UK faces £2bn paper loss
By Peter Thal Larsen, George Parker and Jane Croft in London
Published: October 13 2008 21:50 | Last updated: October 14 2008 07:28
The government was on Monday night sitting on a paper loss of more than £2bn after investors took fright at the terms of its £37bn bail-out of three of the country’s largest banks.
Even as the FTSE 100 index soared, shares in Lloyds TSB, HBOS and Royal Bank of Scotland slumped as investors absorbed the full cost of the bail-out, agreed on Sunday after a weekend of frantic negotiations.
Unless the shares recover in the next few weeks, the sell-off makes it increasingly likely that shareholders in the three banks will reject the opportunity to buy some of the stock, leaving the government with 60 per cent of RBS and as much as 43.5 per cent in the combination of Lloyds TSB and HBOS, which are pressing ahead with their merger. The market reaction took some gloss off Gordon Brown’s claim, made earlier in the day, that the government was buying bank shares “at the bottom of the market”.
Alistair Darling, chancellor, said the government was “not in the business of running banks” and would sell its stake in the three high street banks when conditions improved. He said that the taxpayer could turn a profit on the deal, through appreciating share prices and coupons on preferred shares and fees.
However, investors were spooked by the government’s decision to ban three banks from paying dividends to ordinary shareholders until they had fully redeemed a total of £9bn in preference shares, which pay a fixed 12 per cent interest rate.
There were concerns that the government would restrict the banks’ ability to make commercial decisions. John Varley, chief executive of Barclays, said: “The fact is that those [banks] that have government shareholdings will be more constrained in their strategic and operational flexibility than those that have not.”
The three banks have promised to maintain lending to housebuyers and small businesses at 2007 levels. The government will be consulted on the appointment of three non-executive directors at RBS and two board members at the combined Lloyds TSB-HBOS.
Shares in HBOS slumped 27 per cent to 90p, 23.6p below the price at which the government has committed to invest £8.5bn, while Lloyds TSB shares fell more than 14 per cent to 162p, 11.3p below the price at which it is placing shares with the government. RBS shares, which dropped 8 per cent, closed at 65.7p – just above the placing price of 65.5p.
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Barclays avoids state support
By Peter Thal Larsen, Banking Editor
Published: October 14 2008 04:04 | Last updated: October 14 2008 04:04
In a more normal market, Barclays’ announcement on Monday that it was raising an additional £7bn ($12bn) in capital and scrapping its final dividend would have been seen as a humiliating admission of defeat.
Compared with the £37bn government bail-out of three of its main UK rivals, however, the declaration by John Varley, Barclays’ chief executive, that the bank did not intend to seek state support appeared to vindicate its approach to managing its capital reserves.
Ever since the credit crunch started more than a year ago, Barclays executives have struggled to persuade a sceptical market that the bank was in better shape than some of its main rivals – most notably RBS.
Despite pressure from regulators and investors to raise capital Mr Varley decided against launching a large rights issue, preferring to raise £4.5bn from institutional investors led by the Qatar Investment Authority.
This summer, the bank came under scrutiny after it became clear that Barclays – almost alone among its rivals – was not reflecting the market price of private equity loans in its balance sheet valuations.
Barclays executives said on Monday that despite being submitted to an intense “stress test” of its balance sheet by the Financial Services Authority, the bank had decided not to seek government help. “We’ve made the decision because of the confidence we have in our capital that we don’t need to use the government facility,” Mr Varley said. “That view is reciprocated by the UK authorities. They have approved our capital status and capital plan.”
The decision was not without costs, most notably to Barclays’ full-year dividend, which it scrapped in a move designed to raise £2bn.
Nevertheless, shareholders on Monday welcomed the fact that it had avoided a government bail-out. One large investor said executives “have negotiated well”.
Others are still waiting to see whether Barclays is able to raise the £6.5bn from private investors. Anthony Nutt, manager of Jupiter Income Fund, said: “Barclays have much to prove in terms of funding and also whether their assets are correctly valued.”
Barclays plans to raise £3bn in preference shares and £3.6bn in ordinary stock. It has already lined up an investor willing to commit about £1bn. Combined with the other measures, that will boost the bank’s tier one capital – a key measure of balance sheet strength – above 11 per cent.
But, Mr Varley stressed this ratio would not be permanent. “These are extreme levels for extreme times. We shouldn’t make the assumption that these ratios are in place for ever.”
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City will come out stronger, says Brown
By Jean Eaglesham, Chief Political Correspondent
Published: October 13 2008 23:51 | Last updated: October 13 2008 23:51
The City will emerge stronger from the banking crisis, Gordon Brown pledged on Monday, despite calling for radical “surgical” reforms to global regulation to eradicate the malaise in the financial system.
“London in my view is the great financial centre, working with New York ... I don’t see that changing,” the prime minister told bankers in Canary Wharf. “London can ensure its position by making the changes I’m suggesting and emerge stronger in the long run.”
Politicians from all parties are reluctant to champion the cause of the City at a time when bankers are perceived as electorally toxic allies. But Mr Brown’s remarks reflect a cross-party belief that the crisis offers London a chance to gain an edge over New York. The precedent is the US Sarbanes-Oxley Act, widely seen as a regulatory over-reaction to the Enron scandal that drove business to London.
Mr Brown pledged to avoid making a similar mistake. “This government will always work hard to advance London’s central role in the world financial system,” he stated. “We will not make the mistake of taking reflex and ill-considered actions when facing crises.”
The Tories are reluctant to appear soft on regulation but back the government’s rationale. “Obviously there need to be regulatory changes but there is a danger of going over the top,” Philip Hammond, shadow chief secretary to the Treasury, told the FT. “The health of the US economy is important to us as well and nobody’s sitting here thinking ‘let’s hope the US screws up’. But if we are able to take a more objective view than our competitors and pitch this just right ... we have the potential to come out of this stronger.”
This cross-party consensus on the need to avoid an unduly heavy-handed regulatory response to the crisis does not however mean the City can expect politicians to be wholly sympathetic. “Light-touch regulation” has gone from an all-purpose Westminster mantra to a term of left-wing abuse – the accepted term is now “effective” regulation.
It will take some months before it is clear how this will translate in practice into changes to the rules and regulatory bodies. But Mr Brown made it clear that he believes radical changes are needed. The global financial system is “too clouded with opacity, conflicts of interest [and] irresponsible risk taking,” he said.
Targets for reform included a sweeping commitment to “ensure that all board members have the competence and expertise to manage the risks ... and not walk away from their obligations.”
Greater “openness and disclosure, with an immediate adoption of the internationally agreed accounting standards” was needed, Mr Brown stated. He also forecast tougher regulation of credit reference agencies.
Reforms to ensure “sound banking practice,” and a “new international financial architecture” rounded off a prime ministerial list that might cause some trepidation among the banks – but which they now appear politically powerless to resist.
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The Short View: Market bounce
By John Authers, Investment Editor
Published: October 13 2008 19:01 | Last updated: October 13 2008 23:00
Markets oscillate between bulls and bears but they always keep a place for Tiggers. Like Winnie the Pooh’s friend, bouncing is what markets do best. And what Pooh says of his stuffed friend is also true of the stock market: “He always seems bigger because of his bounces.”
The best day ever for European stocks, and the biggest rebound for US markets since the 1929 Great Crash, must be viewed in this context. Markets are good at bouncing, their course is naturally erratic and a move like this does not prove the trend has changed.
After the 1929 crash, which prefaced disaster, the Dow Jones Industrial Average gained 18.8 per cent on the next two days. There was a two-day rally of 16.6 per cent after Black Monday in 1987, which prompted few lasting economic ill effects. The Dow’s bounce from its Friday low this time was 19.2 per cent.
So the bounce is unsurprising, and sheds no light on where markets will go next.
As for the trend, when the Lehman Brothers collapse started this phase of the crisis, the S&P 500 stood at exactly its average for the previous 50 days. Even after Monday’s bounce, it would need to rise 20.5 per cent more to get back to that average.
Further, we need to look at what prompted the bounce. The latest actions to bolster the international banking system are extreme. Other actions that looked extreme at the time had no impact. It would have been alarming if they had not had a response now.
How could the bounce turn into a rally? First, stocks need evidence of a thaw in money markets. Once there is no need to price in some chance of an all-out banking collapse, equities should be able to rise.
Second, the market needs to gauge the impact of this financial distress on profits. Earnings season for the third quarter is just starting; it is far more important than usual.
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Lex: Morgan Stanley/MUFG
Published: October 13 2008 09:39 | Last updated: October 13 2008 16:25
Pricing deals in current markets is like playing Russian roulette. Mitsubishi UFJ Financial Group knows this to its cost. Two weeks ago, Japan’s biggest bank by assets agreed to pay $9bn for a 21 per cent stake in Morgan Stanley. On Friday, that would have been almost enough to buy the entire US investment bank (excluding a control premium). Understandably, MUFG on Monday reworked the terms.
The original deal saw MUFG buying $6bn of preferred Morgan Stanley stock and $3bn of common shares. Now MUFG will plough $7.8bn into preferred stock, which will convert into common stock at $25.25. This is lower than the $31.25 initially agreed but well ahead of Friday’s $14.22 share price. The residual $1.2bn will, meanwhile, take the form of perpetual non-converting preference stock; in essence a permanent loan.
This seems like a fair compromise. MUFG gets more interest income from its Wall Street prize for the same money thanks to the prefs’ 10 per cent yield. In the meantime, Morgan Stanley gets capital without a wholesale takeover by the Japanese.
But it has risks. First, the recast deal reportedly required a US government pledge that any equity injection it might subsequently make would not wipe out MUFG’s investment. That, after all, was the fate of investors who bought preference shares in Fannie Mae and Freddie Mac this year. For its part, Morgan Stanley will have to cough up more in higher dividends.
MUFG has also imported a whole lot of volatility. Sure, Morgan Stanley dividends will be equivalent to almost a 10th of MUFG’s earnings last year. But this remains a portfolio investment and Japanese banks know how fickle such things are. The country’s six biggest banking groups boasted unrealised gains on their equity portfolios of more than $50bn in June but, as Barclays Capital calculates, tanking markets have turned that into a small loss. MUFG’s Morgan Stanley investment adds further volatility to this mix.
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Qatar sovereign wealth fund to buy shares of country’s banks
October 14th, 2008 - 1:25 pm ICT by IANS -
Dubai, Oct 14 (IANS) With Gulf bourses rebounding Monday after a week of mayhem triggered by the global credit crunch, Qatar’s sovereign wealth fund has announced that it would buy up to 20 percent of Qatari banks’ shares.Khalid Bin Rashid Al Khater, director of the Economic Policies Department at Qatar Central Bank (QCB), said that the Qatar Investment Authority (QIA) was buying up to 20 percent shares of Qatari banks to support the banks’ capitals and improve their financial situation.
In a statement to state-run Qatar News Agency (QNA), Al Khater said that the QIA decision was in line with global trends in increasing the role of the state in the national economy and based on International Convergence of Capital Measurement and Capital Standards or Basel II measures.
Asked whether this move was an acknowledgement on the part of the state that the global financial crisis has had its impact on Qatar, Al Khater said that all countries without exception were affected by the crisis in one way or the other depending upon their exposure to the world financial markets.
He, however, reiterated that the Qatari economy was strong as recognized by all international rating agencies and added that the country’s economy was capable of absorbing all the impacts of this crisis.
Keeping with Monday’s trend in other key Gulf bourses, the Doha Securities Market rose 8.45 percent from the previous day’s close to end at 7,624.09 points.
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Nordic nations watch from the sidelines
By David Ibison and Robert Anderson in Stockholm
Published: October 13 2008 22:32 | Last updated: October 13 2008 22:37
The Nordic region is seeking to distance itself from the woes afflicting the rest of Europe’s banks by making clear its main lenders do not need a government-backed bail-out.
A day after a Europe-wide banking action plan was unveiled, Sweden, Norway and Finland drew a deliberate line between their own banks and troubled lenders elsewhere in Europe.
“Let me be clear that Sweden differs from some other European countries. We don’t have any failed banks and thus reconstruction needs are not as great,” said Anders Borg, the finance minister.
The confident statement was echoed by Norway and Finland. The combined message helped alleviate concerns over possible knock-on effects in the region following the collapse of Iceland’s three largest banks.
