GLOBAL ECONOMIC RECOVERY !!!

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IEA downgrades 2010 oil demand forecast

AFP - Saturday, January 16

PARIS (AFP) - – The International Energy Agency on Friday revised down its forecast for world oil demand in 2010, saying trade would be "sluggish" in rich nations and growth would come only from emerging economies.

The IEA forecast that demand would be 1.44 million barrels per day (mbd) this year, compared to its 2010 estimate made last month of 1.47 mbd.

The Paris-based agency also warned of possible "downside risks" to economic recovery in the member nations of the Organisation for Economic Cooperation and Development (OECD), a grouping of 30 of the world's richest economies.

"Oil demand recovery in the OECD will likely remain sluggish," it said, adding: "Demand growth in 2010 derives entirely from outside the OECD."

The IEA said 2010 demand would rise 1.7 percent from 2009 to 86.3 mbd.

The report also explained that much of that increase would come from Asian markets and some of it from Latin America and the former Soviet Union.

In the United States, the world's biggest economy and largest oil consumer, the IEA said "demand continues to fall relative to a very weak baseline."

"The US economy remains fragile," the IEA added.

Oil prices extended their losses after the publication of the report, with New York's main futures contract, light sweet crude for delivery in February, falling 45 cents to 78.94 dollars a barrel in trading.

"The IEA is still more optimistic than the US Department of Energy that forecasts a demand increase of 1.08 mbd for 2010 and whose projection has also been revised slightly downwards," Germany's Commerzbank said in a note.

In its report, the IEA said top producers such as Russia and Saudi Arabia were now increasingly switching their supplies to growth markets in Asia away from traditional big buyers in Europe and the United States.

"Saudi Arabia has been increasingly diverting both grades (Arab Heavy and Arab Medium crude oil) to meet growing domestic power generation and higher sales into Asian markets," the report said.

Saudi exports of Arab Heavy to Europe in the first nine months of 2009 were down to just 25 kbd -- a crude oil measurement unit -- from 90 kbd in 2008 and 110 kbd in 2007, while export volumes to Asia have gone up, it added.

Russia is following a similar trend, with the inauguration in December of a new pipeline and Asian export terminal in eastern Russia and "a rerouting of crude oil from Baltic and Black Sea ports to the east" in 2010, the IEA said.

The IEA study also reported a surge in oil prices earlier this month because of the Arctic chill in Europe and the United States, with prices rising to 15-month highs but later easing to between 78 and 80 dollars per barrel.

"The weather-related surge in prices that ushered in the new year may prove fleeting" because of a backlog in supplies," the IEA said, adding that the market would look for "signs of economically-driven oil demand growth."

Political tensions in Iran, Nigeria and Russia have also helped boost prices in recent weeks by raising the prospect of supply disruptions, the IEA said, pointing in particular to a brewing Russia-Belarus oil transit dispute.

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JP Morgan reports big jump in profits to $3.27 bln

AFP - 2 hours 40 minutes ago

WASHINGTON (AFP) - – Banking giant JP Morgan Chase reported on Friday a big jump in net profit to 3.27 billion dollars in the fourth quarter of 2009, highlighting renewed health in the troubled sector.

The New York-based financial giant doubled its profits for the full year to 11.7 billion dollars, and quadrupled the numbers put up in the fourth quarter of 2008.

The results highlight a return to health in the banking sector after more than a year of crisis, but were expected to fuel public resentment over hefty profits and compensation of firms bailed out by the government and at a time when much of the US economy continues to struggle and unemployment remains high.

Chairman and chief executive Jamie Dimon said he was "gratified" by the results but said they "fell short of both an adequate return on capital and the firm's earnings potential."

"While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist. Accordingly, we remain cautious," he said in a statement.

The profit for the quarter amounted to 74 cents a shares, better than the 62 cents expected by analysts.

Revenues in the period rose to 25.2 billion dollars from 19.1 billion dollars a year earlier for the banking group, one of the strongest to emerge from the global financial crisis.

For 2009, the profit was 11.7 billion dollars on 100.4 billion in revenues, up from earnings of 5.6 billion dollars in 2008 on revenues of 67.3 billion.

The results come with banks in focus for hefty executive pay schemes -- which some blame for encouraging risky practices that led to the global crisis.

The earnings report for JP Morgan Chase did not include specific bonus amounts, but reports have indicated that many banks are set to pay record bonuses.

A Wall Street Journal analysis found Wall Street banks and securities firms were on track to pay employees 145 billion dollars for 2009, a record amount.

President Barack Obama on Thursday proposed a tax or fee to be assessed on major banks that would recoup the government's bailout for the sector.

JPMorgan, the second largest bank by assets, said its investment banking arm posted a profit of 1.9 billion dollars for the quarter, rebounding from a loss a year earlier. Another big profit driver was corporate and private equity, with 1.2 billion dollars.

But its retail banking including home lending lost 399 million dollars and credit card operations lost 306 million.

Commercial banking operations resulted in a profit of 224 million dollars while Treasury and securities operations earned 237 million.

Despite Dimon's comments, some analysts said the banking giant was hitting its stride.

"The bank blew through expectations," said Douglas McIntyre at 24/7 Wall Street.

That leaves a lot for Bank of America and Citigroup to live up to."

Last year, JPMorgan Chase repaid the US Treasury for an injection of 25 billion dollars in capital under a program to stabilize the financial system.

The repayments, which included dividends, freed the banks from government-imposed compensation restrictions.

Still, public anger has been boiling over at pay scheme that are blamed for fueling the crisis.

Obama unveiled his fee Thursday, saying the new fee on risky assets of big financial institutions was a way to recoup the cost of a massive bailout of the sector than began in 2008.

The plan, which requires congressional approval, would raise 90 billion dollars over 10 years and could be kept for 12 years to offset the full 117 billion dollar shortfall now estimated for the Troubled Asset Relief Program (TARP).

"We want our money back and we are going to get it," Obama said, adding that his determination "is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people."

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Kraft swallows Cadbury in multi-billion-dollar takeover

AFP - 2 hours 6 minutes ago

LONDON (AFP) - – Cadbury, a monument to the British chocolate bar, fell on Tuesday to US giant Kraft by accepting an offer worth 11.5 billion pounds which creates a world leader in food and confectionery.

The pair announced in a statement that Cadbury management had agreed to a takeover worth 840 pence per share -- valuing the group at the equivalent of 13.1 billion euros or 18.9 billion dollars.

Cadbury-Kraft will provide large cost savings and create a global market leader, with annual sales totalling more than 100 million dollars, they added.

"The board of Kraft Foods is pleased to announce the detailed terms of a recommended final offer for Cadbury and the board of Cadbury unanimously recommends Cadbury security holders to accept the terms," a statement said.

The takeover will end more than 180 years of history for the colourful maker of Dairy Milk chocolate bars and Trident chewing gum.

News of a friendly takeover also marks the end of months of hostilities over the control of Cadbury, which began life as a small grocer's shop in Birmingham, central England, in 1824.

Kraft's previous cash-and-shares offer had valued the iconic British firm at about 10.5 billion pounds.

"Kraft Foods believes a combination with Cadbury will provide the potential for meaningful cost savings and revenue synergies from which Cadbury security holders will benefit," the statement added.

"Kraft Foods believes a combination represents a strong and complementary strategic fit, creating a global confectionery leader with a portfolio of more than 40 confectionery brands each with annual sales in excess of 100 million dollars."

In reaction to the announcement, British Prime Minister Gordon Brown said that his government was determined to help save jobs at Cadbury.

"We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure," Brown said at a Downing Street press conference.

Cadbury employs 45,000 staff worldwide, including 5,600 staff at eight factories in Britain and Ireland.

There have been fears about British job losses, with trade union Unite warning Kraft would be saddled with huge debts leading them to axe 7,000 posts at Cadbury and 20,000 at the company's sub-contractors.

Prior to Tuesday, Cadbury had repeatedly rejected the previous offer from Kraft, arguing that it was "derisory" and had undervalued the London-listed firm.

However, the chocolate firm welcomed news of the improved takeover bid on Tuesday.

"We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world," said Chairman Roger Carr.

"We will now work with the Kraft Foods' management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees."

Markets were meanwhile waiting to see if US chocolate maker Hershey would table its own offer for Cadbury. The Wall Street Journal last Friday reported that Hershey planned to bid at least 17.9 billion dollars this week.

There has also been talk of a possible joint bid for Cadbury from Hershey and Italian chocolate maker Ferrero.

Cadbury, the world's second-biggest confectionery company behind Mars, also produces chocolate bar brands Crunchie, Fudge, Flake and Wispa.

Dairy Milk is the most popular chocolate bar in Britain -- and the company sells more than 250 million bars every year in 33 countries around the world.

Other top-selling brands include Cadbury Creme Eggs, Halls throat lozenges and Milk Tray chocolate boxes.

Kraft, the world's second-biggest snacks group after Nestle, makes numerous well-known products including Dairylea cheese, Milka and Toblerone chocolate and Oreo cookies.

The US firm proposes to pay 500 pence in cash and 0.1874 new Kraft Foods shares per Cadbury share. Cadbury shareholders will also receive 10 pence per share in a special dividend if the takeover is successful.

