from the global financial crisis. Skip related content
A huge rescue package for Hungary underlined the pain the worst financial upheaval in 80 years was causing as policymakers around the world scrambled to contain the economic damage.

The Bank of Japan will consider cutting rates at a policy meeting on Friday but will watch market conditions before deciding, according to a source informed on the matter.

Bets on a quarter-point cut to 0.25 percent snapped the recent surge in the yen, which has hurt exporters and helped hammer Japanese shares.

The Federal Reserve is widely expected to cut U.S. rates by at least half a point on Wednesday to 1 percent, the lowest level since June 2004.

Japan's Nikkei share average, which fell to a 26-year low this week, set the tone for the region's stock markets with a 6.4 percent jump during the morning session that built on Tuesday's gain of more than 6 percent.

The rally followed gains on Wall Street, which buoyed by Fed rate cut hopes, had its second-best day ever on Tuesday.

"Although cutting rates might not have much stimulative effect on the economy, it's hard for the bank to continue resisting action when financial markets are so unstable," said Koichi Haji, chief economist at NLI Research Institute in Tokyo.

"Still, a rate cut would send a message to the world that Japan is cooperating with other nations in tackling the financial crisis," he said. "Now that the news is out, markets would be hugely disappointed if the BOJ didn't cut rates."

HUNGARY BAILOUT

Governments have pledged about $4 trillion (2.4 trillion pounds) to support banks and restart money markets to try to stem the crisis set off by the bursting of the bubble in the U.S. housing market, but a growing number of governments have had to look for help of their own as the financial woes ripple outwards.

In the latest sign of the extent of the damage, the International Monetary Fund, the European Union and World Bank agreed to a $25.1 billion economic rescue package for Hungary.

The IMF will lend Hungary $15.7 billion, while the European Union stands ready with an additional $8.1 billion in financing and the World Bank another $1.3 billion.

The IMF is lending Hungary more than 10 times its quota, or subscription, in the fund -- way above the usual limit of three times for countries in trouble.

"The Hungarian authorities have developed a comprehensive policy package that will bolster the economy's near-term stability and improve its long-term growth potential," IMF Managing Director Dominique Strauss-Kahn said in a statement.

"At the same time it is designed to restore investor confidence and alleviate the stress experienced in recent weeks in the Hungarian financial markets," he added.

The agreement comes after Iceland, a high-profile victim of the global credit crisis, raised interest rates by 6 percentage points to 18 percent in an attempt to defend its currency.

Iceland has been driven close to collapse by bank failures, and the central bank said the dramatic rate rise was part of a deal struck with the IMF for a $2 billion loan.

The Fed said late on Tuesday that it had established a $15 billion temporary currency swap line with New Zealand to address pressures in U.S. dollar short-term funding markets, the latest in a number of such swap lines.

Even with such government efforts, the financial crisis could reduce the hedge-fund industry to as little as a third of its current size, billionaire investor George Soros said on Tuesday.

"The hedge-fund industry is going to move through a shakeout," Soros, one of the world's first hedge-fund managers and still among the best known, said.

DETERMINED ON GROWTH

Economic data pointed to a rocky road ahead, even if regulators manage to get to grips with the financial crisis.

In Japan, industrial output rose 1.2 percent in September, beating forecasts, but the Ministry of Economy, Trade and Industry predicted a significant fall in core manufacturing output in October and November.

U.S. consumer confidence plunged in October to the lowest in the 40-year history of the survey, and economists polled by Reuters expect U.S. gross domestic product figures on Thursday to show a 0.5 percent decline in July-September.

Chancellor Alistair Darling urged governments to work as zealously to support their economies as they have to combat a collapse of the world's financial system.

"Three weeks ago, we worked with other countries to put in place a plan to stabilise the banking system," Darling said in extracts from a speech he is to deliver later on Wednesday.

"And today we need the same determination to support the wider economy, to ensure that fiscal policy supports monetary policy, here and across the world, in these exceptional circumstances."

-------------------------
Russia, China sign oil cooperation memorandum

28.10.2008, 15.27

MOSCOW, October 28 (Itar-Tass) - Russia and China have signed a memorandum of understanding on cooperation in the oil sphere, under which the parties will set up a working group to be led by the Russian energy minister and the head of China’s state energy department.

Russian Deputy Prime Minister Igor Sechin and Chinese Vice Premier Wang Qishan signed the document after talks on Tuesday.

--------------------------
US-led aggression in Syria triggers bigger sales of Russian arms
28.10.2008 Source: Pravda.Ru URL: http://english.pravda.ru/world/asia/106632-usa_syria-0

The conflict in Iraq is no longer restricted with its borders. The USA committed an act of aggression against Syria. Spokespeople for the US administration justify their actions with the notorious struggle against terrorism. Washington thus continues to unite Islamic countries against the United States. Following the US-led incursion, Syria decided to expand the list of weapons which the country purchases from Russia.

Nine civilians were killed and 14 injured (including women and children) as a result of the US aggression against Syria, an official statement from Damascus said.

Four US military helicopters conducted the attack. Three Apache choppers opened fire at a building on the territory of Syria. Afterwards, ten US commandoes cleared the object, exterminated every living being there and returned to their base in Iraq.

It goes without saying that Syria was more than just concerned about those events. US and Iraqi ambassadors were summoned to the Foreign Ministry of Syria to explain the aggressive actions. Surprisingly enough, Damascus officials blamed mostly Iraq and asked the country to investigate the events and bar the USA from conducting any operations on the territory of Syria in the future.

The US-led attack took place in the village of Abu Kamal, which is a large transit and customs center of the Syrian-Iraqi border. The Iraqi town of Qaim, which is considered to be a stronghold of the anti-American resistance in the west of Iraq, is located nearby.

Nothing distinctive followed from the US administration to explain what exactly happened in Syria . US officials only said that the special operation had been conducted against an al-Qaida base.

“It goes without saying that one has to consider the situation against the background of Iraqi events only. One may not exclude the fact that the US military struck a terrorist training base. The US is currently busy with establishing law and order in the Sunni regions of the country, where foreign mercenaries also operate,” Sergei Demidenko, an expert specializing in the Arab world told Pravda.ru.

“It is not going to develop into global confrontation. It is a wholly political issue. There are no facts to prove that Bashar Assad’s regime supports terrorism. The situation is similar to that in Saudi Arabia, where some sheikhs, but not the king, sponsor terrorism. It is worthy of note that Syrian President Assad has many pro-Western politicians in his team. Assad himself studied in the West, he is not a military man, he has no hawkish ambition and he shares pro-Western views, no matter how strange it may seem,” the expert added.

