Bank Chief Admits Policy Failure

Bank Chief Admits Policy Failure

59 mins ago
SkyNews Sky News

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Britain's economic policy failed to stop the recession, the governor of the Bank of England has admitted.

Mervyn King said that from the early 1990s until the start of the credit crunch in 2007, monetary policy was successful in controlling inflation and maintaining economic stability.

But he added: "Nevertheless, it is clear that policy did not succeed in preventing the development of an unsustainable position."

Mr King also warned that 2009 would be a difficult year for the UK, during a speech at a Confederation of British Industry (CBI) dinner in Nottingham.

Despite the Government's second attempt at bailing out the banking sector, the governor said it is unclear when fiscal and monetary policy actions will help the economy recover.

"No one can know at what point the impact of all this stimulus will have a visible effect on activity; the lags in economic policy are notoriously long and unpredictable," he said.

"But well-designed policies implemented within a consistent policy framework will eventually work."

Mr King said policymakers may need to use "unconventional" tools to control inflation as interest rates come close to zero.

The Consumer Prices Index fell to 3.1% last month from 4.1% in November in the biggest monthly decline since the recession of the early 1990s.

The latest bank bail-out plans include a new £50 billion fund created for the Bank of England to use to buy up private sector assets.

This ability could be a useful additional tool in the fight against deflation, the governor said.

Sky News business presenter Jeff Randall, who listened to the speech, said: "The governor really went after the banks and pointed the finger of blame at them.

"I've never heard the governor of the Bank of England criticise the commercial banks, that he is supposed to be regulating, quite so openly and fiercely.

"He talked about the need to protect the economy from the banks.

"And later, in an unscripted comment that wasn't in his official speech, he said he understood why business people felt as though they were being held hostage by the banks.

"Quite extraordinary. I think this speech will really reverberate around the economy."

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さらに２００万円引き出し　タイ日本人殺害

2009年1月21日12時2分

　タイに長期滞在していた岐阜県出身の棚橋貴秀さん（当時３３）が殺害された事件に絡み、県警の特別捜査本部は２１日、愛知県一宮市貴船、輸入卸業森宏年容疑者（３１）＝窃盗罪で公判中＝を電子計算機使用詐欺や窃盗などの疑いで再逮捕したと発表した。容疑を認めているという。

　特捜本部によると、森容疑者は昨年８月７日午後、大阪府出身の浦上剛志容疑者（３０）＝窃盗容疑で指名手配＝と共謀し、岐阜市のレストランでノートパソコンを使ってインターネットバンキングに不正にアクセスし、棚橋さんの口座から自分が用意した口座に現金７２２万５千円を移し替え、このうち２００万円を名古屋市の現金自動出入機（ＡＴＭ）から引き出した疑いがあるとしている。

　森容疑者と浦上容疑者は、棚橋さんの口座から総額約１７００万円を引き出したとみられ、ほとんどが浦上容疑者に渡ったという。

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Saudi Arabia and the need for $75 oil

By John Sfakianakis

Published: January 20 2009 15:59 | Last updated: January 20 2009 15:59

Not long ago, when oil prices were at historically high levels, there were calls from within the Organisation of the Petroleum Exporting Countries for production cuts to keep them there. These efforts failed, and Saudi Arabia was responsible for unilaterally increasing supplies to try to calm the market. In fact, the Kingdom saw that while extremely high oil prices may be good for the short-term budgetary needs of oil producing states, they are not good for the global economy. Oil prices have fallen dramatically and oil consumer nations should recognise Saudi Arabia’s long-standing defence of “fair” oil prices and stable production, and realise that just as unrealistically high oil prices are unadvisable, so too are unrealistically low prices. The Kingdom has called for a “fair” price of $75 and, considering the global economic climate, that is an appropriate number.

Crucially, the next few months will be among the first in Saudi Arabia’s history where more than 35 per cent of its oil production capacity is likely to remain idle – far above the historical norm of 15-20 per cent. That comes at an enormous cost, estimated to be more than $15m per day. No other country has the discipline to maintain that much idle capacity. By the end of next year, Saudi Arabia’s oil capacity will reach 12m barrels per day, the result of an estimated $60bn in expansion investments. While this spare capacity will be painful for the Saudi government to carry, it highlights the ever-growing power that the Kingdom maintains over energy security and global prices. With millions of barrels in spare capacity, Saudi Arabia will continue its traditional role of stabilising prices and it will continue to be an essential buffer against any unforeseen supply disruptions.

However, the drive for oil supply security cannot include only the security of reasonable prices but the security of demand. Energy security cannot be achieved when prices are either too low or too high. After the precipitous drop of the past few months, the pendulum has swung to the other extreme, and that carries significant dangers. First, at these low prices “difficult” oil becomes economically unviable to extract. This will have a negative impact on producers with high extraction costs (such as Angola and Brazil), potential new sources (such as the tar sands in Canada), as well as undermine long-term research into alternative fuels and policies promoting energy efficiency. Second, lower oil prices do not generate predictable revenue flows, undercutting the ability of oil producers to make necessary investments in sustainable development and diversification.

There is a subtle expectation that Middle East sovereign wealth funds should do their best to purchase assets in the US and Europe. It seems that most regional sovereign funds will have to re-prioritise and look for investing within their respective local economies.