The underlying message from the Nordic countries was the same: the banks have virtually no exposure to the US subprime market and they rely on depositors rather than wholesale markets for funding.
Sweden, an EU state but not a member of the eurozone, is preparing legislation to boost financial market stability and provide additional protection for depositors. But Mr Borg said: “I don’t mean to inject capital, but rather create a regulatory framework.”
Norway, also a member of the EU but not a eurozone member, unveiled a $55.4bn (€41bn, £32.5bn) liquidity support package on Sunday.
Nina Bjerkedal, director general in the economic policy department, said on Monday: “Norwegian banks are fundamentally strong. Tier one capital is at an adequate level and Norwegian banks have hardly had any exposure to US subprime assets.”
Finland, a member of the EU and a eurozone member, also made clear it would take action if needed but insisted capital injections were not being considered.
“Our banks are not all that active in the real estate market in the US and there do not appear to be any contagion effects from Iceland,” said Peter Nyberg, director general of financial services at the finance ministry.
The Danish government has also guaranteed all bank deposits and interbank loans.
Despite the relative stability of the region’s banks, confidence in two of Sweden’s main lenders, Swedbank and SEB, has been knocked by their exposure to the Baltic states, which have slipped into recession and are regarded by some analysts as vulnerable to the global financial crisis.
Swedbank, the country’s largest savings bank, has more clients in the region than in Sweden and derives almost a third of its operating profit from the area, even though only 16 per cent of its loans are there.
The bank has predicted that 1.2 per cent of its loans in the Baltics will go bad next year, which would wipe out half its operating profits there.
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Bankruptcy threat stalks Asian shipyards
By Raphael Minder in Hong Kong
Published: October 7 2008 03:00 | Last updated: October 7 2008 03:00
Asian shipbuilders face an abrupt downturn in demand that could result in some yards going bankrupt as ship owners cancel or postpone orders, according to executives, bankers and analysts.
The problems could be particularly acute in China, which is now challenging South Korea as the world's leading shipbuilding nation but where many of the new yards are privately owned and rely on additional funding for their expansion.
The shipbuilders' problems stem from those of both the shipping and banking sectors, as a slowdown in trading is compounded by the inability or reluctance of banks to extend financing for orders. The Baltic Dry Index (BDI), the global benchmark for the cost of shipping commodities, has slumped to a quarter of its level four months ago.
"We are now seeing banks withdrawing financing options for new ships," said Arthur Bowring, managing director of the Hong Kong Shipowners' Association. "To have built up such a large shipyard capacity is quite worrying in such doubtful economic times."
Asian shipyards filled their order books until 2011 on the back of a decade-long Asian economic boom. That still provides a cushion for larger and more efficient yards, but some Chinese fledgling companies now scramble to put refund guarantees in place to secure contracts.
"Activity has come off very rapidly right across the board, with the big ships affected most," said Michael Birley, managing director of shipbroker Wallem. "I'm sure that there are orders now which are not being completed."
As many as seven Chinese shipbuilders had earmarked initial public offerings to fund their rapid growth. Some have instead been seeking hundreds of millions of dollars in institutional funds, bankers say.
Rongsheng, which had planned a $1bn IPO, is now trying to raise about $300m. Other shipbuilders that are expected to need additional capital soon include Titan, New Times and New Century.
However, banks are adding stringent covenants when financing vessels, as well as lowering the advance rate of their financing to about 60 per cent of shipbuilding costs from about 80 per cent.
Shares in Korean shipbuilders plunged yesterday, led by Daewoo Shipbuilding & Marine Engineering, amid concern that the downturn could force Korea Development Bank and Korea Asset Management to cancel the sale of their 50.4 per cent stake in Daewoo Shipbuilding.
Analysts also point to an abrupt slump in the second-hand market. Second-hand ships had been trading at a premium to new buildings because of the long lead time before delivery.
Last month, however, prices for vintage dry bulkers fell as much as 40 per cent, according to Christoph de Buys Roessingh, founder of Roland Capital, a shipping consultant.
"The next question is how much of the new buildings will not be built," he said. "That's hard to answer, but my estimate is that anything between 10 and 30 per cent of the order book for dry bulk might not be built, with the smaller units likely to be affected the most."
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UK scraps terror detention plan
By Jimmy Burns in London
Published: October 13 2008 20:34 | Last updated: October 13 2008 23:53
The UK government was on Monday night forced into a humiliating climbdown over its controversial plans to extend the detention of terrorist suspects without charge for up to 42 days after they were heavily defeated in the House of Lords.
Jacqui Smith, the home secretary, told MPs that as a result of the vote the plans would be dropped from the current counter-terrorist bill going through parliament but held “in reserve” in the event of a national emergency provoked by a terrorist attack.
Flanked by the prime minister, Ms Smith told MPs that a new bill which included the measures was written and ready to be made law if and when they were needed.
Ms Smith said she was determined to ensure the security of the British people and “deeply regretted” those she claimed were prepared to “ignore the terrorist threat” by voting against the government. She added: “Let no one kid themselves that this issue can be made to go away . . . Britain still needs to be protected. Britain still needs to be prepared to deal with the worst.”
But opposition MPs derided her for making what they claimed was a cosmetic face-saving statement aimed at downplaying the scale of opposition to the controversial measure. Dominic Grieve, shadow home secretary, told MP’s that government “spin doctors” had prevented Ms Smith from stating the reality that the Bill which the House of Commons will next vote on will be redrafted to exclude its most controversial provision.
Rejecting government claims that the Tories had gone soft on terrorism by voting against the 42 days, Mr Grieve told MPs: “We on this side of the House are perfectly prepared to be firm on terrorism . . . but measures have to be credible, they have to be based on evidence and they must not be put forward in a way that smacks of mere political posturing and gimmicks.”
The surviving bill, which in redrafted form commands greater cross-party support, retains other less controversial measures including tougher sentencing for convicted terrorists, increased police powers for the seizure of terrorist assets, as well as new powers to question suspects after charge.
Ms Smith made her statement to the Commons after 24 Labour rebel peers, including two former Lord Chancellors, joined opposition Conservative and Liberal Democrats as well as independent peers to defeat the proposals to extend the period of detention from 28 days up to six weeks by 309 to 118 votes.
The government narrowly won a Commons vote in June, with Mr Brown insisting publicly that the plans were in the “national interest”. But by Monday night government advisers had reached the conclusion that the prime minister faced an almost insurmountable challenge in persuading the Commons to vote for the measure again. Moreover according to some government insiders the question of pre-charge detention has become less critical for the prime minister than when he made the Commons vote a matter of personal authority over four months ago. What matters more than anything to him, they say, is being seen to deal effectively with the economic crisis.
Monday’s vote was welcomed, among other civil rights campaigners, by Shami Chakrabarti, the director of Liberty. Ms Chakrabarti said: “Common decency says we don’t lock people up for six weeks without charge.”
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Iran’s traders move to revive power base
Published: October 14 2008 04:00 | Last updated: October 14 2008 04:00
The mood in the Tehran baazar on Monday was confused. Some of the grey shutters in the vaulted passageways of the bazaar remained firmly closed, others were open for business while yet more were half open-half closed, perhaps reflecting that many bazaaris – merchants – were in two minds over whether to continue their strike against the government of president Mahmoud Ahmadi-Nejad.
Over the past week merchants in some of the biggest bazaars in Iran have been closed in protest at the imposition of a 3 per cent value added tax. On Sunday Tehran joined the dispute in spite of the fact the government announced late last week that it was to “postpone” imposition of the levy.
The government move was an attempt to avoid confrontation with the old structured market, which has a close relationship with Iran’s senior clergy.
But the reaction in Tehran – where traders have demanded the suspension of the tax not just its postponement – has fuelled suspicions that traders are using the issue as an opportunity to remind the regime of the bazaaris’ historical economic and political power and that it could be exerted again.
Still more suspect the bazaari protest is turning into a political battlefield with the opponents of Mr Ahmadi-Nejad, encouraging the strike to bring pressure on him ahead the presidential election next June.
“You can track political rivalries and see politicians showing muscles in the bazaar,” says one trader.
The bazaaris rendered crucial support to the 1979 revolution. But this strike is the first of its kind against the Islamic regime.
The atmosphere in Tehran’s bazaar, with closed shops, has prompted comparisons with the revolutionary days, with many traders nostalgic for the time when anti-government riots helped topple the Shah and the bazaaris had more economic and political influence than they can muster today.
“We should not be happy with anything less than [the] collapse of [Mr] Ahmadi-Nejad’s government,” says one old trader who argues that the strike should continue.
Many analysts say the bazaaris today largely stand where they were before the revolution in terms of frustration with the government, but the emergence of modern trading companies and shopping malls has reduced their influence.
There is also a new element: many of the modern economic centres are suspected to be affiliated or endorsed by the elite Revolutionary Guards and intelligence services, making rivalry extremely difficult for bazaaris. The bazaaris fear their wealth and power is diminishing and modern trade centres are replacing them, says Mohammad-Reza Behzadian, former head of Tehran chamber of commerce.
The trend is leading to the establishment of a new class of entrepreneurs sweeping power away from traditional traders and ignoring their past contribution.
“The bazaari’s fundamental protest is not against tax. Rather, it is against being ignored,” says Saeed Laylaz, an analyst. “It is weeping like a class worried about extinction.”
Despite a diminishing influence, the geographical concentration of thousands of shops sprawling through hundreds of narrow streets in one district gives the bazaari a unique position and a base of power which is not replicated among other classes.
“It takes probably less than an hour for a few old bazaaris just to walk along the bazaar and ask others to shut the whole bazaar,” says Mr Behzadian.
Although analysts believe the good old days of the bazaari are over and doubt recent protests have the capacity to evolve to a national movement or create any major economic crisis, they warn about its social impact at a time when inflation stands at 29.4 per cent and is growing.
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Wine collectors eye cellars for liquidity
Reuters
By Lisa Baertlein Reuters - Tuesday, October 14 01:03 am
LOS ANGELES (Reuters) - Wine cellars have been taking a hit from the global credit crisis and it isn't because the owners of rare bottles are drinking more -- it's because they have been selling to raise cash.
(Advertisement)
The selling started with mortgage brokers and has moved to Wall Street as owners turn their collections of coveted vintages into liquid assets.
"People need money. Even richer people need money sometimes," Vinfolio.com founder and Chief Executive Stephen Bachmann told Reuters on Monday.
In the last few weeks, private collectors submitted offers to sell $10 million worth of wine to Vinfolio, a San Francisco-based company that buys and sells wine online. Normally the company has about $6 million (3.4 million pounds) offered to it.
Among the wines that that recently have come into Vinfolio's possession are a 6-litre Imperiale of 2003 Chateau Margaux that retails for almost $15,000 and a bottle of 1990 Romanee-Conti that lists for around $11,000.
One Aspen collector is looking to sell $750,000 worth of wine and another individual from the private equity world is offering up wine worth about $500,000 from his collection, he said.
"I think we're seeing a culling of people's cellars without necessarily a wholesale abandonment," said Bachmann, whose company has a five-person team dedicated to buying wine from private cellars.
SELL, SELL, SELL
Wine sales contribute about 95 percent of Vinfolio revenue and Bachmann expects 2008 sales to grow to $27 million from $14.3 million last year.
The privately held company, which also offers white-glove services like personal cellar management, recently launched a free site called WinePrices.com that tracks auction pricing information for more than 10,000 wines.
Bachmann said auction prices have softened recently but that demand still exceeds supplies of sought-after wines.
"I view weakness in the fine wine market as a buying opportunity," said Bachmann, who said Vinfolio has more than 2,000 different wines that sell at an average price of $150 per bottle. Wines from private collections often fetch even higher prices, he said.
Many high-end wines are finding homes in places like Hong Kong, which early this year eliminated a 40 percent duty on wine and is aiming to grow into a global wine auction hub rivaling London and New York.
Demand from Aisa has helped support the Liv-ex 100, an index of blue-chip wines, which was up 9 percent for the year at the beginning of October.
For years, a clique of affluent super-collectors in Hong Kong has established a reputation for outbidding global connoisseurs when top vintages have come up for sale.
"Follow the money is the message," said Bachmann, who this year set up a 50,000 square-foot warehouse in Hong Kong after the city's wine duty was eliminated.