There is nothing surprising about the fact that foreign guerrillas make their way to Iraq via Syria . Jordan lies on their way too, although this country is traditionally believed to be a US ally in the region. However, the US tends to blame only Syria at this point and keep silence about Jordan. It has become a tradition for the United States to forgive its allies and punish the infidels.

The recent raid has become USA’s first open ground operation in Syria. Western media outlets said that the USA was hunting for foreign mercenaries in Syria. However, official spokespeople for the Syrian authorities said that there were neither military objects nor terrorist bases in the attacked region. Furthermore, it was said that the US commandoes had attacked Syrian civilians who were building a farm in the area.

It is worthy of note that it is not the first time, when Syria tries to defend itself making references to farms. Israel destroyed the fruit of nuclear cooperation between Syria and North Korea in September 2007 – the object was built under the guise of a farm too.

Some experts said that the USA made a mistake with its attack against a civil object in Syria. This point of view withstands no criticism, for this “mistake” was made on the territory of a sovereign state, whose relations with the United States can not be described as positive. The USA has already made such a “mistake” before when it invaded the oil-rich Iraq to search for weapons of mass destruction.

The US administration has obtained its profit from the events in Syria. The mystical al-Qaida started “working” again, whereas the struggle against terrorism is the last opportunity for the outgoing US president to justify the disastrous Iraqi campaign. Every fight to defeat terrorism can bring additional votes for Bush’s Republican successor John McCain.

In the meantime, Syria has already contacted Moscow with a request to launch the deliveries of military hardware, including up-to-date missile complexes. It is not ruled out that the USA was sounding out Syria’s defensive abilities.

Sergei Balmasov

------------------------------
Oil drops below 60 dollars per barrel, Putin unhappy
28.10.2008 Source: Pravda.Ru URL: http://english.pravda.ru/russia/economics/106634-putin_oil-0

Prime Minister Putin is dissatisfied with Russia’s current dependence on the export of oil. Russia’s foreign trade has increased 2.2 times during the recent eight years, Putin said at a governmental session Monday. Nevertheless, the foreign trade structure remains unsatisfactory, Putin said.

“Russia still strongly depends on the export of hydrocarbons and other raw materials, which means that the country also depends on the conjuncture of world prices,” RIA Novosti quoted Putin as saying.

“The temptation of simple decisions is obviously strong against the background of the financial crisis, which the whole world suffers from today. It may often go about the closing of national economies, the aggressive protectionism, restrictions for the movement of capitals. Of course, we must take into consideration the reality of today and we will do so in our practical politics, although, strategically, isolation is not our choice,” Putin said.

“Our choice is to continue Russia’s further integration into the global economy. It has been changing, of course, although it is our perspective to join efforts,” the prime minister said.

Putin started to raise the subject of Russia’s oil export dependence about 18 months ago when he was taking the Kremlin office as the president. He particularly stated during his meeting with Russia’s leading entrepreneurs that it was time for the nation to refuse from its dependence on natural resources.

“One has to learn to export crude, gas, ore and wood, and process natural resources inside Russia to be able to enter other markets with high-tech products,” Putin said in February 2007.

Finance Minister Aleksei Kudrin has always been the main adversary of Russia’s dependence on oil prices. The ongoing reduction of the oil prices in the world pushes Russia towards supporting innovative technologies. No one knows which consequences it may have for the nation and the people.

----------------------------
Talks on Russian loan to Iceland could continue in Reykjavik
11:31 | 29/ 10/ 2008

ST. PETERSBURG, October 29 (RIA Novosti) - Russia's next round of talks on a stabilization loan to Iceland could be held soon in Reykjavik, Icelandic Minister of Commerce Bjorgvin Sigurdsson said on Wednesday.

A delegation from Iceland arrived in Moscow in mid-October for a series of meetings to agree the terms for a loan that would allow Iceland's government to shore up its shaky national currency, the krona, which collapsed after the country was forced to nationalize its three main banks after they amassed debts of over $60 billion.

With the sub-Arctic island's population of only 320,000, the banks' debt is equivalent to $187,000 per person.

Iceland's Central Bank said on October 7 that Russia had agreed to grant it a 4 billion euro ($5 billion) loan. Kudrin earlier said Russia viewed Iceland's loan request favorably, but that a decision on whether to grant the loan would only be made after talks.

Iceland's Central Bank said the duration of the loan would be three to four years, carrying interest ranging from 30 to 50 basis points over LIBOR.

With debts some 12 times larger than the national economy, which is expected to contract by 10% in 2009, the bank said the loan would significantly bolster Iceland's foreign exchange reserves, strengthening the stability of the krona in the face of the financial crisis.

The International Monetary Fund has agreed to provide a $2.1 billion loan to Iceland.

-----------------------------
Two Jesuit priests found dead in Moscow flat
10:58 | 29/ 10/ 2008

MOSCOW, October 29 (RIA Novosti) - Two Jesuit priests were found murdered in their flat in central Moscow on Tuesday evening, a Russian Catholic Church official said on Wednesday.

Otto Messmer, who heads the Russian Independent Region of the Society of Jesus, and Colombian priest Victor Betancourt, were found dead in their apartment on Petrovka Street, with severe bodily injuries.

"They did not answer telephone calls, so their brothers in the order went to their apartment, where they found them already dead," Igor Kovalevsky, the general secretary of the Conference of Catholic Bishops of Russia, told reporters.

The motive for the killing is not known, he said.

Earlier reports said the priests were injured in a fight near their house involving two other individuals. A local police source said the clerics died from injuries sustained in the fighting.

Eyewitness said a man of Hispanic appearance, aged around 40, killed the priests.

The Russian Independent Region of the Society of Jesus, which was officially registered in June 1992, carries out educational and missionary work throughout the Commonwealth of Independent States.

-----------------------------
Russia reforging its nuclear shield
18:21 | 28/ 10/ 2008

MOSCOW. (RIA Novosti military commentator Ilya Kramnik) - The introduction of the RS-24 Intercontinental Ballistic Missile (ICBM) in 2009 will be the most important phase in the renewal of the Russian Strategic Missile Force (SMF) after the adoption of the Topol-M.

For the first time in post-Soviet Russia, a new ground-based MIRV-equipped missile system will be adopted by Russia's military.

There is little information on the performance of the new RS-24. According to the most reliable sources, this missile, developed by the Moscow Institute of Thermal Technology like the Topol-M, is in fact a further development of the latter, with an improved third stage and dispensing mechanism, the so-called "bus," from the RSM-56 Bulava ICBM.

