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Hope everyone has enjoyed the change in format and reporting. Our editorial and news staff are dedicated to bringing you the best global economic (and a little political) news from around the world. We have no operating paradigm or filter except our belief in free-markets and global trade. Although the majority of the staff live and work in the United States, our allegiance is to the concept or promise of the United States IN America; it is not about land or territory - it is about ideology.
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PS - Saturday's News: back by popular demand is our analysis of the news we reported - what does it mean for your global business?
Freddie Mac says all the end-of-the-bubble chatter can't conceal the fact that this is turning out to be a great year for the U.S. real estate market.
Even with the slowing in housing activity, the (United States) is in store to have the third-best year on record for the housing industry, surpassed only by 2004 and 2005, the federally chartered mortgage lender said Friday in a statement.
Nominal home values, on average, continue to rise in most markets, adding to home equity wealth and supporting consumer spending, though less than in the past. Cash-out refinancing remains brisk ... which helps to sustain debt consolidation, home-improvement investment and consumer spending.
The company also said the sector has a bright near-term future, because a spring thaw is expected, as the housing market lands softly on more normal patterns supported by employment and income gains.
3:34:28 PM comment []
We might forgive Europeans a little gloating in recent weeks over some economic news of the man-bites-dog variety. It seems the EU outperformed both the US and Japan in the last quarter, posting a 0.9 percent growth rate (with an annualized rate of 3.6 percent). The US and Japan were an anemic 0.7 percent and 0.2 percent, respectively.
Now, a growth rate of less than 1 percent is not exactly a reason to break out the Champagne, but for EU leaders, used to enduring complaints about how desperately they need to reform to catch up to and compete with the US in a global economy, it's at least reason for a minor celebration (perhaps a modest bottle of méthode champenoise, made in California?). This, after all, was the first time in five years that the EU had outperformed the US.
In fact, there have been a few dribs and drabs of good economic news for Europe in recent months - inflation holding steady even as oil prices have gone up, a real estate market that is still growing even as the US bubble bursts, rising exports, small declines in unemployment rates, etc. More importantly, the gains have come not just from the go-go member states of Eastern Europe, where high growth rates are to be expected and are still actively encouraged, but also from France and Germany.
Colombia's finance ministry has included the creation of a multifund pension system in an upcoming financial reform to diversify pension investments, an official from financial regulator Superfinanciera told BNamericas.
Financial regulator head Augusto Acosta recently said the reform would mainly focus on developing a regulatory framework for capital markets and regulate risk management of investment portfolios
By law, all Colombian workers must be affiliated at a private pension fund manager (AFP) or with the social security system. Today the AFPs only manage one pension fund and must guarantee a minimum return for their affiliates.
The regulator is now fine-tuning a proposal to start a system in which AFPs could offer affiliates a family of three funds with different risk profiles.
The final draft of the reform is yet to be defined and will not be sent to congress this year, the spokesperson said.
For the first time, the World Bank has ranked the African region among the top three regions spearheading reforms in business globally. The continent trailed Eastern Europe and OECD countries in easing business transactions in 2005/2006. The World Bank and International Finance Corporation Doing Business 2007 study declared that the period witnessed much pronounced ease in doing business across the world.
South Africa ranked 29th was the only African country in top 30 economies in the world. Singapore was ranked number one followed by New Zealand, United States, Canada, HongKong/China.
In 213 regulatory reforms examined by experts in 112 economies, the report observed increased reduction in time, cost of doing business while easing legal and administrative machinery of countries undergoing reforms.
World Bank President, Paul Wolfowitz, described the report as critical for developing countries so they can determine where additional reforms are needed. "The report points out that in many economies the costs of doing business are so prohibitive that most entrepreneurs are forced to operate outside the formal sector." he stated.
The report states, "two hundred and thirteen regulatory reforms-- in 112 economies-- reduced the time, cost and hassle for businesses to comply with legal and administrative requirements."
