Oct. 11 (Bloomberg) -- Billionaire George Soros, looking to address the "political problem" of climate change, said he will invest $1 billion in clean-energy technology and create an organization to advise policy makers on environmental issues.

Soros, the founder of hedge fund Soros Fund Management LLC, announced the investment in Copenhagen yesterday at a meeting on climate change sponsored by Project Syndicate. The group is an international association made up of 430 newspapers from 150 countries.

"I want to apply rather stringent criteria to the investments," said Soros in an e-mailed message. "They should be profitable but should also actually make a contribution to solving the problem."

Soros, whose own wealth accounts for much of the approximately $24 billion his New York-based money-management firm oversees, didn't provide any details in his speech on the type or scope of investments he might make.

Soros, 79, also will establish the Climate Policy Initiative, a San Francisco-based organization to which he will donate $10 million a year for 10 years.

Two of the euro zone's largest economies - France and Italy - have announced surprise surges in industrial output during August.

Combined with a solid German figure earlier this week, that has bolstered expectations the region will come out of recession during the third-quarter.

Italy reported a seven percent monthly rise and revised its July result upwards.

EUOBSERVER / BRUSSELS - Nobel prize winner in economics, Joseph Stiglitz, says the financial crisis is forcing the EU to re-examine its cornerstone policy area - the single market.

"The crisis has brought home a couple of fundamental questions for the single market concept of Europe that have not really been adequately discussed," said the star economist at a conference on banking regulation in Brussels on Monday (12 October).

Joseph Stiglitz warned the financial crisis was testing the EU's single market

Referring to the banking collapses in Ireland and Iceland late last year, Mr Stiglitz said financial regulation in one country clearly presented problems for depositors in other countries. "And we need to get a grasp on that," he said.

But the former World Bank economist, turned critic of its sister organisation the International Monetary Fund, questioned whether Europe was now dealing with such economies correctly.

American economists Elinor Ostrom and Oliver Williamson have won the 2009 Nobel Prize for economics for their work on economic governance. Ostrom is the first woman to win the economics prize.

AFP - Elinor Ostrom and Oliver Williamson of the United States won the 2009 Nobel Economics Prize on Monday for their work on the organisation of cooperation in economic governance, the Nobel jury said.
   
Ostrom is the first woman to win the Economics Prize, which has been awarded since 1969.
   
"The research of Elinor Ostrom and Oliver Williamson demonstrates that economic analysis can shed light on most forms of social organisation," the jury said.
   
Ostrom won half the 10-million-kronor (1.42-million-dollar, 980,000-euro) prize "for her analysis of economic governance" especially relating to the management of common property or property under common control.

The Business Secretary Lord Mandelson today defended a multi-billion pound sale of public assets as "a much better thing to do than savagely cutting public expenditure".

The Prime Minister will today give details of an initial round of disposals that could raise £3 billion over the next two years - including the Tote, the Dartford crossing, the Channel Tunnel rail link, and the Student Loan book.

Speaking on GMTV, Mr Brown said: "The important thing is we will maintain frontline public services, we will have an economy that is growing with jobs to maintain frontline public services. Now that is the big division between us and the opposition.

"We are doing everything to make sure we maintain our health, our schools, our policing services. That is not the case with our opponents."

Lord Mandelson suggested that airports could be also among the local council-owned assets which could be sold offs.

In a BusinessWeek interview, Siemens CEO Peter Löscher discusses the company's lawsuit threats against former executives embroiled in a major bribery scandal, difficult market environments and the path out of the economic crisis.