The new missile should have a range of 11,000 km or more, and the warheads are most likely to have a yield of between 150 and 300 kilotons each. The RS-24 will hold an interposition between the Topol-M with a 550-kiloton single warhead, though in the future it could be tipped with three individually targeted warheads with a yield between 150 and 300 kilotons, and heavy lift launch vehicles RS-20 Voevoda, carrying up to 10 warheads, 750 kilotons each. The RS-24 is therefore likely to be comparable in performance with the silo-based liquid-fueled UR-100 NUTTH.

Aside from the warheads, the RS-24 carries missile defense penetration systems, hindering enemy detection and interception, which makes the new missile a valuable asset amid the deployment of U.S. global missile defense.

Like the Topol-M, the RS-24 could be specified in either a silo-based or a mobile version, which would increase the Russian SMF's versatility. With the current production capacity, by the beginning of the next decade, up to 15 ICBMs, including five to six RS-24s, could be delivered to the military annually, keeping the ICBM numbers at the required level.

With the RS-24 entering service, the structure of the Russian SMF in the coming decade looks clear. Along with the Topol-M, the new missile will form the backbone of the SMF, their number totaling up to 250 and 60, respectively, by the end of the next decade. Additionally, by 2020, several dozens of Topol and UR-100 NUTTH ICBMs will remain in service. A new heavy missile is also expected to replace the RS-20 Voevoda ICBM. All in all, the SMF would include about 300 to 350 missiles of various types with 800 warheads.

The backbone of the Naval Strategic Nuclear Force will be liquid-fueled RSM-54 Sineva ICBMs, installed on six 667BDRM nuclear powered ballistic missile submarines, which will have their life cycle extended into late 2020s, and cutting-edge solid-fuel RSM-56 Bulava ICBMs on 955/955À submarines. The navy plans to commission eight missile submarines of the above-mentioned class to replace the 667BDR submarines. By 2020, the Russian navy will most likely have between 12 and 14 nuclear-powered ballistic missile submarines carrying between 192 and 224 missiles with 800 to 900 warheads.

Strategic aviation will go on with the employment of the Tu-95MS and Tu-160 bombers, as the new advanced strategic bomber will not enter service before 2020. The balance in bombers class numbers is likely to change, however, with Tu-95s down to between 40 and 48 from the current 68, and Tu-160 up to between 22 and 24 from the current 16.

Therefore, before the end of the next decade, the total potential of Russia's nuclear triad is estimated to be between 1,600 and 1,900 warheads. Is it a big figure? On the one hand, with the given deployment of U.S. missile defenses, this number of warheads doesn't seem so. On the other hand, the rapidly increased defense penetration capability of Russian nuclear weapons will make this inventory sufficient to inflict unacceptable damage to an attacker, whoever it may be.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

---------------------------
週刊ダイヤモンド編集部

【第216回】 2008年10月28日
大手メーカーが凍りついた
中国産冷凍毒インゲン事件の影響

　原料は自社系列農場産、農薬は農園に置かず本社で一括管理、日本以上に厳格な安全管理が行なわれている工場で生産する。

　今年10月上旬に取材した中国の「煙台北海食品」の生産方式は、中国製冷凍毒入りギョーザ事件に見舞われた国内大手冷凍食品メーカーにとって、事件後の“業界標準”ともいうべきものだった。

　帽子、マスク、衛生服の完全装備に、手を3回洗い、エアシャワーをくぐり、さらに従業員によって粘着テープのローラーで全身をなで回される管理体制は半導体工場を凌ぐレベルだ。

　生産ラインにはくまなく監視カメラが設置され、死角はいっさい存在しない。これは、毒入りギョーザ事件以降、地元の山東省政府が食品輸出工場に設置を義務づけたためで、監視はさらに強化された。

　そんな“モデル工場”ともいうべき煙台北海食品の冷凍インゲンから、最大で基準値の約3万5000倍の農薬が検出されたのだから、冷凍食品生産の多くを中国に頼っている国内大手メーカーのショックは計り知れない。

　ちなみに、煙台北海食品は冷凍食品最大手のニチレイが出資する、台湾系食品メーカー。中国内での自社直営農場による安全性をセールスポイントに、日本メーカーとの取引も多い。

　山東省にはニチレイ以外にも、マルハニチロホールディングスと日本水産が、隣接する江蘇省には味の素が自社冷凍食品工場を持っており、山東省周辺は国内大手4社の一大生産拠点だ。

　むろん、現時点で今回の農薬混入が中国国内で行なわれたと断定されたわけではないが、ギョーザ事件同様に捜査は難航するだろう。

　1月の毒入りギョーザ事件で大手各社は冷凍食品の売り上げが半減するなど、大打撃を受けた。夏以降、ようやく前年並みまでの回復の兆しが出ていたところへ、牛乳へのメラミン混入、毒インゲン事件と、再び中国産食品離れを引き起こす事件が相次いだ。

冷凍食品が最も売れる年末年始商戦で冷凍食品、とりわけ中国製商品が売り場から弾かれるのは確実で、大手各社の「年内にギョーザ事件前のレベルまでの市場回復」という希望は砕け散ってしまった。

（『週刊ダイヤモンド』編集部　小出康成）

----------------------------
悪名高い中国食品事情が改善されない理由

「中国人が食品事情に詳しくなり、野菜について農薬を洗剤につけて洗う家庭が増えた」「信頼性のある日本食レストランで食事をする人が増えた」と日本のマスコミは騒いでいた。

　ところが実際に上海市のレストランを何軒も訪問したが、学生や一般的な人々は、国内で食品問題がおきていることさえ知らなかった。日式の日本食レストランで働いている中国人アルバイトでさえ、この問題を知らない人もいた。実際に日本食レストランの売り上げのデータを見せてもらったが、食品事情によって中国人の客が増えたことも実証できなかった。

　中国の都会では、共働きの多くの夫婦は週に４回は外食をする。安全な食品を選択する余裕は、金銭的にも時間的にもない。そんな一般的な市民が食事をする場所が、道路にまでいっぱいにテーブルを出している小規模なレストランである。

　排気ガスや黄砂が巻きこんで、いつもテーブルの上は埃だらけで、目の前の道路から排気ガスが吹き込んでくる。私も地元の人がよくいく屋台で排気ガスの混じった空気を吸いながら中華料理を口にしていた。まだまだ衛生管理ができていない状況の中で、油の種類や農薬を使わない野菜を試用しているかなど、調理の段階を気にとめることなんて不可能なのだ。
食の安全が改善されない本当の理由