Ghana and Tanzania are two African countries on the top 10 reformers in the ease of doing business. Georgia, Romania, Mexico, China, Peru and France topped the list. Others are Croatia and Guatemala.
ZIMBABWE'S currency reforms have failed to win the backing of the International Monetary Fund (IMF), further deepening anxiety over the country's fate when the Bretton Woods institution's board meets to review the country's membership in November.
An IMF spokesperson told businessdigest from Washington that Zimbabwe's currency reforms, undertaken as part of broad-based measures to curb hyperinflation, fell far short of addressing fundamental causes of the country's economic woes.
"The fund has repeatedly urged the Zimbabwean authorities to urgently adopt a comprehensive policy package to address Zimbabwe's economic crisis," said an IMF spokesperson.
"The introduction of a new currency in itself does not address the underlying problem. The fund has also called on the government to provide adequate social safety nets and food security to vulnerable groups," she maintained.
The unfavourable view of the currency reforms by the IMF underline government and the central bank's apprehension over a planned mission to the country by an IMF team, whose visit was scheduled for early September before a board meeting to review Zimbabwe's compliance with the institution's recommendations over the comprehensive policy package to kick-start the economy's revival
Mozambique has continued to make significant gains in its human development index in recent years, according to the statistics presented in the latest National Human Development Report, published by the Southern African Research and Development Centre (SARDC), and funded by the United Nations Development Programme (UNDP).
Although the report is dated 2005, it was launched in Maputo on Friday.
The human development index (HDI) consists of three variables - life expectancy at birth, educational level (measured by the adult literacy rate, and the combined enrolment rate for primary, secondary and tertiary education) and real GDP per capita.
The maximum possible value for the HDI is 1, and the latest global Human Development Report from UNDP ranks Norway as the most developed country with an HDI of 0.963. At the bottom of the pile is Niger with an HDI of just 0.281.
The Mozambican researchers have calculated Mozambique's HDI since the start of the millennium. It has risen from 0.366 in 2000, to 0.385 in 2001, 0.402 in 2002, 0.414 in 2003, and 0.428 in 2004. So the HDI has grown, on average, by about four per cent a year.
THE situation is disheartening. Just days after the old family of bearer cheques was phased out from the market under Project Sunrise -- a Reserve Bank of Zimbabwe initiative heralding the dawn of a new era -- inflationary pressures remain relentlessly entrenched in the country's beleaguered economy.
Central bank governor Gideon Gono in July launched currency reforms aimed at discontinuing speculative activities which he blames as the major cause of the country's inflationary woes.
But while the new bearer cheque system has brought convenience to business transactions, it has done little to stop the sharp hikes in prices and create stability in the crisis-sapped economy.
Inflation touched an all-time high of close to 1 200% in May although it subsided slightly over the past two months to 993,6% year-on-year for July.
But analysts predict a resurgence to about 1 200% before the year is out. Commodity prices have increased significantly over the past two months, putting pressure on incomes.
US to raise issues of trade gaps, closure of N Korea-linked bank accounts
(HANOI) Saving world trade talks and bolstering global financial systems against fiscal crises were the focus of finance ministers of the United States, China and other Pacific Rim economies meeting in Vietnam yesterday.
Mr Paulson: Liberalising trade will have a positive impact on world economy
Officials said ministers of the 21-member Asia-Pacific Economic Cooperation (Apec) forum were to work on a statement to be issued at the end of the two-day conference today that would push to revive World Trade Organisation talks.
The Doha round of trade liberalisation talks stalled in July after five years of stop-start negotiations.
'I can't think of anything . . . that can have a more positive impact on the global economy than trade liberalisation,' US Treasury Secretary Henry Paulson told reporters.
Apec, which says it accounts for 47 per cent of world trade and includes 2.6 billion people, believes it can influence the Doha round aimed at reducing trade barriers.