In late September, Siemens issued an ultimatum to former board members, including ex-CEOs Klaus Kleinfeld and Heinrich von Pierer: Reimburse the company for some of the money it has expended to settle a massive corporate bribery scandal or face legal action. According to the Financial Times, Siemens wants Kleinfeld, now chief executive of Alcoa, to pay more than $2.9 million; it is seeking about three times that from von Pierer. Siemens claims that its former chieftains failed to stop widespread bribery, first revealed in 2006. The scandal has become a long-running embarrassment for a company which The Guardian called "a symbol of German engineering excellence and corporate probity." In 2007, current Siemens CEO Peter Löscher, a former top executive at Merck, was brought in to clean up the mess that has cost the company billions in fines and legal fees. I talked with him about what is perhaps the final chapter of the saga and about how he sees the global recovery shaping up from his vantage point atop a major multinational.

Maria Bartiromo: Siemens has threatened legal action against former executives if they don't reimburse the company for some costs related to the bribery scandal. What exactly are you looking to accomplish?

Peter Löscher: This case is currently being (negotiated) between the supervisory board of Siemens and the former executive board members. Clearly the company has indicated that it wants to settle under certain conditions. Now it's up to the two parties to find out if they're willing to settle.

If you are happy with the banking system, and don't think it needs to be reformed, then you probably work for one of the banks headquartered in New York.
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The Fed banks in Philadelphia and Kansas City and Dallas and elsewhere disagree with what the New York Fed and Fed's Open Market Committee are doing. See this and this.

So the battle isn't between bankers versus outsiders. It is between the giant New York money-centered banks and the rest of the country.
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Goldman Using Taxpayer Dollars to Buy Stock in China?

As everyone knows, Goldman became a "bank holding company" in September, to be able to access funds from the Fed at essentially zero percent interest.

But in a new interview with Bill Moyers, Simon Johnson noted that in August of 2009, Goldman switched again - to a "financial holding company".

What's the difference?

Johnson says that being a financial holding company means that Goldman can borrow money from the Fed at essentially no cost, and then invest it in any thing it wants. For example, Johnson says that Goldman has bought a large share of the stock of a Chinese automaker. Johnson says that if the investment succeeds, Goldman will reap the profits; but if it fails, the taxpayers are on the hook.
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As PhD economist Steve Keen pointed out recently, 2 Nobel-prize winning economists have shown that the assumption that reserves are created from excess deposits is not true:

    The model of money creation that Obama's economic advisers have sold him was shown to be empirically false over three decades ago.
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As Mish has previously noted:

    Conventional wisdom regarding the money multiplier is wrong. Australian economist Steve Keen notes that in a debt based society, expansion of credit comes first and reserves come later.
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Monetary reformers argue that the government should take the power of money creation back from the private banks and the Federal Reserve system.
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The bottom line is that monetary reformers argue that letting banks create credit and money and then charge high interest rates creates massive levels of debt for states and taxpayers. They argue that the power to create money should be reclaimed by the government and taken away from the private banks.
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America's banking system needs to be fundamentally reformed.

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That's the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn't drive away the nation's creditors. The diversification signals that the currency won't rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

The most (popularly) insensitive quote of the year award goes to the FSA's liquidity manager, David Morgan.

In a Friday speech on the FSA's new liquidity rules for banks, which will see them buying more government bonds, he said:

Oct. 9 (Bloomberg) -- British banks may pass on more than 2 billion pounds ($3.2 billion) in fees to customers to make up for the costs of implementing tougher liquidity rules, a U.K. regulatory official said.

Banks can charge retail and corporate customers higher rates and fees to maintain profit margins after implementing the rules, David Morgan, liquidity policy manager at the Financial Services Authority, said in London today. The cost to financial firms of using more expensive funding, such as government bonds, may reach 2.2 billion pounds a year under the proposals, according to FSA data.

"This is not a cost to your shareholders in the long term, this is a cost to your customers," Morgan said in a speech. "You will pass these costs on to your customers."

Thanks, FSA!

Putting the idea in even starker perspective on Monday -- albeit with different numbers -- were UBS banking analysts Alastair Ryan and John-Paul Crutchley.

They reckon the costs to bank customers of the new rules are equivalent to a 2p increase in the basic rate of UK tax: