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ECONOMY & FINANCE
by Fran on Mon Mar 30th, 2009 at 02:03:31 PM EST
SPIEGEL Interview with the Emir of Qatar: 'We Are Coming to Invest' - SPIEGEL ONLINE - News - International

In a SPIEGEL interview, Sheik Hamad bin Khalifa Al-Thani, the emir of Qatar, discusses the global financial crisis as an opportunity for strategic investments, how it is changing the balance of economic powers and his country's role in fostering peace in the tinderbox Middle East and Gulf region.

New construction in Doha: After years of spending domestically, Qatar is now considering foreign investments as the crisis drives down the value of blue-chip firms in Europe.

SPIEGEL: Your Highness, Qatar's economy may grow another 13 percent in 2009, and your people, with a per capita income of €72,000 Euros, are one of the richest in the world. Are people in Qatar even noticing the fact we are currently experiencing a worldwide economic crisis?

FROM THE MAGAZINE Find out how you can reprint this DER SPIEGEL article in your publication. Hamad: Of course we feel this. Within one year the price of oil fell from almost $150 per barrel to less than $50. This limits our ambitions. But I expected the price of oil to go down one day because we already suffered from this after 1973. When the oil price went up we became so rich. People bought a lot of things and they travelled every summer. Then the oil price went down and everything shrank. Since then, I have sought to avoid letting this happen again.

by Fran on Mon Mar 30th, 2009 at 02:06:13 PM EST
[ Parent ]
Oh what a pity... I am about to cry for Qatar's destiny.

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Tue Mar 31st, 2009 at 12:06:37 AM EST
[ Parent ]
SPIEGEL Interview with Airbus CEO Thomas Enders: 'EADS Should Never Have Signed the A400M Contract' - SPIEGEL ONLINE - News - International

Airbus CEO Thomas Enders, 50, talks to SPIEGEL about the latest difficulties with the A380 super-jumbo, production cutbacks and why Airbus may have to scrap the A400M project.

SPIEGEL: Mr. Enders, on December 31 you won a bottle of champagne. You had wagered that Airbus would manage to complete 12 of your super-jumbo jets by the end of the year. That bottle could cost your company millions because, in the heat of the race against the clock, quality and safety may have fallen by the wayside.

Thomas Enders: No, we haven't made any compromises here. Our customers are generally very satisfied with the A380. But, as you know, it is an extremely complex aircraft, which now unfortunately -- like every new model during the introduction phase, I might add -- has some teething problems here and there. We're working intensively on this. And let me say this right away: None of these issues are related to safety. I've heard that SPIEGEL was recently leaked a very interesting document regarding this issue ...

SPIEGEL: ... in which Emirates, one of your major customers, complained on page after page about the current problems with your aircraft. These include singed power cables, bent sections of paneling and much more.

Enders: We take every piece of feedback from our customers very seriously. I don't want to play anything down. But I'll say it again: We're working on it and we'll soon have the problems solved.

by Fran on Mon Mar 30th, 2009 at 02:07:44 PM EST
[ Parent ]
France 24 | French PM announces bonus bans on bailed-out companies | France 24
French companies that have received government cash to help weather the economic downturn will be subject to stringent restrictions on bonuses and severance packages until 2010, under rules announced by Prime Minister Francois Fillon.

French Prime Minister Francois Fillon has unveiled stringent restrictions on stock options and other executive perks for companies that have been bailed out by the state.

Fillon, speaking at the Elysée Palace in Paris, announced that executives of hard-hit companies that have received public money to beat the downturn will have to "renounce their stock options and free share packages".

"The attribution of executive pay in these companies must be made public," Fillon said. "These are crisis rules and they will apply until at least the end of 2010."

"They can be extended indefinitely and come into effect immediately," he added.

by Fran on Mon Mar 30th, 2009 at 02:08:01 PM EST
[ Parent ]
Rising Powers Challenge U.S. on Role in I.M.F. - NYTimes.com
WASHINGTON -- Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit.

Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape.
The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.


by Fran on Mon Mar 30th, 2009 at 02:18:19 PM EST
[ Parent ]
AIG crisis could be the tip of an insurance iceberg
The company's situation reflects problems throughout the life insurance industry as investments suffer. Further strain could bring about a second financial crisis.
By Ralph Vartabedian and Tom Hamburger, Los Angeles Times

When insurance giant American International Group Inc. imploded last fall, the firm's problems were quickly blamed not on its core insurance business but on an obscure operation that traded exotic mortgage securities.

But as the economic crisis deepens, it has become clear that AIG's problems extend across most of its business lines, including its massive life insurance and retirement services operations, which reported a staggering $18-billion quarterly loss this month.