That facility also serves Macau, China's gambling haven that also has abolished its wine tax.
Meanwhile, Bachmann is keeping his eye on the upcoming Zachys wine auction, its first in Asia, scheduled for Oct 25 in Hong Kong, which promises to gauge demand in the region. "That may be an interesting barometer of where things are," he said.
Not to be outdone, Christie's International Wine Department will return to Hong Kong in November with an auction of Bordeaux dating from 1865 to 2005. Those from Latour are directly from the chateau.
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Hedge Funds Concede Errors, Profess Optimism After Worst Losses
By Saijel Kishan and Katherine Burton
Oct. 14 (Bloomberg) -- Hedge fund managers, after enduring the industry's worst month in a decade, are seeking to explain to investors what went wrong and what they are doing about it.
``We clearly underestimated several things, most importantly the tsunami of redemptions that are being delivered to hedge funds as investors line up to get out of these funds as well as record outflows from equity mutual funds,'' Jeffrey Gendell, who runs Greenwich, Connecticut-based Tontine Associates LLC, wrote in an Oct. 1 letter to clients.
``I am not a nervous person by nature, but should have been under the circumstances,'' wrote Gendell, whose Tontine Partners LP fund plunged 59 percent in September, leaving it down 67 percent for the year, according to investors. Gendell, 49, had expected shares of steel, engineering, airline and chemical companies to appreciate because of falling oil prices. Instead they plummeted.
Hedge funds, which endeavor to make money whether markets rise or fall, lost an average of 4.7 percent in September, the biggest monthly decline since August 1998, according to data compiled by Hedge Fund Research Inc. Funds fell 17 percent this year through Oct. 9, compared with the 38 percent decline by the MSCI World Index of stocks. It was the worst performance by the lightly regulated private pools of capital since the Chicago- based firm began collecting data.
Failure Rate
As much as almost a third of hedge funds may close in the next two years, according to a Sept. 29 report by Zurich-based analysts at Credit Suisse Group AG. There were about 3,100 hedge funds that managed a combined $1.9 trillion as of June 30, according to Hedge Fund Research. This year's investment losses mean many funds won't be able to collect performance fees, usually 20 percent of gains, while management fees, usually 2 percent of assets, will shrink.
Managers have been selling assets, both to raise cash for what they expect to be a surge in year-end redemption requests and to preserve capital as market volatility has risen to record levels. The Standard & Poor's 500 Index yesterday rebounded from its worst week in 75 years with an 11.6 percent advance.
David Slager, manager of the Atticus European Fund, told investors that more than 50 percent of his fund is now in cash or U.S. Treasuries after he lost 43.5 percent so far this year.
``I believe it is prudent to maintain our critical focus on capital preservation and liquidity,'' he wrote in a letter sent Oct. 1.
Slager, 36, who is vice chairman of New York-based Atticus Capital LP, told investors that his holdings are now skewed toward stocks that will fall, while in July, his bets were mostly bullish because he had anticipated only a mild economic slowdown in the U.S.
Glad It's Done
``While in hindsight I wish I had made the decision to sell sooner, I am glad that it is now done,'' he wrote. He said he would start buying again only after a ``climactic selloff'' or when he deems that credit markets have stabilized.
Slager declined to comment.
David Einhorn, who runs New York-based Greenlight Capital LLC, said external forces were partly to blame for the 17 percent drop in his three funds in September.
While he and his team made mistakes, ``we believe that our portfolio management has been reasonable,'' Einhorn wrote in an Oct. 1 letter to clients.
Einhorn, 39, pointed to the U.S. Securities and Exchange Commission's Sept. 18 ban on short sales of financial stocks for some of the losses in the month. The ban, which expired Oct. 9, eventually included about 15 percent of the companies in the Standard & Poor's 500 Index.
Caught Short
In a short sale, investors sell borrowed stock in hopes of repurchasing it later at a lower price and pocketing the difference. A long position is one that an investor holds in expectation it will rise.
After the ban went into place, the shorts recovered much more than the longs, he wrote, ``especially the financial shorts abundant in our portfolio.''
Einhorn, who earlier this year was vocal in this view that shares of now-bankrupt Lehman Brothers Holdings Inc. would tumble, said he planned to hold onto the short positions in financial companies ``for a good deal of time (providing there aren't additional extraordinary legal changes) until they begin to trade in a normal market environment again.''
In the third quarter, Einhorn's three funds lost about 15 percent, one percentage point of which came from stocks he had shorted. Nine companies Einhorn held long, including French chemical-maker Arkema SA, French bank Natixis SA and Houston- based oil and gas producer Helix Energy Solutions Group Inc., each contributed more than one percentage point to the quarterly drop.
Playing Defense
Einhorn told investors his funds are more conservatively invested than ever. While almost three-quarters of assets, including leverage, are long, he has offset those holdings with short sales that bring the net to 9 percent. Einhorn declined to comment.
Gendell, who also runs a stock fund that buys and sells banks an other financial-services shares, said he's expanding investments in regional banks, ``which we think will have a remarkable period of earnings growth over the next two to three years.'' His Tontine Financial Partners LP fund was up in September, he told investors in his letter, without providing details.
Tontine is allowing investors to add to their investments, without adding to the length of time their money must remain with the funds, ``for those who seek to take advantage of this decline.'' Gendell declined to comment.
Greenlight is also opening its funds to a limited amount of new investments on Nov. 1 ``in order to take advantage of the investment opportunities we believe will be available in the coming year.''
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Icelanders Sink Under Foreign-Currency Loans as Krona Plunges
By Niklas Magnusson and Chad Thomas
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Oct. 14 (Bloomberg) -- Karl Karlsson, a Reykjavik taxi driver, has canceled his winter vacation. The money he saved is being eaten up by his car loan payment, which has jumped more than 20 percent since June.
Like thousands of Icelanders, Karlsson borrowed in foreign currencies to get a cheaper loan as the benchmark domestic interest rate soared to 15.5 percent this year. With trading in the krona virtually suspended after it plunged against the euro, dollar and yen, debtors now face skyrocketing bills.
``I was told it was better and cheaper to take a loan in foreign currencies than in Icelandic kronur,'' said Karlsson, 65, who now pays 74,000 kronur a month (about $770) on his loan, compared with 59,000 four months ago.
So-called currency basket loans, whose exchange rates are usually adjusted every three months, accounted for 14 percent of household debt in Iceland at the end of June, or 244 billion kronur, according to a Sept. 26 note from the research department of Glitnir Bank hf. Last year the figure was 7 percent.
``If the krona goes down, the principal will go up,'' said Frosti Olafsson, an economist at the Iceland Chamber of Commerce, who added that half of his car loan was in foreign currencies. His monthly payments jumped 30 percent in the past year.
Lenders began promoting foreign currency loans as interest rates and inflation soared amid a four-year economic boom on the volcanic island that's home to 320,000 people. The expansion went bust this month as the credit crunch made it impossible for Icelandic banks to refinance their debt.
The currency has been in freefall since last week, when Iceland put Glitnir, Landsbanki Islands hf and Kaupthing Bank hf, its three biggest lenders, into receivership.
Currency Shunned
On Oct. 8, the central bank, Sedlabanki, abandoned a peg to the euro after just one day when it was unable to defend the rate of 131 kronur per euro. Trading effectively halted when no overseas bank could be found to accept the currency.
Commerzbank AG, Germany's second-biggest bank, said yesterday there is ``no active market'' in the krona. The last quoted price was 340 per euro, compared with 122 a month ago.
A loan of 10 million kronur taken half in Japanese yen and half in Swiss francs in January now stands at 17.8 million kronur, an increase of 78 percent, according to data on the central bank's Web site. That has left people fretting about whether they will be able to keep their cars and homes as the economy deteriorates.
Bank's Tenant
Haraldur Lindal Petursson, the chief executive officer of a local import company, said he's worried about his loan payments as his wife prepares to give birth to their third child.
``It's a Cinderella story but it has its dark side,'' said Petursson, 30, explaining that because of his currency basket loan, his house payment has doubled since June of last year.
Back then, he had paid off about half of his home. Now Petursson reckons he owes more than the house is worth.
With payments eating up 40 percent of his salary, Petursson has postponed a trip to Florida, even though he's already bought the airplane tickets.
``I just live in it,'' Petursson said of his house. ``The bank owns it.''
The government of Iceland has said it may take measures to help citizens with foreign currency loans until the krona stabilizes.
``The government will look into whether we can recommend to the banks that payments on currency-indexed mortgages can be frozen until the currency market is operating more normally,'' Prime Minister Geir Haarde said at an Oct. 9 news conference.
Debt Relief
Glitnir, which started offering such loans in 2004, has instructed branch managers to let customers temporarily pay only the interest rate on those mortgages. The arrangement will end once the krona becomes more stable, spokesman Mar Masson said.
``This has a great effect on every consumer in Iceland, and it is also bad for business as people cannot use the money they are now paying for their more costly loans on something else,'' said Gisli Tryggvason, Iceland's consumer ombudsman, who also has a foreign currency loan.
Sales of new vehicles slumped 30.2 percent from a year earlier in the first nine months of the year, the Umferdarstofa traffic safety agency said on its Web site.
Last week's crisis brought spending on such big-ticket items to a virtual halt.
``The sales of new cars and machines have been reduced dramatically,'' said Birgir Sigurdsson, CEO of Hekla, the country's largest car dealer, whose main showroom in Reykjavik was empty at noon Oct. 9. ``People have stopped spending on more expensive goods -- spending has halted.''
For Karlsson, there's at least some comfort that he has company in his misery.
``A lot of people did the same thing and now they will have problems,'' he said. ``Many will be forced to sell homes and cars.''
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Finland Escapes Iceland's Fate Thanks to Legacy of 1991 Crisis
By Kati Pohjanpalo
Oct. 14 (Bloomberg) -- The financial crisis in the icy northern European country was worsening. Banks were failing, the unemployment rate was 20 percent and a decade-long housing boom had turned bust.
This was Finland in 1991, not Iceland today. Finland is a leader in withstanding the global credit crunch that has sent Iceland into near-bankruptcy -- in part because of what it went through back then.
The collapse of Finland's neighbor and chief trading partner, the Soviet Union, and the end of a bubble in which bank lending expanded as much as 15 percent a year led to a smaller, more regulated banking system and new export markets.
``Those 45-year-olds who were bank managers during the banking crisis learned a lot,'' Prime Minister Matti Vanhanen told reporters in Helsinki on Oct. 7. ``They have been acting more carefully for the past 15 years.''
Finland's unemployment rate remains below that of the euro area, at 5.6 percent in August compared with 7.5 percent. The relative prosperity stems in part from the country from which Iceland now seeks a 4-billion-euro ($5.4-billion) loan: Russia.
While the 1991 demise of the Soviet Union wiped out a quarter of Finland's exports, Russia has become its largest trading partner again, accounting for 10 percent of overseas sales.
European Bailouts
European governments and central banks are struggling to ease the crippling effects of the credit freeze on financial systems and economies. Germany, France and Spain yesterday committed 960 billion euros to guarantee interbank loans and take stakes in banks.
Similar measures, agreed to by leaders of European Union countries on Oct. 12, ``will only be used if Finnish banks need them,'' Vanhanen, 52, said yesterday, according to Finnish broadcaster YLE. Moody's Investors Service gives banks operating in Finland, such as Danske Bank A/S, Nordea Bank AB and Pohjola Bank Oyj, the second-highest investment grade credit rating: Aa1 with stable outlook.
Iceland, for its part, is turning to the International Monetary Fund after its banks amassed debts of $61 billion, according to Bloomberg data. Debt was 12 times the size of the shrinking economy, Iceland Prime Minister Geir Haarde said on Oct. 6. The government last week seized Iceland's top three banks, including Kaupthing Bank hf, the nation's biggest lender.
Finland's banking industry had its own bout with bloat: By 1990 it employed 82,000 people, enough to serve 20 million people, five times the population, said Esko Ollila, a Bank of Finland board member from 1983 to 2000. A third of business loans in 1991 were in foreign currencies, such as the U.S. dollar and the German mark.