Close to two-thirds of Saudi Arabia’s more than $550bn in central banks’ total foreign assets are invested in the US and more than $12bn of goods were imported from the US and another $33bn from Europe in 2007. This “petrodollar recycling” has been longstanding policy for Saudi Arabia, as well as the rest of the Gulf oil producers. For every $72 a barrel of oil Saudi Arabia exported in 2007, close to $40 was recycled abroad. Saudi Arabia’s oil wealth is also felt intra-regionally in the form of remittances and investments within the Arab world. Both these investments and those abroad are falling commensurately with the price of oil; thus, Saudi Arabia’s financial well-being has a wider wealth effect. Over the course of the latest oil boom Saudi Arabian private intra-regional investments are estimated to have amounted to more than $40bn.

Due to effective investment of recent oil profits, Saudi Arabia is better equipped today than a few years ago to weather the global economic crisis. Saudi Arabia will continue to spend in key strategic sectors of the economy: education, employment, infrastructure and healthcare. But resources are finite. Foreign assets would be deployed, if necessary, along with raising debt from the domestic market. It can also decide to spend less until prices reach a more sustainable “fair price “ level.

Saudi Arabia cannot be blamed in the years to come if oil markets are under-supplied with non-Opec oil. Saudi Arabia’s growth is a security concern for all. There should be a realisation that a “fair price” for oil is essential for oil producers and recipients of recycled petrodollars alike. One of the most important things that oil-consuming nations can do is to realise this fact, and note that as the world’s “central banker of oil,” the Kingdom has played, and will continue to play, an instrumental role in ensuring global prosperity. With oil at $75 a barrel, the Kingdom would be positioned to continue this role for at least another generation.

The writer is chief economist, Saudi British Bank (SABB)

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Arab states to form $2bn business fund

By Simeon Kerr in Kuwait City

Published: January 20 2009 22:28 | Last updated: January 20 2009 22:28

Arab states agreed to form a $2bn fund to help small businesses through the credit crunch, one of the few concrete initiatives to emerge from an economic summit in Kuwait on Tuesday.

Mohammed Al Sabah, Kuwait’s foreign minister, told reporters at a press conference that the fund, to be managed by the Arab Development Fund, would include a microfinance programme to extend credit to cottage industries and help reduce unemployment in the Arab world.

“It’s already been proved that economic activity is the best way to control poverty,” he said at the end of the two-day Arab Economic, Social and Development Summit in Kuwait.

More than a third of the Arab world, about 100m people, live on less than $2 a day.

The summit was overshadowed by differences over a unified Arab response to the Israeli assault on Gaza and reconstruction efforts for the devastated coastal strip.

Amr Moussa, the secretary-general of the Arab League, said the summit had agreed that economic issues had to move forward in the face of political differences between the 22 member states.

He said the group would move forward with pan-Arab rail and electricity networks, while also seeking to implement an Arab customs union by 2015.

Unifying customs would ease the movement of trade, goods and people, helping to boost intra-Arab trade and investment, which lags behind other economic blocs.

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Teva and Lonza form generics joint venture

ByAndrew Jack in London and Haig Simonian in Zurich

Published: January 20 2009 15:40 | Last updated: January 20 2009 15:40

Teva, the world's largest generic medicines group, on Tuesday signalled its ambitions to dominate the growing market for copies of off-patent biological drugs by joining forces with Switzerland’s Lonza.

Shlomo Yanai, head of Israel-based Teva, said the partnership would compete on eight of the top-selling ten biological medicines coming off patent over the next decade, which between them are currently generating annual sales $30bn.

The move comes at a time of growing interest in lower cost generic medicines, as patents expire on drugs and governments and health insurers impose tough measures to cut treatment costs.

It also marks a sign of growing confidence by generics companies that they can overcome hurdles to produce equivalents of complex biologically-based treatments — so-called biosimilars or biogenerics.

Biosimilars are more costly and difficult to develop than chemically-based generic drugs, because they are never exactly identical to the original drug and require more exacting clinical trials to prove their equivalence to regulators.

Biological medicines are increasingly the focus of drug research to treat a growing variety of diseases, including cancer.

Mr Yanai said: “This is a very strategic alliance for our future in biogenerics. Biotechnology is the next wave in science, and biogenerics is the next wave in generics.”

A number of innovative pharmaceutical companies have begun to expand into generic drugs through acquisitions, led by Novartis, Daiichi Sankyo and Sanofi-Aventis.

Merck, Eli Lilly and AstraZeneca have all expressed interest in entering the market, principally to focus on “biobetters” reformulated to prove more effective or convenient than the previous patented versions on which they are based.

The complexity of developing biosimilars means that in spite of their higher development costs, they may still permit high margins.

Ron Gal from Bernstein Research said: “We see the deal as positive, as the companies have highly complementary skills and while it is too early to impact our model, strengthens the argument for a future for Teva's generic business after the blockbuster patent challenge era.”

While Teva brings experience in low-cost manufacturing to the partnership, Lonza offers both expertise in building complex biotech drug manufacturing facilities and producing such medicines under contract.

“The field of biosimilars is a natural extension of Lonza’s existing life sciences portfolio, and represents the next strategic step for the company”, said Stefan Borgas, Lonza’s chief executive.

In their joint venture, the two groups will equally share costs and split revenues on their range of biogenerics. Teva will continue to respect existing partnerships on some medicines, including with GSK and BMS, and Lonza will have the right to find other partners for biogenerics with which Teva does not seek co-development.

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11:17 GMT, Tuesday, 20 January 2009
Chinese PM's trip 'snubs France'
Nicolas Sarkozy, left, meets the Dalai Lama in Gdansk, Poland, 6 December 2008

Chinese Premier Wen Jiabao is due to travel to Europe next week, the foreign ministry has announced - but his trip will pointedly exclude France.

Mr Wen will visit Germany, Spain and Britain, as well as the EU in Brussels and the World Economic Forum in Davos.