"This recommended offer represents a compelling opportunity for Cadbury shareholders, providing both immediate value certainty and upside potential in the combined company," said Kraft boss Irene Rosenfeld.

"For Kraft Foods shareholders it transforms the portfolio, accelerates long-term growth and delivers highly attractive returns, while maintaining financial discipline."

Kraft had made a 10.2-billion-pound offer for Cadbury back in September 2009.

However, Cadbury, led by American chief executive Todd Stitzer, rejected the bid, saying that it "fundamentally undervalued" the group.

But the US firm has subsequently improved the offer after selling its North American pizza division to Swiss rival Nestle for 3.7 billion dollars.

The Kraft tie-up also faced opposition in Britain with protest from senior ministers over the attempt by a huge American firm to take over a homegrown company.

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China could overtake US by 2020: PWC

AFP - Thursday, January 21

PriceWaterhouseCoopers (PWC) also said in its report that by 2030 the top 10 world economies could be China, followed by the United States, India, Japan, Brazil, Russia, Germany, Mexico, France and Britain.

The current 10 largest economies, according to 2008 data from the International Monetary Fund, are the United States, Japan, China, Germany, France, Britain, Italy, Russia, Spain and Brazil.

"These projects suggest that China could be the largest economy in the world as early as 2020 and is likely to be some way ahead of the US by 2030," John Hawksworth, head of macroeconomics at PWC, said in the report.

"India could grow even faster than China after 2020, however, and will also move rapidly up the global GDP (gross domestic product) rankings" because of its younger and faster growing population as opposed to China, he added.

The report also pointed to an increasing share of global GDP taken up by China and India, compared to the United States and the European Union.

The proportion in 2010 will be 20 percent for the US, 21 percent for the EU, 13 percent for China and five percent for India, PWC said.

But by 2030 that will have changed to 16 percent for the US, 15 percent for the EU, 19 percent for China and nine percent for India, it added.

Jim O'Neill, chief global economist for US investment bank Goldman Sachs, forecast last November that China will overtake the United States by 2027 -- 14 years earlier than a previous Goldman Sachs forecast of 2041 made in 2003.

O'Neill coined the term "BRICs" to refer to the four emerging market powerhouses Brazil, Russia, India and China, which have since formed an informal grouping to discuss global issues and economic policies.

The Group of 20 (G20) developed and emerging economies last year took over from the traditional Group of Seven (G7) -- Britain, Canada, France, Germany, Italy, Japan and the United States -- as the main forum for economic talks.

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Booming Chinese economy snaps at Japan's heels

AFP - Friday, January 22

TOKYO (AFP) - – China appears to be on the brink of overtaking beleaguered Japan as the world's second-biggest economy after another blistering performance in 2009, analysts said Thursday.

Asia's two biggest economies look to have ended 2009 in a tight race but China, which grew 8.7 percent last year, is soon expected to unseat its neighbour from the position it has held for more than 40 years.

"It may have already overtaken Japan in 2009 and, if not, is likely to do so this year," said Brian Jackson, a senior strategist at Royal Bank of Canada in Hong Kong.

China on Thursday reported nominal -- unadjusted for inflation -- gross domestic product (GDP) for 2009 of 33.5 trillion yuan, or 4.9 trillion dollars at today's exchange rates. Related article: World bank sees 'signs of bubbles' in China economy

Japan posted nominal GDP of about 505.1 trillion yen, or 5.5 trillion dollars, in 2008 and its economy is expected to have shrunk by roughly six percent last year, reducing the figure to about 5.2 trillion dollars.

"If you look at nominal figures, the Japanese and Chinese economies are now very close to each other in size," said Yoshikiyo Shimamine, chief economist at Daiichi Life Research Institute in Tokyo.

Japan is scheduled to release its 2009 GDP figures on February 15.

With China expected to post another year of strong growth in 2010, Japan seems likely to end this year in third place worldwide as it struggles to cope with renewed deflation and a shrinking population, experts said.

China returned to double-digit growth in the fourth quarter of 2009 with a red-hot expansion of 10.7 percent.

Without China's boom, Japan's economy would be even more sluggish given that the two are major trading partners, analysts said.

Comparisons between the two countries are complicated by exchange rate fluctuations. If the yen weakens further, that could hasten China's ascent to world's number two behind the United States.

And China could overtake the United States as early as 2020, PriceWaterhouseCoopers said in a report Thursday, underlining the "seismic change" in global economic power. Related article: China could overtake US by 2020, says PWC

By 2030, India could also take third spot to relegate Japan to fourth, the business consultancy said.

But in terms of per capita GDP, China -- with a population of more than 1.3 billion people -- trails far behind Japan, with about 128 million.

On this basis, China ranked 104th in the world in 2008 with nominal GDP per person of 3,259 dollars, while Japan was 23rd at 38,457 dollars, according to the International Monetary Fund. Luxembourg was top with 113,044 dollars. Related article: Asia markets mixed reaction on China economy figures

Japan's economy staged a stunning recovery from the ashes of World War II and in the 1980s it was widely predicted to outstrip the United States.

But it suffered a decade of stagnation after an asset price bubble burst in the early 1990s.

The country plunged back into recession in 2008 as its exports collapsed due to a severe global downturn.

It returned to growth in the second quarter of 2009, exiting a year-long downturn. But the recovery remains fragile with falling consumer prices, high public debt and weak domestic demand all major concerns for policymakers.

China meanwhile has achieved remarkable growth since opening up its economy 30 years ago, growing at an average of more than nine percent each year in the three decades since 1978 -- three times the world average.

Growth stalled in the second half of 2008 as the global crisis took hold, but rebounded in the latter half of last year thanks in large part to a massive government stimulus package.

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New US export strategy eyes Asia

AFP - Thursday, February 4

WASHINGTON (AFP) - – President Barack Obama will unveil details Thursday of how he plans to double American exports in five years, mainly to rapidly-growing Asia.

Obama's strategy to get US companies to pump out exports is aimed at supporting the creation of two million jobs in America, which is still reeling from double digit unemployment that threatens to dampen its economic recovery.

"If we just increased our exports to Asia by a percentage point, by a fraction, it would mean hundreds of thousands, maybe millions of jobs here in the United States. And it's easily doable," Obama told Senators from his Democratic party Wednesday.

"And that's why we are going to be putting a much bigger emphasis on export promotion over the next several years," he said, a day before his Commerce Secretary, Gary Locke, gives details of the export promotion strategy.

Obama announced his export-boosting strategy during last week's State of the Union address, saying a National Export Initiative would be launched as part of the move.

It would "help farmers and small businesses increase their exports, and reform export controls consistent with national security," he said.

China and India are obviously among the top markets to be tapped, officials said.

US exports for the first 11 months of last year trundled in at 1.411 trillion dollars compared to 1.827 trillion dollars for the whole of 2008.

But despite the deteriorating global economy, exports to the Asia-Pacific region were up more than eight percent in 2008 over the preceding year to 747 billion dollars, figures from the US Trade Representative's office showed.

Agriculture exports to the region were 76 billion dollars, a 30 percent increase over the previous year, and services exports grew to 187 billion dollars.

The Obama administration believes that as a number of key markets around the world recovered more quickly than the United States from recession, exports to these countries will create good American jobs at home.

"Its all about jobs. And if done right, president Obama and I firmly believe that a smart aggressive progressive trade policy of the United States can be a critical part of our overall economic recovery program," said the president's top trade official Ron Kirk.

Americans who work in export-sector jobs are now paid up to 18 percent above the average, Kirk's deputy Demetrios Marantis said.

"We know that six million Americans owe their jobs to manufacturing exports, and that agricultural and service export jobs mean paychecks for many more," he said.

Obama could also boost exports if he pushed Congress to endorse free trade agreements that had already been signed under the former Bush administration.

"If the president is serious about wanting to use free trade to help create US jobs and bolster the American economy, it is time for him to get off the sidelines and fight for the passage of free trade agreements with Colombia, Panama and South Korea," said senior Republican lawmaker Ileana Ros-Lehtinen.

The Obama administration has been pushing South Korea to give further concessions to US automakers, who have been ailing at home and have struggled to penetrate Asia's fourth largest economy.

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Shell fourth-quarter profit dives 75%

AFP - Friday, February 5

LONDON (AFP) - – Energy giant Royal Dutch Shell said on Thursday that fourth-quarter adjusted net profit slumped 75 percent due to weak demand in the downturn, adding it would axe 1,000 jobs amid an uncertain outlook.

Earnings tumbled to $1.18 billion (851 million euros) in the three months to December, compared with $4.8 billion in the same period of 2008, Shell said in a results statement.

For 2009 as a whole, adjusted net profit plunged 69 percent to $9.8 billion.

The London-listed energy major said it will axe another 1,000 jobs this year after cutting 5,000 positions over 2009 as it sought to ramp up efficiency.

Shell said it has targeted at least $1 billion of cost reductions for 2010, largely from downstream and corporate functions.

"Our fourth quarter 2009 results were impacted by the weak global economy," Royal Dutch Shell Chief Executive Officer Peter Voser said in the statement.

"Oil prices have increased compared to a year ago but gas prices and refining margins have declined sharply because of weaker demand and high industry inventory levels.