US officials travelling with Mr Paulson said trade imbalances and efforts to close bank accounts linked to North Korea, which Washington suspects is developing a nuclear weapon, were among the issues he would raise.
Latest survey shows median forecast for this year rising to 7.1% from 6.7% in June
By DANIEL BUENAS
(SINGAPORE) Private-sector economists are more bullish over Singapore's growth prospects than they were last quarter, raising their median GDP forecast to 7.1 per cent this year, up from a 6.7 per cent forecast in June.
A Monetary Authority of Singapore (MAS) survey of 19 economists revealed an optimistic outlook for the economy, with median forecasts for almost all industries being revised upwards for 2006 as a whole.
The survey, conducted in August and the first days of September and released yesterday, found that median expectations for year-on-year GDP growth had risen to 7.1 per cent, with the lowest forecast at 6.9 per cent and the highest at 8.5 per cent.
The median forecast falls within the government's official forecast range of between 6.5 and 7.5 per cent growth.
TOKYO - Finance ministers and central bank governors from the Group of Seven (G7) industrial nations will meet on Sept 16 in Singapore, Japan's Finance Minister Sadakazu Tanigaki said on Friday.
China, Singapore and Thailand are being invited to join in part of the G7 discussions, the ministry said.
G7 groups Britain, Canada, France, Germany, Italy, Japan and the United States.
SINGAPORE - Europe will 'pay a heavy price' if it does not deepen ties with Asia as the region strengthens links with key trading partners like the United States, Singapore Prime Minister Lee Hsien Loong said.
'Europe has many urgent priorities but it must strive to deepen its relationship with Asia,' Mr Lee said in a speech in London late on Thursday ahead of a summit of Asian and European leaders in Helsinki, Finland on Sept 10-11.
'If Europe is left out of Asia at a time when the region is growing and linking up with partners all over the world, it will pay a heavy price, not just in economic growth and vitality, but also in its international influence.'
He said Europe's engagement with Asia must go beyond China and India to include Japan and the Association of Southeast Asian Nations (Asean), a 10-member regional bloc.
'This way, Europe can participate fully in the transformation of Asia, build up its stake in the region and play a full role in an important part of the world,' he said.
The dominant world powers historically pushed for globalisation as a means of increasing wealth and influence. Yet those nations fret as the emerging powers of India and China embrace the same strategy. Citizens of wealthy nations hold two concerns: Job loss from competition with low-wage countries and loss of national identity resulting from increasing numbers of immigrants. BRANCO MILANOVIC argues that Europe needs a social revolution.
Historically, the dominant power tends to support globalisation as a way to increase the ambit of its influence, expand trade and gain economic advantage, co-opt new citizens and possibly show the advantages of its own pax. This was the case with the Roman, British and now American-led globalisations. But recently, the rich West — which saw globalisation as a prelude to "the end of history" — is having second thoughts.
Two fears drive this unease with globalisation: The first is a fear of job loss due to competition from low-wage countries. The second is the fear of ethnic and cultural dilution due to increased immigration.
China, India factor
The cause of the first fear is a fast re-emergence on the world stage of China and India. For students of history, the rise of China and India is not a surprise. The two countries are just recapturing the ground lost during the 19th and most of the 20th century. Before the Industrial Revolution, China's and India's combined output accounted for one half of the world's total. Now, after a quarter-century of China's spectacular growth, and more than a decade of India's growth acceleration, the two countries contribute less than a fifth of total world output.
The first half of 2006 saw India deals, both inbound and outbound, worth more than $25 billion
These are sizzling days for mergers and acquisitions (M&A), not only worldwide but also closer home. India has seen a 175 per cent volume change, to rank third in the global tally of growth rates, as per a recent analysis by Bloomberg.
What is driving M&A ascent in India? "Aspiration of Indian business to go global and the fact that opportunities exist overseas for turnaround of businesses," says Mr V. Ranganathan, Partner, Global Tax Advisory Services of Ernst & Young. The first half of 2006 saw India deals, both inbound and outbound, worth more than $25 billion.
