Jim Rogers calls most big U.S. banks "bankrupt"

Jim Rogers calls most big U.S. banks "bankrupt"

Thu Dec 11, 2008 1:53pm EST

By Jonathan Stempel

NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded.

Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector doesn't address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.

Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept 15 bankruptcy filing by Lehman Brothers Holdings Inc (LEHMQ.PK: Quote, Profile, Research, Stock Buzz). Some of the funds are being used for acquisitions.

"Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.

"What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent," he said. "What's happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics."

Rogers said he shorted shares of Fannie Mae (FNM.P: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.P: Quote, Profile, Research, Stock Buzz) before the government nationalized the mortgage financiers in September, a week before Lehman failed.

Now a specialist in commodities, Rogers said he has used the recent rally in the U.S. dollar as an opportunity to exit dollar-denominated assets.

While not saying how long the U.S. economic recession will last, he said conditions could ultimately mirror those of Japan in the 1990s. "The way things are going, we're going to have a lost decade too, just like the 1970s," he said.

Goldman Sachs & Co analysts this week estimated that banks worldwide have suffered $850 billion of credit-related losses and writedowns since the global credit crisis began last year.

But Rogers said sound U.S. lenders remain. He said these could include banks that don't make or hold subprime mortgages, or which have high ratios of deposits to equity, "all the classic old ratios that most banks in America forgot or started ignoring because they were too old-fashioned."

Many analysts cite Lehman's Sept 15 bankruptcy as a trigger for the recent cratering in the economy and stock markets.

Rogers called that idea "laughable," noting that banks have been failing for hundreds of years. And yet, he said policymakers aren't doing enough to prevent another Lehman.

"Governments are making mistakes," he said. "They're saying to all the banks, you don't have to tell us your situation. You can continue to use your balance sheet that is phony.... All these guys are bankrupt, they're still worrying about their bonuses, they're still trying to pay their dividends, and the whole system is weakened."

Rogers said is investing in growth areas in China and Taiwan, in such areas as water treatment and agriculture, and recently bought positions in energy and agriculture indexes.

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Short View: Dollar rally ends

By John Authers

Published: December 11 2008 18:23 | Last updated: December 11 2008 18:23

The great rally in the US dollar is over for now. Is the buck taking a rest before resuming a rally, or is this the precursor for another decline?

On a trade-weighted basis, the dollar rose 22.7 per cent from July until its peak last month. This was not, evidently, due to any great strength in the US economy. Instead it was largely a perverse phenomenon – as traders sold assets to pay down debts (deleveraging), they often had to buy dollars. So as the crisis intensified, so the dollar strengthened.

The only exception to this was the yen, which does even better than the dollar when investors are anxious.

The dollar is now weakening, down 4.7 per cent on a trade-weighted basis from its peak. This might be down to reducing risk aversion, as a number of stock markets around the world have calmed down for now.

But the dollar is also close to a 13-year low against the yen. Some measures of anxiety are falling, but historic low bond yields suggest risk aversion remains very much alive.

And US stocks, notably financials, have conspicuously failed to join in the party, and refuse to make a decisive break from their downward trend.

That implies that the dollar’s fall may not be about the end of deleveraging, or a general recovery of risk appetite. Rather, something specific to the US is causing concern.

The latest US economic data are terrible, but so are those of everyone else. So there are two broad possibilities.

One is that political anxiety is driving the dollar lower. Ashraf Laidi, of CMC Markets, argues that the mere possibility that the US carmakers could go bankrupt may be scaring traders out of the dollar.

A second is that even as deleveraging goes on, the dollar looks so overvalued that traders are taking the opportunity to sell it. Neither option is encouraging for the US.

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Detroit reeling as $14bn auto rescue fails

By Daniel Dombey in Washington

The high profile effort to agree legislation to lend $14bn to the US auto industry collapsed on Thursday night, leading the Bush administration to hold open the possibility that it would seek funds from its financial rescue plan instead.

Efforts to agree a deal in the US Senate ended in failure when Harry Reid, the leader of the Democratic majority, said negotiations with Senate Republicans were at an end and warned that millions of jobs were at stake as a result.

“It’s over with,” Mr Reid said. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight. Millions of Americans, not only the auto workers, but people who sell cars, car dealerships [and] people who work on cars are going to be directly impacted and affected.”

Both Democrats and Republicans said the sticking point was a demand to push Detroit to bring down labour costs to a par with foreign manufacturers in the US. Democrats said the move made unrealistic demands on the United Auto Workers union, while Republicans argued that no effort to restructure the industry would work without such a step.

The failure to agree legislation throws into doubt the future of General Motors and Chrysler, which had told Congress they needed a total of $15bn to maintain operations until the end of March. Ford had also called for a credit line, while between them the Detroit Three had asked for $34bn to restructure the industry.

On Thursday night the White House refused to rule out procuring the money instead from the $700bn Troubled Assets Relief Programme – a course of action President George W Bush has refused to contemplate until now. His administration has broad discretion over TARP money but has resisted using the funds outside the financial sector, which they are intended to support.

Asked whether TARP funds could be used to extend Detroit a loan in the wake of the Senate defeat, Tony Fratto, a White House spokesman, said: “No decisions have been made”. He added: “We will evaluate our options in light of the breakdown in Congress.”

To dip into TARP funds would not only mark a U-turn on a policy Mr Bush has made a matter of principle, but would also further alienate him from Congressional Republicans who have become increasingly hostile to the recent spate of acts of government intervention in the US economy.

But the alternative of letting iconic US companies such as General Motors and Chrysler fail during the last weeks of his presidency is also profoundly unattractive.

“The economy is in such a weakened state right now that adding another possible loss of 1m jobs is just something our economy cannot sustain at the moment,” Dana Perino, Mr Bush’s spokeswoman, said before the Senate negotiations failed. “The ramifications of that type of massive job loss would ripple throughout the entire economy and through the world.”

However, Mitch McConnell, the Republican leader in the Senate, attacked the compromise stitched together earlier in the week by Congressional Democrats and the White House, and approved by the House of Representatives on Wednesday, as an intervention too far.

Arguing that the deal was “not nearly tough enough” on the Detroit Three, he said its “greatest single flaw is that it promises taxpayer money today for reforms that may or may not come tomorrow”.

His comments – and the failure of the legislation itself – mark Mr Bush’s ebbing influence over Congressional Republicans. The party’s increasingly forceful conservative bent has combined with a growing sense of remorse over the $700bn TARP, which Republicans many believe to have been ineffective. In addition many of the party’s Senators hail from southern states where foreign “transplant” manufacturers, rather than the Detroit Three, maintain operations.

Speaking on Thursday night, Mr McConnell suggested a deal might still be struck. “We’ve reached an impasse for the moment,” he said.

But Mr Reid suggested that differences between the two sides were irreconcilable. “We know we don’t have 60 votes,” he said, highlighting the number of votes necessary to push legislation through in the 100-member Senate, where the Democrats currently have only 50 seats. “We can spend all night tonight, tomorrow, Saturday, and Sunday, and we’re not going to get to the finish line. That’s just the way it is; there’s too much difference between the two sides.”

“What Republicans have done tonight is the equivalent of the Treasury Department letting Lehman Brothers fail,” added a Democratic aide. “We will soon see similar repercussions and a reeling economy plunge deeper into recession.”

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Portugal offers asylum to Gitmo detainees

By Demetri Sevastopulo in Dublin

Published: December 11 2008 23:48 | Last updated: December 11 2008 23:48

Portugal has offered to grant asylum to Guantánamo Bay prisoners in a move that could help the incoming US administration accelerate closure of the controversial detention camp in Cuba.

Luis Amado, the Portuguese foreign minister, said on Thursday that Portugal stood ready to take some of the Guantánamo detainees, and urged other European Union states to follow suit.

“The time has come for the European Union to step forward,” Mr Amado wrote to EU counterparts in a letter to coincide with the 60th anniversary of the Universal Declaration of Human Rights. “We should send a clear signal of our willingness to help the US government . . . through the resettlement of detainees. As far as the Portuguese government is concerned, we will be available to participate.”

The move is the first sign that the EU may be willing to help the US close the prison camp, which was opened in 2002 to detain suspected militants captured in the “war on terror”.