"We are not assuming that there will be a quick recovery and the outlook for 2010 is uncertain," he said.

Production slid two percent during the fourth quarter to 3.331 million barrels of oil equivalent per day.

Voser said the group was positioning itself for "significant growth" in the years ahead.

"We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years."

The group added that it sold around $1.3 billion of non-core downstream assets in 2009.

Asset sales would continue this year, with 15 percent of its refining capacity placed under review, it added.

Shell cuts jobs after profits plunge

AFP - 2 hours 43 minutes ago

LONDON (AFP) - – Royal Dutch Shell plans to axe 1,000 more jobs and sell some of its assets owing to an "uncertain" outlook and after annual profits plunged, the British energy giant said Thursday.

But the group said it turned a profit in the fourth quarter in response to a major restructuring programme and a modest recovery in crude oil prices.

Fourth quarter net profit stood at 1.96 billion dollars after a heavy loss of 2.81 billion dollars in the same period in 2008 when the global downturn slashed worldwide energy demand.

For the year net profit tumbled 52 percent to 12.52 billion dollars (9.0 billion euros) compared with 26.28 billion dollars in 2008, Shell said in an earnings statement.

"For 2010, we are targeting a further underlying cost reduction of at least 1.0 billion dollars and a reduction of some 1,000 employees," the group announced.

Shell said it had cut 5,000 jobs last year as part of a major restructuring that saved more than 2.0 billion dollars.

The group's final quarter of 2009, while profitable, was nonetheless "impacted by the weak global economy," Royal Dutch Shell Chief Executive Officer Peter Voser said in the earnings release.

"Oil prices have increased compared to a year ago but gas prices and refining margins have declined sharply because of weaker demand and high industry inventory levels.

"We are not assuming that there will be a quick recovery and the outlook for 2010 is uncertain," he said.

Fierce rival BP on Tuesday said it too had returned to profit in the fourth quarter, with net earnings of 4.30 billion dollars thanks to higher oil prices and as it ramped up production and slashed costs.

Shell on Thursday said its adjusted net profit, which strips out exceptional items and changes to the value of its oil inventories, slumped 75 percent to 1.18 billion dollars in the fourth quarter.

Production slid two percent over the period to 3.33 million barrels of oil equivalent per day.

Voser said the group was positioning itself for "significant growth" in the years ahead.

"We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years."

Shell sold around 1.3 billion dollars of non-core downstream assets in 2009. Asset sales would continue this year, with 15 percent of its refining capacity placed under review.

BP recently overtook Royal Dutch Shell to become Europe's biggest energy group by stock market value.

Separately on Thursday, Shell said it was investigating a claim from a Nigerian militant group that it had attacked a pipeline operated by the oil giant in the Niger Delta.

A previously unheard-of group calling itself the "Niger Delta Reenforcement Team" sent text messages on Thursday claiming to have blown up a major Shell Petroleum Development Company pipeline in the early hours of the morning.

"We are checking reports claiming an attack on a pipeline at Buguma and can not comment further at this time," a Shell spokesman told AFP in Nigeria.

The message from the group also said it was distinct from the militant Movement for the Emancipation of the Niger Delta (MEND), which announced Saturday it was calling off a three-month-old truce with the government.

The global oil sector was boosted as oil prices had surged to a record 147 dollars a barrel in July 2008.

However, they subsequently plunged under 34 dollars in February 2009 as the global economic downturn hit demand for energy. Prices are currently trading at about 76 dollars per barrel.

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US insurer suffers $8.9 bln fourth quarter loss

AFP - Saturday, February 27

NEW YORK (AFP) – US insurance giant AIG reported Friday a fourth quarter net loss of 8.9 billion dollars, better than the worst of market fears, as it strove to repay a multi-billion dollar taxpayer bailout.

Net loss for the year hit 10.9 billion dollars but was much lower than the 99.2 billion dollars chalked up by the insurer in 2008 as it was saved from collapse by a government bailout.

On a per share basis, AIG reported a quarterly loss of 65.51 dollars. This compares to a loss of 61.7 billion dollars or 458.99 dollars per share in the fourth quarter of 2008, the biggest loss in US corporate history.

AIG said the loss stemmed mainly on charges tied to paying down its debt from the bailout, that eventually ran into a staggering 180 billion dollars, and boosting commercial insurance reserves.

AIG chief executive and president Robert Benmosche said the company made "great progress" in executing its strategic restructuring plan as it stabilized and strengthened insurance businesses, reduced financial product exposures and positioning certain businesses for sale.

"We are increasingly confident in how we see the mix of AIG's businesses over the long term. We are taking the right steps to regain our stature as one of the most respected and diverse property-casualty operations in the world," he said.

Analysts at Briefing.com said the net result looked "a bit better than the worst fears," pointing out that it included multiple items making it incomparable with the Street's expectations.

The improvements in the global financial markets is helping AIG amend the losses, they said.

"The improved results are relative but still spectacularly poor," said Douglas McIntyre of 24/7Wall Street.

In addition to the poor earnings, McIntyre noted AIG plans not to use securitized US life insurance policies to repay the government.

Reports said AIG had abandoned plans to give the Federal Reserve Bank of New York securitization notes of up to 8.5 billion dollars representing embedded value of certain of its US life insurance businesses to pay down its loan.

"This may help the firm's balance sheet but it is a slap at taxpayers," McIntyre said.

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China premier: 2010 'most complicated' for economy

By CARA ANNA, Associated Press Writer - Sunday, February 28

BEIJING – Premier Wen Jiabao promised Saturday to control inflation and keep China's economic recovery on track and expressed hope for an end to tensions with Washington over trade and currencies.

China's top economic official said 2010 will be the "most complicated" year for the country's economy and indicated easy credit will continue despite a recent tightening in lending controls. He gave no indication Beijing is ready to raise interest rates, which might slow growth and affect the global economy by cutting China's demand for foreign oil and other goods.

China's leaders have been carefully reaching out to the world's largest online population with online chats. This one comes just days before the country's annual meeting of the National People's Congress.

"Two things can hurt social stability. One is corruption. The other is the price of products," Wen said, adding that the government should be able to regulate both.

"We can keep economic development stable and fast and still manage inflation," he said.

China's economic growth rebounded last year to 10.7 percent with the help of a massive stimulus package and easy bank lending, but the country's leaders worry the money is fueling inflation and a dangerous bubble in real estate prices.

Inflation eased in January to 1.5 percent over a year earlier, down from December's 1.9 percent. But China's leaders are sensitive to price rises that erode families' economic gains and could fuel social tensions.

Housing costs have soared, jumping 9.5 percent in January from a year earlier, according to the government.

The government has issued directives to banks in recent weeks to fine-tune lending by cutting back credit to projects deemed polluting or unneeded while expanding support to private entrepreneurs.

If last year was the most difficult for China's economy in the new century, this one is the "most complicated," Wen said.

The chat, with video, was carried on the Web sites of China's central government and the state-run Xinhua News Agency.

Wen didn't go into political issues such as the current strained relations between China and the United States over arms sales to Taiwan and President Barack Obama's recent meeting with Tibetan spiritual leader the Dalai Lama.

But he briefly mentioned recent economic disputes with the U.S. over higher duties on imports of Chinese-made tires, and access to each other's markets for steel pipes.

"The friction ought to be solved through negotiation on an equal basis," not through quickly imposed sanctions, he said.

"We hope the friction will calm," he added.

Chinese citizens posted hundreds of thousands of questions online for Wen, who is well-known for his sympathetic public appearances, especially in times of crisis.

Wen stuck to topics of widespread public outrage, such as what one netizen called the "wild horse" of rising property prices.

He said the government will build 5 million affordable housing units this year.

He also spoke out sharply about China's latest food safety problem _ the recent reappearance on the market of some tainted milk products that sickened at least 300,000 children in 2008.

"If counterfeit and substandard products appear again, we will punish without mercy," he said.

Associated Press writer Joe McDonald and researcher Henry Hou contributed to this report.

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How to Get a Raise - 6 personality traits that will impress your boss and increase your salary

by Sara Eckel, PayScale.com

You work hard--meeting deadlines, delivering results, and showing up on time. But each year you've been getting a raise in the measly 2 percent range (if that). Meanwhile, certain coworkers stroll out of their review meetings with big smiles on their faces.

Why do some people get a fat, juicy slab of the pie while others are offered crumbs? Experts say that, of course, diligence and talent play their part, but if you really want to increase your salary, you'll need these qualities:

1. An Owner's Mentality

Many people go into their annual review with a list of reasons that they need more money. But Joel Rudy, vice president of operations for Photographic Solutions, a supplier of digital-camera cleaning products, says that such pleas don't inspire employers to give raises. "I know that utilities have gone up," he says. He is more impressed with people who apply those inflationary concerns to the business--as if it were their own. For example, he was recently impressed with an employee who found a less expensive phone plan for the company. "Now, that's a raise-getter!" he says.

2. Forward-Thinking

While the people who get good raises definitely know how to highlight last year's achievements, Laura Browne, a corporate trainer and the author of "Raise Rules for Women: How to Make More Money at Work," says the highest earners don't dwell on the past. "Forget about last year. Find out the key initiatives that your company or your president wants to achieve this year," she says. For example, if the president said in the annual report that he wants to increase customer satisfaction by 15 percent, focus on that goal. "Your work needs to be connected with what the company cares about right now," says Browne.