Outbound deals up
There was a sharp increase in outbound, that is, Indian companies acquiring businesses abroad. "The largest proportion of outbound acquisition targets by volume continued to be in Europe which accounted for over half the deals, while South America took the lead in value terms," reports the mid-year issue of Asia-Pacific M&A Bulletin from PricewaterhouseCoopers.
"Outbound on IT (information technology) side must be to acquire products and customers," Mr Ranganathan suggests. In the case of manufacturing companies, the focus, he says, can be on customer base, IPR (intellectual property rights, as with the pharmaceutical industry), brands (for consumer goods), or turnaround of sick units.
Finance Minister P Chidambaram is confident of beating back inflation below the 5% level even as he said that the price-line had shot up due to supply side disruptions of certain essentials.
On inflation based on the wholesale price index touching 5.01% for the week ended August 26, he said though it was technically above 5%, this was not something to be alarmed about and the government would do whatever needs to be done to bring it below this level.
"Its our intention to keep it below 5%. There has been some supply side disruptions of vegetables and fruits etc. There continues to be some pressure on wheat and pulses (as well)," Chidambaram told reporters here.
2:24:07 PM comment []
The growth story of Indian stock market looks like it has come to stay going by a global survey of emerging market fund managers, which ranks the country as one of the favourite Asian destinations ahead of China, Russia, Thailand and Pakistan.
According to the survey, conducted by global equity research firm Standard & Poor's, India is the second most preferred market among the BRIC (Brazil, Russia, India and China) countries after Brazil. Among the Asian equity markets, India has grabbed the 3rd position after Korea and Taiwan, S&P said in a report. The country has been placed at 9th position among the 27 emerging markets in the survey, while South Africa, Mexico, Israel, Brazil and Korea have grabbed the top five positions. The report said, "The story for equities in emerging markets in the last couple of decades has been one of explosive growth. Not only are domestic investors in these markets finding equity investing an attractive option, but so too are investors from around the world."
Gold prices today plunged by Rs 270 and ended at two months low of Rs 9225 on the bullion market here today due to heavy selloff following steep fall in the international prices.
Silver also suffered heavily in line with gold.
Standard gold (99.5 purity) opened sharply weak at Rs 9300 and continued to nosedive following heavy selling by stockists and closed at Rs 9225, a level not seen after July 3 and suffered a heavy setback of Rs 270 over yesterday's close of Rs 9495. Pure gold (99.9 purity) also fell similarly to Rs 9275 from Rs 9545 yesterday.
"Today's steep fall in gold in the domestic market was expected after yesterday's sharp fall in the global prices as stockists who had accumulated stocks at the prevaling prices cannot afford to hold their stocks and the only option was to offload major chunk of the current stocks", a bullion dealer said.
Ready silver (.999 fineness), after a sharply lower start at Rs 19,805, fell further to end at Rs 19,595, showing a notable fall of Rs 435 over Rs 20,030 yesterday.
2:19:42 PM comment []
Eurozone finance ministers promised on Friday to use windfall tax revenues, the fruit of the strongest growth for six years, to slash overspending.
Luxembourg Prime Minister Jean-Claude Juncker told a news conference that they had agreed to devote stronger-than-expected revenues to cutting deficits and debt and not repeat past profligacy.
Speaking after chairing a meeting of the ministers in Helsinki, he said: "We believe that the surpluses should be used primarily for the correction of public deficits and to lower debt levels so that we don't repeat the exact same errors we committed at the end of the last century and the beginning of this century."
EU countries are required to keep their public finances in line with EU limits, although many member states have consistently overshot them in the past. In particular they are required to keep budget deficits to less than three percent of output and debt to less than 60 percent.
HANOI (Reuters) - U.S. Treasury Secretary Henry Paulson said on Friday he supported a strong dollar and believed the value of the U.S. currency should be set in open markets.