　それに原油高や人民元切上げ、インフレにより中国の物価はますます上昇している。知人で、上海のテレビ局に勤務しているバイリンガルの30代女性も「家賃が２割アップされた。コンビニエンスストアだけでなくスーパーの食品まで値上がりした。それなのに給料は１％しか上がっていない。物価が高すぎて普通の生活することさえ苦しい。政府はどうにかしてほしい」と嘆いていた。実は、食品の物価が上昇したのは衛生管理などのチェック機能の強化のためでもある。

　しかし、いくら中央政府が規制を厳しくしても、現実には効果はない。なぜなら、多くの企業が地方に存在しているからである。食品事情が改善されないのは次のような理由からだ。

１）各省庁関係者が地元企業と密着している関係
２）政策を掲げる政府ではなく、実際には地元の省庁が監督している
３）原油高により利益を出せない食品企業が厳しく規制されると倒産する
４）倒産すると税金がもらえない省庁の財務が悪化し、役人関係者の成績が悪くなる

１）各省庁関係者が地元企業と密着している関係
　中国ではほとんどの企業が国営企業である。つまり政府が各企業の経営を管理しているのだ。先進国のように成熟した市場経済ではない。わかりやすくいえば、利益が出ても主な株主が政府だから、政府に吸い取られることになる。

　民間企業や外資系企業が急激に増加した中で、国営企業の業績は悪化し、倒産件数も増えている。国営企業は、生き残りをかけて戦っている。市場経済の中でのビジネスそのものを知らない国営企業が生き残る方法は、地方の省庁との人脈につきる。一方、政府関係者も、市場経済が進み、その存在感が薄くなりうまみも減少しており、最後の悪あがきとして必死に賄賂を集めている。結果として、安全基準に違反した国営企業でも、賄賂を差し出せば目をつぶるという構造になっているのだ。

２）政策を掲げる政府ではなく、実際には地元の省庁が監督している
　世界中から中国製品の質の悪さが指摘されたため、政府はさまざまな政策を打ち出したが、実際に管理するのは企業が存在している地域の省庁であるということだ。つまり見せかけだけの政策、世界にアピールするためだけの政策ということになり、実質を伴わない。

３）原油高により利益を出せない食品企業が厳しく規制されると倒産する
　このところの原油高の影響で、原材料の価格が上がっている。一方、中国でも健康ブームのために、菓子類、インスタントラーメンなどの人気は低迷しつつある。今後さらに食品管理の規制が厳しくなるとこうした食品会社の利益は出なくなり、さらに増え続ける外資企業との競争にさらされ、倒産件数も増えることになる。そうした事情で、当局も規制をかけづらい。

　もっとも、悪質な企業は淘汰されればいいのだが、倒産しても、また名前を代えて簡単に新しい企業をつくるのが中国式ビジネスである。米国が悪質企業をブラックリストに載せても、まったく効果がない。

４）倒産すると税金がもらえない省庁の財務が悪化し、役人関係者の成績が悪くなる
　社会主義から市場経済へ移行している最中の中国では、企業もまた国営から民間企業に変わりつつある。その中で、今もっとも自分の将来を悲観しているのが省庁の役人である。これまでの権力が失われていけば、エリートもだいなしである。

　そこで、今のうちになんとか出世しておこうと努力をする。出世の最大の条件は現在の管理下の財政を悪化させないことである。なんとしてでも地方財政を維持しなければならない。そのためには多少違反している企業でも見逃して税金をもらったほうがいい。
北京五輪を機に企業倫理は改善されるか

　以上のような状況の中では、食品の質が改善されることは無理に等しい。ダンボール肉まんのやらせ事件以降、政府が食品がらみのニュースを管理統制するようになったため、食品関係の報道は減少したが、情報が抑えられているだけで、現状がよくなったとはいいづらい。

　そんな中、北京五輪組織委員会は、選手村の調理場での24時間の警備員体制や、食材輸送車両に全地球測位システム（ＧＰＳ）を取り付けるなど、必死で安全性をアピールした。しかし、委員会の対策もむなしく、ほとんどの国の選手団は、日本など近隣諸国で練習し、中国には大会直前まで入らない。

　食品業に限らず製造業においても、地方と中央政府の構造問題が解決しない限りは、質の改善はしばらく見込めないのが現実である。政府間の構造問題は中国企業のコンプライアンスにもかかわる。

　五輪を機に、中国が世界から厳しい目でチェックされ、企業倫理が改善されることを望みたい。それが成熟した市場経済の育成につながるのだから。

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Purple tomato could fight cancer

Genetically modified purple tomatoes that have been grown to be rich in antioxidants could help fight off cancer.

Crossed between an orange and a plum, the new super tomato still tastes and smells like the normal red fruit, but the change in colour is down to antioxidant pigments that can protect against a variety of diseases including cancer and diabetes.

Scientists created the purple tomato by combining them with genes from snapdragon flowers which contain an antioxidant called anthocyanin – also found in blueberries and blackberries. The fruit is already being hailed a success after tests on mice that were prone to cancer lived nearly a third longer when their diet included the super tomato.

The results have inspired scientists to believe there is huge potential for creating many more 'functional foods' that could potentially help protect against disease.

Lead researcher and professor of plant biology, Cathie Martin, admitted she was 'bowled over' by the results.

'It's really clear that the mice eating the modified tomato start to die significantly later than mice on the normal tomatoes,' she said.

'At the very least, it suggests that what you eat can really make a contribution towards preventing disease and helping to keep you healthy.'