3. Visibility

If you stay cloistered in your cubicle, you'll probably be disappointed when raises are announced--no matter how hard you work. "Quiet, shy, or otherwise invisible types are often left behind when it's pay-raise time," says Jane Goldner, PhD., president of The Goldner Group, an Atlanta-based consulting firm. To ensure that you and your hard work are seen, request projects that will get you in front of others--working with colleagues from other departments, giving presentations, or even contributing to the company newsletter. This will make it easier for your boss to plead your case to any necessary approvers. "If your boss is in the meeting and says, 'I want to give a raise to Sally,' it's going to be hard if no one knows who Sally is. On the other hand, if you have been visibly helpful, they'll say, 'Oh Sally, She's terrific!'" says Browne.

4. Charisma

Having great ideas and lofty goals is terrific. But if you want to see them executed, you also have to motivate others to rally around your initiatives. Executive coach Lisa Chenofsky Singer says these kind of interpersonal skills play a huge role when compensation is discussed. "Although someone may be competent from a technical-qualifications perspective, if their style doesn't flow well with others or they're not able to influence others, they tend to be the low-increased players," she says.

5. Tough Skin

No boss will ever say, "I love to give raises to self-promoters." So how do you draw attention to your achievements without looking like a braggart? Milan P. Yager, president and CEO of the National Association of Professional Employer Organizations, says that giving your boss a quarterly progress report and asking for feedback is a subtle way to get noticed. "It is a fine line, but if you can master the technique, it will pay rewards," he says. And letting your supervisors know that you want criticism will show them that you have the confidence to handle any negative comments, which makes the evaluation process a lot less stressful for them.

6. Empathy for the Boss

The highest-earning employees understand that their job is to make their boss's life easier. Think about the things that your boss doesn't like doing--running meetings, tracking numbers--and ask if you can help by taking over those tasks. It's also important to understand that your boss can't always give you what you want, no matter how great your work is. "Most people get keyed up to ask for a raise and when they hear 'no' they respond really negatively," says Browne. "If you instead say, 'I understand, but when raises are unfrozen I would like to be the first in line,' you'll have a much better chance of getting the raise when they can give it."

[kueytoc]

Oil price surge threatens economic recovery: IEA

AFP - Wednesday, April 14

PARIS (AFP) - Rising oil prices threaten to crimp recovery in the world's leading economies, the International Energy Agency warned on Tuesday saying that unexpectedly strong activity could overheat the market.

Higher prices and tighter lending conditions "could stall OECD economic recovery" the IEA said, referring to the 30 advanced economies of the Organisation for Economic Cooperation and Development.

But the IEA also said that the outlook for supplies of oil was improving.

Oil prices fell during trading in London after the publication of the IEA's monthly oil market report, with New York's main contract, light sweet crude for delivery in May, dropping 41 cents to 83.93 dollars a barrel.

Brent North Sea crude for May slid three cents to 84.74 dollars.

The IEA said there were "questions over the sustainability of prices markedly higher" than the 70-80 dollars a barrel level.

"Ultimately, things might turn messy for producers if 80-100 dollars a barrel is merely seen as the new 60-80 dollar a barrel," it added.

The OECD, based in Paris, includes Britain, France, Germany, Japan and the United States, and the IEA is its oil monitoring branch.

The IEA said current higher prices could be "sustained, raising anew concerns about the impact on the global economy.

"Underlying concerns, in some quarters, that oil markets are overheated remain, setting the stage for a sudden reversal of fortune," it said.

"For sure, a recovery in oil demand is moving apace," the IEA said putting the increase in the first quarter of this year at 1.8 mbd on a 12-month comparison.

"So too, however, is global supply, up almost 2.0 mbd."

The IEA said oil demand would be 30,000 barrels per day higher and total 86.6 million barrels per day (mbd) this year owing to unexpectedly strong economic activity in the United States, Asia and the Middle East.

But it reported preliminary data showing that oil product demand in Europe shrank by 3.4 percent in February on a 12-month comparison.

The data cast doubt "on the sustainability of Europe's petrochemical-led, manufacturing-based, export-oriented economic recovery," it said.

"In addition, the thorny and unsettled issue regarding Greece's potential rescue from default and eventual contagion to other southern European countries has introduced a further element of economic uncertainty," it added.

The IEA also noted a boost to the global refining industry which has been in the doldrums for two years and raised its forecast for oil supply from countries such as Canada and Russia that do not belong to the OPEC oil cartel.

Non-OPEC output was revised up by 220,000 barrels per day to 52.0 mbd for 2010 "reaffirming a more optimistic supply outlook amid elevated price levels."

The IEA said that global refining supplies rose in the first quarter of 2010 for the first time since 2008, indicating economic recovery.

It estimated refinery throughput at 72.5 mbd for the first quarter, 800,000 barrels a day higher than the first quarter of 2009.

This is the first annualised increase since the second quarter of 2008.

"While China, India and Russia all posted record highs in February, European throughputs fell to their lowest level in 17 years," the IEA said.

The organisation said it expected global refinery throughput to rise to 72.9 mbd in the second quarter "as global oil product demand growth gathers pace."

Chinese demand, including refinery output and net oil product imports, rose by 19.9 percent in February on a 12-month comparison, the IEA said.

Andrey Kryuchenkov, an analyst at Russian bank VTB Capital, said refineries were "dramatically increasing their crude throughput."

Refineries are "returning from shutdowns and in anticipation of strong domestic fuel demand amid increasing industrial and farming activity," he said.

[kueytoc]

HINT: Time to clear ya stocks position FAST...!

Boss of palm oil giant Sime Darby departs

AFP - Friday, May 14

KUALA LUMPUR (AFP) - – Malaysian conglomerate Sime Darby said Thursday it had asked its chief executive to take leave of absence after huge cost overruns in its energy and utilities division.

Sime Darby, the world's largest listed palm oil producer, said it was braced for losses of 964 million ringgit (300 million dollars) due to problems with projects such as the controversial Bakun mega-dam in Borneo.

"The board has seriously considered the implications... and is taking immediate and stringent measures to correct the deficiencies identified," it said.

President and group CEO Ahmad Zubir Murshid "has been asked to take leave of absence prior to the expiry of his contract on 26 November 2010", a company statement said.

Company officials said that the overruns, uncovered when Sime Darby set up a work group to look into its troubled energy and utilities division, would be recognised in third-quarter results due out May 27.

They said that after posting profits of 1.11 billion ringgit in the first half of the 2010 financial year, the firm was likely to report its first ever quarterly loss.

Sime Darby said that the Bakun dam project, in which Sime Engineering holds a 35.7 percent interest, was awarded in September 2002 and initially scheduled for completion in September 2007.

"However, due to various factors, completion has been delayed and costs have escalated. Management estimates that there could be a potential additional cost attributable to the Group in the financial year 2010 results of 450 million ringgit."

The dam, which involves flooding an area the size of Singapore, has attracted fierce criticism of its impact on the environment and the forced relocation of some 10,000 indigenous people.

The management shake-up comes barely two years after two senior officials, including the conglomerate's chief financial officer, were dismissed after one of Sime Darby's palm oil processing units was discovered to have incurred massive losses from derivatives trading.

Trade in Sime Darby's shares was halted Thursday ahead of the announcement.

"The losses were bigger than expected and may hurt sentiment for the stock," Ivy Ng, senior analyst at CIMB Investment Bank, told Dow Jones Newswires, adding that any delay in finding a successor would depress the share price.

"It will be a tall bill to find a good replacement," said Yeh Kim Leng, chief economist with RAM Holdings, because of the firm's widely diversified nature.

"I think the investors would like to see a new, capable and credible successor to manage the world's largest oil palm plantation company as well as a company that has diversified business in oil and gas and property."

[kueytoc]

How to Get the Salary You Want

by Joe Light

Wednesday, June 23, 2010

A tight job market might have taken away some jobseekers' leverage in a salary negotiation, but that doesn't mean they should roll over and accept the first offer, says New York-based executive coach Rabia de Lande Long. To get the top compensation possible—without putting a sour taste in your potential employer's mouth—take these steps.

1. Do your research.

It used to be hard to find out what your coworkers and other professionals in your industry get paid. But now, several resources have attempted to opened that black box, says Ms. de Lande Long. Salary.com and Payscale.com give salary ranges to expect based on a job seeker's position, location, and experience. Employees at the actual company you're applying to might have also posted their salaries at GlassDoor.com.

2. Don't give out the first number.

You'll be pressured to do this through the application process. "What's your salary requirement?" "What salary range are you looking for?" "What do you get paid now?"

Whatever you do, never give out the first number, says Ms. de Lande Long. If your answer is too high, you might not make it to the next stage. Too low, and an employer will either think you're not qualified or desperate. So, if possible, write "NA" on applications.

If you're pressured to say how much you make during the interview process, try giving your "total compensation," which many large employers will break out for you on the company's internal human resources website. If your current employer doesn't do that, just spell out your salary, benefits, bonuses, and anything else your current employer offers, says Decatur, Ga. career coach Walter Akana. If the new company doesn't offer some of similar benefits, the HR manager will know that your new salary would have to be bumped up to reflect that, he says.

