(BBC - U.K.

Europe's biggest carmaker, Volkswagen(VW), plans to buy German sports car firm Porsche in stages while retaining the latter's independence. (...)

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(The Globe and Mail - Canada

Economy will grow this quarter, beginning long reconstruction of wealth destroyed by crisis, Bank of Canada says (...)

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(Financial Times - U.K.)

Morgan Stanley reported disappointing second quarter results on Wednesday as repayment of government funds and the accounting costs related to its improving credit spreads drove the bank to its third consecutive quarterly loss.

In the second quarter Morgan Stanley lost $159m, or $1.37 a share, from continuing operations, trailing estimates of Wall Street analysts that it would lose 49 cents a share. That compared with profit of $689m, or 61 cents, a year ago and revenues at Morgan Stanley fell by 11.5 per cent from the second quarter of 2008 to $5.4bn.
(...)

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(VOX EU - The Net)

The Icelandic parliament has decided to apply for EU membership. This column warns that domestic opposition and outstanding disputes with EU member countries on Icesave may derail the agreement.

The Icelandic parliament, by the narrowest of margins and broadly on party lines, has just decided to apply for EU membership. If the application is successful and approved by a referendum, Iceland might join the EU in four years. However, serious obstacles, both domestically and within the EU, make the eventual outcome quite uncertain.
(...)

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(Economist - U.K.)

Arnold Schwarzenegger emerged from a meeting late on Monday July 20th of the "big five" political leaders in California to announce that, at long last, a deal had been reached on closing the state's $26 billion budget deficit. It comes after months of partisan bickering, special legislative sessions and the rejection by voters of ballot proposals that would have gone some way to tackling the problem. California's governor laid on the superlatives, calling the agreement hammered out with the Assembly speaker, Senate leader and Republican leaders of both houses of the legislature "a really, great, great accomplishment". (...)

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(CNN - U.S.)

Embattled lender expected to announce securing of $3 billion in financing to avoid bankruptcy, according to published reports.(...)

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(BBC - U.K.)

Iceland has announced a 270bn-crown (£1.3bn) plan to get its banking system back on its feet after it was forced to rescue its three main banks last year. The government will capitalise the three new banks it is creating from the failed ones through a bond issue. Iceland's three main commercial banks, Glitnir, Landsbanki and Kaupthing, all collapsed within a week last October, owing $60bn to foreign lenders.(...)

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(Der Spiegel - Germany)

The German government is considering forcing banks to accept state aid and partially nationalizing them in return because it's increasingly worried that Germany faces a credit crunch, the Süddeutsche Zeitung newspaper reported on Monday.

The German government is worried that the current shortage of bank credit plaguing industry will worsen later this year and is considering tackling the problem by forcibly taking stakes in banks, similar to the policy adopted by authorities in the United States and Britain, a German newspaper reported on Monday.(...)

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(Der Spiegel - Germany)

Politicians in Brussels are working on tough regulations that might make the Continent less appealing to hedge funds and private equity firms.

With European unemployment still rising and consumer confidence at an all-time low, most people don't have much sympathy for the financial sector's Masters of the Universe. And they hold in particularly low regard the whiz kids of private equity and hedge funds who -- unfairly or not -- have shouldered much popular blame for the global economic crisis.(...)

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Economy in China Regains Robust Pace of Growth (The New York Times - U.S.)

Fueled by an ambitious economic stimulus program and aggressive bank lending, China's economy grew by 7.9 percent in the second quarter of this year, the government said Thursday, a surprisingly strong showing given the world economic crisis. The gross domestic product figures, released Thursday morning in Beijing by the National Statistics Bureau, are also surprising given how China's exports have declined sharply after years of torrid growth. (...)

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China GDP grows 7.1% in first half '09 (China Daily - China)

The gross domestic product (GDP) grew 7.1 percent from the same period a year ago to 13.99 trillion yuan (US$2.06 trillion) in the first half, as massive government spending and record lending helped the economy rebound from the worst growth in a decade. Chinese economy expanded 7.9 percent year on year in the second quarter, said Li Xiaochao, spokesperson with the National Bureau of Statistics (NBS) at a press conference.(...)

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Beijing keeps foot on accelerator (Financial Times - U.K.)

While the rest of the world anxiously seeks the green shoots of recovery, China's business landscape is already looking thickly forested with the essentials of a thriving industrial economy.(...)

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My way is right way to solve banking crisis, says Gordon Brown (The Guardian - U.K.

Gordon Brown today defended his response to the banking crisis and insisted Britain had set a model for the rest of the world to copy. The prime minister dismissed suggestions that he should have scrapped the "tripartite" regulatory system that sees responsibility shared between the Treasury, the Bank of England and the Financial Services Authority or required banks to split their retail and "casino" activities.

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UK unemployment hits 14-year high of 2.38m (The Times - U.K.)

Unemployment climbed by a record 281,000 to hit 2.38 million in the three months to May, the highest level since October 1995.

Young people are taking the brunt of the pain in the jobs market, with unemployment among the under-25's spiralling to the highest level since 1993. Almost a third of those leaving school after GCSEs are out of work, official figures show. (...)

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China's Foreign-Exchange Reserves Surge, Exceeding $2 Trillion (Bloomberg - U.S.)

China's foreign-exchange reserves, the world's biggest, topped $2 trillion for the first time as the nation's economic recovery prompted overseas investors to pump money into stocks and property.

The reserves rose a record $178 billion in the second quarter to $2.132 trillion, the People's Bank of China said today on its Web site. That dwarfs a $7.7 billion gain in the previous three months. (...)

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Here comes the recovery. Honest. (CNN - U.S.)

Many economists say weak June jobs and retail sales aren't reason to give up on hopes for a solid bounce back later this year.(...)

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Gas prices push up consumer prices in June (Reuters - The Net

U.S. consumer prices rose at a slightly faster-than-expected 0.7 percent pace in June, but the bulk of the increase was due to soaring gasoline prices and the core measure of inflation remained relatively tame, government data on Wednesday showed.(...)

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Goldman Reports Big Profit, Beating Forecasts (The New York Times - U.S.)

Comfortably beating analysts' forecasts, Goldman Sachs earned second-quarter profits of $3.44 billion, or $4.93 a share, the bank announced on Tuesday. The results continue a robust turnaround for the firm since it rode out the final tumultuous months of 2008 with the help of a federal rescue. They come just one month after it paid back its $10 billion in federal aid. (...)

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US budget deficit tops $1t for 1st time (China Daily - China)

The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher interest rates, inflation and the strength of the dollar.

The deficit has been widened by the huge sum the government has spent to ease the recession, combined with a sharp decline in tax revenues. The cost of wars in Iraq and Afghanistan also is a major factor.(...)

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Tim Geithner's latest headache (CNN - U.S.)

The treasury secretary's bid to rein in derivatives meets fierce skepticism.(...)

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Eurozone output up for first time in year (Financial Times - U.K.

The volume of goods leaving eurozone factories in May picked up for the first time since last summer, but this came along with signals that German investors think any rebound there could be sluggish rather than strong.

Industrial production in the 16-member currency region rose 0.5 per cent in May, although output was still 17 per cent below the level seen the year before, the European Union's statistics office said. (...)

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Energy Stocks: Gusher or Dry Hole? (Businessweek - U.S.)

The demand picture for oil and gas remains cloudy as experts debate the speed of economic recovery. Still, pros see some attractive names for the months ahead (...)