Human rights groups welcomed Lisbon’s statement and urged other EU nations to make the same offer.

Emi MacLean, of the Center for Constitutional Rights, which represents detainees, said: “This step is an important one to usher us into a new era – allowing the closure of Guantánamo and the end to the arbitrary detention without charge of too many men.”

Finding countries to take prisoners who are no longer considered “enemy combatants” is key to closing the camp – which president-elect Barack Obama has pledged to do. President George W. Bush repeatedly said he wanted to shut it, but he ultimately rejected a proposal by Robert Gates, his defence secretary, to bring the detainees to the US.

The Pentagon has approved about 50 detainees for release out of the current population of roughly 250, but Washington has been unable to find countries to take the prisoners.

Some countries have refused to take detainees that the US says are still dangerous, while others have questioned why they should help when the US has not granted asylum to any of the prisoners.

The US has tried unsuccessfully since 2004 to persuade EU states to take some Muslim Uighurs from China’s Xinjiang region who had been approved for release. Some countries feared that taking them would spark Chinese retaliation.

The Bush administration has so far failed to comply with a US court order to release the 17 Uighurs from Guantánamo. The US has refused to repatriate them to China, arguing that they could be abused.

In response to the Portuguese statement, Gordon Johndroe, deputy White House press secretary, said: “We appreciate that they recognise how complicated this issue is.”

Asked whether Lisbon’s move would prompt the US to grant asylum to the Uighurs, however, he added: “An initial offer is quite different from the actual transfer of a detainee to a European country. We’ll see how this develops.”

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Petrobras bullish on outlook for new fields

By Jonathan Wheatley

Published: December 12 2008 02:00 | Last updated: December 12 2008 02:00

Petrobras is expected to release its strategic plan for 2009-13 a week today after three months of repeated delays caused by the recent extreme volatility in oil prices and the turmoil in global credit markets.

Nevertheless, chief executive Sérgio Gabrielli, told the Financial Times that Brazil's government-controlled oil company would demonstrate its ability to invest during turbulent times.

The plan is expected to give more detail on how Petrobras will exploit the so-called pre-salt fields, a formation of reserves discovered in 2007 trapped under as much as 7,000 metres of sea, rock, and a thick, volatile layer of hard-to-penetrate salt.

The fields represent one of the few opportunities for any of the world's oil companies to book substantial new reserves in coming years. They are likely to propel Brazil up the league table of world oil-producing nations. The oil is much lighter, higher quality crude than the heavier oil commonly found in Brazil and offers substantial export potential.

Petrobras has so far released estimates of recoverable oil for just three out of dozens of individual fields in the formation: Tupi, at 5bn-8bn barrels; Iara, at 3bn-4bn barrels; and Jubarte, at 1.5bn-2bn barrels.

It refuses to speculate on the pre-salt formation as a whole, although government officials have spoken of more than 100bn barrels to add to Brazil's current reserves of 14.4bn barrels of oil and natural gas equivalent.

Petrobras releases rolling five-year plans each year. A central element has always been a very conservative estimate of the price of oil over the period. This year, that element may be lacking.

"We have arrived at a price but we have not decided whether or not to reveal it," Mr Gabrielli says, adding that this decision would be left to a meeting of the board of directors - including members of government - on December 19.

"We have more than 600 projects being re-evaluated right now," he says. "We hope we'll finish that in time for the meeting."

Petrobras was currently executing projects devised under previous plans based on oil at $16 a barrel. The current plan assumes a price of $35 a barrel - only about $10 a barrel less than current prices, but less than a quarter of peak prices just a few months ago. "Projects now under operation are very profitable and we have very good cash flow."

Nevertheless, Mr Gabrielli concedes that Petrobras had altered its priorities in relation to the pre-salt fields and was concentrating on maximising short-term cash flow while also trying to bring longer-term plans forward.

Until recently, most attention in the pre-salt fields has concentrated on an area off the coast of São Paulo state, about 300km out to sea and at depths of about 7,000 metres.

But recent tests some 800 km further north have revealed reservoirs at high pressure less than 80 km from the coast beneath existing operations above the salt layer.

"The pre-salt oil is cheaper to produce than the heavy crude [in this area]," Mr Gabrielli says. "We think we will bring forward production as much as possible to have the cash flow to finance the longer-term, more expensive pre-salt fields."

Doubts have surfaced repeatedly in recent weeks over Petrobras's ability to finance its operations - including ambitious commissioning of rigs and other equipment from recently moribund Brazilian shipyards - following the collapse of global credit markets since mid September.

Edson Lobão, mines and energy minister, insisted that Petrobras would continue with plans to build four refineries to allow it to export value-added products instead of the lighter pre-salt crude.

But he also says he has discussed a $10bn loan to Petrobras with Chinese officials, apparently to be offered in exchange for guaranteed oil imports.

Eric Smith, of the Tulane Energy Institute in New Orleans, says the pre-salt fields probably remain viable even with oil at $40 a barrel. But he expects development of the fields to go ahead at a slower pace.

"I also think the talk about building drilling rigs and FPSOs [floating production, storage and offloading vessels] is now in the dustbin," he says.

Petrobras recently borrowed R$2bn (US$864m) from Caixa Econômica Federal, a government-owned bank that lends mainly to home buyers, and would borrow another R$900m from it next month to cover tax and other payments, Mr Gabrielli says. "Remember, the international markets are closed right now."

Nevertheless, the company's financing needs were "tiny", he adds.

Petrobras had no significant debt repayments over the next two years, and had $25bn in gross debt with $8bn in cash, and revenues of R$220bn a year.

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Ecuador maintains bond default threat

By Naomi Mapstone in Lima

Published: December 11 2008 19:42 | Last updated: December 11 2008 19:42

Rafael Correa, Ecuador’s combative leftwing president, is keeping financial markets guessing about whether he will make an interest payment due on Monday on an international bond issue his administration claims is illegitimate.

Regardless of whether Mr Correa makes the payment, many observers say the global financial crisis, a sharp fall in oil prices and remittances from abroad, together with a costly programme of social spending make the odds of Ecuador eventually defaulting greater by the day.

”We feel that the government has entered a slippery slope that will ultimately lead to default, as low oil prices take a toll on revenues and risks over Ecuador’s willingness to pay are compounded by liquidity shortfalls,” said Patrick Esteruelas, Latin America analyst for New York-based Eurasia Group.

Participants in the market for credit default swaps, which provide a form of insurance against non-payments of debt, consider a default highly likely: it costs £4.2m to insure £10m of Ecuador’s bonds against default over the next five years .

But bond prices jumped sharply yesterday after a Quito newspaper reported that the government appeared to have quietly bought back bonds with a face value of $680m in recent months.

A 30-day grace period to pay $30.6m in interest on the 2012 bond issue runs out on Monday, when another $30.9m interest payment falls due on a 2015 bond.

While Ecuador has the funds to make the payments, Mr Correa has denounced these issues and another maturing in 2030 – $3.8bn in total – as ”illegitimate”. Mr Correa claims they were improperly authorised by previous administrations and involved onerous interest rates, commissions and pre-payments.

Mr Correa has engaged US law firm Foley & Hoag to sue bondholders to Manhattan’s district court and flagged up an appeal to a forum such as the International Court of Justice at the Hague. ”We are not going to jump into the void. We’ve got to be responsible. We will seek all mechanisms to repudiate the debt, which is absolutely illegitimate and corrupt,” he said.

Meanwhile the president, a US-trained economist, is likely to find it increasingly difficult to pay, even if he wanted to. The collapse in oil prices has already driven the Opec nation to its first trade deficit in 15 months and remittances, which accounted for 7 per cent of gross domestic product last year, have slumped.

Mr Correa is also hamstrung by a dollarised economy. Ecuador abandoned the sucre for the dollar in 2000, after the collapse of its banking sector, leaving the government unable to run an independent monetary policy.

Mark Weisbrot, co-director of the Center for Economic and Policy Research, a left leaning Washington think tank, said Mr Correa may believe the costs of default are acceptable, given that Ecuador’s access to credit has already been strained by its frosty relations with international bodies such as the World Bank, fractious dealings with foreign investors and a recent suit against Brazil over a loan it says was contracted illegally.