If the interviewer still presses for a required salary, try giving a range of $15,000 rather than a specific number, Mr. Akana says.The low amount should be the minimum you'd be happy with and the high amount should be what would make you happy.

3. Don't lie.

"It's so easy to get someone in HR to verify a salary, even if they're not supposed to," says Ms. de Lande Long. Even if you make it to a job offer, the false salary could come out during a background check, which could result in an outright retraction of the offer or at least upset an employee's new boss. "And from that point onward, you might face trouble in negotiations not just with your new employer, but with everyone in your industry who has heard. Word gets around," says Ms. de Lande Long.

4. Don't take the first offer.

Most employers expect candidates to try to negotiate. So they leave room in the first offer for a raise, says Mr. Akana. If possible, try to arrange a face-to-face meeting with the hiring manager rather than someone in human resources. The hiring manager is more likely to be flexible, says Mr. Akana.

Say that you're flattered to have an offer and really want to join the team, but that there are a couple specific items that you're sure you could resolve if you put your heads together," says Mr. Akana. Despite the pressure on salaries during the downturn, a good rule of thumb is to ask for a 10% higher salary, says Ms. de Lande Long.

If the hiring manager says budget restrictions keep him from going as high as you'd like, it might be that the position is "graded" to be within a certain salary band by HR, says Mr. Akana. It's worth asking if the boss can ask the appropriate person for the job to be re-graded. The worst he can say is no.

5. Once that's locked in, go for other benefits.

Despite what you might have heard, many benefit packages aren't flexible, says Ms. de Lande Long. So, while it's worth asking, it might be difficult to modify the health plan. Your success in getting more vacation days depends on the employer, says Ms. de Lande Long.

Your potential boss might be hesitant to give you more days if it will make other employees think they're being treated unfairly. Instead, focus on things that are easy for the employer to provide, such as a work-from-home arrangement for one day a week, if the employer has made such arrangements in the past, says Mr. Akana.

If you still feel your package is too low, ask if it can be reviewed again in six months. "That way, you can show them that you're worth the money," he says.

[kueytoc]

Goldman Sachs profits fall 82 percent

AFP - Wednesday, July 21

NEW YORK (AFP) - – Goldman Sachs on Tuesday announced its profits slumped 82 percent in the second quarter, hit by a massive US fraud settlement and the costs of a new British tax on bonuses.

Reporting its worst quarter since the height of the economic crisis nearly two years ago, the storied Wall Street firm said earnings were slashed on account of exceptional government payouts worth 1.15 billion dollars.

The New York-based firm set aside 600 million dollars to pay for a new British tax on executive compensation and 550 million dollars to settle US government fraud charges.

The announcement came just days after the firm agreed to pay the US Securities and Exchange Commission a record settlement for mistakenly giving "incomplete" information to clients.

The SEC accused Goldman of allowing a prominent hedge fund to design a complex financial product for clients that was designed to fail and which the hedge fund was betting against.

But Goldman's woes were not limited to strained relations with government.

Reporting net earnings of 613 million dollars, Chief Executive officer Lloyd Blankfein said the business environment had become tougher for the embattled firm.

"The market environment became more difficult during the second quarter, and as a result, client activity across our business declined," he said in a statement.

Second quarter revenues hit 8.84 billion dollars, down 36 percent from the year before.

It was a stark contrast to the first quarter of the year, when Goldman reported profits had nearly doubled to 3.46 billion dollars.

This quarter profit in Goldman's all-important investment and trading businesses each fell around 35 percent versus the second quarter of 2009.

There may yet be worst to come for the firm.

Chief financial officer David Viniar told investors on Tuesday that the latest earnings did not include the potential cost of US financial reform, which is expected to be signed into law by President Barack Obama on Wednesday.

That prospect led Standard & Poor's and other analysts to slash their estimates for Goldman's earnings this year.

"Trading revenues were hurt by lower activity levels, and new rules to be enacted will likely weigh on this business," Standard & Poor's financial sector analyst Matthew Albrecht told clients.

[kueytoc]

Here we go again...time to cut back $pending$.

Bernanke warns of 'uncertain' economic outlook

AFP - Thursday, July 22

WASHINGTON (AFP) - – Federal Reserve chairman Ben Bernanke warned the outlook for the US economy was "unusually uncertain", saying the central bank could step in if the recovery fails.

Bernanke told US lawmakers the world's largest economy would see "moderate growth, a gradual decline in the unemployment rate and subdued inflation over the next several years," compounding fears of a painful exit from recession.

Underlining the severity of the crisis, Bernanke warned that private sector hiring was still growing at "a pace insufficient to reduce the employment rate materially."

His comments kicked off a two-day hearing in Congress, which is deeply divided over how to deal with high unemployment and a stuttering recovery.

With the unemployment rate running at 9.5 percent and amid fears of a looming double-dip recession, Bernanke came under pressure from senators to further stimulate the economy.

Bernanke said the Fed was "prepared to take further policy actions as needed," but stopped well short of saying action was imminent.

"If the recovery seems to be faltering, then we will at least need to review our options," he added.

His comments marked a rapid turnaround for the central bank, which had been focused on winding down crisis measures that left the Fed holding more than a trillion dollars in assets.

But amid growing clamors for a re-entry rather than an exit strategy, doubts have also grown about whether the Fed has any arrows left in its quiver.

The bank's two main routes to stimulate the economy -- lowering interest rates and buying up securities to provide market liquidity -- appear blocked.

Interest rates are already at historic lows and concerns about the soaring US deficit would make buying up more assets deeply unpopular.

But Bernanke insisted the Fed could act if necessary.

"We do still have options," he said, outlining four measures that could help stimulate growth, including buying new assets and lowering selected interest rates.

According to Geoffrey Yu of UBS, by lowering the interest rate for deposits held at the Fed, the central bank could help stimulate lending, which has been tight since the current crisis began.

"The... hope is that banks would be incentivized to lend more into the wider economy rather than dump funds with the Fed," Yu said.

But Bernanke indicated any action was unlikely until it becomes clear the economic recovery is neither sustainable nor self-propelling.

"We are going to continue to monitor the economy closely and continue to evaluate the alternatives that we have," Bernanke said.

"If the recovery is continuing at a moderate pace, the incentive would be less."

His comments appeared to offer little succor to investors worried about a double-dip recession.

"Although the outlook has become more uncertain, the Fed has not changed its policy stance in favor of further accommodation," said Michael Gapen of Barclays Capital. "We do not take a policy signal from this."

The Dow Jones Industrial Average closed down over 100 points, or one percent, after Bernanke made his remarks.

"Bernanke disappointed by not providing hope for a near-term change in monetary policy," Charles Schwab & Co. analysts said.

[kueytoc]

Guess no more ultra-exotica corals for moi-moi.

Eurozone risks threaten nascent recovery: IMF

AFP - Thursday, July 22

WASHINGTON (AFP) - – The eurozone's fiscal crises "threaten" the area's nascent economic recovery and could lead to persistent unemployment and dampen investment flows, the IMF warned Wednesday.

The recovery, driven mainly by external demand, "is likely to be slowed in the near term by market tensions related to sovereign risks," the International Monetary Fund said in a report.

"Over the medium term, the need for fiscal consolidation and structural rigidities will weigh on it, leading to persistent unemployment and subdued investment," the Washington-based fund said after annual consultations with the 16 member economies of the eurozone area.

The IMF warning came ahead of European banking sector "stress test" results -- due to be published on Friday -- designed to assess the capacity of 91 European lenders to withstand economic or financial crises.

Although the markets took a "favorable view" of the stress tests, "some uncertainty regarding the stringency of the tests is likely to remain," the fund said, calling for more transparency and an expansion of these assessments.

It wanted "a more detailed disclosure" of outcomes together with remedial actions by weak institutions to mitigate capital shortfalls, and called for "broadening the transparent use of stress tests beyond the largest institutions."

The markets have turned their attention to the health of banks after an explosion of public deficits and debts in the 16-nation eurozone weakened the single currency.

The debt drama forced European governments to bail out Greece and set up a 750-billion-euro (957-billion-dollar) safety net with the IMF for other countries to tap into if they get in trouble.

The IMF said the depreciation of the euro was "now broadly consistent with fundamentals" and would provide some relief, especially in the area's export competitiveness.

But it warned that the sovereign crisis "has created significant downside risks," saying "further market disruptions cannot be ruled out."

"Since its onset, spillovers to the banking system have increased market and credit risk, and could fuel the adverse feedback loop between the banking system and public finances," the IMF said.

It also raised the specter of "competitiveness problems and private debt overhang" that it said also loomed large in some member countries.

"Immediate action is needed to establish fiscal sustainability. Credible fiscal adjustment must be at the core of the response," the fund advised eurozone nations.

"Countries facing market pressures have no option but to adjust forcefully and meet their deficit targets."

The IMF said the crisis was "a wake-up call" for the euro area, putting the spotlight on the "deficiency of area-wide mechanisms in disciplining fiscal and structural policies."

Despite a strong and far-reaching eurozone policy response to the crisis, "market confidence will take time to restore," it said.