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Government loses £10.9bn in RBS and Lloyds (The Times - U.K.)

UK Financial Instruments (UKFI), the body that manages the Government's shares in some of Britain's biggest banks, today admitted that it is sitting on paper losses of £10.9 billion.

The body, which is in charge of the Government's 70 per cent stake in Royal Bank of Scotland and its 43 per cent holding in Lloyds Banking Group, also refused to give an indication of when it expected to dispose of the shares in the lenders. (...)

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Meltdown on the ocean (Economist - U.K.)

As the state's finances disintegrate, for many so does the California Dream.(...)

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German Economics Ministry Says Recession Is Over (Der Spiegel - Germany

Germany has been suffering its worst recession since World War II. But the dark clouds could soon be lifting as the country looks like avoiding another quarter of negative growth.(...)

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Few Economists Favor More Stimulus (The Wall Street Journal - U.K.)

Most economists believe the U.S. doesn't need another round of stimulus now despite expectations of continued severe job losses.

Just eight of 51 economists in The Wall Street Journal's latest forecasting survey said more stimulus is necessary, suggesting an average of about $600 billion in additional spending. On average, the economists forecast an unemployment rate of at least 10% through next June, with a decline to 9.5% by December 2010.(...)

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With Sale of Its Good Assets, G.M. Tries for a Fresh Start (New York Times - U.S.)

Saying that business as usual was over at General Motors, the chief executive began a new era for the carmaker on Friday with a promise and a thank you.

"We deeply appreciate the support we've received during this historic transformation and will work hard to repay the trust and the money that so many have invested in G.M," the chief executive, Fritz Henderson, said just a couple of hours after the company closed the sale of its good assets to a new, government-backed carmaker.(...)

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G8 to commit $20bn for food security (Financial Times - U.K.)

The G8 summit will pledge $20bn over three years, $5bn more than initially expected, to boost agricultural investment and fight hunger.

Franco Frattini, foreign minister of Italy, told the FT as the summit ended that the final declaration would contain a pledge of $20 bn over three years for the food security fund. Italy's contribution would be $480m, he said.(...)

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Leaders Seek to Finish Trade Deal by 2010 (The Wall Street Journal - U.S.)

Leaders of rich and developing nations want to finish a long-delayed world trade deal in 2010 and head off trade wars that could hit world economies as they struggle to emerge from the recession, according to a draft of a joint declaration obtained by the Associated Press.

Completing the so-called Doha round of talks has risen up the agenda due to fears that the economic crisis will lead to an upsurge in protectionist policies like the ones that helped cause the Great Depression of the 1930s.(...)

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Still Flocking to the Dollar (Economix - The Net)

Amid a low-level global debate about reserve currencies -- and whether the dollar ought to cede that role -- some interesting news from the European Central Bank: Markets and other central banks are not screaming for change.

From the end of 2007 to the end of 2008, the European Central Bank said in a report issued on Wednesday, the euro's share of global foreign exchange reserves rose to 26.5 percent from 25.3 percent. The stock of international debt securities denominated in euros rose to 32.2 percent from 31.3 percent. And the stock of cross-border loans in euros rose to 22.2 percent from 20.7 percent.

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Cities Lose Out on Road Funds From Federal Stimulus (New York Times - U.S.)

Two-thirds of the country lives in large metropolitan areas, home to the nation's worst traffic jams and some of its oldest roads and bridges. But cities and their surrounding regions are getting far less than two-thirds of federal transportation stimulus money.

According to an analysis by The New York Times of 5,274 transportation projects approved so far -- the most complete look yet at how states plan to spend their stimulus money -- the 100 largest metropolitan areas are getting less than half the money from the biggest pot of transportation stimulus money. In many cases, they have lost a tug of war with state lawmakers that urban advocates say could hurt the nation's economic engines. (...)

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IMF sees 2010 growth; G8 frets over risks (China Daily - China)

The fragile recovery from the worst global recession since World War Two will slowly pick up pace into next year, the International Monetary Fund said on Wednesday, but world leaders agreed stimulus spending must remain in place until the economic turnaround is secure.

Fears that high unemployment and slow consumer spending could strangle the nascent recovery pushed Wall Street lower for much of the day before US stocks ended little changed.(...)

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G8 climate change deal stumbles at first hurdle (The Times - U.K.)

Hopes of a deal on climate change at the Group of Eight industrialised nations summit in Italy were today hanging by a thread.

As world leaders sat down for a working lunch at the start of a three day meeting of the G8, it emerged that negotiations had failed to reach agreement on halving greenhouse gas emissions by 2050. (...)

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The G-8 Summit: Serious Business and a Berlusconi Sideshow (TIME - U.S.)

Much has changed -- and much has not -- since Italy last hosted a G-8 summit. The July 2001 gathering in Genoa, which was the first G-8 meeting for President George W. Bush and the second for President Vladimir Putin, was marred by massive street protests and a harsh police crackdown that included the shooting death of a 23-year-old Genovese protester and beatings of dozens of nonviolent demonstrators. The security arrangements at that event included surface-to-air missiles to guard against airborne terror attacks, but that would come seven weeks later, in New York City, and fundamentally altered the global agenda of the leaders that had gathered in Genoa. This year, the host -- Italy's Prime Minister Silvio Berlusconi -- is the only veteran of the 2001 G-8 summit, and terrorism has been eclipsed by the global economic meltdown at the top of the agenda.(...)

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Crisis Remains Key Issue for G-8 (Der Spiegel - Germany)

Policymakers have made some progress reforming financial services, but a recovery in the wider economy has yet to take hold.(...)

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Hu skips G8 over China unrest (Al Jazeera - Al Qatar)

China's president is skipping the G8 summit in Italy and returning to Beijing as ethnic tensions which have already claimed at least 156 lives, flare again. The official Xinhua news agency said Hu Jintao, who had been on a state visit to Italy ahead of the Group of Eight summit starting on Wednesday, cut short his trip "due to the situation" in Xinjiang.(...)

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Stimulus: Where's the $787 Billion? (Businessweek - U.S.)

Administration officials insist that it takes time to dole out money properly, which explains why so little has been spent so far Call it the $787 billion question: Where is all that government stimulus money, and why hasn't it stemmed the heart-stopping slide in U.S. employment?(...)

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German industrial orders surge (Financial Times - U.K.)

German industrial orders increased in May at a rate not recorded since June 2007, a further signal that the global economy may be stabilising after the financial and economic crises of the past year. Manufacturing orders were 4.4 per cent higher in May than in April, according to the German economics ministry, a jump that surprised economists, who had expected a rise of 0.5 per cent.(...)

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Worst of the recession 'is over' (BBC - U.K.)

The worst of the UK's recession is over, according to the British Chambers of Commerce (BCC) business group, but talk of a recovery is premature. Its report, based on a survey of 5,600 companies, found there had been "welcome progress" in confidence levels between April and June.(...)

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Zimbabwe economy shows signs of recovery, says IMF (Mail & Guardian Online - South Africa)

Improved economic policies in Zimbabwe have led to a "nascent" recovery in the economy, the International Monetary Fund (IMF) said on Thursday, but stressed the country must clear more than $1,1-billion in arrears to creditors before it can qualify for IMF financial aid. (...)

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B Ikea's founder warns: we must cut more jobs (The Guardian - U.K.)