Correspondents say Beijing continues to snub Paris because of a meeting between President Nicolas Sarkozy and the Dalai Lama late last year.

China reacted at the time by cancelling a scheduled summit with the EU.

'Mutual understanding'

Mr Wen's visit is being seen by analysts as a sign it is ready to mend relations with European leaders following the heated row last year over China's crackdown on Tibetan protesters.

"We hope that the visit will further enhance mutual understanding and trust," foreign ministry spokeswoman Jiang Yu told reporters.

"Setbacks that have happened in the past are not what we want to see," she said.

This attempt at a rapprochement does not appear to include France.

Ms Jiang gave no reason as to why Mr Wen's visit did not include meeting the French, but correspondents say officials in Beijing are still angry at Mr Sarkozy's meeting with the Dalai Lama.

The Chinese foreign ministry recently warned that the future of China's ties with France depended on whether Paris was prepared to "correct its wrongdoing" over Tibet.

China accuses the Tibetan spiritual leader of trying to seek Tibetan independence from Chinese rule, and opposes any foreign leader meeting the Dalai Lama.

But Beijing was particularly incensed by Mr Sarkozy's decision, because at the time France held the rotating presidency of the EU.

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13:20 GMT, Monday, 19 January 2009
Bush shoe man 'not after asylum'
Shoe attack against President Bush

The brother of the Iraqi journalist who threw his shoes at US President George W Bush has denied media reports stating he is seeking asylum in Switzerland.

Dargham al-Zaidi told the BBC he had not instructed a Geneva-based lawyer to write to the Swiss foreign ministry on behalf of his brother, Muntadar.

Earlier, the lawyer told the Tribune de Geneve that Muntadar al-Zaidi feared for his safety in his Baghdad prison.

Mauro Poggia also said Mr Zaidi would be unable to resume his job in Iraq.

Mr Zaidi, 29, launched his news conference attack at the US president, who ordered the invasion of Iraq in 2003, with the words: "This is a farewell kiss, you dog".

Since his arrest, the TV journalist has reportedly been beaten in custody, suffering a broken arm, broken ribs and internal bleeding.

'Human rights violations'

In an interview with the Tribune de Geneve on Monday, Mr Poggia said he had been contacted by Mr Zaidi's family and was drafting a letter to the Swiss foreign ministry requesting its assistance in granting him political asylum.

Muntadar al-Zaidi (archive image)

"Even if many Iraqis support his act, he is at the mercy of all kinds of extremists," he said. "His life could become hell in his own country."

But Mr Zaidi's older brother, Dargham, later rejected the statement.

He told the BBC that the family was in the process of filing a lawsuit against Iraqi Prime Minister Nouri Maliki and Mr Bush, claiming Mr Zaidi's human rights had been violated - citing his imprisonment and physical beatings while in jail.

Mr Zaidi's family are also waiting for a decision from the Iraqi judiciary on whether he can be represented by a lawyer of his choice, or whether the courts will appoint a lawyer on his behalf.

A decision is expected after this month's provincial elections.

Mr Zaidi is charged with aggression against a foreign head of state, and faces up to 15 years in jail if convicted. His family denies he has done anything wrong.

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17:12 GMT, Monday, 19 January 2009
Ancient Persians 'gassed Romans'
By Tanya Syed
BBC News

Remains of Persian soldier (Yale University Art Gallery, Dura-Europos Excavation Archive)

Ancient Persians were the first to use chemical warfare against their enemies, a study has suggested.

A UK researcher said he found evidence that the Persian Empire used poisonous gases on the Roman city of Dura, Eastern Syria, in the 3rd Century AD.

The theory is based on the discovery of remains of about 20 Roman soldiers found at the base of the city wall.

The findings were presented the Archaeological Institute of America's annual meeting.

The study shows that the Persians dug a mine underneath the wall in order to enter the city.

They also ignited bitumen and sulphur crystals to produce dense poisonous gases, suggested Simon James, an archaeologist at the University of Leicester.

"The Roman assault party was unconscious in seconds, dead in minutes"
Dr Simon James,
University of Leicester

He added that underground bellows or chimneys probably helped generate and distribute the deadly fumes.

The Romans apparently responded with counter-mines in an effort to thwart the siege.

"For the Persians to kill 20 men in a space less than 2m high or wide, and about 11m long, required superhuman combat powers - or something more insidious," said Dr James.

"The Roman assault party was unconscious in seconds, dead in minutes."

Excavations showed that the soldiers' bodies were stacked near the counter-mine entrance by the attackers to create a protective barricade before setting the tunnel on fire.

"It is clear from the archaeological evidence at Dura that the Sasanian Persians were as knowledgeable in siege warfare as the Romans," said Dr James.

"They surely knew of this grim tactic." Graphic showing how the Persians created the toxic gases

Evidence also shows that the Persians dug their mine with the intention of collapsing the city wall and adjacent tower.

Although the mine failed to destroy the structures, the attackers eventually conquered the city.

However, how they broke into the city still remains a mystery because details of the siege cannot be found in surviving historical records.

Dura was later abandoned, and its inhabitants were slaughtered or deported to Persia.

In 1920, the well-preserved ruins were unearthed by Indian troops trying to dig defensive trenches along the buried city wall.

The structures were excavated in a series of campaigns in the 1920s and 1930s by French and American researchers.

In recent years, they have been extensively re-examined using modern technology.

Dr James and a colleague are currently investigating records and objects collected about 80 years ago.

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03:35 GMT, Wednesday, 21 January 2009
Nuclear test veterans launch case
Nuclear tests

Veterans involved in British nuclear tests in the Indian and Pacific oceans are to launch a legal bid against the government at the High Court later.