The company's situation is emblematic of problems across the life insurance industry, which is suffering deep losses on investments that underlie policies for millions of American families.

So far, some of the biggest companies have suffered sharp drops in their stock prices, and many of them are asking for federal assistance.

Industry conditions last year were the worst in memory and are expected to grow deeper this year amid credit rating downgrades, declining revenue and investment losses, according to credit rating firm A.M. Best Co.

The worst-case scenario is that a second financial crisis is looming if these life insurance companies come under too much stress.

I suppose with a baby boom there may be an accompanying funeral boom.

by Magnifico on Mon Mar 30th, 2009 at 04:51:26 PM EST
[ Parent ]
When a "financial adviser" was pitching annuities to me last summer I told him my concern with an annuity would be institution risk.  He almost scoffed at the notion that Hancock, Prudential or AXA could find themselves in trouble....

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Mar 31st, 2009 at 12:17:57 AM EST
[ Parent ]
pensions are best provided by the markets, it's just true.

(and if your pensions is shrinking right now, it's because you were too incompetent to invest properly, and deserve your fate)

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Mar 31st, 2009 at 07:15:16 AM EST
[ Parent ]

Hat tip naked capitalism

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Tue Mar 31st, 2009 at 07:22:08 AM EST
[ Parent ]
The statistical illiteracy of contraryinvestor.com is illustrated by their decision to plot a "average for the period" where there is a clear trend.

The proper way to plot these data is probably on a single chart with Marchetti Curves.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 07:26:45 AM EST
[ Parent ]
BBC NEWS | Business | Spain bank bail-out hits shares

The Bank of Spain is to take over Caja Castilla la Mancha in the first bank bail-out in Spain since the global financial crisis began.

The government will also back the bank with 9bn euros (£8.4bn) in guarantees.

Shares in banking giants Santander and BBVA declined on concern over the health of the banks in Spain, where the housing market has been badly hit.

The branches of Caja Castilla opened on Monday morning as scheduled.

Share slump

Santander, which owns the Abbey and Alliance & Leicester in the UK, saw its shares drop 5.6% to 5.04 euros.

 

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Mon Mar 30th, 2009 at 06:11:38 PM EST
[ Parent ]
El Banco de España cuestiona las cuentas de Caja Castilla La Mancha · ELPAÍS.comThe Bank of Spain puts into question the accounts of Caja Castilla La Mancha - ElPais.com
Según diferentes fuentes, el supervisor considera que CCM necesita más capital porque la pérdida esperada de las inversiones bursátiles y las de la morosidad crediticia va a ser mayor de lo que ahora reflejan las cuentas. Por eso, las dotaciones que necesita superan los 156 millones acordados por la entidad, lo que provocará que CCM entre en pérdidas tras la reformulación de las cuentas de 2008.According to various sources, the [Spanish banking] supervisor considers that CCM needs more capital because the expected loss from its stock market investment and those [expected losses] from credit default [are] going to be greater than what [CCM's] accounts currently reflect, which will cause CCM to post losses after reformulating the 2008 accounts.
In other words, CCM cooked the books to try to forestall a takeover by the regulator.