Boom's End
Then the Soviet Union began to split apart just as the housing boom came to an end. Plunging trade, restrictive monetary policy and faltering consumer confidence led to soaring unemployment: The jobless rate climbed to 19.9 percent in May 1994 from 2.1 percent in 1990.
Pauli Nurminen, 59, remembers the daily struggle to keep alive the machinery-parts business his grandfather founded in 1917, the year Finland gained independence from Russia.
``We were as close to ending our story as possible,'' said Nurminen, the owner of Hellmanin Konepaja Oy, a Helsinki-based metal industry subcontractor. What saved the business was an agreement with employees under which those who didn't have work would take a vacation day: ``Without this we probably wouldn't have survived.''
Independent Regulator
In 1991, the government took control of more than 40 small savings banks and moved the non-performing assets off their books to a company run by the central bank. In 1993, it set up an independent authority to monitor the financial services industry. The number of bank employees fell by half during the 1990s, according to the Bank of Finland.
``We learned a lot,'' said Esko Kivisaari, the Federation of Finnish Financial Services' deputy managing director. ``Our structures have changed completely and risk management at our banks is in much better shape.''
By 1995 only 12 percent of business loans were in foreign currencies. Finnish companies also found new export markets in Western Europe and Asia and now trade goods ranging from the world's biggest cruise liners to Nokia Oyj's mobile phones.
In the current crisis, Finland has also been shielded by its 1995 membership in the European Union and use of the bloc's single currency, the euro, which has lessened exchange rate risk. Iceland's central bank had to abandon its Oct. 7 peg to the krona two days later; trading is now halted entirely.
``The euro has protected us,'' said Pasi Sorjonen, chief economist at the ETLA research institute in Helsinki. ``There's no doubt about it.''
On the streets of Reykjavik, residents say they envy the stable economy that Finland has created since its turmoil.
``When they went through their crisis, they sort of got their act together,'' said Matthias Kjartansson, the 53-year-old owner of an Icelandic tourism business that employs four people. ``Personally, I feel that they have played their cards right.''
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Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports
By Chad Thomas
Enlarge Image/Details
Oct. 13 (Bloomberg) -- After a four-year spending spree, Icelanders are flooding the supermarkets one last time, stocking up on food as the collapse of the banking system threatens to cut the island off from imports.
``We have had crazy days for a week now,'' said Johannes Smari Oluffsson, manager of the Bonus discount grocery store in Reykjavik's main shopping center. ``Sales have doubled.''
Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said, standing in a walk-in fridge filled with meat products, among the few goods on sale produced locally.
Iceland's foreign currency market has seized up after the three largest banks collapsed and the government abandoned an attempt to peg the exchange rate. Many banks won't trade the krona and suppliers from abroad are demanding payment in advance. The government has asked banks to prioritize foreign currency transactions for essentials such as food, drugs and oil.
The crisis is already hitting clothing retailers. A short walk from Bonus in the capital's Kringlan shopping center, Ragnhildur Anna Jonsdottir, 38, owner of the Next Plc clothing store, said she can't get any foreign currency to pay for incoming shipments and, even if she could, the exchange rate would be prohibitively high.
``We aren't getting new shipments in, as we normally do once a week,'' Jonsdottir said. ``This is the third week that we haven't had any shipments.''
Bankrupt
Iceland's 320,000 inhabitants have enjoyed four years of economic growth in excess of 4 percent as banks and businesses expanded abroad, buying up companies from brokerages to West Ham United soccer club. Now, the three biggest banks, Kaupthing Bank hf, Landsbanki Island hf and Glitnir Bank hf have collapsed under the weight of about $61 billion in debts, 12 times the size of the economy, according to data compiled by Bloomberg.
The central bank, or Sedlabanki, ditched its attempt to peg the krona to a basket of currencies on Oct. 9, after just two days, citing ``insufficient support'' in the market. Nordea Bank AB, the biggest Scandinavian lender, said the same day that the krona hadn't been traded on the spot market, while the last quoted price was 340 per euro, compared with 122 a month ago.
``There is absolutely no currency in the country today to import,'' said Andres Magnusson, chief executive officer of the Icelandic Federation of Trade and Services in Reykjavik. ``The only way we can solve this problem is to get the IMF into the country.''
Imports Dependency
The International Monetary Fund sent a delegation to the island last week. Prime Minister Geir Haarde said on Oct. 9 his country may ask it for money after failing to get ``the response that we felt that we should be able to get'' from European governments and central banks. The state will also start talks with Russia over a possible 4 billion-euro ($5.5 billion) loan.
Iceland's rugged, treeless terrain, a barren stretch of volcanic rock, geysers and moss, means the country imports most food, other than meat, fish and dairy products.
Magnusson said last week that one of Iceland's largest supermarket chains was unable to get any foreign currency to make purchases abroad and another retailer's electronic payment didn't go through. Iceland will begin to see shortages of ``regular goods'' by the end of the week if nothing changes, he said.
``We are struggling to make the economy survive from hour to hour,'' Magnusson said. ``There is an enormous amount of capital that wants to get out of the country.''
Sedlabanki told lenders on Oct. 10 that residents who want foreign currency should first prove they need the money for traveling by providing documentation for their trip.
Essential Goods
Wholesalers are demanding that importers pay before any goods are shipped, said Knutur Signarsson, head of the Reykjavik-based Federation of Icelandic Trade. Under normal circumstances, wholesalers abroad would extend credit for 30 to 90 days, he said.
``Many of them ask us to pay cash before they send the goods to Iceland,'' Signarsson said. ``Because of the situation, Iceland has become a country that no one trusts any longer.''
Bogi Thor Siguroddsson, owner of Johan Roenning, an import and retail business which has about 7 billion krona ($71 million) in annual sales, says he's instructed his purchasing managers to only import the core goods, including light bulbs, lamps and electrical cables, they need to serve their customers.
``It's enough to have the credit crisis,'' he said. ``Then you have the currency crash. Unfortunately, we have shown that we can't handle it ourselves.''
Food Inflation
Icelanders, whose per capita gross domestic product is the fifth highest in the world, according to the United Nations 2007/2008 Human Development Index, will have to tighten their belts.
Shoppers are paying more for the goods they do get. The cost of fruits and vegetables, nearly all of which are imported, have gone up about 50 percent in recent months, said Steinunn Kristinsdottir, a 33-year-old Reykjavik resident who was leaving the Bonus store with her cart full.
``This situation really has been a bit troubling for people,'' she said. ``They don't know what's going to happen.''
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A sinking feeling in South Korea
By Louise Lucas, Song Jung-a and Raphael Minder
Published: October 13 2008 19:46 | Last updated: October 13 2008 19:46
ship building Korea
Lowered expectations? A vessel under construction at the STX yard in Jinhae. South Korea is the world leader in shipbuilding but an economy reliant on exports is vulnerable to a fall in demand Bloomberg
The global credit crisis is washing up on Asia’s shores. The region, having been through its own devastating financial crisis in 1997-98, remembers many of the lessons that others forgot. By and large, Asia today is a continent of current account surpluses, well-capitalised banks and modestly leveraged balance sheets.
But fault-lines exist. South Korea, which was bailed out by the International Monetary Fund in 1997, has seen its currency plunge to a 10-year low amid a scramble for dollars.
Politicians and the private sector are rallying round. Kang Man-soo, finance minister, is taking his plea for dollars to Wall Street, where he is due to meet executives of banks such as Citigroup and Morgan Stanley. Posco, the steel maker, said last week it would sell $1bn (€730m, €570m) of bonds overseas as part of efforts to stabilise the won. Employees at Kyunggi NongHyup, a farmers’ bank in greater Seoul, are hunting down dollars so that they can open deposit accounts at the lender – and provide it with foreign funding. The employee who hauls in the most dollars will win a prize.
Lest anyone miss the point that one of the world’s most successful exporting nations is in a bind, Mr Kang recently told a parliamentary session that “apart from exports, everything – including investment, consumption, employment and the current account balance – is showing a trend similar to that seen during the [Asian crisis]”.
EDUCATION REMITTANCES:
‘The amount I need to send is growing’
South Korea’s tumbling currency has brought sleepless nights for Kim Seung-ki, a technology analyst at a Seoul securities house and one of the thousands of kirogi appa, the “geese fathers” who fund their families’ overseas schooling, writes Song Jung-a
Every month Mr Kim changes an ever bigger chunk of his won-denominated salary into dollars, which he duly remits to his wife and two children who migrated to Canada for the young Kims’ education.
“The amount that I have to send them is getting bigger, adding more financial burden. And I am afraid the situation will get worse,” he laments.
More Koreans have been choosing this split existence, as parents and children alike despair of a gruelling school system based on rote learning.
The trend started in the rich districts of southern Seoul but has spread across the country, with many middle-class families joining the trend despite the personal sacrifices and financial costs involved.
Koreans form the largest group of foreign students in the US, with about 73,000 studying there. The number has been growing rapidly, with an American education increasingly seen as a ticket to success in Korea.
The US is the prime destination but cheaper countries such as Canada, Australia and New Zealand are becoming popular alternatives. Last year, nearly 218,000 Koreans were studying at overseas universities and graduate schools, up 36 per cent from four years ago. But the number of children attending school abroad, at around 30,000, has jumped 80 per cent over a similar period.
Although South Koreans are increasingly becoming global consumers of higher educational services, the tumbling won may put a brake on the trend as parents start to feel the pinch. The won has plunged about 24 per cent so far this year to its lowest level in a decade, reminding many South Koreans of the 1997-98 financial crisis, in which the value of the local currency halved. At that time, many parents brought children studying abroad back home, unable to meet the cost.
“I still don’t want to bring them back, although it is getting more difficult,” says Mr Kim. “But I may have to if the situation gets worse.
South Korea’s problems look scarily familiar. Like the US, its consumers and companies have taken on too much debt. Like banks in the US and UK, Korean lenders rely on wholesale markets for funding – and with global credit markets clammed up, they are left in the same position: between a rock and a hard place.
South Korea has some $175bn in external short-term debt that has to be rolled over by the end of next June. Of this, perhaps $80bn relates to foreign banks’ onshore branches and can be deducted (on the assumption that the banks’ head offices will make dollars available). It is the balance that has Korean policymakers sweating at night – and which lies behind the pleas for access to dollar credit lines.
In a worst-case scenario, Korea’s foreign exchange trove of $240bn could be deployed. But what makes the position of Korean banks especially precarious is that domestic liquidity too is ebbing. The widening spread between banks’ funding rates and policy rates shows that risk aversion exists on home turf as well.
Lee Myung-bak
Hence, perhaps, the appeal to grassroots patriotism. Last week, President Lee Myung-bak (right) lambasted Koreans for not helping stem the won’s tumble. “Some businesses and individuals seem to think they can get rich quickly by hoarding dollars,” he said. “But individual greed should be put aside in times of national crisis.”
Individual greed was put aside in spades in the last crisis, when housewives brought necklaces and wedding rings to be melted down in order to repay foreign debt. This time, that may not be possible. Korean consumers tend to have more debts than baubles, a result of a push into home ownership. Indeed, levels of indebtedness in Korea are enough to make the average American blush: private sector debt stands at 180 per cent of gross domestic product.
Reliance on overseas markets has increased too. Banks rake in 12 per cent of their funding from overseas, according to Moody’s Investors Service. Wholesale markets are more important than in most of the rest of Asia, where banks generally have far more deposits than they can lend on to borrowers. In Korea, by contrast, the loan-to-deposit ratio is about 124 per cent. For the big four banks, adjusted loan-to-deposit ratios rose to 150-180 per cent in the second quarter, according to Moody’s. The rating agency changed its outlook on the four to negative this month.
“The liquidity squeeze is serious, and an obvious concern is that it may evolve into an issue of solvency,” says James McCormack, head of Asia-Pacific sovereign ratings at Fitch Ratings.
Elsewhere on the checklist for vulnerability, South Korea ticks several boxes. It has high external debt. Short- and long-term borrowing totals $400bn, above the levels at the time of the last crisis both in nominal terms and as a percentage of GDP.
The current account balance has teetered into the red, for the first time since the crisis of 1997-98. Portfolio capital flows into the country are susceptible to swift changes of direction – foreigners have been net sellers of the stock market in each of the past four years, for example. The economy, which Mr Lee pledged would grow by 7 per cent a year, is instead decelerating sharply and is this year expected to expand by a modest 4.7 per cent.