Monday 27 October 2008

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東京金融取引所の4―9月、取引低調で営業益56％減

　東京金融取引所が29日発表した2008年4―9月期決算は営業利益が前年同期比56％減の21億円に落ち込んだ。主力の金利先物と同オプション取引が低調で手数料収入が減少したほか、4月に実施したシステム投資で販管費が膨らんだことが響いた。

　営業収益は同29％減の約49億円、純利益は同61％減の約13億円だった。4―9月は日銀による金融政策の大きな変更がなく、将来の金利変動予測などを基に取引する金利先物などの取引数量が同45％減少した。外為証拠金取引（くりっく３６５）は増えたものの、補えなかった。(19:01)

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資源運搬船、運賃一段と下げ　バルチック指数、6年ぶり1000割れ

　鉄鉱石や石炭、穀物などを運ぶばら積み船運賃の国際指標、バルチック海運指数（1985年平均＝1000）が28日、一段と低下した。982と前日比 66ポイント（6％）下げ、6年2カ月ぶりに1000を割り込んだ。5月20日の史上最高値（1万1793）からは92％低下した。

　新興国向けをはじめ、世界的に鉄鉱石の輸送量が伸び悩んでいる。世界の鋼材需要をけん引してきた中国で鉄鋼メーカーの減産が拡大しているほか、インドでも鉄鋼生産の伸びが失速した。(18:01)

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三井住友銀、韓国最大手銀に出資　09年メドに２％

　三井住友銀行は29日、韓国最大の総合金融機関、ＫＢフィナンシャル・グループ（ＫＢＦＧ）と資本提携する方向で最終調整に入った。来年をメドに200 億円程度を投じて発行済み株式の約2％を取得する方針。出資を機に現在、業務提携しているＫＢＦＧ傘下の商業銀行最大手、国民銀行と取引先の相互紹介や協調融資の連携など関係を拡大・強化する。国際的な金融混乱は続いているが、成長が見込めるアジアでの投資を続ける。

　三井住友とＫＢＦＧは近く、資本提携の合意を両国で発表する見通し。金融危機の影響を見極めながら、出資の時期や最終的な金額は慎重に詰める。株式の2％を取得すれば、海外金融機関としてはオランダのＩＮＧ（約5％）に次ぐＫＢＦＧの株主になる。(16:02)

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著作物利用、新制度の原案内示　知財戦略本部

　政府の知的財産戦略本部（本部長・麻生太郎首相）は29日午前の専門調査会に、教育や研究など公正な理由があれば無許可で著作物を利用できる「フェアユース制度」の原案を提示した。政府は調査会で案をまとめた後、文化庁での議論を経て早ければ来年の通常国会に著作権法の改正案を提出する方針だ。

　今の著作権法は「私的な録音や録画」など約25項目の例外事項以外は、権利者の許可なく作品を改編・出版することなどを禁じている。知財本部案は「権利者の利益を不当に害しない範囲で、許諾なしに著作物を利用できる」という趣旨の規定を追加することを提言している。(14:02)

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新日鉄の09年3月期、経常益5600億円　原燃料下落で採算改善

　新日本製鉄は29日、2009年3月期の連結経常利益が従来の会社予想を1100億円上回り、前期比0.7％減の5600億円になる見通しだと発表した。前回予想を公表した7月末時点に比べ、輸出向けを中心に鋼材の値上げが進んだうえ、夏場以降に鉄スクラップや重油など原燃料の価格が下落したため採算が改善する。ただ世界景気の減速が鋼材需要にも波及するとみて、下期に約100万トン、率にして6％の粗鋼減産に踏み切る。

　今期は八幡製鉄所（北九州市）の火災に伴う代替燃料の調達や設備復旧で、計200億円の追加費用が発生。加えて減産も300億円のマイナス要因となる。一方、鋼材値上げと原燃料費減による利益押し上げ効果は従来予想比で1400億円に上り、火災や減産の影響額を大幅に上回る。純利益予想は7％減の 3300億円と、750億円上方修正した。

　同時に発表した08年4―9月期連結決算は、売上高が前年同期比12％増の2兆6021億円、経常利益が8％減の2622億円。4―9月期末配当は従来予想より1円上積みし、前年同期と同じ5円とする。(20:06)

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サムスン、「第11世代」液晶パネル工場稼働へ　2010-11年

　液晶パネル世界首位の韓国サムスン電子は29日、2010―11年に「第11世代」と呼ばれる液晶パネル工場を稼働させる方針を明らかにした。シャープが堺市で建設中の第10世代工場を上回る世界最大のガラス基板を使い、60型以上の大型テレビ用パネルを生産する。消費低迷が懸念される中、積極投資で2 位以下のメーカーを突き放す考えだ。

　サムスンの張元基・ＬＣＤ総括副社長が、横浜市で開かれている薄型ディスプレーの国際展示会の講演で明らかにした。

　韓国忠清南道にある液晶パネル工場の敷地内に新棟を建設する。利用するガラス基板は縦横が3メートル×3.32メートルで畳6畳分の大きさ。シャープがソニーと共同で、10年3月までに堺市で稼働させる工場の基板（2.85メートル×3.05メートル）を上回る。(19:29)

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本店決裁不要の融資枠、上限まで売上高水増し　新銀行東京詐欺

　新銀行東京（東京・新宿）の融資金詐欺事件で、同行の本店決裁を経ずに融資を引き出せる限度額に合わせ、融資先の会社側が売上高を水増ししていたことが 29日、警視庁捜査2課の調べで分かった。同課は、元行員、青木千代美容疑者（56）が融資基準などの情報を提供することで、不正融資に加担していた疑いが強いとみて、詳しい経緯を調べている。

　新銀行の融資については、融資の限度額は月間売上高の約3倍。これに加え、青木容疑者が在籍していた出張所決裁では上限が5000万円に制限されていた。水増し額を本店決裁を経ない範囲にとどめることで、不正融資の発覚を防ぐ狙いがあったとみられる。(16:01)

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警察署次長自殺は公務災害、職場のストレス原因と認定　静岡

　静岡県で2004年、警察署次長だった警視＝当時（57）＝が自殺したのは、職場の人間関係などによるストレスが原因だったとして、地方公務員災害補償基金が警視の死亡を公務災害と認定、遺族補償費などが給付されていたことが29日分かった。

　静岡県などによると、精神的ストレスが原因で自殺した警察官に公務災害が認定されるのはまれという。

　静岡県警によると、警視は警察署次長だった04年11月、官舎で自殺。06年11月に遺族が公務災害を申請していた。

　警察署に赴任した直後の04年4月、署員が交通事故で死亡した問題の処理などで精神的なストレスを抱えていた上、仕事の進め方をめぐり、上司だった当時の署長から厳しい指導を受けるなど関係が悪化していたことが自殺の一因だったと認められた。

　今年4月に公務災害と認定されたことを受け、県警は警視を殉職と認定した。

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教員のうつ傾向が深刻　一般企業の2.5倍

　子供の訴えを十分聞く余裕を持てない教員は6割超、1週間で休める日がゼロという人も5割近い――。教員のメンタルヘルス（心の健康）に関する文部科学省の委託調査で、こんな傾向が明らかになった。うつ傾向を示す教員の割合も一般企業の2.5倍に上り、教員を取り巻く環境の厳しさが浮かんだ。