IMHO the management could face criminal charges.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 05:04:11 AM EST
[ Parent ]
La CCM ha sufrido en un año una fuga de depósitos de 2.000 millones | El Periódico de Catalunya | EconomíaThe CCM has suffered in a year a deposit drain of €2 billion | El Periódico de Catalunya | Economy
El vicepresidente económico del Gobierno, Pedro Solbes; el presidente de Castilla-La Mancha, José María Barreda, y las organizaciones sindicales denunciaron ayer la campaña de "rumores", "acoso" y "desprestigio" de la que Caja Castilla La Mancha (CCM) ha sido víctima durante el último año y que se ha traducido en una fuga de unos 2.000 millones de euros, según CCOO. La salida del 11% de los depósitos totales, sumada a la mala gestión de la entidad, hizo inevitable la intervención por parte del Estado el domingo para garantizar su normal funcionamiento y dar seguridad a los depositantes y los acreedores de la caja.[Spain's] economic vice-president Pedrio Solbes; the president of [the Autonomous Community of] Castilla La Mancha, and trade unions denounced yesterday the campaign of "rumours", "harassment" and "disrepute" that Caja Castilla La Mancha (CCM) suffered over the past year and which translated into a flight of approximately €2bn, according to [Communist trade Union] CCOO. The exit of 11% of deposits, added to the bad management of the entity, made Sunday's State intervention inevitable to guarantee its normal operation and reassure depositors and creditors of the Caja.
Había gran temor al día siguiente, pero en las oficinas de la CCM no hubo colas ni aglomeraciones de clientes exigiendo el reembolso de sus ahorros. "Sí ha habido retirada de fondos; algo más que otros días, pero el problema es que llevamos así año y medio", se quejaba un empleado de la CCM en Toledo.There was great fear the day after, but at CCM branches there were no queues or crowds of clients demanding the reimbursement of their savins. "There's been withdrawal of funds; a bit more than on other days, but the problem is that it's been like this for a year and a half", lamented an employee of CCM in Toledo [the capital of Castilla La Mancha].
El peor momento fue la semana del 16 al 23 de febrero, justo después de que la secretaria general del PP, María Dolores de Cospedal, impusiera a los consejeros de la entidad designados por su partido abandonar su puesto en protesta por la "falta de transparencia" en el intento de fusión de la CCM con Unicaja. Solo en esa semana se retiraron 320 millones de sucursales de la CCM según estados contables a los que ha tenido acceso EL PERIÓDICO. En lo que va de 2009 se han retirado 500 millones, según los mismos datos.The worst moment was the week of February 16 to 23, just after the secretary general of the [centre-right opposition party, both nationally and in Castilla La Mancha,] PP, María Dolores de Cospedal, imposed the departure from the board of the members designated by her party in protest over "lack of transparency" in the attempted merger of CCM with Unicaja. Only that week €320M were withdrawn from CCM branches according to accounting statements that El Periodico has had access to. So far in 2009, €500M have been withdrawn.
So, effectively, there has been a slow, quiet run on the bank.

€500M is about the size of the current "hole" in the CCM's accounts.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 06:29:50 AM EST
[ Parent ]
Actually, the hole is something like €1.3bn, though Unicaja wanted €3bn from the Government to sweeten the takeover deal. The Government baulked and here we are.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 12:28:15 PM EST
[ Parent ]
BBC:

The Bank of Spain is to take over Caja Castilla la Mancha in the first bank bail-out in Spain since the global financial crisis began.

Correction: the Bank of Spain has taken over CCM. This is not a bailout but receivership. It is the first bank failure since Banesto in 1993.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 09:34:15 AM EST
[ Parent ]
FT.com / Global Economy - OECD predicts 10% jobless rate for 2010
One in 10 workers in advanced economies will be without a job next year, "practically with no exceptions", the head of the Organisation for Economic Co-operation and Development said on Monday.

In a graphic indication of the global recession's transmission from the financial sector to the rest of the economy, Angel Gurría warned that the ranks of the unemployed in the 30 advanced OECD countries would swell "by about 25m people, by far the largest and most rapid increase in OECD unemployment in the postwar period".



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Tue Mar 31st, 2009 at 03:56:53 AM EST
[ Parent ]
FT.com / Global Economy - World Bank warns of dip in remittances
Money sent home by migrants to families in developing countries is set to fall by up to 8 per cent this year, according to the World Bank.

But remittances could rise again as soon as next year, underscoring the resilience of such payments compared to other external flows of money during downturns in rich countries.

Globally, remittances to developing countries rose by only 8.8 per cent to $305bn last year after rising 16 per cent in 2007 and 18 per cent in 2006. The World Bank forecasts remittances will fall to $280-290bn this year and $280-299bn next year because of recession in many of the rich countries that host migrant employees.

Mr Ratha said the regional impact of lower remittances this year would be uneven. Developing countries in eastern Europe and central Asia are likely to see remittances fall by 10.1-12.7 per cent. Money sent home by Tajik migrants in Russia is affected by the depreciation of the rouble, which has fallen by 35 per cent since August 2008, he said.

On the other hand, developing countries in the Middle East and north Africa will suffer only a modest decline of 1.4-5.2 per cent in remittances. Flows from Gulf Co-operation Countries are not affected by falling oil prices, said Mr Ratha.

Poor countries in east Asia and the Pacific would probably see remittances slow by 4.2-7.5 per cent. The Philippines could see money sent home by migrants fall by only 4 per cent, said the World Bank economist.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Tue Mar 31st, 2009 at 04:01:44 AM EST
[ Parent ]
Defaults Rise on Home Mortgages Insured by FHA
Defaults on home mortgages insured by the Federal Housing Administration in February increased from a year earlier.

A spokesman for the FHA said 7.5% of FHA loans were "seriously delinquent" at the end of February, up from 6.2% a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy.

Meanwhile, Banks Starting to Walk Away on Foreclosures

Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal -- from legal fees to maintenance -- exceeds the diminishing value of the real estate.