G The founder of Ikea has warned that the Swedish retailer must cut more staff after finding that sales of flat-pack furniture were not immune from the recession. Ingvar Kamprad believes that the 5,000 jobs that Ikea has already shed from its workforce will not be enough to bring the company in line with the tougher economic climate.(...)

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A cavalier preparing to host the world (The Economist - U.K.)

The host of the G8 summit, Silvio Berlusconi, faces many lurid scandals at home. But the biggest should be his refusal to accept the extent of Italy's economic woes.(...)

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Kremlin Plays Coy on Agenda for G8 Summit (The Moskow Times - Russia)

With the world's attention turning to Moscow on Monday for U.S. President Barack Obama's three-day visit, the Kremlin has decided to take a wait-and-see approach before unveiling its agenda for a G8 summit later this week(...)

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Berlin Making Hollow Threats to Banks Over Credit Crunch (Der Spiegel - Germany)

German politicians say the banks have had the carrot -- billions of dollars in financial aid. But they're now threatening banks with the stick in the form of new legislation unless they start lending more cash to companies. But media commentators aren't taking the threats too seriously quite yet. (...)

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Bankruptcy Judge Approves GM Sale (The Washington Post - U.S.)

General Motors won permission late Sunday night from a federal bankruptcy judge to sell its assets to a new government-backed company, setting the stage for the largest U.S. carmaker to complete a historic restructuring plan that is at the heart of the Obama administration's efforts to overhaul the ailing auto industry.(...)

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Happy new year (The Economist - U.K.)

THE mantra in Washington, DC, is simple: spend billions now, pay later. Congress has been crafting ambitious plans for energy, health care and transport. But the mood in state capitals has been different. Forty-six states had a deadline of June 30th to pass their budgets. Just as important, those budgets had to be balanced. With the sole exemption of Vermont America's state governments, unlike the federal one, are not allowed to run deficits. For many states June was an agonising month.(...)

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Oil's record high, one year later (CNN - U.S.)

Crude is less than half its $145 peak of last July 3 - as a global economic slowdown zaps demand.(...)

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Merkel Favors G-20 to Tackle World's Problems (Der Spiegel - Germany)

Italy is preparing to host the G-8 summit next week, but German Chancellor Angela Merkel says that the G-20 is her preferred forum for tackling global problems. Germany's leading anti-globalization group Attac agrees. The group is planning to eschew Italy and instead focus its protest energy on the bigger G-20 summit in Pittsburgh. (...)

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New York City Sees Slide in Tourism (Wall Street Journal - U.S.)

New York City, one of the world's most visited places, is seeing a downward slide in tourism this summer even as it battles other economic woes. City tourism officials project about 11.3 million people will visit this summer, down nearly 6% from last summer's 12 million. Industry officials say they need the long July 4 holiday weekend to reverse the momentum.(...)

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California prints first batch of IOUs (Financial Times - U.K.)

The first batch of IOUs to be issued by cash-strapped California has been printed and will be sent to people awaiting income tax rebates today unless Arnold Schwarzenegger, the governor, manages to strike a last-minute budget deal with the state government.

With the state teetering on the brink of fiscal collapse, the controller's office is scrambling to issue about 30,000 IOUs, which California is offering instead of tax rebates because it has run out of money.(...)

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Job Losses Rise in June as Unemployment Reaches 9.5% (New York Times - U.S.)

The pace of job losses quickened in June after slowing just a month earlier, casting a shadow over the Obama administration's attempts to stanch months of declines in the labor market.

The American economy shed 467,000 jobs last month, and the unemployment rate rose to 9.5 percent from 9.4 percent, the Labor Department reported on Thursday. Job losses were widespread among the construction, manufacturing, and business and professional services sectors.

The losses were sharply higher than economists' expectations of 365,000 lost jobs.
(...)

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Indian growth of 7% 'is possible' (BBC - U.K.)

India could achieve growth of 7% in the current year and more in coming years if the right reforms are made, a report from the finance ministry said. (...)

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Bond-Market Finance Takes Hold (Wall Street Journal - U.S.)

An unprecedented rise in European companies' use of bond markets, rather than banks, to raise money could cool off in coming months. But the shift toward bond-market finance across the continent may be here to stay.

European companies have historically relied on lending from banks, rather than tapping the bond markets as U.S. companies tend to. Yet despite the fact that European politicians have loudly blamed "Anglo-Saxon capitalism" for the global financial crisis, companies across the continent have this year raised billions of dollars, American style, from the bond markets.(...)

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Where did Madoff's missing billions go? Investigators face uphill task (The Guardian - U.K.)

One of the biggest mysteries of the Madoff affair is what happened to all the money. Federal investigators involved in tracking Madoff's missing billions are not even sure how much they are looking for. The amount ranges from estimated losses suffered by investors of $13bn to the $70bn which Madoff has accepted was attributable to his unlawful activities.

So far Irving Picard, the court-appointed trustee of Madoff's collapsed firm, has recovered just $1.2bn on behalf of investors. It is a small return for a six-month investigation that involved the US justice department, the financial regulator the Securities and Exchange Commission, Picard's office and the US marshals.(...)

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China manufacturing indices record gains (Financial Times - U.K.)

China's two widely watched manufacturing and business activity indices both finished in positive territory in June, confirming that the world's third largest economy is continuing to expand amidst a mixed picture elsewhere in Asia.(...)

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Zimbabwe gets $950m loan from China (Al Jazeera - Al Qatar)

Zimbabwe is to receive a $950m loan from China to aid its devastated economy. Morgan Tsvangirai, Zimbabwe's prime minister, called the loan an "overhwelming success" and said it was the largest secured by the new government formed in February. The money is seen as a major boost to the country's global appeal for funds to rebuild the shattered economy.(...)

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EU Regulator Sets Sights on U.K. Banks (Wall Street Journal - U.S.)

Europe's top competition regulator is ready to turn its attention to the U.K. banking sector, with divestments likely required from Lloyds Banking Group PLC and Royal Bank of Scotland Group PLC, said Competition Commissioner Neelie Kroes.

Having agreed to "changes to several German banks, our attention must turn to U.K. banks," Ms. Kroes said, speaking to a group of banking and finance professionals in London on Tuesday.

The British financial sector includes two of the worst-performing banks in Europe, Lloyds and RBS, and the government has been forced to support the industry with £1.26 trillion ($2.087 trillion) in various commitments that could last until 2014, the commissioner said.(...)

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UK economy shrinking at fastest rate in more than 50 years (The Guardian - U.K.)

he year and the recession started three months earlier than thought The current recession is even deeper than had been thought - and started more than a year ago - as statisticians today revised the drop in national income in the first quarter of the year to 2.4%, the biggest fall since 1958. The annual drop in output in the January to March period is now said to be an all-time record of 4.9%, fresh Office for National Statistics figures showed.(...)

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Brown Outlines Programs to Soften the U.K. Recession (The Wall Street Journal - U.S.)

the recession, including extra money to fight youth unemployment and build affordable housing. A year into a severe recession and less than 12 months from the next general election, Mr. Brown's proposals also included public-services reforms and changes to the political system. He said he would boost funding for affordable housing over the next two years to £2.1 billion ($3.5 billion) from £600 million. The money will be brought forward from future years' spending plans. Mr. Brown said the extra spending will deliver 20,000 new affordable homes, creating 45,000 jobs in the construction sector. But analysts were skeptical of how much the program would help the U.K.'s beleaguered house builders.(...)