”The consequences [of default] are not always as great as one might think,” he said. ”In Ecuador’s case they can’t really borrow on international markets anyway so they’re in a strong economic position to renegotiate with their creditors.”

But Ramiro Crespo, of Quito-based Analytica Securities, said Ecuador was engaging in dangerous game of brinkmanship that could leave it isolated.

”It is very difficult to try to look for rationality in perhaps an irrational situation,” he said. ”In a sense this is very ideological. They [Mr Correa’s administration] don’t like markets. They don’t like Wall Street. They don’t like most of the international organisations, especially the World Bank and the [International Monetary Fund]. But instead of being pragmatic about it and using them according to their needs they have taken an ideological approach.”

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'Energy crunch' looming, warn MPs

By Ed Crooks

Published: December 12 2008 02:00 | Last updated: December 12 2008 02:00

Britain is threatened by an "energy crunch" with disastrous social and economic consequences because of the impact of the financial crisis on the industry's investment plans, a committee of MPs has warned.

The Commons' business and enterprise committee said just as the government had intervened to support the banks, it needed to step in to ensure energy companies invested in new power stations and gas storage facilities.

In a report published this morning, the MPs write: "Generating capacity equivalent to nearly a third of current electricity demand will be made redundant by 2020. It will need to be replaced. We believe that in the current economic climate there is a high risk that the energy companies will not be able to raise the finance necessary to build this."

Peter Luff, the committee's Tory chairman, said there was a concern about investment in new nuclear power stations, because of the increased cost of raising funds, and the government's failure to set a clear policy lead. "Particularly for nuclear, the important thing for investment is the cost of capital, and that plus the fact that there is not a statement of need for nuclear from the government means there is a real risk of not getting the nuclear investment we need," he said.

Although the report backed the government's call for the big energy suppliers "to cut prices for their retail customers as soon as possible in 2009", it defended the industry's need to be profitable. "A reasonable level of profit by the big energy suppliers will be a precondition of this investment taking place."

The MPs acknowledged that suppliers' hedging policies, by which they buy gas and electricity in the forward markets, meant there would inevitably be a lag of "weeks or months" before retail prices followed the steep falls in wholesale energy costs since the summer. British Gas, the country's biggest energy supplier, has indicated it is unlikely to be able to cut retail prices until March.

The committee's report reflects a growing debate over the competing demands on the energy industry, which is under pressure to cut bills for consumers, but also to invest heavily to make sure the lights stay on.

Ed Miliband, energy and climate change secretary, gave mixed signals in a speech on Tuesday, lauding the benefits of dynamic, competitive energy companies and the essential role of private sector investment, but promising action to tackle market failures. Industry executives suggest Mr Miliband, appointed in October, is still learning his way into the job.

Garry Felgate, of the Energy Retail Association, representing suppliers, said: "We welcome the committee's and Ofgem's recognition of the time lag between price movements on the wholesale market, and the prices that domestic customers pay. It is also encouraging to note that the committee has highlighted the necessity of investment in new generation and in renewables."

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P&G to embark on record expansion

By Jonathan Birchall in New York

Published: December 11 2008 18:36 | Last updated: December 11 2008 18:36

Procter & Gamble is to embark on the most ambitious expansion programme in its history, as it moves to increase its strategic focus on emerging markets despite the current global economic slowdown.

Bob McDonald, chief operating officer, told Wall Street analysts that “almost all” the 20 new manufacturing facilities that P&G will open during the next four years will be outside its established markets.

“P&G’s centre of gravity will shift toward developing markets,” he said. “We will literally transform our manufacturing and distribution systems by proactively managing our capacity needs around the world.”

The company has 39 manufacturing sites in the US, but only 10 in China and just two in India.

Emerging markets account for about 30 per cent of P&G’s annual sales of more than $83bn, and have delivered low double-digit growth during the past four years, accounting for 60 per cent of its sales growth.

Werner Geissler, head of global operations, said developing market growth would continue in at least the high single digits during the coming years. He said P&G had seen signs of retailers and customers cutting down on their inventories of its products in markets ranging from China and Russia to Pakistan.

But AG Lafley, chief executive officer, said: “We just have a huge opportunity to service urban consumer households in developing markets who have plenty of income, even with an economic downturn.

“We are not getting anywhere near our fair share of that business, and I think that was sort of eye-opening for us over the last year.”

Mr McDonald also outlined P&G’s strategic efforts to improve its productivity, which include a modernisation of its trucking system in the US. P&G also plans to double the volume of its US shipments capable of being carried by rail from 15 per cent currently to 30 per cent over the coming year.

In Europe, he said P&G planned to have 30 per cent of its shipments using rail by 2016, up from less than 10 per cent currently.

The company also said it had been surprised by the speed and degree to which retailers and consumers had cut back on purchases of its products as the economic downturn gathered pace.

As a result, P&G said it expected organic sales growth this quarter to miss its forecast range of 4-6 per cent, although it maintained its earnings guidance.

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Google moves ahead on Chrome

By Rob Minto

Published: December 12 2008 02:00 | Last updated: December 12 2008 02:00

Google has taken its Chrome browser out of beta status, paving the way for the software to be pre-installed on new computers next year.

The move out of beta - which indicates that software is usable but may have bugs - means that Chrome can be considered by manufacturers such as Hewlett-Packard or Dell as part of the bundle of software included on laptops and other PCs.

Dennis Woodside, UK managing director of Google, told the Financial Times this year that Chrome would "definitely" come pre-installed with a leading maker in early 2009, but would not be drawn on the manufacturer.

Dell, the world's second-largest PC maker have said that they are in talks with Google about pre-installed components. The deal with Dell to supply the Google toolbar, a pre-installed search function in rival browser Internet Explorer, expires in January.

The move out of beta is quick for a Google product. Googlemail, the company's web e-mail service, is still labelled beta in spite of being launched in 2004 and having millions of users.

The significance of browsers is increasing as more and more software applications are delivered through the web, and the success of those applications depends on how well browsers can handle the programming code. For instance, Google Docs, a free rival to Microsoft's Office, runs directly in the browser, and requires javascript to work.

Chrome has failed to break 1 per cent of market share of internet users, gaining 0.78 per cent in September on its release, falling to 0.74 per cent in October and rising to 0.83 per cent in November, according to internet statistics provider Net Applications.

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中国式拷問を参考と米報告　テロ容疑者収容所での虐待
2008.12.12 11:06

　キューバにあるグアンタナモ米海軍基地の収容所などで米軍がテロ容疑者に対し行った虐待は、朝鮮戦争（１９５０～５３年）の際に中国側に捕らわれた米兵が受けた拷問を参考に行われていたことが１１日、米上院軍事委員会の超党派の報告書で明らかになった。

　グアンタナモやイラクの旧アブグレイブ刑務所で行われた水責めや睡眠を奪うなどの虐待行為は、通常の尋問で引き出せない証言を得るため、現場指揮官が必要に迫られ実行したと現政権側は説明してきた。

　しかし報告書はこれを否定。２００２年２月にブッシュ大統領が、捕虜の人道的扱いを定めたジュネーブ条約は国際テロ組織アルカーイダやアフガニスタン旧政権タリバンには適用されないと宣言した文書に署名したことがきっかけで、虐待が始まったと認定した。

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Japan Aluminum Premium Slumps by Most in Seven Years (Update1)

By Aya Takada

Dec. 12 (Bloomberg) -- Aluminum producers will cut the fee they charge Japanese buyers by as much as 27 percent, the biggest reduction in seven years, as a recession saps demand in Asia’s largest importer of the metal used in cars and houses.

The premium, a regional benchmark, will fall to $55 to $58 a metric ton over the London Metal Exchange cash price for the three months to March 31, down from $75 to $77 a ton this quarter, according to three executives involved in the talks. They declined to be identified as the negotiations were private.

The premium fell for a second quarter to the lowest in five years. The slump is the largest since July-September of 2001 as the world’s second-biggest economy entered its first recession in seven years, spurring manufacturers to slash output as consumers spend less on vehicles electronics and houses.

“Carmakers are cutting output on an unprecedented scale, leading to a slump in aluminum demand as the industry is one of the largest users of the metal,” Akio Shibata, director at Marubeni Research Institute, said by phone.