Arguably, this time around, Korea could be seen as a victim of its own success. On a macroeconomic level, a country that derives 40 per cent of its GDP from exports will now have to cope with dwindling western demand for its products. Companies such as Samsung and LG supply consumers worldwide with goods ranging from computer chips and mobile phones to televisions and fridges. Korea is also the world’s leading shipbuilding nation, with unchallenged expertise in the manufacturing of advanced vessels such as liquefied gas carriers. Hyundai, meanwhile, has built the world’s largest car manufacturing centre in its southern fiefdom of Ulsan, using a dedicated deep-water port to ship out 1m vehicles a year.
Beyond such household names, the country’s small- and medium-sized enterprises are often world leaders in niche markets and have come to play a key role in South Korea’s development. SMEs account for 88 per cent of Korea’s employment, half of its manufacturing output and 32 per cent of its exports.
Knock-on effects
Seoul is to help small and midsize enterprises (SMEs) suffering losses from a currency derivative product called kiko (knock-in knock-out).
Kiko contracts set a predetermined range for the won/dollar exchange rate. So long as the won stays within this range – usually 10 per cent – holders can sell at a specified rate. But if the currency moves beyond that, they take a bigger hit than if no derivative contract were in place.
The government estimates that SMEs chalked up W1,285bn ($1.03bn, £591m, €756m) in losses on the instrument as of the end of August.
Yet this segment is highly vulnerable to a downturn, implying higher unemployment, reduced domestic demand and more bank loans turning bad. “I think Korea will weather this [crisis] but not without some battle wounds,” says Duncan Wooldridge, Asia chief economist at UBS. “I’m much more concerned about the risk of a domestic credit bubble bursting. Many people do not seem to appreciate the risk.”
While the rapidly weakening won should stimulate exports, it again recalls the 1997 crisis and adds to fears about rolling over short-term dollar-denominated debt. It also risks depleting Korea’s formidable foreign currency kitty, the sixth biggest in the world and a key difference between 2008 and 1998, when reserves were a mere $22bn. While the current $240bn gives the Bank of Korea a far bigger buffer, it can still be whittled back – JPMorgan estimates that intervention, on both the spot and futures market, cost $40bn over the past two months.
While the government makes frequent reference to its foreign reserves and insists that the won will stabilise, economists are divided over whether the currency can recover soon, especially in the wake of Korea’s interest rate cut last week.
But it is hard for ordinary Koreans to avoid a sense of panic when the government unveils ever more desperate-sounding measures: on Monday, for example, Mr Lee urged people to ration energy consumption and overseas spending. “If we cut down on energy by 10 per cent, we will not post a current account deficit,” he told radio listeners.
Adding to nervousness is the fact that Koreans have been here before – several times in the past decade. Takahira Ogawa, sovereign analyst at Standard & Poor’s, notes that Korea was among the first Asian economies to recover from the 1997-98 crisis, in part because the government increased the issuance of domestic corporate bonds to companies shut out of international markets. The financial groups accumulating the paper soon ran into difficulties and had to be bailed out by the government.
Still determined to galvanise growth, the government then targeted consumer spending. A cocktail of tax incentives and credit card deregulation prompted a debt-fuelled spending binge – and another burst credit bubble in 2002-03. Hundreds of thousands of Koreans were obliged to file for bankruptcy; several also committed suicide.
The latest slump takes place under the watch of a relatively new, and unpopular, government. “The government has lost its credibility in terms of economic policy, because of its failed handling of currency rates. People don’t seem to trust its policy management capability, which makes the current situation more difficult,” says Huh Chan-gook, a researcher at the Korea Economic Research Institute.
The most immediate concern for Korea, however, is how to unwind the leverage that it has accumulated since the Asian crisis. That will not only be painful for the banks but could also bring the economy to a standstill, given how much of the lending has been handed to SMEs in the form of collateralised loans. Since 60 per cent of these SME loans are supported by government-controlled banks, however, the most likely scenario is a quantum leap in non-performing loans.
Furthermore, while the currency’s fall should normally benefit exporters, it could prove expensive for the many that have taken hedges against currency swings (see above). Two years ago, when the Korean won was steadily appreciating, shipbuilders and others grew worried about the mismatch between rising manufacturing costs and dollar order books stretching for as long as three years. To protect themselves, they bought hedging contracts from banks, which in turn had to go and borrow short-term US currency to offset this additional risk.
For now, Koreans are not running to their banks to withdraw savings and most pundits remain confident that Korea and its banks are sufficiently solid to avoid an Icelandic-style implosion. Some investors, in fact, are already positioning themselves to take advantage of a recovery. Just as it did in the aftermath of the 1998 crisis, when it established its presence in Korea, Oaktree Capital Management, the US private equity fund, is now earmarking $3bn to buy on the cheap once calm returns. “If assets become mispriced, they become more attractive,” says Oaktree’s Asian managing director, Robert Zulkoski.
Alas, if the experience of the west is any guide, it may take some time and angst before that point is reached.
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Newspapers Axe Monday Issues on Paper Cost, Ad Slump (Update2)
By Sarah Rabil
Oct. 13 (Bloomberg) -- When the McPherson Sentinel stopped publishing on Mondays, the newspaper told readers it wasn't any different from Hellman's shrinking its mayonnaise jars or Extra gum offering two fewer pieces per pack at the same price.
Eliminating one edition allowed owner GateHouse Media Inc. to avoid firing employees or shrinking the newspaper the rest of the week, the Sentinel explained in August to subscribers in the central Kansas town of 14,000.
Newspapers are pushing to save money. Circulation is shrinking, and industry print advertising sales fell a record 16 percent in the second quarter, according to the Newspaper Association of America. Printing less often and publishing on the Web cuts delivery costs and helps counter paper prices that jumped a record 35 percent in the past year.
``You have to sort of weigh the service versus the cost, and right now newsprint is very costly,'' said Nancy Conway, editor of MediaNews Group Inc.'s Salt Lake Tribune, which reduced its early-week press runs by dropping features, merging sections and halting an afternoon tabloid. ``Revenue isn't what it used to be, so we have to make some tough decisions.''
Monday issues have also vanished for readers of The Dispatch in Davidson County, North Carolina; GateHouse's Daily Review Atlas in Monmouth, Illinois; the Star Courier in Kewanee, Illinois; and the East Valley Tribune near Phoenix.
Advertisers ``aren't stupid,'' said George Sylvie, associate professor of journalism at the University of Texas at Austin. ``They know that the eyeballs aren't there on Monday.''
Cooperation
Newspapers have taken other cash-saving steps. The owner of the Miami Herald, McClatchy Co., cut its quarterly dividend in half to 9 cents a share last month and announced the second round of job cuts this year. The New York Times and News Corp.'s Wall Street Journal now publish on narrower pages to save on newsprint.
Some competitors are working together. Last year, Chicago- based Tribune Co. struck a deal to distribute cross-town rival Chicago Sun-Times, owned by Sun Times Media Group Inc. The Miami Herald, Tribune Co.'s Sun Sentinel and Cox Enterprises Inc.'s Palm Beach Post are sharing news stories to fill gaps in their South Florida coverage caused by job cuts this year.
The success of these actions and the need for additional cuts will become clearer as the largest publishers disclose third-quarter earnings, starting Oct. 16, when Tampa Tribune owner Media General Inc. reports results.
New York Times
New York Times Co. reports earnings on Oct. 23, followed the next day by Gannett Co., the largest U.S. publisher and owner of USA Today. Both posted August ad sales declines of 14 percent or more.
New York Times may say revenue fell 7.4 percent to $698.8 million, cutting operating profit to $16.2 million, based on the average of analysts' estimates compiled by Bloomberg. Gannett, which also owns television stations, is forecast to report operating income of $308 million as revenue decreased 9.3 percent to $1.64 billion.
Shares of newspaper companies have tumbled this year with the decline in advertising sales. New York Times fell 97 cents to $12.63 at 4:04 p.m. in New York Stock Exchange composite trading and is down 28 percent in 2008. McLean, Virginia-based Gannett fell 11 cents to $12.76 and is down 67 percent this year to its lowest since January 1985.
In Default
The list of publishers in default is also growing. The Minneapolis Star Tribune, owned by Avista Capital Partners, missed a $9 million interest payment last month and is considering bankruptcy. Philadelphia Media News LLC, the closely held owner of the Philadelphia Inquirer, skipped loan payments this month and has been in technical default since June.
New Haven Register publisher Journal Register Co. is in talks with lenders including JPMorgan Chase & Co. as a deal to skip interest payments expires at the end of the month. The company stock trades over the counter at less than 1 cent. Freedom Communications Inc., owner of the Orange County Register in Southern California and the East Valley Tribune, said last week it may be in violation of loan agreements.
Eliminating Monday editions, historically the worst for advertising, is a step in the right direction, said Lauren Rich Fine, a former newspaper industry analyst and now a researcher at Kent State University in Ohio.
The loss of advertising generally appears to be ``picking up steam rather than slowing, and there really aren't more costs to cut,'' said Rich Fine, formerly of Merrill Lynch & Co.
Ad Outlook
Last week, Wachovia Capital Markets and Barclays Capital sliced their advertising estimates for the industry, projecting steeper declines this year and next.
The industry's changes have also been tough on subscribers.
In September, The Dispatch, owned by New York Times Co., ended Monday print issues, becoming a five-day-a-week newspaper. Executive Editor Chad Killebrew wrote in August that elderly subscribers who don't own computers worry about news only going on the Web.
``Going through such a transition is difficult, especially for people who prefer the old way,'' Killebrew wrote. ``And yet we must adapt to survive.''
Bruce Tossell, the mayor of Kewanee, Illinois, says his almost 13,000 residents would rather have their Star Courier newspaper publish five days a week than not at all. Even so, he's not a subscriber to the GateHouse publication, and instead scans City Hall's copy occasionally for the headlines and police blotter.
``It's not like we're shut off from the world when the local paper stops one day out of the week,'' said Tossell, 50, a life-long Kewanee resident. ``In a small town, gossip gets around town faster than the newspaper comes out.''