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Eurozone inflation turns negative (Financial Times - U.K.)

Eurozone annual inflation has turned negative for the first time, complicating the job of the European Central Bank as draws a line under emergency measures to tackle continental Europe's recession.

Consumer prices in the 16-country eurozone were 0.1 per cent lower in June than the same month a year before, according to Eurostat, the European Union's statistical office. (...)

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Quelle Gets 50 Million Euros in State Aid (Der Spiegel - Germany)

The German government has agreed to shore up ailing mail order firm Quelle, a unit of insolvent group Arcandor, with a 50 million euro temporary loan. But officials warned Tuesday that the company is not out of the woods yet. The German government has agreed to provide a €50 million ($70.5 million) state loan for mail order company Quelle, a unit of insolvent retail and travel group Arcandor, but warns that the company could still fail. (...)

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The quiet Americans (The Economist - U.K.)

Employees are proving stoical in the face of pay cuts and compulsory unpaid leave.(...)

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G8 set to push for a return to 'ethics' (Financial Times - U.K.)

Flawed markets and fundamental weaknesses in the world economic system demand adoption of a "global standard" of norms and principles and a return to ethics in business, according to finance ministers from the Group of Eight club of rich countries. In a 66-page report ex¬pected to be endorsed by heads of government at next week's G8 summit in Italy, ministers agree "a re¬thinking of the framework of the global economic and financial system is critical".(...)

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Euro-Zone Businesses, Consumers Grow More Confident (The Wall Street Journal - U.S.)

Business and consumer confidence in the 16 countries that use the euro improved for the third straight month in June, as the economy continues its slow climb from record lows. The overall economic-sentiment indicator for the euro zone rose sharply to a seven-month high of 73.3 from 70.2 in May, according to a monthly survey by the European Commission, the European Union's executive branch. The increase in the economic-sentiment indicator was stronger than expected, as economists surveyed last week forecast it would increase to 70.9. The May number was raised from the previously reported 69.3. (...)

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U.S. Companies Seek New Tax Havens (Businessweek - U.S.)

Ah, Bermuda. Pink sand beaches. Charming pastel cottages and kelly-green golf courses. Tiny storefront "headquarters" of major global corporations. For years the archipelago, along with its Caribbean siblings the Cayman Islands and British Virgin Islands, has played host to companies seeking favorable tax treatment. But rising concerns about a U.S. crackdown on tax havens have a growing number of companies rolling up their beach blankets and decamping to far less sunny shores. (...)

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Banks Still Vulnerable, BOE Warns (The Wall Street Journal - U.S.)

The Bank of England said Friday the U.K. and global banking systems will remain vulnerable to any renewed wave of economic and financial tensions for some time, despite a better-than-anticipated improvement in market conditions over recent months. In its semiannual Financial Stability Report, the BOE warned that government help for banks could reach a point where it became less effective by driving up national debt and making it even more expensive for them to raise funding. It said alternative means of support, such as public-private asset purchases or the formation of "good" and "bad" banks, should be considered.(...)

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China argues to replace US dollar (BBC - U.K.)

China's central bank has reiterated its call for a new reserve currency to replace the US dollar. The report from the People's Bank of China (PBOC) said a "super-sovereign" currency should take its place. Central bank chief Zhou Xiaochuan has loudly led calls for the dollar to be replaced during the financial crisis.(...)

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A Russia considers bail-out for banks (Financial Times - U.K.)

Russia is looking at a bail-out of its banks that would go further than the emergency action taken by the US, amid growing fears that bad loans could paralyse the country's economy.

Igor Shuvalov, deputy prime minister, will consider taking stakes in troubled banks when a group of experts on the financial crisis meets on Friday to discuss ways to recapitalise Russia's banking system, according to a draft proposal seen by the Financial Times. (...)

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Not so dreamy (The Economist - U.K.)

Another delay to the production of the 787 Dreamliner is a setback for Boeing. Only a few days ago staff at Boeing were opening a ceremonial barrel of sake at the factory in Seattle where assembly was starting of the first 787 Dreamliner aircraft to be delivered to All Nippon Airways (ANA), the launch customer. At the ceremony Boeing affirmed that the virgin test flight of the world's first big airliner to be made largely of composite materials, rather than aluminium, would take place by the end of June. But on Tuesday June 23rd Boeing's share price fell by almost 9% when the company announced that because of structural flaws the test flight would be delayed. Boeing said it would take weeks before a further date could be set.(...)

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Dubai's finance head removed from all posts (Al Arabyia - UAE)

Former Dubai Department of Finance director-general Nasser al-Shaikh has been removed from all government positions, United Arab Emirates state news agency WAM reported on Wednesday.

Shaikh resigned earlier this week from several government-linked positions, including Dubai Islamic Bank and its affiliate Deyaar just a month after he was replaced as head of the emirate's finances.(...)

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Spanish banks to get €90 billion bailout (The Times - U.K.)

A €90 billion (£76.9 billion) bailout fund for healthy as well as struggling Spanish financial institutions is expected to be approved tomorrow.

The fund, to help banks to restructure, is likely to be supported by the Spanish Cabinet at one of its regular Friday meetings, according to reports. (...)

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G.O.P. to Paint Bernanke as Big Government Ally (New York Times - U.S.)

In a peculiar role reversal, Republican lawmakers are mounting a ferocious attack on the Republican chairman of the Federal Reserve, while Democrats are coming to his defense.

Ben S. Bernanke, the Fed chairman, will be grilled on Thursday by the House Oversight and Government Reform Committee about his role in orchestrating Bank of America's controversial takeover of Merrill Lynch late last year.

The House investigation is heavily colored by partisanship. President Obama is proposing to give the Federal Reserve formidable new powers to regulate giant institutions, including Bank of America, that could pose risks to the financial system.(...)

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U.S. Jobless Claims Rise, Total Benefit Rolls Climb (Bloomberg - U.S.)

The number of Americans filing claims for unemployment benefits unexpectedly rose last week and the total number receiving payments increased, indicating the labor market may take longer to stabilize.

Initial jobless claims rose by 15,000 to 627,000 in the week ended June 20, from a revised 612,000 the week before, the Labor Department said today in Washington. The number of people collecting unemployment insurance gained by 29,000 in the prior week, to 6.74 million. (...)

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The trail of disaster (The Economist - U.K.)

NINE months after the collapse of Lehman Brothers, the world's economic crisis is still usually discussed as though it consisted of dire bank balance-sheets, falling exports and bankruptcies or job losses in the West. But at the other end of the trail that starts with financial woes in rich countries are underweight children and anaemic expectant mothers in poor ones. New research by the United Nations' standing committee on nutrition (available on www.unscn.org) gives a first estimate of how the crisis has hurt the group of people most affected by the crash: the very poorest.(...)

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ECB pumps record €442bn into system (Financial Times - U.K.)

The European Central Bank has pumped a record €442.2bn into the eurozone banking system in a first-ever offer of unlimited one-year funds as it battles continental Europe's severe recession. The results of the operation, part of ECB efforts to revive the eurozone economy by rejuvenating the financial system, highlighted expectations that liquidity will not be available again on such favourable conditions. The previous largest amount injected in a single ECB operation was €348.6bn in December 2007.(...)

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OECD says recession 'near bottom' (BBC - U.K.)