Japanese trading companies and aluminum mills buy the metal under contracts with producers such as BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto Group. The premium applies to so-called Good Western-grade ingot imported for processing in Japan and includes insurance and shipping. The amount is levied on top of the LME price for immediate delivery.

One of Japan’s largest rolling mills will not purchase any of the aluminum for the January to March quarter under contracts because of rising inventories amid the recession, a company manager said. He declined to be named as talks are confidential.

Auto Slump

Shipments of rolled-aluminum products to the car industry plunged 12 percent in October to 26,766 tons from a year earlier, according to the Japan Aluminium Association. The drop was the largest since August 1998, when shipments to the industry fell 13 percent, said Koji Iida, an association spokesman.

“Shipments may keep declining in the first half of next year,” Iida said by phone. “It’s hard to predict when the contraction will be over as the outlook for global economies looks quite uncertain.”

Toyota Motor Corp. and rivals are accelerating production cuts after sales slumped the most in 34 years in Japan in November. Sales in the U.S., the largest export market for Japanese carmakers, also plunged at the steepest annual pace in 26 years last month.

Japan’s rolled aluminum product shipments fell 1.4 percent from a year earlier to 1.92 million tons in the 10 months ended Oct. 31 as demand from builders, the largest consumer of Japanese aluminum products, deteriorated because of a slump in the property market amid the credit crisis.

Construction Demand

Construction represented almost a quarter of aluminum product demand in the 10 months, while the auto sector accounted for 14 percent, according to the association.

Japanese demand for primary aluminum is forecast to drop 1 percent from a year earlier to 2.26 million tons next year, the lowest since 2003, according to Marubeni Corp., Japan’s biggest importer. It is the third straight year of decline.

Aluminum for delivery in three months traded at $1,553.25 a ton at 11:58 a.m. in Tokyo. Prices reached a five-year low of $1,478 on Dec. 9, losing 56 percent from a record $3,380.15 on July 11. Metal for immediate delivery in London rose 2.6 percent to $1,522.25 a ton yesterday.

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Australian Wool Output Will Slump to 84-Year Low, Group Says

By Madelene Pearson

Dec. 12 (Bloomberg) -- Wool production in Australia, the world’s top producer and exporter, will drop to the lowest in 84 years as drought cuts into flock numbers.

Shorn wool output may be 370 million kilograms in the year ending June 30, 2009, the Australian Wool Production Forecasting Committee said in an e-mailed statement. That compares with its September forecast of 375 million kilograms and is the lowest since 1924-1925.

Production has slumped after years of drought forced farmers to sell livestock they couldn’t feed and as producers switched to grain amid wool’s 22 percent price slump this year. Exports are forecast to drop to the lowest in at least two decades.

“The sell-off of sheep continued over winter, with sheep slaughterings across Australia up by 10 percent in the September quarter, due to the dry seasonal conditions and concerns about feed availability,” Russell Pattinson, chairman of the committee, said in the statement.

Still, widespread rainfall in November may improve summer feed and water supplies and help to slow the reduction in sheep numbers, the group said.

Today’s forecast is 7.5 percent lower than the 400 million kilograms produced last year, which was the lowest in 64 years, according to Chris Wilcox, the committee’s secretary.

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Australia’s Newcastle Port Plan to Help Triple Coal Exports

By Angela Macdonald-Smith

Dec. 12 (Bloomberg) -- Australia’s Newcastle port, the world’s biggest coal-export harbor, will be able to triple shipments from existing levels under a proposal by the state government to end a deadlock on access to port capacity.

The plan will allow the construction of a fourth coal terminal at Newcastle that could provide as much as 90 metric tons a year of additional shipping capacity, bringing in as much as A$23 billion ($15 billion) of export revenue, New South Wales Ports Minister Joe Tripodi said today in an e-mailed statement.

Bottlenecks at Australian ports have helped constrain supplies of the fuel to Asian customers, contributing to record prices earlier this year and increasing costs for mining companies. Prime Minister Kevin Rudd said separately today the rail link to Newcastle, the world’s biggest coal-export harbor, will be expanded to boost export capacity and create jobs.

“Whilst some details need to be sorted, the plan appears to strike a balance between giving existing miners the certainty they need to invest in infrastructure and increase output, and giving new entrants the certainty they need to access the port,” Eileen Doyle, chairwoman of Port Waratah Coal Services Pty, operator of the two existing coal terminals at Newcastle, said in a separate statement.

The plan allowing for the construction of a fourth coal- loading terminal at Newcastle’s Kooragang Island will allow mining companies to commit to long-term contracts for terminal access, Port Waratah said.

Rio, Xstrata

Rio Tinto Group, Xstrata Plc and BHP Billiton Ltd. are among mining companies that ship coal through Newcastle. The proposal is a blend of recommendations by Nick Greiner, an independent coordinator for coal exports through Newcastle, and requirements of the state government and the coal industry.

“We believe this proposal will provide certainty for companies wanting to explore and develop coal resources in New South Wales,” Peter Wilkinson, executive general manager (NSW) of Idemitsu Australia Resources, which mines coal in Australia, said in the statement from Tripodi’s office. BHP, the world’s biggest mining company, said it was “encouraged” by the proposal, while Rio Tinto and Xstrata said it will allow for long-term growth in the industry.

Some A$580 million will be allocated to expanding rail links between the Hunter Valley and Newcastle port to increase capacity for mining companies, Rudd said in Canberra. The work is scheduled to be finished in 2011 and will generate 650 direct jobs.

This forms part of A$4.7 billion Rudd pledged to spend on infrastructure in a bid to prevent the economy from sliding into a recession as the global economy stalls.

The state government and the coal industry now need to make a clear case to Australia’s national competition regulator about the merits of the plan to secure approval, Port Waratah’s Doyle said.

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India May Buy Coal Mines Abroad, Raise Local Output (Update1)

By Debarati Roy

Dec. 12 (Bloomberg) -- India may buy coal mines in the U.S., Australia and Mozambique to meet increasing demand for the fuel from domestic users, said Santosh Bagrodia, junior coal minister.

The South Asian nation plans to allot more coal mines to private companies for captive mining and is seeking partners to reopen 18 mines to help boost local production, Bagrodia told reporters in New Delhi today.

India, Asia’s third-biggest economy, needs coal to meet demand from power plants, steelmakers and cement companies. The government estimates imports of the fuel will increase to 60 million tons annually by 2012.

India may produce 415 million metric tons of coal in the year to March and import as much as 31 million tons, Bagrodia said. Coal production may rise by 8 percent next year, he said.

Power utilities in India may import 20 million tons of coal in the year to March, according to the Central Electricity Authority. More than half the generation capacity of about 146,752 megawatts as of Oct. 31 is coal-fired.

The peak power shortage in India may widen to 18.1 percent in the year to March as demand in the world’s second-fastest growing major economy outstrips supply, the Central Electricity Authority has said.

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Russians Buy Jewelry, Hoard Dollars as Ruble Plunges (Update1)

By Emma O’Brien and William Mauldin

Dec. 11 (Bloomberg) -- Moscow resident Tima Kulikov banked on the full faith and credit of the U.S. government, not the Kremlin, when he sold his biggest asset for cash.

The 31-year-old director of a social networking Web site initially agreed to sell his apartment for rubles, then cringed at the thought of the currency weakening as it sat in a lockbox pending settlement of the contract. It wasn’t until the buyer showed up with $250,000 stacked in old mobile-phone boxes and stuffed in his pockets that Kulikov closed the deal.

“The exchange rate we agreed on wasn’t great, but I did it because the money’s going to lie there for a month,” Kulikov said. “Put it this way, the ruble’s more likely to have problems than the dollar.”

Russians are shifting their cash into foreign currencies and buying things they don’t need as the economy stalls and the central bank weakens its defense of the ruble, signaling a larger devaluation may be on the way. The currency has fallen 16 percent against the dollar since August, when Russia’s invasion of neighboring Georgia helped spur investors to pull almost $200 billion out of the country, according to BNP Paribas SA.

The central bank today expanded the ruble’s trading band against a basket of dollars and euros, allowing it to drop 0.8 percent, said a spokesman who declined to be identified on bank policy.