"I am very much in favor of a strong dollar because that's in our nation's interest," Paulson said in response to students' questions at National Economic University in Hanoi.
Paulson said economies around the world had a role in realigning imbalances in flows of trade and capital.
"No nation can solve this by themselves. It's a shared responsibility," he said.
He said the United States should work to reduce its low savings rate, Japan and Europe to boost growth, and East Asia and China to promote greater exchange rate flexibility.
Sept. 8 (Bloomberg) -- U.S. stock-index futures rose before reports next week that may show inflation has slowed enough for the Federal Reserve to keep interest rates on hold.
Dow Chemical Co., the largest U.S. chemical maker, advanced in Germany as oil prices declined for a fifth day. General Motors Corp., which makes cars in China with Shanghai Automotive Co., climbed as sales increased in the world's most populous nation.
Standard & Poor's 500 Index futures expiring in December added 2.80 to 1310.20 as of 10:23 a.m. in London. Dow Jones Industrial Average futures rose 17 to 11,456. Nasdaq-100 Index futures gained 3.25 to 1590.
U.S. stocks yesterday declined for a second session on more evidence that the housing market is slowing, dragging down economic growth, after the Fed raised borrowing costs 17 times in a row before pausing last month.
TOKYO (XFN-ASIA) - Bank of Japan governor Toshihiko Fukui said the central bank's monetary policy remains unchanged despite a much slower-than-expected rise in the consumer price index (CPI) for July which was calculated using a new standard and a new base year.
Fukui was speaking at a news conference after the central bank 's nine-member policy board voted unanimously to keep the overnight call rate target at 0.25 pct, a move that had been widely expected by the market.
In July, the central bank raised the overnight call rate target to 0.25 pct from zero, the first rate increase in six years, amid signs that the economy was on the mend and deflation was history.
2:07:05 PM comment []
TOKYO (Reuters) - Japan's Shinzo Abe pledged on Friday to be bold in diplomacy and press on with economic reform as he formally launched his campaign to become the next prime minister -- a contest he appears to have won hands down already.
Abe said Japan was open to leaders' summits with China and South Korea, opening the door to an improvement in ties after five years of strained relations under outgoing Prime Minister Junichiro Koizumi.
Japan's Chief Cabinet Secretary Shinzo Abe gestures with a bouquet after announcing himself as a candidate in the upcoming election to become the next Japanese prime minister at a hotel in Tokyo September 8, 2006. (REUTERS/Kiyoshi Ota)
But the 51-year-old conservative cabinet minister made clear it was up to Beijing and Seoul to step forward.
Abe, in line to become Japan's first prime minister born after World War Two, has made revising the pacifist constitution a linchpin of his platform. The constitution was drafted by U.S. occupation authorities after Japan's 1945 defeat.
"From the standpoint of emerging from the 'post-war regime', I want to show leadership on a new constitution," he told reporters before registering to run in the Sept. 20 election of the ruling Liberal Democratic Party's (LDP) next president.
"I want to develop an assertive diplomacy," he added.
Sept. 8 (Bloomberg) -- Crude oil dropped to a five-month low after supplies of gasoline and diesel in the U.S., the world's biggest energy market, rose unexpectedly.
Gasoline stockpiles gained for a third week and distillate supplies, including diesel, advanced twice as much as forecast because refineries processed more oil, the U.S. government said. BP Plc said it will restore full production at Prudhoe Bay in Alaska, the biggest U.S. oil field, as soon as work to bypass a corroded pipeline is done at the end of October.
``The Prudhoe Bay oil field in Alaska is ready for full output,'' said Hiroyuki Kikukawa, deputy general manager of research at brokerage Nihon Unicom Corp. in Tokyo. ``For next week, the price is likely to drop.''
Crude oil for October delivery fell as much as 63 cents, or 0.9 percent, to $66.69 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $66.92 at 9:56 a.m. in London. Brent crude oil for October settlement fell 42 cents to $66.11 a barrel on London's ICE Futures exchange.