Ex-servicemen want compensation for illnesses they claim are the result of exposure to radiation in the 1950s.

But MoD lawyers will try to derail their claims before a full hearing, by arguing the tests happened too long ago for compensation to be considered.

The MoD says it recognises the troops' "vital role" in British nuclear tests.

At the height of the Cold War in the 1950s, Britain carried out a series of nuclear weapons tests in mainland Australia, the Montebello islands off the west Australian coast and on Christmas Island, an Australian territory in the Indian Ocean.

Veterans who served in the Army, Royal Navy and Air Force, as well as personnel from New Zealand and Fiji, were involved in the tests.

"We are the frontline heroes from the Cold War"
Douglas Hern, British Nuclear Test Veterans' Association

They say there were not properly protected from the blasts and did not know the possible consequences.

Many blame ill health, including cancers, skin defects, fertility problems and reduced life expectancy, on radiation exposure.

The High Court hearing to assess whether the claims are barred by the Limitation Act 1980 begins on Wednesday and may take two weeks.

Solicitors representing the veterans say if a compensation hearing can go ahead, the MoD could face claims from up to 1,000 individuals, potentially costing millions of pounds.

Douglas Hern, of the British Nuclear Test Veterans Association, said the serving troops had been "part of an experiment".

"We were human guinea pigs. We are the frontline heroes from the Cold War. There was no-one closer to it than us," he said.

He blames radiation exposure for causing his diabetes. He also believes that the death of his daughter from cancer at the age of 13 had a hereditary link to what he calls the "genetic confusion" in his own body.

An MoD spokesman said: "The UK government recognises the vital contribution service personnel played in the UK's nuclear tests during the 1950s and understands its obligation to veterans.

"When compensation claims are received they are considered on the basis of whether or not the Ministry of Defence has a legal liability to pay compensation.

"Where there is a proven legal liability, compensation is paid. There is a case ongoing and therefore it would be inappropriate to comment further."

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Russia’s Federal Security Service arrests group of dynamiters

20.01.2009, 16.56

MOSCOW, January 20 (Itar-Tass) - Russia’s Federal Security Service has established the identities of and arrested, jointly with the Interior Ministry, a group of persons "involved in masterminding and staging a series of explosion in Moscow on January 16, 2006 - at a McDonald’s restaurant, the approach tracks near the Tsaritsyno station, in the area of the Kuzminki subway station on October 5, 2008, the main railway line of the Paveletskaya branch near the Bulatnikovo station on November 4, 2008 and at St.Nicholas Church in the district of Biryulyovo Zapadnoye on November 30, 2008," the FSB public relations department told Itar-Tass on Tuesday.

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Ukraine to lose $1 bln as result of Naftogaz-Gazprom agts-official

21.01.2009, 04.17

KIEV, January 21 (Itar-Tass) - As a result of agreements signed by the heads of Naftogaz and Gazprom, Ukraine will lose over 1 billion US dollars, Bogdan Sokolovsky, the Ukrainian president’s envoy for energy affairs, said on the Channel 5 TV on Tuesday evening.

“We are trying to comfort ourselves that we have got a 20-percent discount on which we will save 2.2 billion US dollars,” he said. “However, owing to the fact that our transit tariff is 1.7 US dollars and not 4 dollars as in Slovakia, we will lose in the transit about 3.4 billion dollars. If we balance the result, we have over 1 billion US dollars” to the disadvantage of Ukraine, he noted.

Sokolovsky said that the presidential secretariat has not received yet even the copies of the decisions signed by the Naftogaz and Gazprom heads.

The presidential envoy expressed the view that the delegation that conducted talks in Moscow on natural gas supplies should report to the president on the fulfilment of directives given by him.

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Greek foreign minister to discuss Caucasus, energy in Moscow

10:41 | 21/ 01/ 2009

Print version

ATHENS, January 21 (RIA Novosti) - The Greek foreign minister will meet with her Russian counterpart in Moscow on Wednesday to discuss a broad variety of bilateral and international issues, the Greek ministry said.

Dora Bakoyannis, whose country presides over the Organization for Security and Cooperation in Europe (OSCE) this year, will meet with Russian Foreign Minister Sergei Lavrov to discuss issues "addressed by the OSCE, including the crisis in the Caucasus and the shaping of a new security architecture for Europe."

Russia and Georgia fought a five-day war after Georgia attacked South Ossetia in early August last year. Moscow subsequently recognized South Ossetia and Abkhazia, another disputed Georgian republic, as independent states on August 26.

Last month, during a meeting of foreign ministers of the 26-nation intergovernmental security body in Finland, Lavrov strongly criticized the OSCE for its failure to "react to the illegal use of force [by Georgia]," and demanded an official enquiry into the August events in the Caucasus.

The Greek ministry also said in a statement that "the two foreign ministers will also look at issues of particular interest to the two countries, such as energy, developments in the Middle East, the Cyprus issue and the course of EU-Russian relations."

The issue of energy will also be high on the agenda during the foreign ministers' meeting. Last week Kostis Khatzidhakis, the Greek development minister, announced that his country may seek compensation from Russia after shortages in gas deliveries due to a dispute over a new gas contract with Ukraine.

Russian gas supplies started reaching European consumers on Tuesday for the first time since January 7 when Russian energy giant Gazprom suspended deliveries to Europe through Ukraine following accusations that Kiev was stealing Russian gas.

Following talks Sunday between the two country's premiers, Gazprom and Ukrainian energy company Naftogaz signed on Monday a Russian gas supply deal to Ukraine for 2009-2019, allowing for the restart of gas transits to Europe.