　調査は2006年から07年にかけて、健康情報サービス事業を手掛けるウェルリンク（東京・文京）と東京都教職員互助会が文科省から委託を受けて共同で実施。全国の教育委員会と、公立小中学校の教員にアンケートを依頼し、473教委と約1300人の教員から回答を得た。

　普段の仕事で「とても疲れる」と答えた教員は45％。厚生労働省が実施する同種調査での一般企業の平均は14％で、教員はほぼ3倍だった。ストレスの原因で多いのは「仕事の量」が61％、「仕事の質」が41％だった。(14:02)

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朝鮮総連傘下団体を家宅捜索　税理士法違反容疑で警視庁

　税理士資格がないにもかかわらず、会員の税務申告に関する業務を行った疑いがあるとして、警視庁公安部は29日午前、税理士法違反容疑で、朝鮮総連傘下の「在日本朝鮮東京都新宿商工会」（東京都新宿区）や同会関係者の男の都内の自宅など計6カ所の家宅捜索を始めた。

　男は税理士業務の見返りに、会員から報酬を受け取っていた可能性もあるとみて、公安部は押収した資料を分析、金の流れについても調べる。

　公安部によると、同会の当時副会長だった男が2006年3月上旬、会員の飲食業者から相談を受け、確定申告書類を作成する税理士業務を無資格で行った疑いが持たれている。(13:05)

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東横イン前社長を逮捕　廃棄物処理法違反の疑い

　松江市の「東横イン松江駅前」で5月に起きた硫化水素騒ぎで、島根県警は29日、発生源となった石こうボードの投棄に関与したとして、廃棄物処理法違反（不法投棄）容疑で、東横イン（本社東京）創業者で実質的オーナーの前社長西田憲正容疑者（62）を逮捕した。

　騒動をめぐっては、東横イン系列会社の元社長ら2人が同法違反容疑で逮捕、起訴されている。県警は、石こうボードが投棄された2004年当時社長だった西田容疑者が、不法投棄の意思決定に深く関与していたとみている。

　調べでは、西田容疑者は系列会社の元社長らと共謀し、ホテルの新築工事中だった04年10月から12月にかけ、ホテル地下にある配管室に石こうボードなどの建築廃材計約30トンを投棄した疑い。

　地下室で石こうボードが雨水に反応した結果、今年5月28日、致死量を上回る濃度の硫化水素が発生、近くの8人が頭痛などを訴え、病院で手当てを受けた。

　西田容疑者は06年5月に社長を退任し、会長に就任。今年9月に会長も退任している。〔共同〕(10:34)

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あのジェイコム男、現金でポン！９０億ビルオーナーに

世界不況どこ吹く風…

　日経平均が７０００円を割り込み、もはや大恐慌寸前の株式市場の中、デイトレで２００億円超の資金を運用する“ジェイコム男”ことＢ・Ｎ・Ｆ氏（３０、本名非公表）が、不動産投資に進出していたことが２９日、分かった。「株ニート」から「ビルオーナー」へ華麗な転身－。投資家必見のＢ・Ｎ・Ｆビルディングは、東京・アキバのど真ん中にあった。

　今月１６日、不動産再生企業からＢ・Ｎ・Ｆ氏に所有権が移転したのは、秋葉原駅徒歩０分の商業ビル「ｃｈｏｍｐ　ｃｈｏｍｐ　ＡＫＩＨＡＢＡＲＡ（チョムチョム秋葉原）」。同氏は今年４月２４日にオープンしたばかりの地下１階地上１０階の新築ビルを９０億円のキャッシュで購入し、晴れて「ビルオーナー」の肩書を手に入れていた。

　Ｂ・Ｎ・Ｆ氏は有名私大を中退しニートだった２００５年１２月、みずほ証券による「ジェイコム株大量誤発注」を見逃さず、１０分間で２２億円の利益を上げた。今年春先には総資産２００億円を突破していたが、最近までメディア出演が見られず、一部で「巨額損失」「市場撤退」がささやかれていたが、実態は違った。

　ビルが建つ２３８平方メートルの敷地は、元々は老舗家電量販店「ロケット」本店だったが、００年１０月に倒産。不動産再生企業に所有権が移転し、飲食店中心の商業施設として再開発された。現在、空きフロアはなく、現在まで１４の飲食店とコンビニ（１階）、不動産会社（最上階）が入居している。

　テナントのオーナー（店長）らは、Ｂ・Ｎ・Ｆ氏による買収をまったく知らされておらず、夕刊フジの取材に一様に驚きを隠さない。

　上層階の有名飲食チェーン店長は「３日前、購入者（＝Ｂ・Ｎ・Ｆ氏）の代理人を名乗る不動産業者がやってきて、所有権が移った旨聞かされたが、まさか買い主が“あの方”だったとは…」と呆然。「家主とのトラブルが多い個人オーナーになると最初から分かっていれば、入居は絶対なかった」と言い切った。

　別の店長は「（不動産再生会社は一刻も早く売却したかったようですし、お互いの需要が合致したってことでしょう。ただし、アキバ通り魔事件以降、週末のお客が激減してますし、期待したほどの集客はナシ。９０億の投資価値があったかどうかはかなり疑問」と話す。

　一方、地元不動産業者は「賃料は坪当たり３－５万円。１棟買いなら単純計算で毎月５０００万円前後の家賃収入で、１５年前後で回収可能」と解説。「そもそも、利息も担保もゼロの“ニコニコ現金決済”なら、多少の見込み違いも恐るるに足らず。不況時代の投資としては賢明ですが、一般投資家にはまったく参考にならない」と話している。

ZAKZAK 2008/10/29

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在韓被爆者：日本へ補償請求交渉求め韓国政府を提訴

　【ソウル堀山明子】韓国原爆被害者協会（金龍吉会長、約２７００人）は２９日、韓国政府が日本政府に在韓被爆者の補償を求めなかったために「憲法の『国家から外交的保護を受ける権利』を侵害された」として、憲法裁判所に審判請求書を提出した。在韓被爆者が韓国政府を相手に提訴したのは初めて。

　日本の最高裁は昨年１１月、在外被爆者を被爆者援護法の適用から除いた旧厚生省通達は違法だとして、１人当たり１２０万円の慰謝料の支払いを命じた。今回の提訴は、在韓被爆者全体を救済するよう韓国政府に補償交渉を促したものだ。