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日産、スペイン工場の人員26％削減
日産自動車はスペインの日産モートル・イベリカの2工場の人員を2009年9月までに26％削減する。燃料費高騰などを背景に小型車へ需要がシフトしており、同工場が生産している小型トラックや多目的スポーツ車（ＳＵＶ）など商用車の販売が低迷。生産調整に踏み切るのに伴い人員を削減する。
日産モートル・イベリカはバルセロナとアビラの工場を現在、約6300人体制で運営している。今回、バルセロナの工場を三直から二直体制に変更するなどして、2工場合わせて1680人の従業員を削減する。
日産モトール・イベリカではピックアップトラックやＳＵＶ中心に商用車6車種を生産。欧州市場では燃費効率が良く環境性能の高い小型車に消費者の需要が移行しており、同工場が生産している大型の商用車の需要が急減していた。
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鉄鋼業界の排出枠取得5000万トン台に 12年度まで、試算の２割増
鉄鋼業界が二酸化炭素（ＣＯ2）排出削減目標を達成するため2012年度までに購入する排出枠の合計が、従来試算より2割程度増えて5000万トン台に乗る見通しになった。鋼材需要の増加に加え、電力使用時のＣＯ2排出量が増えるため。電力業界も排出枠取得見通しを大幅に増やしており、産業界全体の12 年度までの取得量は3億トン規模に膨らむ見込みだ。
日本鉄鋼連盟は今月下旬にも開かれる環境省と経済産業省の合同審議会で、新たな試算を報告する。同連盟はこれまで連盟と新日本製鉄、ＪＦＥスチールなど加盟各社の合計で取得分4400万トン、取得費1000億円とみていた。買い増しによる追加負担は200億―300億円規模になる可能性がある。
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ルネサステクノロジ、非接触ＩＣカードでイスラエル社と提携
ルネサステクノロジは非接触ＩＣカード事業で、同カード用ソフトを手がけるイスラエルのＯＴＩ社と提携した。ルネサスが強みとするＩＣカード用半導体（マイコン）とＯＴＩのソフト技術を融合したＩＣチップなどを開発・販売する。
両社はすでに、非接触ＩＣカードによる決済の国際標準規格である米マスターカードと米ビザの規格認証を取得。同規格に準拠したセキュリティー性能の高いマイコンとソフトを融合したＩＣチップなどを開発した。米国など海外銀行の決済用カードへの採用を働きかけていく。(13日 07:00)
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エムスリー、独最大の医師サイトと提携
医療情報サイト運営のソネット・エムスリーはドイツ最大の医師向けサイト運営会社と提携した。約3万人の医師会員を抱える独社のサイトで、エムスリーの顧客である製薬会社の医薬品情報を提供する。
提携先はエルツテナハリヒランディーンスト・フェアラークス（ハンブルグ）社。同社が運営するサイト「ファハアルツト・ｄｅ」はドイツでは最も多い3万人の医師会員を抱える。サイト上で医師が活発に意見を交わし、医療行政に影響力を持っているという。このサイトで、エムスリーが支援する製薬会社の医薬品情報などを提供する。(13日 07:00)
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税以外の滞納、徴収体制強化 奈良市
奈良市は施設の使用料や自己負担金といった市税以外の滞納債権について徴収強化に乗り出す。部署ごとに処理している現状を改め、対応を統合するための対策本部を月内に設置。滞納の未然防止と債権の管理・回収の徹底に取り組む。滞納者への延滞金制度や住民サービス制限などについても強化を検討する。
藤原昭市長が10日、定例記者会見で明らかにした。市の2007年度の市税以外の債権は約49億円。市長は「一部を除き延滞金や住民サービス制限などがないことが滞納の要因」と指摘した。
対策本部は滞納債権の実態を調査し、効率的、効果的な徴収の方法を検討。来年度から徴収を統括する新体制をスタートする。対象は駐車場や住宅、下水道の使用料や保育園、老人保護施設の自己負担金など。生業資金や福祉資金など貸付金、市立病院の診療費などは別扱いになる見通し。
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カドミウム含有米も廃棄、石破農相が意向
石破茂農相は14日の閣議後の記者会見で、カドミウムが含まれるために食用に適さないとして工業用ののりの原料に使われているコメについて、「（農薬などに汚染された）事故米と同様の処理をしたい」と述べ、在庫を廃棄する意向を示した。健康被害が懸念されるカドミウムを含むコメは国が公益法人を通じて一定の基準値のものを買い取り、工業用のり原料として販売している。
農林水産省は事故米の食用への不正転売問題を受け、農薬やカビ毒が見つかったコメは焼却するなどして廃棄することを決定。カドミウム米は年間 1000―2000トンほど発生し、国などの在庫は約6500トン。着色して販売していることもあり、不正転売はないとしてきたが、石破農相は「消費者の安全にかんがみて適正に処理したい」と述べ、今後は買い取りもやめる方向で検討するとの認識も示した。(15:04)
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三浦元社長自殺で第三者調査を要求 ロスの弁護人
【ニューヨーク＝中前博之】米ロサンゼルス銃撃事件で自殺した三浦和義元会社社長（61）の弁護人マーク・ゲラゴス氏は12日夜、ニューヨークで記者会見し、自殺をめぐるロス市警の警察発表について「私は非常に懐疑的だ」と述べ、第三者による独立した調査を要請する考えを示した。
同氏は自殺がロス市警の留置場独房で起きたことについて「監視体制に何らかの問題があったのは明白だ」と指摘。巨大なロサンゼルス郡の拘置施設とは異なり、小規模な市警の留置場なら、監視の目は届きやすかったはずだと批判した。
自殺の約4時間前に事務所の弁護士が接見した際、元社長は「やる気を見せ、闘う準備をしているようだった」といい、「彼を知る誰に聞いてみても、自殺の兆候は全くなかった」と述べた。遺書の存在は把握していないという。(16:00)
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後期高齢者医療制度、未納が続出 督促で混乱
4月に始まった後期高齢者医療制度を巡り、高齢者が行政への不信感を強めている。年金からの保険料天引きを15日から始める5都道県の一部自治体で半年分の保険料未納者が続出。突然「督促状」を受け取った高齢者が役所の窓口に殺到する騒ぎが各地で起きた。「制度が難解で分からない」という高齢者に対し行政は「きちんと周知している」。両者の溝は深まるばかりだ。
後期高齢者医療制度導入に伴い、全国の大半の自治体は4月、保険料徴収を年金からの天引きで始めたが、東京都や神奈川県などの29市区町村は「準備が間に合わない」などの理由で10月15日に延期。この間の保険料は7月以降、高齢者が金融機関などで直接納める必要がある。(16:00)
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鉄道博物館が開館１周年 入館者188万人、目標の倍近く
さいたま市の鉄道博物館が「鉄道の日」の14日、開館1周年を迎えた。午前10時の開館前には鉄道ファンや子供連れの家族ら約700人が列をつくり、開館と同時に館内に入場した。初年度の入館者は目標の2倍近い188万人を記録。首都圏の新しい観光名所として人気を集めている。
開館1周年のセレモニーはないが、先着10人に1950年代から活躍した気動車「キハ11形式」の内部を公開する。13日午後5時から並んださいたま市在住の近藤大隆さん（29）は「運転台に入れるのでぜひ行こうと思った」と興奮気味に話した。14日から26日まで来館者に、切符の形をした「開館1周年記念硬券」を配布する。
鉄道博物館は蒸気機関車や初代新幹線「０系」など歴代の車両36両を一堂に展示。体験型の博物館として人気を集め、初年度の入館者目標100万人は半年足らずで達成した。(16:00)
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海自３曹死亡の格闘訓練、訓練逸脱と認識 防衛相
海上自衛隊第1術科学校（広島県江田島市）で、男性3等海曹（25）＝死亡後2曹に昇進＝が集団を相手に格闘訓練させられ死亡した事件で、浜田靖一防衛相は14日の閣議後会見で、3曹1人対15人の徒手格闘について「特殊、特別な気がしないでもない」と述べ、訓練を逸脱しているとの認識を示した。
海自などによると、多人数を相手にする訓練は養成課程の通常科目に含まれておらず、警務隊は養成課程を辞め2日後に異動する3曹への暴行の疑いが強いとみて、傷害致死容疑などで教官らから事情を聴いている。
浜田防衛相は「隊員の死亡は大変遺憾」と謝罪。さらに「いろいろな点を勘案すると（今回の訓練は）特殊、特別なのかという気がしないでもない。恒常的に行われているのかなど厳正に調査したい」と強調した。〔共同〕(14:37)
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「自転車は左側通れ」と注意されキレてボコボコに
埼玉県警越谷署は１３日、自転車の通行をめぐり、口論になってお年寄りを殴ったとして傷害容疑で、同県春日部市、会社員（３１）を逮捕した。
調べでは、容疑者は１２日午後６時すぎ、越谷市東越谷二丁目の市道の歩道を自転車で通行中、近くの無職男性（７１）から「自転車は左側を通れ」と注意された後、口論になり、堀口さんの顔を殴り転倒させ、脳挫傷などで意識不明の重体にさせた疑い。
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山中に４年、軽トラで生活…車荒らしで生計の男を逮捕
山中の軽トラックで生活、楽しみはカーラジオ－。滋賀県警東近江署は１４日までに、軽トラを盗んだ疑いで、住所不定、無職の男（５６）を逮捕した。
同署によると、無職の男は刑務所を出た約４年前から、滋賀と三重の県境沿いに連なる鈴鹿山脈に数カ所の車の隠し場所をこしらえて転々。山中の消防団倉庫にあるカップめんを盗んだり、車荒らしをして得た現金で買い物をし、時にはパチンコもしていた。
荷台のガスボンベからホースを車内に引き込み、助手席に設けた専用台のこんろで調理。運転席でカーラジオを楽しみ、寝ていた。周辺ではこの４年間に軽トラを中心に計約２０台が盗まれたといい、無職の男の関与を調べている。
調べでは、２００６年、滋賀県甲賀市で鍵付きの軽トラ１台を盗んだ疑い。ことし９月、東近江市の山すそのスーパーに現れ、指名手配の顔写真を見ていた店員の通報を受けた署員が身柄を確保した。
調べに「人と接するのが嫌だった」と供述。東近江署は数回、山を捜索したが見つけられなかった。「山を知り尽くしている。町に下りてきてえさをあさるクマが車に乗っているようなものだ」と署幹部は逮捕にひと安心した様子だった。
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ノーベル経済学賞：クルーグマン氏、日本にも大きな影響
ノーベル経済学賞の授与が決まったポール・クルーグマン氏は、バブル崩壊後の１９９０年代にデフレ不況が長期間続いた日本経済を分析し、「インフレ目標」の導入による景気回復策を提示して注目されるなど日本の経済政策にも大きな影響を与えた。
同氏は９８年発表の論文で当時の日本経済について、名目金利がゼロ近くに低下し通常の金融緩和が限界に達し、金利引き下げによる景気刺激が行えない「流動性の罠」に陥っていると指摘した。
１９２９年からの世界恐慌時には公共事業による財政政策が処方箋とされたが、クルーグマン氏は９０年代後半の日本では予算の制約や効率性、有益性などの問題点があるとの考えを示した。そのうえで、景気を回復させるため、日本銀行が一定の物価上昇率を達成する目標（インフレ目標）を掲げ、人々の間に「物価は上昇する」という「インフレ期待」を醸成するべきだと主張。デフレから脱却し物価が適度に上昇すれば、実質金利が低下し債務負担が軽減されると、インフレ目標の意義を説明した。
クルーグマン氏の理論は「インフレ目標」論者の理論的支柱となり、経済財政諮問会議の前民間メンバーの伊藤隆敏・東大教授など支持者も少なくない。ただ、日銀は明確な形では「インフレ目標」は採用していない。
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手放しで喜べないノーベル賞ラッシュ 日本に「狭く深く」の軽視はないか
理科系研究者のノーベル賞ラッシュにわいた先週の日本だが、日本人の受賞者の数をめぐり、国内外の評価が分かれた。日本の多くの新聞は「ノーベル物理学賞に日本人３氏」と１面を飾ったが、世界の有力紙は「米国人が１人、日本人が２人」と報道した。
■日本人受賞者は４人か２人か
シカゴ大学名誉教授の南部陽一郎氏は研究のため米国に帰化した
物理学賞の選考にあたるスウェーデン王立科学アカデミーの発表でも、日本国籍は２人とされている。日本国籍の益川敏英氏、小林誠氏は、留学経験のない「純国産コンビ」（毎日新聞）だが、米国籍の南部陽一郎氏は、物理学の研究を続けるために米国に帰化し、シカゴ大学で半世紀に渡り研究に打ち込んで、現在はシカゴ大学名誉教授である。
一方、ノーベル化学賞を受賞した下村脩氏は、日本国籍だがプリンストン大、ウッズホール海洋生物学研究所等で研究生活を送り、現在はボストン大名誉教授である。南部氏、下村氏ともに、自身の研究のために米国に拠点を移し、米国での研究成果が今回の受賞につながった。
下村脩氏は日本国籍だが研究拠点は米国
今回の日本人受賞者は、日本の報道によれば４人、日本国籍を基準とすれば３人。しかし、本来は、受賞の対象となった研究業績がどこで生まれたかを基準とすべきであり、そうであれば「日本」の受賞者は２人となる。逆に、外国人が国内の研究拠点での業績で受賞すれば、日本の受賞にカウントすべきだろう。
このような国内外の報道をきっかけに、「頭脳流出」に対する問題意識が高まり、よりよい研究環境を求めて国境を越える研究者を念頭に、世界の頭脳が日本に集まる「頭脳循環」の実現のために魅力的な研究環境を整えるべきとの議論が高まりつつある。筆者もかねてから指摘してきたが（2001年執筆のコラム参照 ）、日本人が海外で活躍することよりも、日本という「場」が生み出す価値を高めるための「ＧＤＰ的発想」がより重要であるはずだ。
■競争力に不安抱える日本の大学
しかし、世界の先端研究者を惹きつけるべき大学をみると、日本の競争力は実に心許ない。国際的な高等教育情報機関であるイギリスのＱＳ（Quacquarelli Symonds）は、2008年版「世界大学ランキング」を10月９日に発表した。研究者による評価、論文の引用数など研究力を中心に、教育力、企業からの評価、留学生比率なども加えたうえでの総合評価だ。
１位は米ハーバード、２位は米エール、３位は英ケンブリッジ、４位は英オックスフォードで、15位までは米英が独占している。20位までに米国が１３校、英国が４校入るなか、日本からは東京大の19位が最高で、100位以内でも京都大（25位）、大阪大（44 位）、東京工業大（61位）の計４校にとどまった。
本来はこの種のランキングは、総合評価ではなく専門分野ごとに評価すべきだが、そのような評価を行えば、理系では日本の大学の評価がより高く、文系ではより低くなる傾向が予想される。筆者の専門である経済学であれば、ノーベル賞受賞者数の実績と同様、米国のランキング独占がますます強まり、受賞者がゼロの日本は目を覆いたくなる結果となるだろう。
筆者は日米双方の大学院に在籍したが、教員・学生双方の観点から、日本の大学には改善の余地が多いと感じている。大学改革のための処方箋リストは別の機会にゆずるとして、日米の大きな相違は雇用の仕組みである。
米国には教授としての終身雇用に向けた厳しい競争システム（tenure制度）があり、その間に査読論文の質と量、教育への貢献等さまざまな評価が加えられるが、日本ではそのような仕組みが広がらない。いったん採用されればやがては教授に昇進するのが原則だ。国内競争がうまく機能しなければ、国外との競争に打ち勝つことは難しいだろう。
専門課程のあり方にも違和感がある。最近は、大学・大学院での新設学科・研究科が目白押しのようだが、学際、融合、超領域等の名前を冠し、専攻する学問領域が的確に想像しにくいものが多い。筆者の関係する政策分野でも、「公共政策」、「総合政策」といった政策系の学部・大学院が広がっている。
しかし、誤解を恐れずに言えば、「政策」は学問ではない。利害関係者との調整や国民への説明等を要する優れて実践的な作業である。この「政策」がどうあるべきかを分析するのが政策科学とも言うべき学問であって、その性質上、理系・文系にまたがる複合領域となる。
このような政策系の学生と接すると、ある種の傾向を感じる。例えば、専攻を聞くと、「環境が専門です」などと言う。筆者が考えるに、「環境」は学問の対象であって、それ自体が学問ではない。理学、工学、医学、法学、経済学など、様々な専門的アプローチがあるはずだ。しかし、そこまで尋ねると満足な答えはなかなか返ってこない。むしろ、クールビズやヒートアイランド、洞爺湖サミットなど、ジャーナリスティックな意味で関心を呼ぶ政策の話題で饒舌になる。
■専門知識の追求なくして進歩なし
専門家が集う学会にも同様の傾向がある。境界領域を標榜し、響きはよいが学問的基礎のあいまいな名称の学会が次々に発足し、日本の学会は乱立気味だ。主導権争い等により、同じ専門領域に２つも３つも学会が存在するケースさえある。その一方で、国際的に通用する質を維持した査読付の学会誌を備えた学会は数少ない。
自省も込めて言えば、基礎の弱いうちからいきなり境界領域に飛び込んで成果を挙げるのは無理だ。水は最初はチョロチョロ流れて細く地面を刻み、水量が増してくるにつれて深さを増し、やがて勢いを得て幅を広げて川となる。最初から幅の広い地面を覆おうとすれば水が浅くなり、時には干上がってしまうだろう。
実感するのは、自分の軸となる学問的な分析ツールが確立してこそ、境界領域という他流試合にも臨めるということだ。自分と相性の良い「狭い」学問領域をできるだけ早く選択し「深く」掘ることで自然と水量が溢れ、幅を広げて境界を侵食していく。伝統的な学問領域でアイデンティティーを確立するのは古臭く、頭が固くなり、最先端の学際領域に対応できなくなるというのは全くの誤解だ。創造は知識の企図しない融合であり、先人の知識を消化しなければ何も生まれない。
昨今の風潮で憂慮するのは、理解に努力を要する専門知識がないがしろにされがちな点だ。組織内では調整に長けたジェネラリストが重用され、入門書が得意で視聴者に簡単に面白く伝えられる学者が引っ張りだこになる。政治家も得意分野をつくれば族議員と批判され、小選挙区制で年金、食品、税制、道路から拉致問題まで何でもカバーしなければならない。
討論番組や記者会見などでも、勉強不足の質問者やコメンテーターが、攻撃は最大の防御とばかりに専門家の話を遮って、まるでクイズのように「白なのか、黒なのか」と迫る光景をよく目にする。「分かりにくい」と一刀両断して思考停止する前に、もう少し辛抱強く専門家の話を聞き、理解しようと努力できないものだろうか。
新しい理論や技術を生み出し社会を進歩させるのは専門家の役割だ。政策に新たな潮流や手法をもたらすのも、「薄く広く」の評論ではなく「狭く深く」の専門知識である。ノーベル賞ラッシュで思い出した世界級の専門家に対する畏敬の念を、もう少し身の回りの「本物」の専門家にも振り向け、じっくり耳を傾けてもいいのではないだろうか。
-筆者紹介-
今川 拓郎(いまがわ たくお)
総務省 情報通信国際戦略局 情報通信経済室長
略歴
１９９０年東京大学大学院修了、同年郵政省入省。９７年米ハーバード大学経済学博士。大阪大学大学院助教授、総務省総合通信基盤局市場評価企画官等を経て現職。東京大学公共政策大学院・早稲田大学政経学部等の非常勤講師を兼務。専門は、情報経済学、産業組織論、都市経済学等。“Economic Analysis of Telecommunications,Technology, and Cities in Japan” (Taga Press)、「高度情報化社会のガバナンス」（ＮＴＴ出版、共著）、「デフレ不況の実証分析―日本経済の停滞と再生」（東洋経済新報社、共著）等、著書・論文多数。静岡県出身。