Russia delivers about 6 million cu m of gas per day to Greece, around two-thirds of the country's consumption. During the dispute Greece was forced to purchase extra gas from Azerbaijan, as well as liquefied gas from Algeria.

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Ukraine to pay European prices for Russian gas
20:21 | 20/ 01/ 2009

Print version

MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - The Russian-Ukrainian gas conflict has been settled.

During the talks between Prime Ministers Vladimir Putin and Yulia Tymoshenko, the sides agreed to resume the transit of Russian natural gas to Europe via Ukraine, approved the European pricing formula for gas deliveries to Ukraine, and decided to abandon gas trade intermediaries.

As a result, the Gazprom and Naftogaz CEOs signed supply and transit contracts for 2009-2019 on January 19.

In 1990-2007, Ukraine received Russian natural gas at the so-called Ashgabat formula based on the price of the cheap gas Gazprom bought in Central Asia, because Ukraine transited up to 80% of Russian gas exports to Europe.

Last year, Ukraine bought Russian natural gas at $179.5 per 1,000 cubic meters, although the price for Europe exceeded $400 by the end of 2008.

However, in the summer of 2008, when oil prices reached their peak and the demand for hydrocarbons soared, it became clear that Kazakhstan, Uzbekistan and Turkmenistan would adjust their gas prices to European market prices. Putin recently said that the Russian gas monopoly would pay $340 per 1,000 cubic meters of Central Asian gas on average in the first quarter of 2009.

Initially, Russia and Ukraine considered Ukraine's gradual transition to the European gas pricing formula by 2011, but the gas crisis has sped up the transition. As of now, Ukraine has agreed to buy Russian gas at the European price with a 20% discount in 2009.

The gas price for Ukraine will be $360 in the first quarter of 2009, or 80% of the earlier claimed European price for Ukraine of $450. Later the price for Ukraine will change every three months depending on the average European price, which is likely to fall because it depends on oil prices six months previous.

Some analysts say the average European gas price will fall to $250 in the second quarter and to $175-$180 in July-December 2009.

Gazprom's budget is based on an average annual European price of $280 per 1,000 cubic meters of gas, which puts the price for Ukraine at $224. This is probably why Tymoshenko said after the Monday talks that Ukraine would pay less than $250 for Russian gas in 2009, adding that this would save her country $5 billion.

Russia and Ukraine also decided to make mutual gas trade more transparent and to stop using the services of gas trader RosUkrEnergo, a parity venture between Gazprom and two Ukrainian businessmen.

Russia will also save on gas transit to Europe via Ukraine in 2009. The new 10- year transit contract stipulates a preference tariff of $1.70 per 1,000 cubic meters per 100 kilometers for 2009. This will save the Russian gas monopoly up to $2 billion this year because the average European tariff is approximately $3.

But from January 2010 Ukraine will pay European prices for Russian natural gas, and Russia will pay a European tariff for gas transit via Ukraine.

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

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Emerging Markets Face $180 Billion Investment Decline (Update1)
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By Patricia Lui

Jan. 21 (Bloomberg) -- Foreign direct investment in developing nations will drop by $180 billion, or 31 percent, this year as a global recession prompts multinationals to cut spending on factories and mines, according to the World Bank.

The decline will put renewed pressure on emerging-market currencies, even as asset sales by fund managers slow, according to Mansoor Dailami, manager of international finance in the global development prospects group. Rallies in the South Korean won, Brazil’s real and the Polish zloty have all faltered since the end of 2008 as companies including Rio Tinto Group and Honda Motor Co. put expansion plans on hold.

“This is the most serious reaction so far to the global recession, the factory level,” Dailami, who joined the bank in 1986, said in an interview in Washington. “Most emerging-market currencies are already under pressure and this tendency will continue. In 2008, it was a stocks and portfolio story. This year, it will be an FDI story.”

Foreign direct investment fell an estimated 10 percent in the developing world in 2008 and will cool further this year, the United Nations said in its 2009 outlook. FDI, which typically involves spending on plant and machinery or the purchase of a controlling interest, accounted for 38 percent of inflows into emerging markets in recent years, compared with 10 percent for investment by funds and 54 percent for loans, according to Morgan Stanley estimates.

Investment Delays

Bloomberg-JPMorgan indexes tracking currencies in Asia, Latin America and Eastern Europe in 2008 posted declines of 5.9 percent, 19 percent and 11 percent, respectively, and have since dropped further. The won is down 8.3 percent versus the dollar so far this year following a 17 percent jump in December. The real is 2.6 percent weaker and the zloty has lost 12 percent.

Rio, the third-largest mining company, this month postponed a $2.15 billion expansion of an iron-ore mine in Brazil. Honda, Japan’s No. 2 automaker, delayed construction of a $100 million factory in Argentina and has shelved expansion plans in Turkey and India. Hitachi Construction Machinery Co., the world’s largest maker of giant excavators, froze a $1 billion plan to expand production in China and other emerging markets.

“I’ve never before experienced seeing sudden, simultaneous drops in worldwide demand,” Hitachi Chief Executive Officer Michijiro Kikawa said this month in an interview in Tokyo. “New investment won’t be implemented until we can foresee how the market will recover.”

As recently as Oct. 28, the Tokyo-based company was predicting 26 percent growth in China sales for the current financial year. The nation’s excavator market shrank 50 percent from year-earlier levels in November and 37 percent in December.

Weaker Currencies

Of the world’s five largest economies, only China has so far escaped recession. The nation will tomorrow report a 6.8 percent expansion for the fourth quarter, the slowest growth in seven years, according to the median estimate of economists surveyed by Bloomberg News.