　審判請求書は、最高裁判所判決で示された慰謝料について「在韓被爆者すべてに適用されるべきだ」と指摘。韓国政府は０５年８月、日韓条約（６５年締結）に関する外交文書を全面公開した際、在韓被爆者や慰安婦問題は交渉時に議題になっておらず「日本政府に法的責任が残る」との政府見解を示していることから、日本政府に補償を求める義務があると主張している。

　日本の厚生労働省は今年８月、在外被爆者が個別に国家賠償訴訟を起こせば慰謝料を支払う方針を示した。

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米名門紙：部数減で週刊紙に　ネットに活路求め

　米名門紙クリスチャン・サイエンス・モニター（本社・ボストン）は２８日、部数減による経営難により０９年４月から週刊紙に移行し、購読者には毎日、電子メールでニュースを提供すると発表した。米国の主要日刊紙では初の試みという。今後はインターネットに活路を求め、電子版の充実を図っていく。

　同紙は１９０８年創刊で、中東情勢など国際問題の深い分析記事に定評がある。しかし７０年代に２０万部以上あった部数が現在では約５万部に落ち込んでいた。（共同）

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刑事施設：高齢化ズシリ　０７年度医薬品費２０億円、１年で１．５億増－－法務省調査

　刑務所や拘置所などすべての刑事施設について、受刑者らが使う医薬品調達額を法務省が調べたところ、０７年度で計１９億５１２４万円にのぼり、前年度から約１・５億円増加していることが分かった。会計検査院に報告を求められた同省が初めて医薬品について調べた。同省矯正局は、受刑者らの高齢化や増加で医療費が増大していると分析している。【苅田伸宏、林哲平】

　刑事施設は刑務所、拘置所、少年刑務所計７５カ所とその支所などがある。医薬品代は原則として国費負担で、施設ごとに調達する。

　検査院はこのうち１５施設を選び、０７年度に調達した３４６６品目、約５億１５４９万円分を調べた。後発医薬品など安価品を探せば約５２０８万円の節減が可能だったと指摘するとともに、受刑者らの増加と高齢化を挙げて「調達量も増加が見込まれる」として同省に改善を求めた。

　この検査の過程で、検査院は全施設の調査も求めた。同省が自主的に０６年度分の概算も併せて調べたところ、０６年度は約１８億円で、増加傾向が浮かんだ。

　同省の統計によると、受刑者や被告など施設の被収容者数は０３年が７万３７３４人、０７年が７万９８０９人と約８％増だったのに対し、薬を処方されている被収容者は０３年の３万８７４６人から０７年は５万２７４人と約３割も増加。６０歳以上の新規の被収容者数も０３年２９２９人、０７年３７２７人と増え続けている。

　同省矯正局は、医薬品の調達に約２０億円かかっていることについては「投薬は医師の専門的な判断。一概に購入経費を（高いとか安いとか）評価できない」と説明。一方「被収容者の高齢化などを背景に生活習慣病を有する患者数が増加しており、近年の被収容者数の増加と相まって医療需要の増大をもたらしている」との認識を示した。
　◇医師不足も一因－－元横浜刑務所首席矯正処遇官の浜井浩一・龍谷大法科大学院教授（犯罪学）の話

　高齢の被収容者は入所時点で疾病を抱えた人が多い。そもそも経済困窮者などが多く、刑務所で初めて診察を受け、糖尿病や高血圧が分かるケースもある。医師不足で刑務所の医師も減っている。診察時間が乏しい中、患者の被収容者から薬を要求されると出してしまう傾向もあるのではないか。

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空自戦闘機：緊急発進が約４割減

　航空自衛隊の戦闘機が領空に接近した他国機に対処するため緊急発進（スクランブル）した回数は、０８年度上半期（４～９月）で前年同期の約４割減だったことが分かった。防衛省統合幕僚監部は「このまま減少するのか注意深く分析したい」としている。

　統幕によると、０８年度上半期の発進回数は１０６（０７年度同期は１６６）回。国別ではロシアが９９回で最も多く、この期間に四川大地震や北京五輪があった中国は前年同期の３８回から１回に激減した。

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新日本石油：２３０億円の赤字転落の見通し　０９年３月期

　新日本石油は２９日、０９年３月期連結決算の最終（当期）損益が２３０億円の赤字（前年同期は１４８３億円の黒字）に転落するとの見通しを発表した。７月時点では９５０億円の黒字を予想していたが、夏場から原油価格が急落し、７３０億円の在庫評価損が発生する見通しになったのが主な要因。

　一方、０８年９月中間連結決算は売上高が前年同期比２８．４％増の４兆２８３６億円、営業利益が同３９．４％減の８６４億円、最終利益が同７６．２％減の２０１億円だった。【谷川貴史】

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Anti-GM group slams GM pasture trial

Lyndal Reading

October 29, 2008

A NEW trial of genetically modified pasture in Western Victoria has been criticised by an anti-GM lobby group.
The Victorian Government announced yesterday that Australia's first trial of GM pastures would be conducted at the Department of Primary Industries site in Hamilton.

However, anti-GM campaigners GeneEthics said the GM pasture grasses were a waste of scarce public resources.

Spokesman Bob Phelps said the funds and scientific effort were needed right now to develop and deploy ecological systems that could drought proof, desalinate and restore soil fertility on farms.

"The 'bright idea' of more digestible GM grass would make farmers more reliant on increasingly expensive and scarce stocks of oil, synthetic fertilisers and chemicals," Mr Phelps said.

"We need new systems not gee-whizz plants, to get off the chemical treadmill."

The Federal Gene Technology Regulator has granted a licence to plant up to 500 lines of GM pasture varieties at the Department of Primary Industries site in Hamilton.

Innovation Minister Gavin Jennings said the pastures had a reduced non-digestible content which could mean farmers would be able to reduce the amount of feed they required for stock.

"This would be a critical breakthough for dairy, beef and sheep industries which have less pasture available for stock because of climate change and the prolonged drought," Mr Jennings said.

Mr Phelps said more digestible GM grass was still at the preliminary stage and it would take at least a decade to commercialise and the probability of success was very low.

"The GM grass will not be fed to animals so, like CSIRO's weevil resistant field pea research it may prove to be toxic to animals in ten years time, after hundreds of millions are wasted," Mr Phelps said.

Mr Phelps said in 1996 the GM industry commercialised four GM crops - soy, corn, canola and cotton - with the herbicide tolerance and insect toxin traits.

"In 2008, GM still has no new products," he said.

"GM is a stalled and failed technology."

Agriculture Minister Joe Helper said the trials would focus on pastures based on perennial ryegrass and tall fescue, developed by Victorian scientists.