The Organisation for Economic Cooperation and Development says the world economy is near the bottom of the worst recession in post-war history. The body that represents the 30 most industrialised nations said that those economies would shrink 4.1% this year. But it adds that recovery is likely to be "weak and fragile" for some time.(...)

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BRICs and the world economy: Not just straw men (The Economist - U.K.)

The biggest emerging economies are rebounding, even without recovery in the West The inaugural summit of the BRICs--Brazil, Russia, India, China--came and went in Yekaterinburg this week with more rhetoric than substance. Although Russia's president, Dmitry Medvedev, called it "the epicentre of world politics", this disparate quartet signally failed to rival the Group of Eight industrial countries as a forum for economic discussion. But that should be no surprise: to realise how disparate they are, consider that Russia and Brazil are big commodity exporters, whereas China is a big commodity importer; China is a proponent of the Doha trade round, India a sceptic; India and China vie for influence in the Indian Ocean, Russia and China compete in Central Asia.(...)

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U.S., Europe File Trade Complaint Against China (The Wall Street Journal - U.S.)

The U.S. and the European Union filed separate complaints with the World Trade Organization on Tuesday alleging that China is unfairly benefiting domestic industries by restricting exports of certain raw materials. The complaints filed with the WTO represent a departure from past allegations by the U.S. and other countries that China is flooding other countries' markets with its exports.(...)

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China rejects US, EU export complaints (China Daily - China)

China Wednesday rejected charges from the United States and Europe against its restrictions on raw materials exports, saying that the country's policies were in keeping with the World Trade Organization regulations. The Ministry of Commerce said the restrictions are meant to protect the environment and comply with Chinese trade commitments.(...)

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How Much Do Americans Actually Care About the Federal Deficit? (Economix - The Net)

According to two recent polls from The New York Times/CBS News and The Wall Street Journal/NBC News, Americans appear very worried about controlling the federal deficit.

The two survey questions, phrased slightly differently, found that most Americans put a higher priority on keeping the budget deficit down than on spending more money to stimulate the economy.

Can it be true that Americans care more about balancing the budget than fixing an economy that's eating them alive? And are their budget worries in any way related to actual trends in federal deficits? (...)

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Sarkozy rejects austerity measures (Financial Times - U.K.)

Nicolas Sarkozy, French president, on Monday ruled out austerity measures to sort out France's rapidly deteriorating public finances as he outlined plans to put saving jobs ahead of economic reform and fiscal restraint.

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Bernanke Set to Defend Record as Reappointment Debate Begins (Bloomberg - U.S.)

Federal Reserve Chairman Ben S. Bernanke will defend his unprecedented actions to prevent a financial collapse as debate on whether he should be reappointed begins.

Bernanke, whose term expires Jan. 31, faces lawmakers at a hearing this week on steps to aid Bank of America Corp.'s takeover of Merrill Lynch & Co. as Congress increasingly questions the Fed's interventions. The session comes after a two-day meeting on monetary policy that starts today. (...)

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ECB set for record 'stimulus by stealth' (Financial Times - U.K.)

The World Bank has warned that a dramatic decline in global growth has led to a significant drop in investment in developing countries and is helping to fuel increasing poverty there. The bank said the world economy would shrink by 2.9 per cent in 2009 and that economic damage to developing countries "has been much deeper and broader than previous crises".

.(...)

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Recovery's Missing Ingredient: New Jobs (The Washington Post - U.S.)

Despite signs that the recession gripping the nation's economy may be easing, the unemployment rate is projected to continue rising for another year before topping out in double digits, a prospect that threatens to slow growth, increase poverty and further complicate the Obama administration's message of optimism about the economic outlook. (...)

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Pain and pleasure (The Economist - U.K.)

Next month the shareholders of British Airways will enjoy the services of the firm's embattled boss and finance chief, free of charge, as the pair do their bit to cut costs by foregoing a month's wages. This week the firm urged other employees to volunteer to work without pay for a spell as well, since the airline is in a "fight for survival". To soften the blow, it has generously offered to spread out the loss of earnings over several months.

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States Turning to Last Resorts in Budget Crisis (the New York Times - U.S.)

With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable.(...)

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Developing nations hit by slowdown (Al Jazeera - Quatar)

The World Bank has warned that a dramatic decline in global growth has led to a significant drop in investment in developing countries and is helping to fuel increasing poverty there. The bank said the world economy would shrink by 2.9 per cent in 2009 and that economic damage to developing countries "has been much deeper and broader than previous crises". .(...)

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Decline in world economy moderating: IMF's Lipsky (Reuters - U.S.)

The International Monetary Fund is likely to revise its 2010 growth forecast for the world economy up with signs the rate of decline in global output has moderated, a senior IMF official said on Friday. Addressing a Turkish business conference in this southern Turkish resort, IMF First Deputy Managing Director John Lipsky, however, warned it was far too early to declare victory, with financial conditions far from normal and the world economy still in recession.(...)

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EU Leaders Reach Deal on Financial Supervision (Wall Street Journal - U.S.)

European Union leaders have negotiated a new model for financial-market supervision and agreed to give Irish voters guarantees to win their support for a stalled treaty. Discussions during the leaders' two-day summit in Brussels were complicated by disputes between some of the bloc's largest players, particularly over how to regulate the EU's financial system. By contrast, the leaders' voiced unanimous support for European Commission President Jose Manuel Barroso to serve a second term.(...)

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China resumes IPOs after 9-month hiatus ( China Daily - China)

The securities regulator appears to have lifted a nine-month ban on initial public offerings, or IPOs, by reportedly approving the listing of a medium-sized drug firm. The official China Securities Journal reported on its website late Thursday that Guilin Sanjin Pharmaceutical Co had received a regulatory notice from the China Securities Regulatory Commission (CSRC) allowing it to seek a stock exchange listing.(...)

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Stanford surrenders to FBI (Financial Times - U.K.)

Sir Allen Stanford, the Texan billionaire accused by US regulators of perpetrating an $8bn fraud, was on Thursday night US time arrested in Richmond, Virginia by federal law enforcement officials. The Justice Department is expected to announce criminal charges on Friday that were returned by a federal grand jury in Houston, the Federal Bureau of Investigation said. Sir Allen is due in court on Friday in Virginia to respond to the indictment and is expected to be later transferred to Houston. (...)

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S Porsche global sales slump by 28% (BBC - U.K.)

Porsche has seen its nine-month unit sales slump by more than a quarter after demand for its cars was hit by the worldwide recession. Global sales at the German carmaker declined 28% to 53,635 vehicles between August 2008 and the end of April, compared with a year earlier. On a financial basis, its sales fell 15% to 4.6bn euros ($6.4bn; £3.9bn). (...)

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Draft of President Obama's Financial Regulation Proposal (The New York Times - U.S.)

President Obama's plan to reshape financial regulation is the product of weeks of meetings among government officials, financial experts, lawmakers, industry executives and lobbyists, many of whom were invited to help the White House draft the proposal. This is a recent draft of the proposal that was sent to members of Congress.(...)

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Geithner remarks (Financial Times - U.K.)

Treasury Secretary Tim Geithner's Opening Statement before the U.S. Senate Banking Committee:

Chairman Dodd, Ranking Member Shelby, members of the Banking Committee. I'm pleased to be here today to testify about the Administration's plan for financial regulatory reform.