The World Bank estimates that foreign direct investment in developing countries will shrink to $400 billion this year from an estimated $580 billion in 2008 and $500 billion in 2007, according to Dailami, author of the lender’s annual Global Development Finance report.

The outlook is “pretty grim,” said Peter Elston, a Singapore-based strategist at Aberdeen Asset Management Plc, which is Scotland’s largest independent money manager and oversees $154 billion. “Given that exports have fallen off a cliff, you would expect FDI to do the same.”

Tumbling Exports

The World Bank predicts global trade will contract this year for the first time since 1982 and Brazil, Latin America’s biggest economy, forecast its exports will drop as much as 20 percent. Germany, the world’s biggest goods exporter, reported a record slide in shipments for November and China, the second- largest, last month had its worst decline in a decade.

Investment in China, the largest developing economy, fell 5.7 percent from a year earlier to $5.98 billion in December, sliding for a third straight month, official figures show.

Net flows to Brazil, the second-biggest, slid 14 percent to $2.18 billion in November and the country’s central bank last month cut its 2009 estimate for foreign direct investment to $30 billion from $33 billion.

“If we start seeing very severe cutbacks for more than a year, then you start moving into a world where shortage of FDI will become an issue for currencies,” said Richard Urwin, head of asset allocation at BlackRock Inc., the largest publicly traded U.S. asset manager with $1.26 trillion of funds. “Emerging currencies have already been weak due to the slower capital inflows from stocks.”

Fund Exodus Abates

Some $67 billion was pulled out of emerging-market equities and bonds funds in 2008, after net inflows of $62 billion the previous year, according to EPFR Global, a Cambridge, Massachusetts-based research company. The outflows eased this year as the funds took in $4.29 billion in the first 14 days of 2009, the data show.

So far this year, 22 of 26 emerging-market currencies tracked by Bloomberg have weakened versus the dollar. Hungary’s forint was the worst performer, sliding 14 percent, as Europe’s recession crimps demand for products assembled in the country such as Audi cars and Nokia phones.

Eastern European countries are the most vulnerable among developing regions to a slide in foreign investment as they have relatively large overseas debt, the World Bank’s Dailami said. The International Monetary Fund has already offered emergency funding to Belarus, Latvia, Hungary, Iceland, Serbia and Ukraine.

Banks Bailing Out

Government-led bailouts of finance companies in the U.S. and Europe are forcing lenders there to pull funds back from emerging markets, forcing the sale of “prized jewels” such as stakes in Chinese banks, David Bloom, global head of currency strategy at HSBC Holdings Plc, said Jan. 16 in Hong Kong.

Royal Bank of Scotland Plc, the biggest government- controlled bank in the U.K., sold its $2.3 billion stake in Bank of China Ltd. last week to replenish capital and Zurich-based UBS AG raised some $900 million by selling shares in the Chinese lender. Bank of America Corp., the largest U.S. lender by assets, this month sold part of its stake in China Construction Bank Corp. for $2.8 billion.

”The flow of money and the cross-border flows will slow,” said Bloom, who predicts the world’s economic output will decline this year for the first time since World War II.

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King Says BOE Asset Buying May Start Soon as Rate Effects Wane
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By Brian Swint

Jan. 21 (Bloomberg) -- Bank of England Governor Mervyn King said officials may start buying assets within weeks to loosen credit markets as the lowest interest rates since 1694 fail to avert a “marked” recession.

The U.K. central bank may acquire securities such as corporate bonds and commercial paper to bolster lending to companies and consumers as banks rebuild balance sheets damaged by the global financial crisis, King said yesterday. He said interest-rate reductions to the current 1.5 percent won’t prevent a contraction in the first half of the year.

“Despite those big cuts, there remains a risk that inflation will fall below 2 percent,” the target rate, King said in a speech in Nottingham, England. “It is sensible for the Monetary Policy Committee to prepare for the possibility -- and I stress that we are not there yet -- that it may need to move beyond the conventional instrument” of the bank’s benchmark interest rate.

King backed Prime Minister Gordon Brown’s plan to give the Bank of England unprecedented powers to buy securities, unveiled on Jan. 19 along with a 100-billion pound ($140 billion) bailout for banks. Those tools may later be expanded to fight deflation as the British economy faces a recession this year that may be the worst since the aftermath of World War II.

“This is a momentous speech that sets the policy agenda for the next decade,” said Lena Komileva, an economist at Tullett Prebon in London. “More rate cuts are likely but before long, the Bank of England may reach the point of using quantitative easing to target inflation, in effect to prevent deflation.”

Pound, Oil Prices

The pound fell to a record low against the yen yesterday and slipped below $1.40 for the first time since 2001. “Since the summer, the exchange rate has fallen by almost 20 percent, and oil prices have fallen by around two-thirds, both of which will boost demand,” King said in the speech.

“A pronounced contraction in spending and output is under way,” King said. “Total output in the fourth quarter is expected to have fallen sharply. In the first half of this year, the rate of contraction is likely to continue to be marked.”

The inflation rate declined to 3.1 percent in December from 4.1 percent the month before, the biggest drop since records began in 1997. The economy may shrink 2.7 percent this year, the most since 1946, the Ernst & Young Item Club said this week.

“The bank is almost ready, but very willing, to engage in unconventional monetary policy techniques,” said Philip Shaw, chief economist at Investec Securities in London. “There is still some room for interest rates to come down. But there’s a good chance they’ll use this facility.”