"The trials are for proof-of-concept research and not for commercial release," Mr Helper said.

"But this research may give famers access to new pasture plant genetics with improved quality and energy content for livestock production."

DPI Biosciences Research Division executive director Professor German Spangenberg said the new technologies allowed for a targeted modification of lingin and fructan production in perennial ryegrass and tall fescue.

He said lignin provided the water proofing fibrous parts of pasture that could not be easily digested by livestock.

"Fructan are soluable carbohydrates that provide a readily available energy source to livestock," Prof Spangenberg said.

"By modifying lignification and enhancing fructan production in these plants, the herbage nutritive value is increased and stock can gain more energy from less pasture."

He said the GM grasses would not be used for animal feed.

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Australian-first GM grass trial to start

October 28, 2008 - 8:44PM

Genetically modified pasture grass that is more nutritious and easier for stock to digest is set to be trialled in Victoria in an Australian first.

Field trials of up to 500 lines of grasses will start in Hamilton, in western Victoria, following approval from the Federal Gene Technology Regulator.

The trials will be undertaken by the Department of Primary Industries (DPI) and the grasses will not be commercially released.

If successful, GM grasses could save farmers money in feed and help them survive drought.

"These new grasses have a reduced non-digestible content which, depending on the field trials, could mean farmers will be able to reduce the amount of feed they require for their stock," Innovation Minister Gavin Jennings said.

"This would be a critical breakthrough for dairy, beef and sheep industries which have less pasture available for stock because of climate change and the prolonged drought."

The trials will focus on pasture-based perennial ryegrass and tall fescue, developed by DPI scientists.

Agriculture Minister Joe Helper said the trials were for "proof-of-concept" research and would not be commercially released or used for animal feed.

Eventually they may provide farmers access to better quality pastures with a higher energy content for livestock, he said.

"The development and adoption of new pasture plant genetics with increased nutritive value could lead to increases on farm productivity, and may also help reduce the amount of feed farmers need to buy in when they have feed shortages," Mr Helper said.

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October 28th, 2008
Genetically modified tomatoes to fight cancer?

Posted by Roland Piquepaille @ 10:19 am

Despite advertising campaigns, we don’t eat the five fruits and vegetables we’re supposed to do to protect us from obesity and many diseases. This is why European researchers have decided to genetically modify one of the plants we still often eat, the tomato. And the high anthocyanins content purple tomatoes they’ve produced are apparently able to extend lifespan in cancer-prone mice. (Annthocyanins are part of a category of antioxidants belonging to the class of flavonoids). Experiments on mice look promising, with the ones eating these purple tomatoes having an average lifespan of 182 days in comparison to the 142 recorded for mice fed with standard diet. But the scientists are cautious, adding that these are very preliminary results. I guess we’ll not see purple tomatoes before a while. But read more…

Genetically modified purple tomatoes

This research has been done for the EU-funded Flora project which wants to set a strategy of improving health through diet. One of the institutions involved is the Norwich BioScience Institutes at the John Innes Centre, UK. And one of Flora’s subprojects is the Moli-sani project of the Università Cattolica del Sacro Cuore, Italy.

This Norwich BioScience Institutes news release, Fried purple tomatoes, gives more details about the process. “Scientists have expressed genes from snapdragon in tomatoes to grow purple tomatoes high in health-protecting anthocyanins. Anthocyanins are naturally occurring pigments found at particularly high levels in berries such as blackberry, cranberry and chokeberry. Scientists are investigating ways to increase the levels of health-promoting compounds in more commonly eaten fruits and vegetables.”

The researchers add that “anthocyanins offer protection against certain cancers, cardiovascular disease and age-related degenerative diseases. There is evidence that anthocyanins also have anti-inflammatory activity, promote visual acuity and hinder obesity and diabetes.” So how did the scientists do? For ‘this study the scientists expressed two genes from snapdragon that induce the production of anthocyanins in snapdragon flowers. The genes were turned on in tomato fruit. Anthocyanins accumulated in tomatoes at higher levels than anything previously reported for metabolic engineering in both the peel and flesh of the fruit. The fruit are an intense purple colour.”

Now, let’s return to the Università Cattolica del Sacro Cuore news release mentioned in the introduction to see if these genetically modified tomatoes are good for the mice. “Mice used in the experiment have been divided into three groups, fed three different diets: the first one has received a standard diet, while the second group was fed diet supplemented with 10% powder from freeze-dried red tomatoes and the last one with 10% powder from purple tomatoes. ‘We have not recorded significant differences between the first two groups,’ argues Marco Giorgio from the European Institute of Oncology who followed the experimental phase on mice. ‘But mice fed with purple tomatoes showed a significant increase of lifespan.’ The last group has reported an average lifespan of 182 days in comparison to the 142 recorded for mice fed standard diet.”

Even with such results, Giorgio is still very cautious. “Although mice’s lifespan has significantly increased once fed on purple tomatoes we still don’t know how it works. It is not likely everything can be explained on antioxidants basis alone. Moreover, we have to consider that in this study we have not taken into account any possible toxicity so I shall say we’re far from considering a human trial. Next step is to investigate the effect of purple tomatoes on different kinds of tumor models and define the mechanism of action.”

For more information, this research work has been published in Nature Biotechnology as an advance online publication under the title “Enrichment of tomato fruit with health-promoting anthocyanins by expression of select transcription factors” (October 26, 2008). Here is the comment from Nature Biotechnology about this paper. “Fruit-specific overexpression of a pair of snapdragon transcription factors produces tomatoes that uniformly accumulate anthocyanins at levels unprecedented for metabolic engineering. When included as a dietary supplement, the purple tomatoes increase the life spans of tumorigenic p53 knockout mice.”

And here is the beginning of the abstract. “Dietary consumption of anthocyanins, a class of pigments produced by higher plants, has been associated with protection against a broad range of human diseases. However, anthocyanin levels in the most commonly eaten fruits and vegetables may be inadequate to confer optimal benefits. When we expressed two transcription factors from snapdragon in tomato, the fruit of the plants accumulated anthocyanins at levels substantially higher than previously reported for efforts to engineer anthocyanin accumulation in tomato and at concentrations comparable to the anthocyanin levels found in blackberries and blueberries.”

If you see purple tomatoes in a future visit to your market, don’t hesitate to buy them. They might be good for you. But if you don’t like the idea of genetically modified tomatoes to avoid future cancers, drop me a note.

Sources: Università Cattolica del Sacro Cuore news release, October 26, 2008; Norwich BioScience Institutes news release, October 26, 2008; and various websites