The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.

.... In Buffalo, where officials said the problem had reached "epidemic" proportions in recent months, the city sued 37 banks last year, claiming they were responsible for the deterioration of at least 57 abandoned homes; the city chose a sampling of houses to include in the lawsuit, even though the banks had walked away from many more foreclosures. So far, five banks have settled.

What a wonderful world.

by das monde on Tue Mar 31st, 2009 at 05:55:45 AM EST
[ Parent ]
2008-2009 Keynesian resurgence - Wikipedia, the free encyclopedia

Many policymakers around the world currently see Keynesian solutions as the best option for shielding their populations from the current crisis. Nevertheless this revival of Keynesian ideas has attracted considerable criticism. Commentators on the left question whether policy has become sufficiently Keynesian - in their view Obama's economic team is disappointingly centrist, with its inclusion of liberal-leaning economists like Jason Furman and Larry Summers.[40] [41] In February 2009 Shiller and George Akerlof published Animal Spirits , a book where they argue the current US stimulus package is too small as it doesn't take into account the loss of confidence, or do enough to restore the availability of credit. Also there is Germany, whose administration, according to some, stands out in their reluctance to wholeheartedly embrace Keynesian policy.[42]

From the right, some commentators assert the late 2000s crisis was caused not by excessively free markets but by the remnants of Keynesian policy. Libertarian think tanks such as the Cato Institute have argued that markets in the United States suffered from harmful distortions caused by government stretching back to the Sherman Anti Trust Act of 1890. [43] Historian and Austrian School Economist Thomas Woods published a book in 2009 which again firmly places the blame for the crises on Government intervention.[44] Most critics focus on arguing that Keynesian policy will be counter-productive - as it will be inflationary, create more income disparity, cause consumers to rein in their spending even more as they anticipate future tax rises, as well as various other technical reasons.[45] [46] [47]



Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 07:16:19 AM EST
[ Parent ]
Pension insurer shifted to stocks - The Boston Globe
Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.

Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.

The agency refused to say how much of the new investment strategy has been implemented or how the fund has fared during the downturn. The agency would only say that its fund was down 6.5 percent - and all of its stock-related investments were down 23 percent - as of last Sept. 30, the end of its fiscal year. But that was before most of the recent stock market decline and just before the investment switch was scheduled to begin in earnest.

No statistics on the fund's subsequent performance were released.

Nonetheless, analysts expressed concern that large portions of the trust fund might have been lost at a time when many private pension plans are suffering major losses. The guarantee fund would be the only way to cover the plans if their companies go into bankruptcy.

"The truth is, this could be huge," said Zvi Bodie, a Boston University finance professor who in 2002 advised the agency to rely almost entirely on bonds. "This has the potential to be another several hundred billion dollars. If the auto companies go under, they have huge unfunded liabilities" in pension plans that would be passed on to the agency.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Tue Mar 31st, 2009 at 10:35:21 AM EST
[ Parent ]
I forgot: hat tip Paul Krugman and TPM.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Tue Mar 31st, 2009 at 10:35:57 AM EST
[ Parent ]
Oh boy. This kind of news doesn't make me want to go Wheeeee!
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Mar 31st, 2009 at 10:38:08 AM EST
[ Parent ]
WTF?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 10:45:41 AM EST
[ Parent ]
Words EPIC FAIL.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 10:49:22 AM EST
[ Parent ]
Bet their bonuses are sorted tho'.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Tue Mar 31st, 2009 at 11:22:29 AM EST
[ Parent ]
See? This is why people's pensions should not be managed by the State and instead people should invest their savings in stocks... Oh, wait!

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 11:34:51 AM EST
[ Parent ]
Of Raising Rates and the Stakes | afoe | A Fistful of Euros | European Opinion
As Edward put it recently, it is difficult not to note a irrevocable pattern in the (unfortunate) countries subject to IMF intervention whereby they collapse under the yoke of the measures demanded in trade for the loan.
The IMF hasn't learned anything from the 1997 Asian crisis, has it?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 31st, 2009 at 10:53:13 AM EST
[ Parent ]
The IMF's actions are a result of the Nincompoopery of Neo-Classical Economics.

Knowledge begats Action and if your Knowledge is gibbering nonsense your Actions cannot be anything but foolish.  In order to align Actions with reality Knowledge needs to be aligned with reality.  The first step the IMF needs to take to align Knowledge with reality is admitting they're an alcoholic¹ their Knowledge -- NCE -- is bogus.  

¹  Lined it out but there is a truth in there

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Mar 31st, 2009 at 11:58:20 AM EST
[ Parent ]

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