[miningmx.com] -- WE look the chart of the US dollar gold price, which is currently breaking out of a consolidation pattern and is giving a target figure.
Though weakness is expected in the dollar gold price over the coming weeks, the long-term trend is still up and expected to resume after this correction is over.
GOLD PRICE ($) - SHORT-TERM VULNERABILITY
Trend: Short term down. Medium term sideways. Long term up.
Strategy: Sell short - but with caution.
1:59:55 PM comment []
Premier Wen Jiabao has called on the government to build an innovative administration, saying it is the major task for restructuring administrative management and a major part of the country's economic and political restructuring.
Chinese Primier Wen Jiabao delivers a speech at a national television meeting of the State Council held in Beijing, capital of China on July 26, 2006. The State Council held the meeting Wednesday on Chinese economic situation of the first half of the year, and the plan for the economic work in the latter half. [Xinhua]
Wen, who is also member of the Standing Committee of the Communist Party of China (CPC) Central Committee Political Bureau, made the remarks in his key-note speech delivered at a national teleconference on accelerating government reform on September 4.
According to the premier, since the convening in 2002 of the 16th Party Congress, the government has adopted a series of measures to boost the government's own reform.
This included amending the Rules for the Work of the State Council, which feature the three fundamental principles of scientific and democratic decision-making, administration by law, and administrative supervision.
The government has focused on strengthening its ability to handle societal issues, provide better public service and establishing a mechanism for handling emergencies.
The government has pushed forward the reform of administrative approvals; set the goal and requirements for building a government ruled by law; implemented the Law on Public Servants, and increased efforts to fight corruption.
The Canadian dollar shed more than half a cent after a weaker-than-expected jobs report sparked talk that the next Bank of Canada interest rate move may be down, not up.
The loonie weakened to 89.41 cents (U.S.), the biggest one-day decline in two months, from yesterday's close of 90.06 cents. It remains at lofty levels though, having appreciated 5.8 per cent against its U.S. counterpart in the past year.
Canadian employers unexpectedly shed 16,000 jobs in August, the third month in a row of declines, nudging the jobless rate up a notch to 6.5 per cent — the highest since January, Statistics Canada said Friday. The report prompted several economists to predict rates may come down towards the end of the year.
The report “will certainly not provide the Bank of Canada with any reason to get into rate hike mode – and may even fuel market chatter about eventual Bank of Canada rate cuts down the road,” said Marc Lévesque, chief strategist at TD Securities Inc. in a note.
OTTAWA (Reuters) - Canada's biggest opposition party, the Liberals, rejected on Friday a softwood lumber deal with the United States, leaving the government with just enough backing to push the accord through Parliament.
The Liberals' move came one day after the Bloc Quebecois, the second-largest opposition party, pledged their support for the accord, ensuring a majority of votes for the deal in the House of Commons.
The Bloc's backing also ensured the survival of the minority Conservative government because Prime Minister Stephen Harper had said he would call an election if the opposition defeats the accord in the House of Commons.
The Liberals have 102 votes in the 308-seat House, compared with a combined 175 votes for the Conservatives and the Bloc. The New Democratic Party, with 29 seats, also opposes the deal.
Dominic Leblanc, a Liberal lawmaker and trade critic, argued Ottawa should take advantage of legal victories in the dispute and persist through the courts until recovering 100 percent of the duties the United States has collected on Canadian softwood exports.
The messages contain an animated graphic that shows a message recommending a certain stock for 17 seconds. Then it suddenly runs through three frames in 90 milliseconds that each show the words 'buy! buy! buy!'.
Over at this blog someone has helpfully reproduced the animation and extracted the 'subliminal' frames. Don't worry about taking a look at the original though - you'll easily spot the frames and shouldn't suddenly feel the urge to buy, buy, buy. They're shown for far too long to be subliminal.
1:43:18 PM comment []