Over the past two years, our nation has faced the most severe financial crisis since the Great Depression. Our financial system failed to perform as it should have - by distributing and reducing risk.

Instead, the system magnified risk. Some of the world's largest institutions failed. The resulting damage on Wall Street hit Main Streets across the country, affecting virtually every American.(...)

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Some Lawmakers Question Expanded Reach for the Fed ( The New York Times - U.S:)

No sooner had President Obama proposed a new regulatory road map for the country's financial system on Wednesday than senior lawmakers expressed reservations about one of the plan's central elements -- to broadly expand the reach of the Federal Reserve to regulate financial risk across the entire system.

Mr. Obama said that the plan would protect consumers, impose new restraints on financial behemoths and guard against the murky practices that caused the market crisis.(...)

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A Slacker's Debate Hits Wall Street and the Fed (Real Time Economics - U.S.)

By Jon Hilsenrath

An important and interesting debate is brewing inside the Federal Reserve and on Wall Street about how much slack has built up in the economy during approximately a year and a half of recession. The debate is important because slack is a key driver of inflation -- the more time factory floors are spent collecting dust, the less incentive factory managers have to raise prices on the stuff they do make. The debate is interesting because it isn't clear yet who's right. (...)

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Obama Sought to Enlist a Wide Consensus on Finance Rules (The New York Times - U.S.)

President Obama's plan to reshape financial regulation, which he will unveil on Wednesday, is the product of weeks of meetings among government officials, financial experts, lawmakers, industry executives and lobbyists, many of whom were invited to help the White House draft the proposal.(...)

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Unemployment hits 12-year high of 2.26m (The Times - U.K.)

UK unemployment hit a 12-year high of 2.26 million during the three months to April but new figures revealed today that the pace of decline had eased. Today's figure, which rose by 232,000, is below the 2.279 million economists had been expecting while the number of people claiming unemployment benefits also rose more slowly than expected.(...)

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BRIC nations urge diverse monetary system ( China Daily - China)

Brazil, Russia, India and China on Tuesday called for a more diversified international monetary system, but wrapped up their first full-fledged summit by avoiding any explicit criticism of the world's dominant currency, the US dollar.

The statement issued by the leaders from the BRIC nations contained no reference to developing new reserve currencies to complement the dollar, which Russia had called for at a separate event earlier in the day.(...)

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New rules put Fed in hot seat (Financial Times - U.K.)

President Barack Obama will reveal plans on Wednesday for a new system of US financial regulation that gives the Federal Reserve primary responsibility for averting future financial crises.

Mr Obama will also announce plans for the creation of a council of regulators and a new consumer protection regulator. He is expected to call for the elimination of the Office of Thrift Supervision, one of the nation's bank regulators. (...)

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Foreign investment in China plunges (Al Jazeera - Qatar)

Foreign investment in China has fallen sharply in the first five months of the year, the government has said amid warnings that the economy was still some way off from recovery. The Chinese commerce ministry said on Monday that the $34.05bn in foreign direct investment (FDI) China had drawn was 20.4 per cent less than in the same period last year. In May, China attracted $6.38bn in FDI, down 17.8 per cent from a year earlier and the eighth straight month that FDI inflows had fallen year-on-year. But the drop was less steep than in April, when it fell 22.5 per cent from a year earlier..(...)

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GM agrees Saab sale to Koenigsegg (BBC - U.K.)

General Motors has reached a tentative agreement to sell Saab to the Swedish sports car manufacturer Koenigsegg. GM said that as part of the deal there would be $600m (£367m) of funding from the European Investment Bank (EIB), guaranteed by the Swedish government.(...)

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May rebound in US housing starts ( BBC - U.K.)

The number of new houses started in the US rebounded in May from April's record low, the Commerce Department has said. Housing starts jumped 17.2% to a seasonally adjusted annual rate of 532,000 units in May, up from April's figure of 454,000. However, the rate was still down 45.2% from May 2008. (...)

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In Finance, Recent Signs of Hiring ( Wall Street Journal - U.S.)

Job hunters' stock may be rising on Wall Street. Large and midsize financial-services institutions are hiring again, albeit modestly. Recruiters cite improving financial markets and increasing investor confidence as catalysts. They say some firms that laid off too many workers at the start of the recession now want to take advantage of the large amount of talent available. Most desired are proven performers skilled in areas such as credit, refinancing, wealth management and restructuring. (...)

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Financial crisis: Worst may be still ahead, says IMF chief (The Guardian - U.K.)

The worst may yet lie ahead for the world economy in the current financial crisis, the head of the International Monetary Fund warned today. Speaking during a trip to Kazakhstan, Dominique Strauss-Kahn said he largely agreed with the weekend conclusion of finance ministers from the G8 nations that the global economy was showing signs of stabilising after the worst financial crisis since the 1930s.(...)

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Is Obama Flubbing the Financial Fix? (Businessweek - U.S.)

Old habits die hard--especially bad ones, and especially when they're backed by well-heeled lobbyists and a powerful congressional committee chairman. It was hard not to draw that conclusion over the past week, as Wall Street and Washington alike prepared for President Barack Obama's much-anticipated June 17 speech outlining the Administration's proposals to overhaul financial regulations .(...)

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A stony road ( The Economist - U.K)

Spare a thought for Ford Motor Company, which lost $14.7 billion last year but is battling on, trying to fix its problems with hardly a shred of government help in either America or Europe. In America its two domestic rivals, General Motors (GM) and Chrysler, are using bankruptcy protection and $62 billion from the Treasury to shrink their debt, reduce the cost of their obligations to retired workers and prune their sprawling dealer networks (...)

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Europe's Economy Lagging Behind U.S. (The New York Times - U.S.)

There was more evidence Thursday that the United States economy might be stabilizing, if not rebounding, even as economic reports in Europe remained gloomy. The American news -- showing slight growth in retail sales and a dip in first-time jobless claims, as well as rising stocks -- was not enough to end the disagreement between bulls and bears over how soon the economy would improve.(...)

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Setback for eurozone recovery hopes (Financial Times - U.K.)

Eurozone economic recovery hopes have been set back by an unexpectedly sharp fall in industrial production that suggests continental Europe's recession is only slowly losing its ferocity.

Industrial production in the 16-country region tumbled by 1.9 per cent in April, further extending the precipitous falls since the second half of last year, according to Eurostat, the European Union's statistical office. Compared with April 2008, production was 21.6 per cent lower - the steepest year-on-year fall since record began in January 1991.(...)

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Brazil Officially in Recession ( Latin American Herald Tribune - Venezuela)

Brazil's economy officially has entered into recession, with the gross domestic product contracting 1.8% in the first quarter and posting a decline for the second consecutive quarter. (...)

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Japan stocks close above 10,000 ( BBC - U.K.)

The Nikkei index of leading Japanese shares has closed above 10,000 points for the first time in eight months.

The Nikkei-225 stock average closed up 154.49 points at 10,135.82 points, as global recovery hopes grew. (...)

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World Bank Sees Economy Shrinking 3 Percent This Year (The New York Times - U.S.)

Underscoring the risk that hopes for a quick turnaround may be premature, the World Bank said Thursday that it expected the global economy to shrink nearly 3 percent in 2009, far deeper than the 1.7 percent contraction it predicted slightly more than two months ago. Although the bank said that it expected growth in developed countries to resume next year, emerging-market countries could feel the effects of what it terms "aftershocks" for several years, as the full impact of the worst downturn since World War II becomes apparent(...)