With the specter of the 1998 debt default and devaluation in mind, Russians withdrew 355 billion rubles ($13 billion), or 6 percent of all savings, from their accounts in October, the most since the central bank started posting the data two years ago. Foreign-currency deposits rose 11 percent.

Oligarchs Pinched

Those withdrawals are increasing pressure for the ruble’s devaluation, according to Basil Issa, an emerging- markets analyst at BNP Paribas in London.

Property is now a protective investment, not just a status symbol, said Sergei Polonsky, founder of real estate developer Mirax Group, which is building Moscow’s tallest skyscraper.

“Lately our clients are mostly those who buy real estate not to live in but to secure their investments,” Polonsky said. “No one wants to be left with pieces of paper.”

The 25 wealthiest Russians on Forbes magazine’s list of billionaires, including Oleg Deripaska and Roman Abramovich, lost a combined $230 billion from May to October as asset values plummeted, according to Bloomberg calculations.

‘Feel Happy’

For the burgeoning middle class, investments of choice range from electronics to gold jewelry. Evroset, Russia’s largest mobile-phone chain, is telling people to buy anything they can.

“It’s better to feel happy that you own something than to fear losing the money you have earned,” Chairman Yevgeny Chichvarkin says in a letter posted at 5,200 Evroset stores. “If you need a car, buy a car! If you need an apartment, buy an apartment! If you need a fur coat, buy a fur coat!”

Sales at Technosila, the third-biggest consumer electronics chain, have doubled since September as customers rush to swap rubles for flat-screen TVs and laptops, spokeswoman Nadezhda Senyuk said by phone from Moscow, where the company is based.

Jewelry sales are also accelerating, particularly items made of gold and diamonds, said Vladimir Stankevich, advertising director at Adamas, Russia’s third-largest jewelry retailer.

“More cash appeared on the market and there’s an opinion among shoppers that gold is a good investment in times of crisis,” Stankevich said.

Natalya Kulikova has a different approach. The 31-year-old sales manager said she’s opened accounts in rubles, euros and dollars at three different banks -- one foreign and two domestic -- to guard her savings.

“My main goal is to save money,” she said.

Putin Pledge

Those who don’t want to spend are keeping more money at home or in safe-deposit boxes because the government guarantee on bank accounts is limited to 700,000 rubles, said Yulia Tsepliaeva, chief economist in Moscow at Merrill Lynch & Co.

Alfa Bank, Russia’s biggest non-state lender, said demand for boxes has increased about 40 percent since October, and there are few available.

“The Russian experience with saving is not that good and people prefer to consume and enjoy rather than save in pre-crisis situations,” Tsepliaeva said. “Buy cash dollars and put them in mattresses or safe deposit boxes but not in accounts because most crises are accompanied by banking crises.”

A decade ago, many lost their life savings after the ruble plunged 71 percent against the dollar. Those fears prompted Prime Minister Vladimir Putin to pledge not to allow “sharp jumps” in the exchange rate, during a call-in television show Dec. 4.

‘Ideal Time’

Troika Dialog, Russia’s oldest investment bank, is betting the central bank will allow a one-time devaluation of the ruble of about 20 percent in January, following New Year’s and Orthodox Christmas celebrations.

“With the holidays at the beginning of January, companies won’t be fully working and people will be spending more money,” said Evgeny Gavrilenkov, Troika’s chief economist and a former acting head of the government’s Bureau of Economic Analysis. “That means demand for rubles will increase and that means it’s an ideal time to allow a devaluation.”

Russia has drained almost a quarter of its foreign-currency reserves, the world’s third-largest, since August as it tries to slow the ruble’s decline. The central bank has widened the trading band five times in the past month, effectively reducing its defense of the currency amid plunging oil prices.

Devaluation Skeptic

Urals crude, Russia’s main export earner, has slumped 72 percent since reaching a record $142.94 a barrel July 4. It fell below $40 for the first time in three years last week, compared with the $70 needed to balance the country’s budget.

The government will avoid a large, one-step devaluation because it wants to prevent a run on the banks and lure back foreign investors, said Chris Weafer, chief strategist in Moscow at UralSib Financial Corp.

“I’m skeptical a 10 to 15 percent devaluation will provide a significant boost for the economy because the sector that it will most benefit, manufacturing, is just too small,” he said.

The ruble will probably be allowed to drop in small steps to as low as 33 per dollar by the middle of 2009, from about 28 now, Weafer estimates. It will end next year at 26.8 because of a recovery in oil prices and a weaker U.S. currency, he said.

Svetlana Guseva isn’t taking any chances.

The 32-year-old mother of two from the southern city of Sochi plans to take her 8-year-old daughter, Dasha, to Moscow for the New Year’s holiday, a trip that will cost twice her family’s monthly income of about 30,000 rubles.

“This way at least we’ll have some memories,” she said.

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Abu Dhabi Offers New Oasis for U.K. Engineers as Dubai Dries Up

By Tim Barwell

Dec. 11 (Bloomberg) -- Abu Dhabi, armed with oil wealth and a $500 billion spending plan, is providing the escape route for British engineers as their bets on Dubai’s construction boom turn sour.

Dubai’s focus on financial services, luxury homes and mass tourism attracted U.K. skyscraper designers and road-network planners like WS Atkins Plc and builders including Carillion Plc. It also made the emirate dependent on industries that have been hit hard by the economic slump.

Abu Dhabi, where 1 million people sit atop 8 percent of the world’s oil reserves, is pumping money into developing tourist attractions and manufacturing to break away from its dependence on crude. Oil prices have fallen to below $50 a barrel from $147 in July. The spending project, titled “Plan Abu Dhabi 2030,” includes the world’s first Ferrari-branded theme park and museum ventures with the Louvre and Guggenheim.

“Abu Dhabi has a master plan,” Atkins Chief Executive Officer Keith Clarke said in an interview. “You can even buy a copy and read it. They have developed a plan for which they have the cash. All the budgets were done on $50 to $55 a barrel of oil.”

Dubai accounts for half of Epsom, England-based Atkins’s 112 million pounds ($163 million) in Middle East sales, though Abu Dhabi is on course to match that level in a couple years, Clarke said. Dubai will see a slowdown from its “vastly impressive growth,” said Clarke, whose firm is the U.K.’s biggest engineering-design company.

Carillion’s Reach

Abu Dhabi will be the main driver behind Carillion’s goal to double Middle Eastern sales by the end of 2009, according to CEO John McDonough. He has moved 150 senior directors from Europe to the Gulf region this year and has added 6,000 employees in Abu Dhabi, working on projects ranging from hotels to aluminum smelters. Britain’s second-biggest construction company is adding jobs this year, while many of its peers slash employee numbers.

“The wealth and power to invest in infrastructure is absolutely enormous,” McDonough said yesterday. “What’s going on in Abu Dhabi is unbelievable and the growth there is sustainable over the next 10 to 15 years.”

Gulf Arab cities are struggling to expand infrastructure to match population growth. Traffic jams cost the Dubai economy about 4.6 billion dirhams ($1.25 billion) a year in lost man- hours, according to the emirate’s transportation authority. The population of Abu Dhabi will triple to about 3 million by 2030, the country’s planning council estimates.

Joint Ventures

U.S. companies also have the emirate in their sights. General Electric Co., the world’s biggest maker of power-plant turbines and medical-imaging machines, formed an $8 billion venture with Abu Dhabi’s Mubadala Development Co. in July to expand commercial investments in the Middle East and Africa.

GE, which is contributing half the money, will pursue financing for the region’s power plants, hospitals, roads and water treatment. The Fairfield, Connecticut-based company will also build a research center in Abu Dhabi’s new Masdar City. Las Vegas-based casino company MGM Mirage and Mubadala have also formed a venture to develop non-gaming hotels and resorts, and would start with projects in Abu Dhabi, Las Vegas and the U.K.

“Dubai is energy poor and Abu Dhabi is energy rich,” Giyas Gokkent, head of research at National Bank of Abu Dhabi, said in an interview. “Dubai has been the paragon, the leader. Abu Dhabi’s economic model can be summed up in one word: diversification.”

Dubai Dims

For Carillion, based in Wolverhampton, England, revenue from Middle Eastern operations is set to soar to more than 600 million pounds by the end of 2009, nearly double the group’s 2007 figure, CEO McDonough said. Most sales will stem from Abu Dhabi’s infrastructure plans, and the company yesterday raised its earnings growth target to 15 percent.