The fund prodded the eurozone nations to "urgently" address the crisis in a well-coordinated manner.

"Now is also the time to establish an effective economic and monetary union by strengthening the enforcement of sound fiscal and structural policies and completing the area-wide framework for financial stability," it said.

[kueytoc]

Oracle's Ellison highest paid CEO of the decade

AFP - Tuesday, July 27

WASHINGTON (AFP) - – Oracle Corporation founder and chief executive Larry Ellison topped the list of best-paid executives of the decade with 1.84 billion dollars, according to a report in the Wall Street Journal.

The 65-year-old software pioneer, who founded Oracle in 1977, beat Internet tycoon Barry Diller into second place on just over one billion dollars.

Ellison has a 23 percent stake in the company, the Journal reported in Monday's editions.

In the 10 years ended May 31, 2009, the most recent fiscal year for which Oracle has disclosed pay data, its market capitalization nearly tripled, to 98 billion dollars, up from 36 billion, and has risen even more since, it said.

In second place on the compensation list was Diller, who received some 1.14 billion dollars from IAC/Interactive and Expedia Inc, the online travel site IAC spun off in 2005, where he remains chairman.

Occidental Petroleum Corp. CEO Ray Irani came in third place, with 857 million dollars.

Apple's Steve Jobs was fourth with 749 million dollars.

Jobs took a one dollar annual salary throughout the decade, but ranked fourth primarily because of a 647 million dollar gain on restricted stock that was granted in 2003 and vested in 2006. He still holds the shares.

In fifth place was Capital One Financial Corp. CEO Richard Fairbank with 569 million dollars earned over the decade.

The Journal analysis included salaries, bonuses, perks and realized gains on both restricted stock and stock options; it excluded new grants of restricted stock and stock options.

[kueytoc]

China Passes Japan as Second-Largest Economy

Monday August 16, 2010, 12:20 am EDT

SHANGHAI — After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.

The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.

The recognition came early Monday, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.

Experts say unseating Japan — and in recent years passing Germany, France and Great Britain — underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030. America’s gross domestic product was about $14 trillion in 2009.

“This has enormous significance,” said Nicholas R. Lardy, an economist at the Peterson Institute for International Economics. “It reconfirms what’s been happening for the better part of a decade: China has been eclipsing Japan economically. For everyone in China’s region, they’re now the biggest trading partner rather than the U.S. or Japan.”

For Japan, whose economy has been stagnating for more than a decade, the figures reflect a decline in economic and political power. Japan has had the world’s second-largest economy for much of the last four decades, according to the World Bank. And during the 1980s, there was even talk about Japan’s economy some day overtaking that of the United States.

But while Japan’s economy is mature and its population quickly aging, China is in the throes of urbanization and is far from developed, analysts say, meaning it has a much lower standard of living, as well as a lot more room to grow. Just five years ago, China’s gross domestic product was about $2.3 trillion, about half of Japan’s.

This country has roughly the same land mass as the United States, but it is burdened with a fifth of the world’s population and insufficient resources.

Its per capita income is more on a par with those of impoverished nations like Algeria, El Salvador and Albania — which, along with China, are close to $3,600 — than that of the United States, where it is about $46,000.

Yet there is little disputing that under the direction of the Communist Party, China has begun to reshape the way the global economy functions by virtue of its growing dominance of trade, its huge hoard of foreign exchange reserves and United States government debt and its voracious appetite for oil, coal, iron ore and other natural resources.

China is already a major driver of global growth. The country’s leaders have grown more confident on the international stage and have begun to assert greater influence in Asia, Africa and Latin America, with things like special trade agreements and multibillion dollar resource deals.

“They’re exerting a lot of influence on the global economy and becoming dominant in Asia,” said Eswar S. Prasad, a professor of trade policy at Cornell and former head of the International Monetary Fund’s China division. “A lot of other economies in the region are essentially riding on China’s coat tails, and this is remarkable for an economy with a low per capita income.”

In Japan, the mood was one of resignation. Though increasingly eclipsed by Beijing on the world stage, Japan has benefited from a booming China, initially by businesses moving production there to take advantage of lower wages and, as local incomes have risen, by tapping a large and increasingly lucrative market for Japanese goods.

Beijing is also beginning to shape global dialogues on a range of issues, analysts said; for instance, last year it asserted that the dollar must be phased out as the world’s primary reserve currency.

And while the United States and the European Union are struggling to grow in the wake of the worst economic crisis in decades, China has continued to climb up the economic league tables by investing heavily in infrastructure and backing a $586 billion stimulus plan.

This year, although growth has begun to moderate a bit, China’s economy is forecast to expand about 10 percent — continuing a remarkable three-decade streak of double-digit growth.

“This is just the beginning,” said Wang Tao, an economist at UBS in Beijing. “China is still a developing country. So it has a lot of room to grow. And China has the biggest impact on commodity prices — in Russia, India, Australia and Latin America.”

There are huge challenges ahead, though. Economists say that China’s economy is too heavily dependent on exports and investment and that it needs to encourage greater domestic consumption — something China has struggled to do.

The country’s largely state-run banks have recently been criticized for lending far too aggressively in the last year while shifting some loans off their balance sheet to disguise lending and evade rules meant to curtail lending growth.

China is also locked in a fierce debate over its currency policy, with the United States, European Union and others accusing Beijing of keeping the Chinese currency, the renminbi, artificially low to bolster exports — leading to huge trade surpluses for China but major bilateral trade deficits for the United States and the European Union. China says that its currency is not substantially undervalued and that it is moving ahead with currency reform.

Regardless, China’s rapid growth suggests that it will continue to compete fiercely with the United States and Europe for natural resources but also offer big opportunities for companies eager to tap its market.

Although its economy is still only one-third the size of the American economy, China passed the United States last year to become the world’s largest market for passenger vehicles. China also passed Germany last year to become the world’s biggest exporter.

Global companies like Caterpillar, General Electric, General Motors and Siemens — as well as scores of others — are making a more aggressive push into China, in some cases moving research and development centers here.

Some analysts, though, say that while China is eager to assert itself as a financial and economic power — and to push its state companies to “go global” — it is reluctant to play a greater role in the debate over climate change or how to slow the growth of greenhouse gases.

China passed the United States in 2006 to become the world’s largest emitter of greenhouse gases, which scientists link to global warming. But China also has an ambitious program to cut the energy it uses for each unit of economic output by 20 percent by the end of 2010, compared to 2006.

Assessing what China’s newfound clout means, though, is complicated. While the country is still relatively poor per capita, it has an authoritarian government that is capable of taking decisive action — to stimulate the economy, build new projects and invest in specific industries.

That, Mr. Lardy at the Peterson Institute said, gives the country unusual power. “China is already the primary determiner of the price of virtually every major commodity,” he said. “And the Chinese government can be much more decisive in allocating resources in a way that other governments of this level of per capita income cannot.”

[kueytoc]

Vietnam's thirst for beer hard to quench

Sunday 29 August 2010, 13:01 SGT

Vietnam's thirst for beer is hard to quench, and a new production line with a capacity for 50,000 bottles an hour is the latest industry attempt to target one of the region's key markets.

VBL Danang Ltd opened the line producing Larue beer at its factory in central Vietnam on Friday.

The brew with a tiger on its label is a down-to-earth favourite in the seaside city of Danang.

"Vietnam... is one of the largest beer markets in Asia Pacific and of the highest growth potential," Christopher Kidd, regional director of Singapore-listed Asia Pacific Breweries Ltd (APB), said in remarks prepared for the opening ceremony.

APB and Vietnamese state-owned SATRA Group comprise the VBL joint venture.

VBL said the expansion, "to meet robust and surging beer demand", will double bottling capacity and is the latest upgrade since it bought the brewery from Australia's Foster's three years ago.

At the ceremony, Singapore's Minister for Trade and Industry, Lim Hng Kiang, said Larue is now available in most of Vietnam's provinces and showed healthy volume growth of 25 percent last year and 50 percent this year.

Along with the Danang brewery, VBL manages and operates three others in central and southern Vietnam. A wholly-owned unit supplies Tiger beer, Heineken and other brands in the country's north.

"Over the next 18 months, APB through its joint ventures and subsidiary, plans to invest close to 100 million dollars in capacity expansion in our various breweries in Vietnam," Kidd said.

He said APB was one of the first foreign-invested firms to enter Vietnam after the communist country began to adopt a policy of economic openness 24 years ago.

Other beer firms have kept coming.

In Danang, stubby bottles of the Philippines-based beer San Miguel sat on wooden tables at a roadside restaurant, hoping to tempt drinkers away from Larue or other labels.

The US brand Budweiser, among others, has moved into Vietnam, and Japanese brewer Sapporo Holdings said in December that it will enter the country from early 2012 in a joint venture with Vietnam National Tobacco Corp.

Sapporo said it will be the first Japanese brewery to build a production and marketing base in the "promising Vietnamese market which has been growing at an annual rate of more than 10 percent".

In a report last year, Spiros Malandrakis, an analyst with global market research firm Euromonitor International, said Vietnam's integration into the World Trade Organization opened up more opportunities for investment and imports from foreign companies, particularly with the government's commitment to slash tax on imported beer.