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China's World-Beating Car Market Showing Signs of Weakness (China Stakes - The Net)

China's auto market has lately turned over more than a million cars a month for three straight months, and ranked No.1 in the world for five straight months. In the first five months of this year, China's passenger car sales grew 54.7%, year on year. The industry is rubbing its hands and wondering whether such good fortune can last. The answer, according to the National Passenger Car Association, is apparently not. Figures for the first week in June show a distinct decline in both car production and terminal sales volume. (...)

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The myth of "Made in China" ( Foreign Policy - U.S.)

Chinese exports aren't entirely Chinese -- and neither is the U.S.-China trade deficit. From shoes to electronics to kitchen appliances, that ubiquitous stamp, "Made in China," has become a symbol of the times. In the last decade, annual U.S. imports from China have grown from about $81 billion to last year's $338 billion. Everything, it seems, comes from the Middle Kingdom. But as it turns out, "Made in China" is a bit of a misnomer these days. Over the last 20 years, supply chains have fragmented across the globe -- with one part made here, and another made there. Rarely is any one product made in any one country. China often specializes in the final stage of production: putting components together before exporting to the final users. Indeed, much of the value of U.S. imports from China, and similarly from Mexico, includes parts and components made in other countries -- the United States among them. According to our recent study, domestic content (the stuff that directly contributes to domestic economic growth) makes up about 45 percent of Chinese exports and 34 percent of Mexican exports to the United States. The rest comes to China from abroad to be assembled and sold. A tag like "Made in China, Vietnam, the United States, Japan, and China again," might be more apt. (...)

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Huge French job losses in first quarter ( France24 - France)

The continuing economic crisis ensured a further 187,800 French job losses in the first quarter of this year, a figure twice as high as for the whole of 2008, according to French statistics institute INSEE. Unemployment now stands at 8.7 percent. (...)

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Irish Deflation Is Worst Since 1933 ( Wall Street Journal - U.S.)

The continuing economic crisis ensured a further 187,800 French job losses in the first quarter of this year, a figure twice as high as for the whole of 2008, according to French statistics institute INSEE. Unemployment now stands at 8.7 percent. (...)

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Industrial production growth raises recovery hopes (The Guardian - U.K.)

by Larry Elliott

Britain's industrial output expanded for the first time in more than a year in April, raising hopes that the economy is emerging from recession. Figures from the Office for National Statistics (ONS) showed a 0.3% increase in production after a run of falls that began in March 2008. (...)

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High Court Clears Way for Sale of Chrysler (The Wall Street Journal - U.S.)

by MARK H. ANDERSON and NEIL KING Jr.

The U.S. Supreme Court on Tuesday cleared the way for Chrysler LLC to exit bankruptcy court, lifting a stay on its proposed sale to a group including Italy's Fiat SpA. The high court's move marks a victory for the Obama administration and its ambitious plan to remake the American auto industry by pushing both Chrysler and General Motors Corp. through quick and painful restructurings under Chapter 11 bankruptcy. (...)

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Oil prices rise to new 2009 high (BBC News - U.K.)

US light crude rose 1.5%, or $1.08, to $71.09. London Brent crude rose 1.3% to $70.53 a barrel. The price of oil has more than doubled this year on hopes the worst of the global recession is over. "I wouldn't be surprised if we're testing $80 in a week or two," said Gerard Rigby, an analyst with Fuel First Consulting. (...)

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In Asia, Hints of a Distant and Fragile Recovery (The New York Times - U.S.)

by BETTINA WASSENER

The global economy may have stopped its free fall, but data from the Asia-Pacific region Wednesday underscored what economists have long been cautioning: that a return to actual growth is months off, and that once it does arrive, it will be feeble. In Japan, orders for machinery slid 5.4 percent in April from a month earlier, much more than analysts had expected, official data showed Wednesday. (...)

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China leads escalation of coal consumption (The Guardian - U.K.)

by Terry Macalister

Coal consumption is continuing to grow more quickly than other traditional sources despite high prices and the dangerous impact it will have on carbon emissions, new statistics released by oil giant BP show. China, which has been trumpeting its new wind and solar goals in recent days, led the way with a near 7% increase in the amount of coal it burned during 2008 despite average prices rising 73% to $150 (£129) per tonne. This accounts for 43% of global coal use. (...)

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Supreme Court Order Delays Chrysler Sale (The New York Times - U.S.)

The effort by the administration of President Barack Obama to hurry Chrysler through bankruptcy court ran into an unexpected last-minute delay, when the Supreme Court said it could consider whether to hear the objections of three Indiana state funds and consumer groups.

The implications of the court's intervention Monday -- Judge Ruth Bader Ginsburg issued a one-sentence order that amounted to a holding action -- are unclear.(...)

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Arcandor Woes Deepen as Berlin Rejects Aid Request (Der Spiegel - Germany)

Time is running out for German retail group Arcandor after Berlin rejected two separate requests for state aid on Monday, pushing it closer to insolvency. But Chancellor Angela Merkel, bolstered by Sunday's European election results, can afford to stay firm. (...)

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Lloyds closes Cheltenham & Gloucester branch network ( The Guardian - U.K.)

The entire Cheltenham & Gloucester branch network is to close by November, as Lloyds Banking Group cuts another 1,660 jobs after the merger with HBOS.

The bank, which yesterday began repaying its multibillion-pound loan from the taxpayer, confirmed this lunchtime that all 164 C&G branches will shut within five months. This will mean about 1,000 employees will lose their jobs. (...)

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Fiat Commits to Chrysler Despite Court Delay ( TIME - U.S.)

Italian automaker Fiat said Tuesday it will not turn its back on a deal to acquire a controlling stake in Chrysler despite a U.S. Supreme Court stay on the sale. Under terms of the agreement, Fiat has the option to abandon the deal if it is not completed by June 15.

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In uncertain times voters cling to centre-right (Financial Times - U.K.)

At a time of unprecedented insecurity, because of the global economic downturn, European voters clearly opted for the safety of the right, although only a minority bothered to vote in most countries. Leading centre-left parties including the German SPD, UK Labour party and France's Socialist party, went down to bad defeats.(...)

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Misery for social democrats as voters take a turn to the right (The Guardian - U.K.)

With the jobless numbers soaring amid the worst economic crisis in the lifetimes of European voters, the centre left is clearly failing to benefit politically in circumstances that might be expected to boost its support. (...)

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European Elections 'A Debacle for the SPD' ( Der Spiegel -Germany)

The massive loss of votes that the SPD experienced five years ago could easily be explained away as a protest against the government of then-Chancellor Gerhard Schröder. But there is no such excuse this time around. The SPD campaign centered clearly on a universal minimum wage and on providing millions in state-aid to struggling companies. But it didn't help. Indeed, it might have hurt, which will now have to be discussed within the SPD (...)

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A new sick man ( Economist - U.K.)

On a recent Friday night the beau monde of Chelyabinsk, the industrial armpit of Russia known during the war as Tankograd, drove out to the edge of town for the gala opening of a new Mercedes dealership. Inside the neon-lit avtosalon, half-naked dancers covered in silver paint and goosebumps greeted the city's dressed-up business elite. Girls in sparkling skirts tap-danced. A Vladimir Putin lookalike promised "support". The extravaganza concluded with the guests posing for cameras inside the latest Mercedes, which was unveiled by two long-legged beauties in short black dresses

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This way out (Economist - U.K.)