As Abu Dhabi plans and invests, the economic slump has taken the shine off of Dubai, which borrowed $80 billion to finance its transformation through projects such as the world’s tallest building, the biggest hotel and man made palm-tree shaped islands packed with luxury homes for bankers and professional athletes.

Real-estate prices may drop 20 percent or more, analysts at EFG-Hermes Holding SAE, the biggest publicly traded investment bank in Egypt, said in a report this month. House prices in Dubai quadrupled in the last five years, fueling concerns that a slump is imminent. The government has set up a committee to restore confidence in the real-estate market.

Scaling Back

Nakheel PJSC, the Dubai state-owned developer of three palm- shaped islands in the Persian Gulf, said Nov. 30 it is scaling back or delaying work on some of its $30 billion in projects, including the 62-story Trump International Hotel & Tower near the Mega Yacht Club on the trunk of Palm Jumeirah.

“There is no question that Dubai has seen its outlook soften, with contracts delayed, some indefinitely,” Tim Jones, finance director at Interserve Plc, said in a Dec. 5 interview. “Abu Dhabi will be extremely exciting over the next few years.”

Interserve, which has built roads, towers and electricity stations in the Gulf region, gets nearly one-third of its annual sales from the Middle East through building contracts including roads, apartment blocks and electricity stations.

“We can initially attack Abu Dhabi from our Dubai base because they are so close, and the more work we get, the more likely it is that we will seek to set up an office there,” said Jones.

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World Bank’s ‘Wrong Advice’ Left Silos Empty in Poor Countries

By Alison Fitzgerald and Helen Murphy

Dec. 10 (Bloomberg) -- Inside and out, the rusted towers of El Salvador’s biggest grain silo show how the World Bank helped push developing countries into the global food crisis.

Inside, the silo, which once held thousands of tons of beans and cereals, is now empty. It was abandoned in 1991, after the bank told Salvadoran leaders to privatize grain storage, import staples such as corn and rice, and export crops including cocoa, coffee and palm oil.

Outside, where Rosa Maria Chavez’s food stand is propped against a tower wall, price increases for basic grains this year whittled business down to 16 customers a day from 80.

“It’s a monument to the mess we are in now,” says Chavez, 63.

About 40 million people joined the ranks of the undernourished this year, bringing the estimate of the world’s hungry to 963 million of its 6.8 billion people, the Rome-based United Nations Food and Agriculture Organization said yesterday. The growth didn’t come just from natural causes. A manmade recipe for famine included corrupt governments and companies that profited on misery. Another ingredient: The World Bank’s free- market policies, which over almost three decades brought poor nations like El Salvador into global grain markets, where prices surged.

“The World Bank made one basic blunder, which is to think that markets would solve problems of such severe circumstances,” said Jeffrey Sachs, director of the Earth Institute at Columbia University and a special adviser to UN Secretary-General Ban Ki- moon. “But history has shown you need to help people to get above the survival threshold before the markets can start functioning.”

‘The Washington Consensus’

Created in 1944, the Washington-based World Bank Group spent much of its first 35 years dispensing low-interest loans, grants and development advice to poor countries with an eye toward promoting self-reliance. In 1980, the bank’s executives began attaching conditions to loans that required “structural adjustments” in the recipients’ national economies. The mandates were designed to have poor countries cut import tariffs, reduce government’s role in enterprises such as agriculture and promote cultivation of export crops to attract foreign currency.

The philosophy, which came to be known as “The Washington Consensus,” was based in part on assumptions that importing basic grains would be inexpensive and that farmers in developing nations could earn more producing exports. Food prices had fallen for years and few economists thought that would change, said Mark Cackler, manager of the bank’s Agriculture and Rural Development Department in Washington.

Exporter to Importer

In 2007 and the first half of 2008, an index of more than 60 food commodity prices compiled by the FAO rose 82 percent. While costs have since eased, they were 20 percent higher on Nov. 1 than at the end of 2006.

The increases hit hard in countries such as El Salvador, which had adopted the principles of the Washington Consensus in return for loans. El Salvador’s Central Reserve Bank said the total amount of the lending was “not available.” The Agriculture Ministry did provide this measure of their effects: The country was a net exporter of rice 20 years ago; now it imports 75 to 80 percent of what it consumes.

The World Bank has “given consistently wrong advice,” said Jose Ramos-Horta, the president of East Timor in Asia and the 1996 Nobel Peace Prize winner.

“It is their advice -- that buying externally is cheaper than producing -- that has resulted in this,” he said.

‘More Than Underinvestment’

Current and former World Bank officials say small countries hurt their own agriculture industries by suppressing prices, taxing farms, inflating exchange rates and favoring urban development. They reject the assertion that structural adjustment loans hurt developing nations’ self-sufficiency.

“The premise that this crisis was caused by these policies is something that we don’t agree with,” said World Bank spokeswoman Geetanjali Chopra. “This crisis was caused by much more than underinvestment in agriculture.”

Still, in nations such as Honduras and Ghana, imports of basic grains climbed after governments eliminated agricultural subsidies, sold off grain stores or decreased tariffs to get World Bank loans in the 1990s, according to data from the UN’s FAO.

In Honduras, 23,000 rice farmers went out of business, and employment from rice fell to 11,200 people from 150,000 after the government trimmed import duties, according to the human rights group Oxfam International. Honduran farms now supply 17 percent of the domestic demand for rice, down from 90 percent before the tariffs changed.

McNamara’s Shift

In Ghana, the World Bank required a tariff reduction on rice to 20 percent from 100 percent. Imports tripled, said Raj Patel, a scholar at the Center for African Studies at the University of California at Berkeley.

The free-market policies were a sharp turn from the bank’s earlier efforts -- led by former bank President Robert McNamara - - to develop poor countries’ domestic agriculture and self- reliance, said Uma Lele, a World Bank economist from 1971 to 1991 and 1995 to 2005.

McNamara, who oversaw the escalation of the U.S. war in Vietnam as defense secretary under presidents John F. Kennedy and Lyndon Johnson before joining the bank in 1968, shifted his views. He introduced the structural adjustment concept in 1979, in a speech in Manila urging rich nations to open their markets to imports from poor countries.

“Developing countries will need to carry out structural adjustments favoring their export sector,” he said in the speech. McNamara, 92, declined to comment for this story.

Free Market Principles

World Bank officials were frustrated that their investment in agriculture through the 1970s wasn’t paying off, especially in Africa, said Pierre Landell-Mills, a bank economist at the time.

“There were state marketing organizations that were a complete nightmare of mismanagement and corruption,” said Landell-Mills, 69, now a principal at the Policy Practice, a public policy consulting group in Brighton, England, in a June interview. “There were unsustainable subsidies.”

The “preferred solution,” he said, was to dismantle the marketing boards, shrink governments and remove barriers to entrepreneurship. McNamara in 1980 approved the first three structural adjustment loans. By 1985, they made up more than 25 percent of the World Bank’s total lending, according to Kyle Peters, its country services director.

Free-market principles were on the rise in the U.S. and the U.K., the bank’s major funders. Margaret Thatcher had become British prime minister in 1979 with promises of privatizing state-owned enterprises. Ronald Reagan was elected U.S. president in 1980, pledging to cut taxes and government programs.

New Ideas, New Staff

Reagan appointed Alden “Tom” Clausen, a former chief executive officer of Bank America Corp., to succeed McNamara in 1981. The new bank president was convinced “that you could fight poverty better and more efficiently and more quickly if you get the policies of a country right,” Clausen said in an interview.

“I loved structural adjustment loans, and I made a lot of them,” he said.

As the bank’s philosophy evolved, so did its staff. Clausen hired Anne Krueger, an economist known for her advocacy of “getting prices right” by removing government controls, as vice president for economics and research in 1982. She “reshuffled the central economics staff,” wrote Devesh Kapur, in the bank’s official history, “The World Bank: Its First Half Century.”

“Of course the direction of research had changed,” Krueger, 74, said in an interview on Aug. 25. She acknowledged that some economists left because they didn’t agree with the bank’s focus. “Research moved away from big planning models with unreasonable incentives and swung toward things that were much more conducive to agriculture.”