However, Malandrakis said Vietnam's domestic "economy lager" generated the strongest yearly sales increase, 10 percent in 2008.

The brewers are trying to capitalise on a beer market which Euromonitor International forecasts will continue to be one of the region's largest and fastest-growing.

Total beer sales volume at Vietnamese cafes, restaurants and other outlets grew 56 percent between 2004 and 2009 to 1.6 billion litres, the second-fastest growth rate in Southeast Asia after Cambodia.

Euromonitor International sees continued expansion of the Vietnam beer market, at 8.9 percent for 2009-10 and 5.6 percent growth by 2013-14, slightly behind Laos and Cambodia.

Vietnam's leading brewer is Saigon Beer, Alcohol and Beverage Corp (SABECO), which had up to 35 percent of national beer sales and was increasing its production, the official Vietnam News Agency reported last year.

It said Hanoi Beer, Alcohol and Beverage Corp (HABECO) had a 15 percent market share.

Earlier this month HABECO inaugurated its new Hanoi-Me Linh brewery built with an investment of more than 100 million dollars, Vietnam News Agency said.

HABECO bottles Hanoi Beer and is a major producer of the draft brew known as "bia hoi". The draft is dropped off every day at Hanoi's ubiquitous sidewalk bars which are little more than plastic chairs and a metal tank of the beer.

"In my opinion, bia hoi is the best drink," said Nguyen Duc Trung, 42, citing its relatively low alcohol content and thirst-quenching abilities in Hanoi's heat.

"I drink bia hoi every day and that's become my habit."

[kueytoc]

Heavy in dollars, China warns of depreciation

Zhou Xin and Simon Rabinovitch, 7:42, Friday 3 September 2010

BEIJING (Reuters) - China on Friday offered a rare glimpse into its foreign exchange reserves, confirming that they are overwhelmingly allocated in dollars, while a central banker said the mountain of cash could face depreciation risks.

The Chinese government's currency reserves, the world's largest such stockpile at $2.45 trillion, are held roughly in line with what was described as the global average: 65 percent in dollars, 26 percent in euros, 5 percent in pounds and 3 percent in yen.

The report in the China Securities Journal, an official newspaper, cited unnamed reserve managers.

The allocation of Chinese foreign exchange reserves is considered to be a state secret, but analysts have long estimated that about two-thirds are invested in dollar assets.

Separately, Hu Xiaolian, a vice governor with the People's Bank of China, warned that depreciation loomed as a risk for foreign exchange reserves held by developing counties.

"Once a reserve currency's value becomes unstable, there will be quite large depreciation risks for assets," she wrote in an article that appeared in the latest issue of China Finance (CHFI.OB - news) , a Chinese-language magazine published under the central bank.

She reiterated China's long-standing discomfort with a global financial system dominated by a single currency in the dollar.

"The outbreak and spread of the global financial crisis has highlighted the inherent deficiencies and systemic risks in the current international currency system," she said.

"A diversified international currency system will be more conducive to international economic and financial stability," she added.

To that end, developing countries must speed up reform of their financial markets, and China would work to promote greater cross-border use of the yuan, she said.

DIVERSIFICATION

There have been signs in recent months that Beijing has stepped up the pace of diversification of its foreign exchange reserves away from dollar assets.

Chinese net buying of Japanese debt has surpassed 1.7 trillion yen this year, far surpassing its record of 255.7 billion yen in 2005.

China has also raised holdings of South Korean bonds by 2.48 trillion won ($2.11 billion) in the first seven months of this year from 1.87 trillion won at the end of last year. However, Chinese investors only started buying South Korean bonds in the middle of 2009.

At the same time, China has slightly cut back its vast holdings of U.S. Treasuries, from $894.8 billion at the start of the year to $843.7 billion in June, according to the most recent data. China remains the biggest single holder of U.S. government debt.

But analysts have also warned against reading too much into the apparent shifts in the flow of cash from China. Like any investor with commercial interests in mind, Beijing has shown a readiness to shift its strategy depending on what it sees as good buys at the time.

The China Securities Journal laid out the prospects for a shift back to the dollar in the near term.

"It is unlikely that China will increase purchases of Japanese bonds in the coming months because the yen might weaken at any time," the newspaper said.

"China is very likely to increase purchases of U.S. Treasuries in September. The possibility for China to buy more Korean bonds can't be ruled out," it added.

(Editing by Ken Wills)

[kueytoc]

Rich investors still choose safety first

On Tuesday 5 October 2010, 23:18 SGT

By Martin de Sa'Pinto and Joe Rauch

GENEVA/NEW YORK (Reuters) - Wealthy investors are retaining cash, buying gold and limiting exposure to risk in a sign confidence in a sustained recovery remains at a low ebb.

Speaking at the Reuters Global Private Banking Summit, bankers said that while wealthy clients were still investing in riskier assets like hedge funds and private equity, they were limiting leverage and keeping tabs on their exit options.

"When the credit bubble exploded, people needed to unwind products to meet borrowing needs. People are coming back to the market with a more conservative approach, (they) have realised too much leverage is bad," said Pablo Garnica, J.P. Morgan's (NYSE: JPM ) head for private banking at the Geneva summit site.

At the New York leg of the summit, Keith Banks, president of Bank of America private banking unit U.S. Trust, said clients still want to de-leverage.

His division is "eager to loan (to high net worth clients), but the wealthy are hesitant to take on additional debt in the current climate," he said.

Clients were also likely to hold on to cash positions built when they sold assets during the crisis, bankers said.

"We have seen a clear shift from alternatives into cash. I don't mean treasury bills, I mean cash, cash, cash," said Josef Stadler, who heads the UBS private banking business for clients with over $50 million in investable assets.

Stadler said his European clients were holding 30 to 35 percent of their disposable wealth in cash. Unicredit private banking head Andreas Woelfer said the level among his clients, with disposable assets of at least 500,000 euros, was about 25 percent.

Asian clients were seemingly more bullish, although they too were holding historically high levels of cash and equivalent deposits, at between 10 and 20 percent of total assets, Nick Pollard, RBS Coutts' Asia chief executive said from Singapore.

The lowest cash portion estimate from the Geneva leg of the summit, at 5 to 10 percent, came from J.P. Morgan's Garnica.

Clients have also increased gold holdings as a hedge against inflation, deflation or the collapse of a major currency.

In 2010 gold, traditionally a hedge against inflation, is now used to preserve value against declining major currencies and as protection against renewed financial turmoil, said Enrique, Marazuela, Chief Investment Officer at BBVA.

Illiquid asset classes are still out of favour.

"Illiquidity lockups are a thing of the past for the time being. It's very difficult. You hear this also with hedge funds and some of the private equity funds. Fund raising in the ultra high net worth ($50 million plus) segment is very tough," said Stadler, whose unit manages $300 billion.

EMERGING BONDS FAVOURED

One of the strongest trends has favoured emerging countries' sovereign and corporate debt. Here, investors are seeking access to fast growing Asian and Latin American economies while limiting exposure to those markets' more risky and volatile equities.

"We saw clear pick-up in demand for emerging stocks and bonds especially government bonds as an alternative, as a risk mitigator," said Stadler.

Van of Julius Baer's recommendations for Asian investors also include Asian bonds, G3 bonds and Asian stocks with high-dividend yields such as telecoms companies including Singapore's StarHub, China Mobile, and Taiwan Mobile.

He also recommends holding a diversified basket of primarily Asian currencies along with structurally sound European currencies like the Swiss franc and Norweigian kroner.

Some bankers noted growing client interest in currency trading as they try to squeeze some yield from cash holdings, while others said clients were holding baskets of emerging markets currencies as a hedge against further declines in the dollar, euro and yen.

Although some equities were cheap, private clients are looking for a less volatile environment before increasing investments in that asset class.

"What they are waiting for is some stability and some direction," said Citibank general manager Samir Raslan.

"We have come out of the very difficult financial environment two years ago into a period of uncertainty," he said.

(Additional reporting by Kevin Lim; Editing by Andrew Callus and Hans Peters)

[kueytoc]

Super-rich investors buy gold by tonne

On Tuesday 5 October 2010, 2:38 SGT

By Laura MacInnis

GENEVA (Reuters) - The world's wealthiest people have responded to economic worries by buying gold by the bar -- and sometimes by the tonne -- and by moving assets out of the financial system, bankers catering to the very rich said on Monday.

Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.

"They don't only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,314.50 an ounce on Monday, near the record level reached last week.

"We had a clear example of a couple buying over a tonne of gold ... and carrying it to another place," Stadler said. At today's prices, that shipment would be worth about $42 million.

Julius Baer's chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lackluster U.S. data and amid concerns about currency weakness.

"I see gold as an insurance," Van Anantha-Nageswaran said. "I recommend 10 percent as minimum in portfolios and anything more than that to be used for trading purposes, to respond to short-term over-bought or over-sold signals."

ULTIMATE BUBBLE?

Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the "ultimate bubble" because it is costly to dig up and has no real value except its market price.

But a rising price for the precious metal has in itself generated more and more demand from investors looking for a way to hedge against a fresh recession. Gold bears no yield and is uncompetitive in an environment of rising interest rates.