‘Adjustment’ Needed

Commercial banks still need to pay down their debts to put their balance sheets in order, King said. “Leverage ratios of large banks remain at remarkably high levels, and the required adjustment will not happen quickly,” he said.

The Treasury said that the central bank can make asset purchases of up to 50 billion pounds and the government will indemnify the bank against any losses, starting on Feb. 2. King said officials “will consider purchasing only high-quality assets” and that any such actions would seek “to complement and stimulate private demand, not substitute for it.”

“In each case the bank will keep the market fully informed,” King said. “It will be a matter of weeks not days before a program of purchases can begin, but it will be weeks and not months.”

Fed Purchases

Any purchases by the Bank of England would follow similar moves by the U.S. Federal Reserve, which has started buying securities after cutting its benchmark interest rate to a target range of zero to 0.25 percent.

Policy makers will watch measures of lending to non- financial companies to gauge how well the asset purchases and the government’s capital injections and loan guarantees are working, King said.

The measures “are not designed to protect the banks,” King said. “They are designed to protect the economy from the banks.”

The economy may still take some time to recover, he said. “The lags in economic policy are notoriously long and unpredictable. But well-designed policies implemented within a consistent policy framework will eventually work.”

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Barack Obama plans to make US relationship with Britain less special than before

Barack Obama will play down Britain's importance and cast it as merely "one of the crowd" of countries with which America has a special relationship, sources close to the incoming president have warned.


By Tim Shipman in Washington
Last Updated: 7:14PM GMT 17 Jan 2009

Barack Obama threatens Britain's 'special relationship' at risk

He intends to move away from the tight links with Britain forged under George W.Bush and develop closer relations with a far wider range of countries, according to his closest allies.

Foreign Office officials admit that they feel "threatened" by Mr Obama's plans to "flirt" with others and they know that the British influence may seem to wane in Washington as Mr Obama looks elsewhere to forge friendships and alliances on the world stage.

Diplomats remain hopeful that their close personal links with US officials and Britain's shared interest in rebuilding the global economy and getting to grips with such problems as Afghanistan and Iran will eventually reassert the importance of the special relationship.

But a senior Democrat with close links to the Obama team revealed that Britain should be prepared for changes as Mr Obama reaches out to leaders shunned by President Bush.

Mr Obama's first foreign visit is expected to be to a Muslim nation and he will spend time forging links with countries in Asia and the Middle East, while in Europe he will focus on building closer ties to France and Germany.

The Democrat said: "The relationship with Britain will remain special but Britain might have to make room for a few more special countries. They'll be one of the in crowd but it will be a bigger crowd."

A British official said: "The public line has always been that we're happy for America to flirt with other countries, and it makes sense for Obama to snuggle up to France and Germany. But in truth we are a little bit threatened by that."

Officials in London and Washington play down the prospects of a one-to-one meeting between Gordon Brown and Mr Obama before the new president visits Britain for the next G20 economic summit in April.

Britain may have to settle instead for a visit from Hillary Clinton, the new secretary of state, whom Mr Obama is dispatching on international "listening" tour to rebuild bridges with foreign nations burned by the Bush administration.

Diplomats say the special relationship is anyway riven by more serious rows behind the scenes than is widely appreciated back home, and warn of future flare ups under Mr Obama.

The British official said: "There is a surprising level of disagreement behind closed doors, but there is an understanding that it is kept private. People don't routinely leak it all like the French do."

Diplomats say that they made repeated private criticisms to the Bush administration of the Guantanamo Bay detention camp, an issue one described as "a constant headache". They warn of renewed tension if Mr Obama does not quickly fulfil his promise to close the facility. "We will seek to hold him to that," one said.

Other British officials are concerned that some ministers and Labour MPs have an unrealistic view of what Mr Obama can change and achieve, which would add to future tensions. "Some ministers are frankly misty-eyed about him," one diplomat said. "But that slightly blind American support for Israel is not going to change overnight. America's national interests will continue to get in the way of Britain's national interests."

A Foreign Office official described the military relationship as "complicated" in Afghanistan and Iraq, and said that diplomats have made great efforts over the last 12 months to persuade Mr Obama's team that British withdrawal from Basra this year would not create more problems for the new president.

The official said: "We had to go to great lengths to convince them that we will not leave a vacuum behind."

Foreign Office sources also say they believe Mr Obama is a "protectionist" and will solidify trade barriers to appease struggling US companies, a rare admission after months of playing down differences on free trade.

But British diplomats in Washington do expect to have Mr Obama's ear as he tries to ease worldwide economic downturn and thaw relations with Iran and they hope to steer him towards a new international climate change deal by the end of the year.

"On Iran our views will certainly be sought," one Washington source said. A diplomat said: "We were also struck that Hillary Clinton raised climate change as a foreign policy issue at her confirmation hearings. That's a new departure."

Steve Clemons, a senior fellow at the New America Foundation think tank, who has close links to the Obama team, the state department and foreign embassies in Washington said Mr Obama would be most dependent on Gordon Brown to help the worldwide economic recovery.

He praised the role of British ambassador Sir Nigel Sheinwald and his team in establishing links with Mr Obama's team. "They have a breadth and sophistication of contacts that has left the French and Germans lagging."

British diplomats in Washington say those links, plus shared history, language and culture, will stand the special relationship in good stead even if Mr Obama initially appears more interested in other countries.

But British officials admit they are sensitive to changes of mood in the special relationship because, unlike most other countries, the huge amounts of intelligence and military technology that the UK gets from the US means that staying close to America is a fundamental goal of foreign policy in itself.

"If it wasn't for the intelligence sharing and military cooperation we would become a bit like Luxembourg," the official said, only half in jest.