‘Dysfunctional Systems’

Krueger led a five-volume study that concluded developing countries were hurting their own agriculture with tax and exchange rate policies. She said the bank’s free-trade principles boosted output and growth.

“These were largely dysfunctional systems,” she said. “It made sense to reduce tariffs so that countries could produce the goods that they were most efficient at.”

After leaving the bank in 1986, Krueger became first deputy managing director of the International Monetary Fund, which makes loans to help countries correct balance of payment problems and promotes economic policies.

As structural adjustment loans grew, the portion of the World Bank’s lending devoted to agriculture fell, to about 8 percent in 2000 from 30 percent in 1980. Last year, farm-related loans made up 12 percent of the bank’s $24.7 billion portfolio.

‘A Human Face’

“One of the reasons we have problems today is because of the cuts in agriculture,” said Montague Yudelman, 86, who was director of the World Bank’s agriculture department under McNamara. “If they’d made a continuously high level of investment, we’d have been in much better shape.”

By the late 1980s critics began saying the bank, along with the IMF, was fostering poverty and dependence. UNICEF, the United Nations Children’s Fund, in 1987 published a two-volume study titled, “Adjustment With a Human Face.” It concluded that some of the bank’s programs led to increases in malnutrition and disease in poor nations and urged new strategies to protect the most vulnerable people.

In 1995, just 30 days into his tenure as bank president, James Wolfensohn promised changes.

During a meeting with representatives of 12 non-profit organizations, Wolfensohn heard their argument that 15 years of adjustment lending had wiped out small farmers in countries from Africa, Latin America and Asia, damaging their ability to feed people. Some called for the bank to be disbanded.

‘A Different Way’

“What I’m looking for is a different way of doing business in the future,” Wolfensohn, a former Australian Olympic fencer and New York banker, told them. Wolfensohn, 75, who left the World Bank in 2005, declined to be interviewed for this story.

The bank’s commitment to free-market principles didn’t waver.

In 2000, as a condition for a $6.8 million agriculture loan in East Timor, the bank demanded that publicly funded agricultural service centers be privatized and rejected money for a public grain silo and slaughterhouse, according to Tim Anderson, a political economy lecturer at the University of Sydney. He has written several papers on East Timor’s development.

It also turned down proposals for the government to provide research and advice to farmers and to supply seeds and fertilizer because, “such public sector involvement has not proved successful elsewhere,” according to a World Bank mission report that year.

Small Farms Ignored

At the time, there was already evidence that private entrepreneurs weren’t serving so-called smallholders, who the bank says make up 60 percent of the world’s 2.5 billion farm households.

A 1998 study by Michael L. Morris, then a senior economist and project coordinator with the International Maize and Wheat Improvement Center in El Batan, Mexico, found that private seed companies in Africa focused on supplying large commercial operations and “often ignored small-scale, subsistence-oriented farmers located in remote areas.” Morris, 53, is now the World Bank’s lead agriculture economist for the Africa region.

In its 2008 World Development Report, the bank acknowledged that limiting governments’ participation in agriculture had hurt small farmers -- citing Morris’s 10-year-old study as part of the evidence.

“The expectation was that removing the state would free the market for private actors to take over these functions -- reducing their costs, improving their quality, and eliminating their regressive bias. Too often, that didn’t happen,” the bank said in the report.

No ‘Evil Force’

In 2000, Wolfensohn defended the bank to critics. During a meeting at Prague Castle that year, he told an invited crowd of 300 activists, bankers and government officials: “You should not regard us as a black and evil force. Maybe we’ve gotten things wrong. I’m sure we have in many cases.”

The next year, several non-profit groups that had worked with the bank to study its loan conditions released a report saying that the policies “have undermined the viability of small farms, weakened food security and damaged the natural environment.”

In response to the criticism from the Structural Adjustment Participatory Review International Network, the bank issued its own analysis that listed successes as well as missteps. It concluded that the required changes in agriculture were too much, too soon.

Lessons Learned

“The lessons for future policies are that agricultural adjustments are complex and require a sequence of modest steps,” the bank said in the report.

In August 2004, James Adams, the World Bank’s head of operations policy, declared the end of structural adjustments.

“We have abandoned the prescriptive character of the old policy,” Adams said in a statement. At the same time, he said, the underpinnings of the Washington Consensus “remain important themes of economic policy.”

The next year, the bank demanded that Niger privatize its irrigation systems, according to a 2007 report by Eurodad, a Brussels-based coalition of 56 non-profit groups. The requirement “has seriously damaging effects on poor farmers’ access to a precious and scarce resource,” said the report, based on an analysis of the bank’s databases. In all, the group found economic policy conditions were attached to 71 percent of loans and grants.

The World Bank in May pledged $1.2 billion for a Global Food Response Program that’s designed to speed money to the neediest countries without the usual red tape. As of last month the Bank approved $364 million for 25 countries and $541 million more is designated for 10 others.

Trade Talks Stalled

Current Bank President Robert Zoellick, a former U.S. trade representative, has promised to double agriculture spending while touting free trade as a solution to rising food prices. Zoellick, 55, declined to be interviewed.

Poor countries remained skeptical of open markets during the latest round of World Trade talks in Geneva, in July. They insisted that they be allowed to raise tariffs to protect domestic agriculture, stalling the negotiations.

El Salvador, meanwhile, has invested about $240 million in agriculture since 2004. It now gives farmers a $30 bag of the seed of their choice and a $30 sack of fertilizer.

“The World Bank had a very short-term vision; it couldn’t have been more wrong,” said Mario Salaverria, El Salvador’s agriculture minister, as he inspected corn in Sonsonate province, about 50 kilometers (31 miles) west of San Salvador.

His country must regain self-sufficiency, he said. “We can stop using our cars because of price increases, but we can’t stop eating.”

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政投銀、ＣＰを直接購入　政府検討、企業の資金繰り支援

　政府は12日、企業の資金繰り支援を含めた追加の経済対策に乗り出す。政府系金融機関である日本政策金融公庫の資金を使い、日本政策投資銀行が企業の発行するコマーシャルペーパー（ＣＰ）を2兆円程度購入できるようにする。金融機関への公的資金による資本注入を可能にする金融機能強化法改正案では、中小企業向け融資の「数値目標」を金融機関に課し、資金の円滑な供給を促す。

　資金繰り支援の強化策などは12日夕に麻生太郎首相が記者会見して発表する方針。大企業が市場で資金を調達し、中小企業が金融機関を通じて融資を受ける道を政府が支えることで、金融の逼迫（ひっぱく）による景気の一段の冷え込みを抑える。(07:01)

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埼玉県内実質成長率、15年ぶりマイナス成長　りそな財団予測

　埼玉りそな産業協力財団（利根忠博理事長）は11日、埼玉県内実質経済成長率が2008年度、09年度と2年連続でマイナスになるとの経済見通しを発表した。08年度はこれまでプラス1.7％としていたのをマイナス0.6％に下方修正。09年度はマイナス0.5％とした。県内企業の設備投資抑制と個人消費の停滞が主因で、実質成長率がマイナスになるのは1993年度以来、15年ぶり。

　名目成長率は08年度がマイナス1.1％、09年度はプラス0.3％と予想した。

　同財団では県内経済を「後退色を強めている。当面は厳しい景気情勢が続く」と分析。国内の実質成長率は08年度がマイナス0.8％、09年度は同0.7％と見込んでおり、埼玉県の成長率はこれをわずかに上回る予測になっている。

　県内実質成長率の15％程度を占める08年度の民間企業設備投資はマイナス4.1％と大幅減を見込む。前回の1.1％成長から大きく引き下げた。

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沖縄科技大学院大、「特別な学校法人」で運営

　政府は2012年度に開校予定の沖縄科学技術大学院大学（沖縄県恩納村）について、国立、私立のどちらでもない「国設民営」型の設置方式にする。財政面では支援するが学内人事などの運営には基本的に関与しない。国内外から優秀な研究者を集めるには研究の自主性や自由度を確保する必要があると判断した。

　設置形態は「特別な学校法人」と呼ばれる方式。政府は関連法案を次期通常国会に提出する。(16:00)