The uneasy outlook for inflation, hard currencies and global growth has triggered a five-fold increase in a physical gold fund launched by Pictet one year ago, the Swiss private bank said.

UBS's Stadler said the precious metal has become a staple of investors' portfolios, despite questions about whether it makes for a smart long-term investment.

"If you talk to ultra-high net worth individuals, that level of uncertainty has never been higher in the last two, three, four years," he said. "If they ask me, 'Is inflation going up or are we entering a deflationary cycle?,' I don't know. But obviously nobody knows."

Anthony DeChellis, managing director of Credit Suisse 's Americas private banking unit, said at the Reuters summit in New York that clients are more interested in capitalizing on the rise in gold prices than using the precious metal as a safe-harbor investment.

"They're asking, 'If it's a bubble, how far can I ride that bubble,'" he said. "I cannot say we've seen a spike in gold interest, but there's an interest in the phenomenon of it."

Samir Raslan, Citigroup Inc's regional head for central, eastern and northern Europe, Africa and Turkey, said clients were not going overboard on gold.

"I wouldn't say that clients are over-investing. It's part of an asset allocation, but it's not something that they are deciding all of a sudden," he said.

And not all bankers are recommending exposure to gold.

Andreas Wolfer, head of private banking at UniCredit Group, attributed the run-up in the price of gold to frayed investor nerves after the 2008 financial crisis as well as concerns about sovereign debt in the euro zone.

"We have seen it but we have not overweighted it in our asset allocation," Wolfer told the Reuters summit in Geneva, which has emerged as a major trading hub for precious metals as well as other physical commodities.

"We strongly believe in an asset allocation having a clear and diversified portfolio, which sounds a bit boring but in the end it brings the best returns," Wolfer said.

(Additional reporting by Kevin Lim in Singapore and Joe Rauch in New York; Editing by Greg Mahlich and John Wallace)

[kueytoc]

Private bankers advise: 'just say no to gold'

On Wednesday 6 October 2010, 4:42 SGT

By Joseph A. Giannone

NEW YORK (Reuters) - Gold is all the rage as investors flee uncertain markets and worry about inflation, but some bankers to the very rich do not take a shine to the precious metal.

Gold prices have spiked 22 percent this year, with investors sending gold futures to record highs of more than $1,337 on Tuesday. The weak dollar, volatility in currency markets and deficit worries boosted demand for the metal as a safe store of value.

Private banking executives, say gold's glittering price tag is or should give their wealthy clients pause.

"We're not really recommending gold right now, just because it's at a level where there are things driving it beyond the types of things (where) that we can add a lot of value," U.S. Trust President Keith Banks said at the Reuters Global Private Banking Summit in New York.

Instead, Banks said gold prices may reflect the surge in demand for gold exchange-traded funds, listed shares that purchase physical gold, and broader worries about government spending leading to rapid price inflation.

"So what exactly is leading to gold at the levels it's at? Your guess is as good as mine," said Banks, who runs the Bank of America (NYSE: BAC ) private bank unit.

The SPDR Gold Trust ETF (Pacific: GLD ), which lets retail investors more easily bet on gold, has surged 21 percent this year to a record high of 130.71. The fund shares are up more than 50 percent since the end of 2008.

Wealthy families are more interested than ever in owning commodities such as metals and energy, assets that do not move up and down in step with stock and bond prices. They also offer a hedge against inflation, since their values rise with prevailing prices.

There are many critics who warn gold is the latest frenzy and is doomed to collapse.

"With gold being over $1,300 an ounce now, you have people who are asking whether, first, 'Is it another bubble?' and then, 'How far can I ride that bubble?,'" Credit Suisse Americas private banking chief Anthony DeChellis said.

Bessemer Trust Chief Executive John Hilton said his New York wealth management firm allocated a single-digit percentage of its real return fund into gold.

For some clients, he acknowledged, that was not enough.

"We have clients who have made very large individual purchases of gold. Sometimes they'll just say they're doing it, and they'll ask us if we can hold it for them, but we haven't made any large purchases of gold directly for our clients," said Hilton, whose firm manages about $56 billion.

U.S. private bankers, to be sure, also told the Summit they do recommend investments in a range of commodities.

"We have been a proponent of having an exposure to commodities. The bank is optimistic about the economic recovery, and commodities is a way to play global growth," said U.S. Trust's Banks.

U.S. Trust formed its Specialty Asset Management group, which buys hard assets on behalf of its wealthy clients -- anything from real estate, timberland and farmland to oil and gas properties. U.S. Trust will buy and sometimes hire people to operate these assets.

The business, which manages about $16 billion of assets, is seeing strong interest from clients, he said.

"These are assets that I think people can feel good about, that are probably not going to track the more typical areas, and it's just a unique opportunity," Banks said.

(Reporting by Joseph A. Giannone. Editing by Robert MacMillan)

[kueytoc]

AIG to repay 36.7 billion dollars of US bailout

AFP - Tuesday, November 2

WASHINGTON (AFP) - – Ailing insurer AIG is poised to repay 36.7 billion dollars in government bailout aid after floating its Asian unit AIA and selling another subsidiary, US officials said Monday.

American International Group raised 20.5 billion dollars of cash in its initial public offering of pan-Asian insurer AIA Group last week, the Treasury Department said in an update on AIG's taxpayer-funded rescue.

In the sale of unit American Life Insurance Company (ALICO) to MetLife, Inc., AIG raised about 16.2 billion dollars, including about 7.2 billion dollars in cash.

"This approximately 36.7 billion dollars in aggregate proceeds will be used to fully repay the loan extended to AIG by the Federal Reserve Bank of New York (FRBNY) and a substantial amount of the FRBNY's preferred interests in certain AIG subsidiaries," the department said.

As part of AIG's restructuring targeted by March 31, 2011, the insurer will draw up to 22 billion dollars in remaining Troubled Asset Relief Program (TARP) funds from the Treasury.

The money will be used to purchase the New York Fed's preferred interests in the special-purpose vehicles holding AIA and ALICO, and subsequently Treasury will receive those interests.

The Treasury said it would own 92.1 percent of AIG after the restructuring, a holding that would be much more valuable than its current cash investment.

The stake of 1.66 billion shares of common stock, based on Friday's closing share price, would be worth about 69.5 billion dollars, it said.

"This amount significantly exceeds Treasury's current 47.5 billion dollar cash investment in AIG," which is in addition to its investment in the preferred interests.

The US government expects to earn a profit on its loans to and investments in AIG after the restructuring, announced a month ago, is completed.

"The completion of the restructuring is subject to a number of conditions," the Treasury said.

"Nevertheless, the AIA IPO and sale of ALICO reflect the substantial progress that AIG and the USG (US government) have made to date in restructuring the company."

AIG, once the world's largest insurer, received more than 180 billion dollars from US taxpayers two years ago to help cover investments that disappeared amid the collapse of a US real-estate bubble.

[kueytoc]

UK's total debt forecast to hit £10 trillion by 2015

Emma Rowley, 6:29, Tuesday 9 November 2010

Britain's total debt will top £10 trillion by 2015, according to PricewaterhouseCoopers, which warned the burden could slow growth for decades as interest rates eventually rise.

Property-related borrowing and lending between financial institutions helped the collected debt of households, businesses and government balloon from roughly twice gross domestic product (GDP) in 1987 to around 5.4 times by 2009, when total debt stood at £7.5 trillion, according to the report.

Despite government austerity measures, the firm's latest economic outlook sees the UK's debt to GDP ratio sticking near historic highs as borrowing hits £10.2 trillion by 2015.

But if the economy does not perform as well as expected, one plausible alternative scenario could still see the debt burden soar as high as 5.8 times of GDP, the report said.

Deleveraging will go well beyond the immediate challenge of getting public finances under control, PwC warned.

While attention is on reining in government borrowing, the "debt explosion" seen since the mid-1980s has been most marked in the private sector, it said.

Even in 2009, government debt was still less than a sixth of the size of the private sector's total debt, which grew as financial institutions geared up in search of higher returns on equity and pre-recession house price rises fuelled mortgage lending for households.

The increased burden has so far been supported by low interest rates, but these are likely to rise "significantly" over the next five years, said PwC. The firm believes interest rates on mortgages may end up higher than before the recession, as tougher regulation pushes up lenders' costs.

The projections will stoke fears for households kept afloat by near-zero rates.

"The UK's addiction to debt has reached alarming levels during the past decade," said John Hawksworth, chief economist at PwC.

The unprecedented levels of private sector debt would, sooner or later, have to be addressed, "either through debt being run down sharply, which would risk triggering another recession, or more likely through a persistently heavy debt service burden that could dampen economic growth for decades to come".

He added: "Either way, deleveraging will be a painful process for the UK."

Separately, the Organisation for Economic Cooperation and Development said the leading economies appear to be diverging as they recover, with the UK among those facing a downturn.

While the organisation's composite leading indicators (CLI) a measure of economic turning points stayed steady for its 33 members as a group, there were marked differences between rival nations.

Signs pointing to a "moderate downturn" in the UK, Canada, France, India and Italy offset indicators of continuing expansion in Germany, Japan, the US and Russia.

Indicators for Brazil and China were worse, implying industrial production will fall below longer-term trends.