Diplomats hope that Mr Obama's willingness to listen to conflicting views will make candid friendship easier than under Mr Bush. "Tony Blair recognised that you had to be 100 percent on Mr Bush's side or not at all, and I think he was right," said a Foreign Office official.

"With Obama, there's the chance that we can have a relationship more like Thatcher with Reagan. She was not frightened to tell him what she thought. We will be scared to test the love too much, but we will flex a bit more muscle."

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去りゆくブッシュさん、聴衆から「ヘイ、ヘイ、グッドバイ」
特集 オバマ新政権
２０日、オバマ米大統領の就任式後、ヘリコプターに乗り込み、ワシントンを去るブッシュ前大統領とローラ夫人＝ロイター

　【ワシントン＝増満浩志】ブッシュ前大統領夫妻は、オバマ大統領の就任式後、議会議事堂の広場からヘリコプターに乗り、ワシントンを去った。郊外のアンドリューズ空軍基地でヘリからジェット機に乗り換え、地元テキサスへ帰った。

　ヘリが飛び立った際、就任式の興奮さめやらぬ群衆から「ヘイ、ヘイ、ヘイ、グッドバイ」と唱和する声が、空へ向かって響き渡った。スポーツで勝利チームのファンが敗者に浴びせかけるからかいの歌で、歴史的な歓迎を受けたオバマ大統領とは対照的な、寂しい退任となった。

　しかし、ブッシュ氏はこの日、終始リラックスした笑顔を見せた。就任式に向かう際は、８年間過ごしたホワイトハウスに向かって投げキス。ＡＰ通信によると、執務室の机の引き出しに、新大統領へのメモを残したという。

　一方、チェイニー前副大統領は、ブッシュ夫妻に先立ち、車で議会を去った。前日に引っ越し作業で背中を痛め、この日は車いすで就任式に出席していた。

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ベトナム航空副機長、食材などの密輸入も…犯罪組織から報酬

　ベトナム航空乗務員による盗品の密輸出事件で、副機長ダン・スアン・ホップ被告（３３）（盗品運搬罪で起訴）がベトナムから日本へのフライトの際も、本国の犯罪組織から報酬を受け取ってベトナム食材などを密輸入していたことがわかった。

　食材などは国内のベトナム雑貨店で販売されていた。

　山口、埼玉、兵庫など１４府県警の合同捜査本部は、ホップ被告が、日本―ベトナム間の往路・復路両方で「運び屋」を務めたと断定。金や品物の流れを調べている。

　ホップ被告は２００６年秋頃から、主犯格であるホーチミン市在住のベトナム人女（３４）（盗品有償譲り受け容疑で逮捕状）から１回１００ドルの報酬を受け取り、自らの荷物に紛れ込ませる手口で、盗品などをベトナムに密輸出していた疑いが持たれている。

　捜査関係者によると、ホップ被告は日本に向かう際も、女から渡されたベトナム食材などを荷物として機内に搬入。日本に持ち込んだ後、女の指示に従い、各地のベトナム雑貨店に宅配便で発送し、１回５０ドルの報酬を受け取っていたとみられる。主犯格の女は、国内のベトナム雑貨店などに「食材を買わないか」と持ちかけ、販路を広げていた。

　ホップ被告は「日本に来る際に何度も品物を運び、その度に金をもらった。職場の同僚たちもやっていた」と供述している。捜査本部は２１日、ホップ被告を山口県警から埼玉県警に移送し、午後にも盗品有償譲り受け容疑で再逮捕する。

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産業用電力、最大の落ち込み　昨年１２月は１３％減

2009年1月21日18時21分

　国内１０電力会社が昨年１２月に販売した産業用大口電力量は前年同月比１３．０％減で、過去最大の落ち込みだった。昨年１０月から３カ月連続の前年割れ。デジタル家電や自動車が同１８．１％減、それらの産業に鋼材などを供給する鉄鋼も同２４．８％減と過去最大の下げ幅だったほか、すべての産業で前年割れだった。これまでの最大の下げ幅は、第１次石油危機で工場の稼働率が下がった７５年５月の同９．３％減。

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経産省が「植物工場」　モデル施設を設置

　経済産業省は21日、発光ダイオード（ＬＥＤ）などを利用して農作物を計画的に生産する「植物工場」のモデル施設を同省別館ロビーに設置した。植物工場は、温度や湿度を制御しながらＬＥＤなどの光源を用いて人工的に農作物を栽培する施設。安全な農産物を効率よく安定的に生産できる利点がある。

　全国では約30カ所で稼働し、食品メーカーなどがトマトやレタスといった農作物を栽培している。経産省は製造業の技術や小売業のノウハウなどを農業に応用する「農商工連携」の柱として普及拡大を目指している。

　設置式典には二階俊博経産相や石破茂農相らが出席。農相は「両省が連携して、農業を促進していくのは意味がある」と強調。経産相も「全国で取り組んでもらうことで大きく花開くのではないか」と期待を寄せた。(21:52)

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日証協、投資家保護団体を設立

　日本証券業協会は21日、投資家からの苦情や相談、あっせん業務を手掛ける特定非営利活動法人（ＮＰＯ法人）を新設すると発表した。内閣府の認証を受け早ければ9月に活動を始める。金融商品を巡るトラブルが絶えないため、苦情、相談などの業務を専門に担う法人を設置し、投資家の保護につなげる。

　これまで相談窓口は、トラブルの形態や金融商品の性質により、日証協や投資信託協会、日本証券投資顧問業協会などに分かれていた。新法人を設置し業務を一元化する。(18:52)