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インド洋給油法が成立　活動期限を1年延長へ

　インド洋での海上自衛隊の給油活動を延長する法律が12日午後の衆院本会議で与党の賛成多数で再可決、成立した。来年1月15日に切れる活動期限を1年間延長し「テロとの戦い」での海上阻止活動に参加する米国やパキスタンなど8カ国の艦船への給油・給水を続ける。12日午前の参院本会議では野党などの反対多数で否決した。(15:52)

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国立高度医療センター、独立法人化法が成立

　国立高度専門医療センター（ナショナルセンター）の独立法人化法が12日午前の参院本会議で賛成多数で可決、成立した。国立がんセンターや国立循環器病センター、国立長寿医療センターなど6拠点が2010年4月に独法に移行する。(12:48)

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中学生ら注意に逆上、67歳男性を暴行　警視庁、容疑で逮捕

　深夜の飲食店で集まっていたことを注意した男性（67）に暴行し財布を奪うなどしたとして、警視庁少年事件課は12日までに、東京都品川区の中学2年の男子生徒（14）ら中学生3人と、都立高校1年の男子生徒（16）の計4少年を強盗や傷害などの疑いで逮捕した。

　調べによると、4人は、10月29日午前2時40分ごろ、同区戸越六のファストフード店で、帰宅途中の男性から「こんな時間に何してんだ」と注意を受けたことに立腹、男性をけって足の骨を折る重傷を負わせるなどした疑い。そのうち中学生1人は、男性の現金2万円入りの財布も奪った強盗の疑いが持たれている。(15:13)

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丸紅契約書偽造、371億円詐取認める　コンサル元社長ら初公判

　丸紅の偽造契約書を使い、架空の病院再生事業で米大手証券リーマン・ブラザーズから371億円をだまし取ったとして、詐欺罪などに問われた医療コンサルティング「アスクレピオス」元社長、斎藤栄功被告（46）ら2人の初公判が11日、東京地裁（井口修裁判長）であり、同被告は罪状認否で起訴事実を認めた。

　建築コンサルティング「ジーフォルム」社長、高橋文洋被告（61）も認めたが、詐取したとされる金額の一部は「後で知った」と述べた。

　検察側は冒頭陳述で、同被告らが2006年以降、投資家から計約1500億円の出資金を集めたと指摘。投資せずに出資金を償還に回す「自転車操業」を繰り返し、未償還額が約500億円に上ると明らかにした。(07:00)

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客室乗務員に不況の嵐…年収１１０万円トルコ航空内幕

日本人全員「派遣切り」の危機も

　世界的な景気悪化の影響で、日本でも企業のリストラや人員整理が相次いでいるが、女の子のあこがれの職業である航空会社の客室乗務員にも不況の嵐が直撃している。なかでも悲惨なのが、日本とイスタンブールを結ぶトルコ航空の日本人フライトアテンダント（ＦＡ）。「年収２２０万円が１１０万円に激減」するうえ、全員が「派遣切り」の危機にさらされているというのだ。その内幕を、現役ＦＡが暴露した。

　「トルコ航空は外国の航空会社では珍しく、日本人ＦＡを直接雇用していない。全員、『派遣』です」と語るのは、トルコ航空乗務歴７年半のベテランＦＡ、高木千春さん（３４）＝仮名。

　高木さんは東京都内の派遣会社からトルコ航空に派遣されているが、労働環境の著しい悪化を受け、日本人ＦＡ１３人で労働組合「トルコ航空ユニオン」を結成し、委員長に就任した。

　高木さんによると、日本人ＦＡの仕事内容は「トルコ人ＦＡと同じ」。だが、待遇には大きな格差があるという。

　トルコ人ＦＡは正社員で、平均月給３４万円。ボーナスも７４万円が支払われる。だが、高木さんは日本～トルコ往復（片道約１３時間、拘束４日）で６万７０００円。月３－４往復で月収は約２５万円前後だが、ボーナスはおろか社会保険や雇用保険もない。「成田空港までの交通費も出ません」。また高木さんには、２年間で約１２０万円相当の残業代未払いもあるという。

　今年９月からは、さらに待遇が悪化。いきなり職種が「通訳」扱いとなり、乗客への食事サービスなどができなくなった。１１月からは日本人ＦＡの２人乗務体制が１人に変更。勤務シフトが半減したことで月収が１０万円を切り、年収が１１０万円程度になる可能性が出てきた。

　「ＦＡの仕事だけでは生活できなくなり、私を含めてほとんどの同僚が別の派遣で社長秘書や会社の受付をやりつつ、乗務している」と高木さん。そして今月、「来年２月２６日をもって契約解除したい」というメールが届いたという。

　高木さんは「日本語のできるトルコ人ＦＡを採用する、というのが解雇理由のようですが、緊急時の誘導や急病、年配のお客さまへの対応は、日本人でないと難しい」と日本人ＦＡの重要性を訴える。不況のなか、他の外国航空も“日本人切り”を進める可能性が高いだけに、乗客としても人ごとでは済まされない。

ZAKZAK 2008/12/12

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日弁連：国選弁護費用水増し防止へ　全弁護士に異例の文書

　岡山弁護士会所属の黒瀬文平弁護士（６７）による被疑者国選弁護費用の水増し請求問題で、日本弁護士連合会の宮崎誠会長が、適正な報酬請求を呼び掛ける文書を全弁護士に送っていたことが分かった。日弁連が会員向けに発信するのは通常、総会や新制度に関する案内文書などで、再発防止を促す要請文は異例。広報担当者は「問題の重要性を考慮した」と説明している。

　被疑者国選弁護は、起訴前の容疑者に弁護士をつける制度。弁護報酬は税金から支出される。黒瀬弁護士は受任した７事件で２４回しか容疑者と接見していないのに、４７回と記載した報告書を日本司法支援センター（法テラス）に提出。本来の報酬（約５２万円）より約３４万円多い８６万円余を受領した疑いがある。

　文書は「国選弁護報酬の請求について（お願い）」というタイトルで１１月１３日、全国約２万５０００人の弁護士の事務所にファクス送信した。水増し請求について「国民の信頼を大きく揺るがす。弁護士の報告のみに基づいて支払われる運用に厳しい批判と、真相究明と再発防止策についての意見が寄せられている」と指摘。「報告書の記載に正確を期す」よう求めている。

　法テラスは黒瀬弁護士の刑事告訴を検討中。岡山弁護士会も懲戒処分に向け手続きを進めている。【小林直】

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株価下落、投信を直撃　純資産３年ぶりの低水準

2008年12月12日0時2分

　株価下落が個人投資家向けの投資商品である投資信託を直撃している。投資信託協会がまとめた１１月の投信概況によると、販売低迷や運用の不振で、投信の純資産総額（１１月末時点）は５２兆８３億円と４カ月連続で減少した。０５年１０月以来約３年ぶりの低水準で、金融不安が「貯蓄から投資へ」の流れにブレーキをかけている。

　投信の設定額は前月末比３１．４％減の３兆１２３３億円で０３年１１月以来の低水準。解約額は３７．３％減の３兆３１９６億円と、０４年１１月以来の低さだ。株価低迷で投信が売れずに設定が減り、すでに買った投資家も売るに売れずに解約も少ない、という状況に陥っているとみられる。

　世界的な金融市場の混乱で運用も６カ月連続のマイナス。純資産総額はピークだった０７年１０月末の約８２兆円から４割程度も減少している。

　投信協会の乾文男副会長は「投信には厳しい状況が続いている。円高で外国証券に投資した投信へのダメージも大きかった」と話している。

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米新政権、イスラエルに「核の傘」提供か　現地紙報道

2008年12月11日22時42分

　【エルサレム＝村上伸一】１１日付のイスラエルの有力紙ハアレツは、米国のオバマ次期政権がイスラエルに対し、イランの核攻撃に対抗するため、米が核兵器で報復する「核の傘」を提供する意向だと報じた。イスラエルは米の「同盟国」を自負しているが、日米安保のような条約はなく、イスラム諸国からの脅威に軍が独自に対処する方針を堅持している。「核の傘」を受け入れれば、方針の転換を意味する。

　同紙によると、「核の傘」の提供はイランの核兵器保有を前提にしている可能性があるとして、保有を阻止するための軍事攻撃まで視野に入れているイスラエル政府内からは反対の声が出ている。