------------------------------
Too many officers?
18:50 | 13/ 10/ 2008
MOSCOW. (Nikita Petrov for RIA Novosti) - On October 8, a joint panel of the Russian and Belarusian Defense Ministries issued unexpected, if not breaking news, which is sure to trigger significant feedback from the public.
Russian Defense Minister Anatoly Serdyukov revealed a new plan to cut the Army and Navy size down to one million personnel by 2012, and not by 2016 as previously stated. The plan, which will be heavily debated in public, will mostly affect commissioned officers (COs), not conscripts and non-commissioned officers, despite the fact that the latter is suggested regularly as a target for cutbacks by pro-democratic public. According to the plan, the number of serving COs will be reduced by half, from 300,000 to 150,000.
Anatoly Serdyukov remarked that it was not his decision, and that the changes will be made in accordance with a presidential order. The appearance is as if the draft was not suggested to the President by the Defense Ministry. "We will not discharge any officers. The reduction will be done routinely by attrition through retiring COs who are beyond their term of required service," the minister said.
There has been discussion regarding the need to reduce the CO count for several years. A significant disproportion has developed in recent years, as the General Staff and the Defense Ministry and various other departments have too much redundant duplicating structure. However, there's a shortage in COs at platoon commander level, who are responsible for training conscripted junior ranks. Currently, platoon-level commander positions are only 40 to 50% filled.
The Defense Minister has issued a directive to reduce personnel in the departments and other subordinates in the Defense Ministry and General Staff by 40 to 50%, filling the newly vacated positions with civilian specialists, allowing a transfer of the former COs from the reserve.
The shortage of platoon-level commanders will be compensated for by young reserve officers, graduating from military training centers at civil higher education institutions, who will be called up to serve for three years as Lieutenants. These COs will also have the opportunity to sign another contract for an additional three to five years, if they wish to continue their service. This will grant them the privilege of using the savings and mortgage system for housing and other benefits.
The idea that Russian Armed Forces will need 150,000 COs instead of the current 300,000 was a surprise for every analyst in any way connected to the Army.
Opinions differ on the Defense Ministry's decision. Some experts say it will make the Russian Army proportionate to those of the world's leading powers like the U.S., Great Britain and France, where COs are elite decision-makers, who rely on professional sergeants in the execution of orders. An armed force would need a limited number of such commanders, therefore there are a small number of military academies in the above mentioned countries. The U.S. has three military academies, with officers receiving their basic education at civil colleges and universities before going on to training courses which last for six to nine months depending on the specialty, training them to successfully lead the subordinate units afterwards.
It is different with the Russian Armed Forces. Russian COs graduate military higher education establishments after at least 4 to 5 years of study to become military professionals for almost the rest of their lives. COs are personally responsible for the fostering and training of subordinate soldiers, they lead attacks and organize defense and mobile dispersion. In peacetime, COs supervise day-to-day control of their subordinates' activity.
A number of military experts believe a rapid cut in the number of COs is risky and could significantly decrease the military's combat readiness. Adjusting the Army to Western military standards should begin with the creation of a professional junior commander core, which could replace COs in the fostering and training of privates, as in the U.S. Armed Forces. This task couldn't be accomplished within one or two years. Also, servicemen need training with sophisticated hardware, which could be most effectively achieved by professionals. The Russian Army also needs modern battle management and support systems, including intelligence, target acquisition, communications and navigation systems, science-intensive computers among others, which are a necessity for modern warfare.
Currently, the Russian Armed Forces don't have the above listed advantages, and are unlikely to have them before 2012, because insufficient defense industry capacity and the low educational level of the soldiers will hinder the reforms. Two or three years won't be enough to improve the situation.
The federal program aimed at filling sergeant positions with professional servicemen hasn't been approved yet. Relevant funding has not been allocated. There are no sufficient education and training programs for professional sergeants, as well as no favorable social or financial environment with which to encourage them to serve for at least ten to fifteen years, allowing them to master their specialty and to effectively train conscript soldiers. Much work needs to be done to replace lieutenants with professional sergeants at the platoon commander level.
Experts say the severe reduction in COs will solve several nagging problems, allowing the Defense Ministry to provide housing for 122,400 CO families, which have been waiting for it for ten years or longer, free up funds to increase military compensations and avoid boosting defense expenditure. It's impossible, however, to improve the country's defense capabilities, while losing many of the most experienced specialists.
The decision by Anatoly Serdyukov could prove to be pure voluntarism not backed up economically or socially, causing a weakness in national defense capability, which would take many years to reverse.
Meanwhile, the joint panel of the Russian and Belarusian Defense Ministries made a series of other important decisions, including the joint strategic exercise Zapad-2009 (West-2009) scheduled for 2009. "By holding this exercise, we will take the next step towards ensuring high capability of our Armed Forces and the military security of the Union State", Anatoly Serdyukov said. The decision to cut CO numbers will not affect this exercise.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
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09:24 GMT, Tuesday, 14 October 2008 10:24 UK
Syria to open embassy in Beirut
Lebanese and Syrian presidents shake hands during Damascus summit in August
Syria's President Bashar al-Assad has issued a decree to set up diplomatic ties with Lebanon and open an embassy.
Anti-Syrian politicians in Lebanon and their Western backers have long called on Syria to recognise its sovereignty by establishing official ties.
The presidential decree did not say when the embassy would open in Beirut or give any further details.
Syrian troops left Lebanon in 2005 ending years of military and political domination by the giant neighbour.
The decree announced "the establishment of diplomatic relations between the Syrian Arab Republic and the Lebanese Republic and the creation of a diplomatic mission at ambassador level in the Lebanese capital Beirut," Syria's official news agency reported.
Lebanese officials said Foreign Minister Fawzi Salloukh would visit Damascus on Wednesday and the timing of the next moves would be announced later.
Tensions
Syria and Lebanon have been in the process of normalising relations and their presidents have made clear in recent months their intention to start diplomatic ties.
But tensions have been raised again since September when Syria deployed 10,000 troops on the northern Lebanese border, prompting anti-Syria politicians in Beirut to raise the possibility of an invasion.
Map Washington - a strong backer of the Lebanese anti-Syrian movement - has said it is concerned about the troop movements and warned Damascus against interfering in Lebanon.
President Michel Suleiman - who has the support of both Lebanon's pro- and anti-Syrian factions - said he accept Syria's explanation that the deployment is to prevent smuggling.
Many Lebanese blame Syria for the killing of former Lebanese PM Rafik Hariri in 2005.
An international tribunal into Mr Hariri's death, which has already implicated the Syrian intelligence apparatus, is still a major potential stumbling block in bilateral ties.
Damascus strongly denies any involvement in Mr Hariri's death.
During a groundbreaking visit to Damascus by Mr Suleiman in August, the two sides also agreed to tackle longstanding Lebanese demands to demarcate borders and investigate the question of missing Lebanese prisoners in Syria.
Correspondents say Damascus still has considerable influence over Lebanese affairs, much to the frustration of anti-Syrian politicians.
Syria's close ally, the Lebanese Hezbollah movement, which has Lebanon's most powerful military force, is now part of a national unity government and has the power of veto over its decisions.
-----------------------------
الرئيس الأسد يصدر مرسوماً بإنشاء علاقات دبلوماسية بين سورية ولبنان وإحداث سفارة في بيروت
الثلاثاء, 14 تشرين الأول , 2008 - 10:35
دمشق-سانا
أصدر السيد الرئيس بشار الأسد اليوم المرسوم رقم 358 للعام 2008 القاضي بإنشاء علاقات دبلوماسية بين سورية ولبنان وفيما يلي نص المرسوم...
مادة 1... تنشأ علاقات دبلوماسية بين الجمهورية العربية السورية والجمهورية اللبنانية.
مادة 2... تحدث بعثة دبلوماسية للجمهورية العربية السورية بدرجة سفارة في عاصمة الجمهورية اللبنانية.
مادة 3... تصنف العاصمة اللبنانية بيروت في الفئة الثامنة من المرسوم رقم 78 تاريخ 28/2/2006.
مادة 4... ينشر هذا المرسوم ويبلغ من يلزم لتنفيذه.
دمشق في 14 شوال 1429هـ الموافق ل/14/10/2008/م
وكان قد صدر إعلان خاص عن القمة الثنائية السورية اللبنانية في دمشق في الثالث عشر من شهر اب الماضي جاء فيه.. انه في اطار تعزيز العلاقات الاخوية القائمة بين البلدين الشقيقين ونتيجة للمباحثات التي اجراها الرئيسان بشار الأسد وميشال سليمان بتاريخ 13 آب 2008 فقد اتفق الرئيسان على إقامة علاقات دبلوماسية بين سورية ولبنان على مستوى السفراء بما ينسجم مع ميثاق الأمم المتحدة والقانون الدولي بما في ذلك اتفاقية فيينا للعلاقات الدبلوماسية وتكليف وزيري خارجية البلدين اعتبارا من تاريخه باتخاذ الإجراءات اللازمة لذلك وفق الأصول التشريعية والقانونية في كل من البلدين.
وأكد الجانبان في البيان الختامي للقمة التزامهما بالعمل على ترسيخ علاقات سورية لبنانية تقوم على الاحترام المتبادل لسيادة واستقلال كل منهما والمحافظة على العلاقات الاخوية المميزة بين البلدين الشقيقين عبر الوسائل التي تلبي آمال وتطلعات الشعبين الشقيقين وتعمق أواصر التعاون والتنسيق بينهما.
---------------------------
President al-Assad issues a Decree Stipulating the Establishment of Diplomatic Relations with Lebanon
Tuesday, October 14, 2008 - 11:05 AM
Damascus,(SANA)-
President Bashar al-Assad on Tuesday issued Decree No.358 for the year 2008 stipulating the establishment of diplomatic relations between Syria and Lebanon. Following is the text of the decree:
Article (1) :
Diplomatic relations are established between the Syrian Arab Republic and the Lebanese Republic.
Article (2):
A diplomatic mission of embassy level is created in the capital of the Lebanese Republic.
Article (3):
The Lebanese capital ,Beirut, is classified in the 8th category of the Decree No. 78 dated 28.2.2006.
Article: (4):
This decree is to be enforced upon publishing.
The decree came as translation of the agreement between President Bashar al-Assad and Lebanese President , Michel Suleiman ,at their summit which was held last Aug.13th , on the establishment of diplomatic relations between Syria and Lebanon on the ambassadorial level in conformity with UN.Charter , and international law.
The two sides stressed in the final statement their commitment to consolidate the Syrian-Lebanese ties which are based on reciprocal respect of sovereignty and independence of each country.
-------------------------------
23:07 GMT, Monday, 13 October 2008 00:07 UK
Parkinson's linked to vitamin D
Man with Parkinson's
Scientists are testing whether vitamin D supplements can ease symptoms of Parkinson's disease.
A US team found 55% of Parkinson's patients had insufficient levels of vitamin D, compared to 36% of healthy elderly people.
However, the Emory University researchers do not yet know if the vitamin deficiency is a cause or the result of having Parkinson's.
The study appears in the journal Archives of Neurology.
Parkinson's disease affects nerve cells in several parts of the brain, particularly those that use the chemical messenger dopamine to control movement.
The most common symptoms are tremor, stiffness and slowness of movement. These can be treated with oral replacement of dopamine.
Previous studies have shown that the part of the brain affected most by Parkinson's, the substantia nigra, has high levels of the vitamin D receptor, which suggests vitamin D may be important for normal functions of these cells.
Sunlight
Vitamin D is found in the diet, but is primarily formed in the skin by exposure to sunlight.
However, the body's ability to produce the vitamin decreases with age, making older people more prone to deficiency.
One theory is that people with Parkinson's may be particularly vulnerable because their condition limits the amount of time they spend out of doors.
However, scientists say it may also be possible that low vitamin D levels are in some way related to the genesis and origin of the disease.
The researchers examined vitamin D levels in 100 people with Parkinson's, 100 with Alzheimer's disease and 100 who were healthy. The groups were matched for age, and economic circumstance.
Among the Parkinson's group 23% of patients had vitamin D levels so low that they could be described as deficient. In the Alzheimer's group the figure was 16%, and in the healthy group 10%.
The researchers said the findings were striking because the study group came from the South West of the US, where sunny weather is the norm.
'Intriguing finding'
Researcher Dr Marian Evatt said: "We found that vitamin D insufficiency may have a unique association with Parkinson's, which is intriguing and warrants further investigation."
Dr Kieran Breen, director of research, Parkinson’s Disease Society said: "Further research is required to determine at what stage the deficiency in vitamin levels occur in the brains of people with Parkinson's and whether the provision of a dietary supplement, or increased exposure to sunlight may help alleviate symptoms or have an effect on the rate of the condition's progression.
"This would help us answer the question as to whether the decrease in vitamin D levels in Parkinson’s is a cause or effect of the condition."
Doctors have known for decades that vitamin D plays a role in bone formation.
More recently, scientists have been uncovering its effects elsewhere, including producing peptides that fight microbes in the skin, regulating blood pressure and insulin levels, and maintaining the nervous system.
Low vitamin D levels also appear to increase the risk of several cancers and auto-immune diseases such as multiple sclerosis and diabetes.
-------------------------------
04:50 GMT, Tuesday, 14 October 2008 05:50 UK
Exotic spiders crawl into the UK
By Rebecca Morelle
Science reporter, BBC News
Exotic species of spiders are making their homes in the UK, scientists say.
Researchers believe arachnids arriving in imports of food and plants are now able to survive and spread thanks to the UK's increasingly mild climate.
The new inhabitants include a species of false widow spider and some believe the deadly black widow could be next to invade.
Conservation group Buglife wants import rules to be strengthened to stem the tide of alien species invasion.
Matt Shardlow, director of Buglife, told BBC News: "Other countries in the world take great care about what biological material they allow in, because it can contain pests that can damage our goods, our livelihoods, our health and our biodiversity.
"Our increasingly warm climate is starting to suit many more spiders "
Stuart Hine, Natural History Museum
See other insects invading the UK
"Currently in the UK, we have a laissez-faire attitude - there is an open licence for people to bring in dangerous pests."
But a spokesperson for the Department for Environment, Food and Rural Affairs (Defra) said that a new strategy was in place to "tackle the threat to the UK's native biodiversity from unwanted pest species which have 'hitchhiked' into the UK on plants".
All this week, BBC News will be taking a closer look at some of the alien invaders that are in the UK.
Aggressive arachnid
John Partridge from the British Arachnological Society said his organisation had had an increase in the number of enquiries about "strange spiders".
He added: "We are certainly getting more spiders coming into the UK - and it seems that more are spreading around the country once they are in." Steatoda paykulliana (S.Hine)
One new inhabitant is Steatoda paykulliana, a false widow spider that is native to Southern Europe, West Asia and North Africa.
It is about 0.7-1.5cm (0.3-0.6in) in size and can bite.
While this spider had been spotted in the UK in the past, it was thought that no colonies had established.
But Stuart Hine, who runs the Insect Identification Service at the Natural History Museum, said this was no longer the case.
He said: "Now we have found it in Plymouth. And it looks as if it is here to stay."
The arrival of exotic spiders and insects that had hitched a ride on various imports was not a new phenomenon, said Mr Hine.
"If there was a warm period they would be able to survive, but a cold snap would kill them off," he explained.
"But now, our increasingly warm climate is starting to suit many more spiders - and once they come in, they are able to stay put."
This has also meant that some invasive species that once only existed within a few small pockets in the UK have been able to spread.
Steatoda nobilis is one such spider.
This false widow is thought to have first arrived in the UK from the Mediterranean in the late 1800s.
For many decades it remained in a small area within Devon, but about 15 years ago it began to spread and it can now be spotted all along the South Coast.
"In spider terms, it has to be said that [the tube web] is an aggressive spider"
Stuart Hine, NHM
Tube web spider (S.Hine)
Mr Hine said: "It has a nasty bite - and some people can have a bad reaction to it."
The tube web spider (Segestria florentina), another non-native biting spider, has also been on the move, spreading from the South Coast much further north.
It is a large spider, measuring between 1.5cm and 2.2cm (0.6-0.9in), with green iridescence on its jaws.
Mr Hine said: "In spider terms, it has to be said that this is an aggressive spider.
"If you approach it, it raises its legs and bares its fangs.
"Most spiders will back away - this one will jump at you and bite."
Mr Hine believes that the black widow spider could be next on the list for the UK.
He said: "There is no great reason that they wouldn't survive here now - winters are now mild enough.
"It really is only a matter of time."
A balancing act
While experts stress that not all new species have a negative impact, they do warn that trade is a key factor in the number of new species that enter the country.
Defra is responsible for checking the products that enter the UK. Black widow
A spokesperson told the BBC: "The government and its agencies work with businesses, overseas authorities and the general public to minimise the risk of exotic animal and plant pests and diseases from entering the country and threatening public health, livestock, agriculture, horticulture and the environment.
"Disease can enter the country in many ways; that's why Defra undertakes international disease monitoring, while there are also strict controls on the movement of livestock and animals."
But Mr Shardlow from Buglife said: "We cannot just view moving biological material around like other trade products.
"You have to have a bit of environmental awareness, and I think we should be looking to import and export less biological material."
--------------------------------
魁皇、千代大海の両大関とも八百長を否定
2008.10.14 16:49
週刊誌「週刊現代」が元幕内若ノ鵬による大相撲の八百長告発を掲載している問題で、日本相撲協会の伊勢ノ海（元関脇藤ノ川）、友綱（元関脇魁輝）両理事は１４日、１１日発売号で元若ノ鵬に八百長を持ちかけたと報じられた魁皇、千代大海両大関を東京・両国国技館に呼んで事情を聴いた。
両大関は記事のような事実はないと否定し、魁皇は「ないことに対していいようがない。ばかばかしい」と吐き捨て、千代大海は「ないことを説明するのは難しいが、堂々と『八百長はない』というしかない」と話した。両大関は新たに訴訟を起こすつもりはなく、友綱理事も「今のところ法的措置は考えていない」と述べた。
また、６日発売号で元若ノ鵬に八百長を持ちかけたと報じられた大関琴欧洲と十両春日錦も、八百長裁判を担当している協会側の弁護士から事情を聴かれた。両力士はすでに協会幹部の事情聴取に対し、八百長への関与を否定している。
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1 comment:
Government leaders are trying to fix the finical crisis by bailing out there banks. We are seeing that this is having little or no affect on the crisis. This crisis is different and cannot be resolved with solutions that worked in the past. This crisis is showing us that we are all part of one interconnected system, and we are dependent on each other for our success. We need to look at what has caused this crisis: greed and our egoistical attitudes toward others. Then we will be able to see that there is only one solution that will resolve this crisis and pave the way to our success, the changing of our attitudes towards others.
Michael Laitman has more information on this topic at
link to article.
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