A FIREFIGHTER'S first rule of survival is "know your way out". The same can be said of financial firefighting. Though it has no intention of exiting soon, the Federal Reserve is planning its path out from the extraordinary measures it has taken to free credit markets and boost demand.(...)

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Jobs could get run over by auto woes (CNN - U.S.)

The last thing the battered U.S. labor market needs are the current problems at GM and Chrysler.

There have been some signs that the job market might be slowly improving. The number of people filing for new jobless benefits has declined for three straight weeks, and both payroll processing firm ADP and outplacement firm Challenger Gray & Christmas reported a reduction in job losses in May.

The government will release the official labor figures for May on Friday and economists surveyed by Briefing.com forecast that employers cut another 520,000 jobs. (...)

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Pound, Gilts Fall as Brown Rejigs Cabinet Amid Calls to Resign (Bloomberg - U.S.)

The pound fell, heading for its biggest weekly decline since April against the dollar, and gilt yields rose, as Prime Minister Gordon Brown rearranged his cabinet amid calls for his resignation.

The British currency slumped after Pensions Secretary James Purnell stepped down, becoming the fifth minister to resign, and called on Brown to follow. Initial results from U.K. local elections showed the Labour Party is set to lose at least 23 seats, with 213 of 2,000 results counted. (...)

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Ailing, Banks Still Field Strong Lobby at Capitol ( The New York Times - U.S.)

As he often does, President Obama took the opportunity in a bill-signing ceremony last month to remind Congress "to do what we were actually sent here to do -- and that is to stand up to the special interests, and stand up for the American people."

But Mr. Obama did not mention that the measure he was signing, the Helping Families Save Their Homes Act, was missing its centerpiece: a change in bankruptcy law he once championed that would have given judges the power to lower the amount owed on a home loan.(...)

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Bankruptcy filings rise to 6,000 a day as job losses take toll (USA Today - U.S.)

By Christine Dugas

Consumer and commercial bankruptcy filings are on pace to reach a stunning 1.5 million this year, according to a report from Automated Access to Court Electronic Records. While well below the record 2 million filings in 2005, the number of filings is up sharply from last year's 1.1 million, says Robert Lawless, professor of law at the University of Illinois. Bankruptcy filings took a dramatic nose dive after a 2005 bankruptcy reform measure was signed into law to curb bankruptcy abuse and make it harder to erase debts. (...)

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Jobless Claims Fall Slightly in U.S. (The New York Times - U.S.)

The number of people on the unemployment insurance rolls fell slightly last week for the first time in 20 weeks, while the tally of new jobless claims also dipped, the government said Thursday. The report provides a glimmer of good news for job seekers, though both drops were small and the figures remain significantly above the levels associated with a healthy economy. (...)

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Job growth strong sign of recovery (China Daily - China)

By Wang Linyan

Signaling a recovery in China's employment market, 3.65 million urban residents found new jobs in the first four months of the year, an executive meeting of the State Council presided over by Premier Wen Jiabao said Wednesday. The short-term measures that the country has taken to counter the employment pressures are adequate, said Yang Weiguo, an associate professor at the school of labor and human resources of Renmin University of China. (...)

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ECB leaves interest rates on hold at 1% ( The Financial Times - U.S.)

By Ralph Atkins in Frankfurt and David Oakley in London

Eurozone official interest rates have been left unchanged at 1 per cent by the European Central Bank as it waits to see the impact of measures taken to combat continental Europe's worst recession since the second world war. (...)

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Warning on eurozone economy dip (BBC - U.K.)

The eurozone economy could shrink by more than 5% in 2009, the European Central Bank has said, worse than previously forecast. The bank said it expected the eurozone economy to contract by between 4.1% and 5.1% this year.

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Germany Blasts 'Powers of the Fed' (Wall Street Journal> - U.S.)

German Chancellor Angela Merkel, in a rare public rebuke of central banks, suggested the European Central Bank and its counterparts in the U.S. and Britain have gone too far in fighting the financial crisis and may be laying the groundwork for another financial blowup. "I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line," Ms. Merkel said in a speech in Berlin. "We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years' time.". (...)

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Australia able to avoid recession (BBC> - U.K.)

The Australian economy has unexpectedly avoided falling into recession after its economy grew by 0.4% in the first three months of 2009. Increased exports and consumer spending helped the economy to rebound from the 0.5% contraction recorded between October and December last year. Australian Prime Minister Kevin Rudd said the country was now the only advanced economy not in recession. An economy is said to be in recession after two straight quarters of decline. (...)

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Chavez threatens private banks with sanctions (Business Week - U.S.)

President Hugo Chavez on Tuesday threatened to sanction private banks that fail to collaborate with his government's regulations as it moves toward a socialist economy. Chavez says that banks are designed to intervene in the financial system and provide credit to people buying houses or producing food, rather than generating massive earnings for their owners. "If private Venezuelan banks don't follow the path, comply with the constitution and the laws, they'll have to be sanctioned," Chavez said. "The only way this government and this socialist project will accept private banks is if they fulfill their duty to intermediate, and join the government to promote economic development." (...)

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New data points to end of recession by autumn ( The Guardian - U.K.)

today, after the UK's dominant service sector returned to growth in May. Data released this morning showed an unexpected increase in services activity, driven by a rise in new business. The purchasing managers' index (PMI) hit 51.7 last month, up from 48.7 in April, and crucially above the 50-mark that separates contraction from expansion. Analysts, who had predicted a figure of 49.2, said the PMI survey suggested the worst of the recession was over. Although the economy is expected to have shrunk between April and June, there is a growing feeling among economists that a recovery will have begun by the autumn. "Today's reading is probably the first genuine bit of good news on activity for many months, as opposed to 'less bad' data," said Colin Ellis, the European economist at Daiwa Securities.(...)

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Cuba to Sanction Businesses that Waste Energy (China Daily - Latin America)

The Cuban government will cut power supplies to companies and organizations that do not observe the "exceptional measures" set to take effect Monday to save fuel and relieve the deteriorating economy of the communist-ruled island.

Havana's director of economy and planning, Jorge Luis Villa, said that each enterprise has a plan for using electricity whose observance "conditions" whether it may continue to consume energy, the official weekly Tribuna de La Habana said.

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Once a Recession Remedy, GM's Empire Falls (The Washington Post - U.S.)

Once, the very name General Motors conveyed the kind of industrial dominance shared by the likes of Standard Oil, American Telephone and Telegraph, and General Electric. Unlike most of those companies, GM also invoked Americans' sense of manifest destiny and unlimited possibility. "See the U.S.A. in your new Chevrolet," the legendary Dinah Shore sang in a 1953 ad. Those companies or their progeny live on, in some cases after dramatic restructuring. "(...)

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Slimmer, healthier Chrysler emerges (Financial Times -U.K.)

"A slimmed down Chrysler is set to emerge from bankruptcy this week with Fiat's chief Sergio Marchionne taking the helm in short order, said a person close to the matter. Barack Obama, US president, praised the "quick, surgical" bankruptcy process of Chrysler. The automaker received court approval for the sale of most its operations roughly one month after it filed Chapter 11 and the night before General Motors' petition on Monday. A court order issued late Monday said the Chrysler sale can close on Friday.(...)

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Eurozone unemployment hits 10-year high (The Guardian - U.K.)

Unemployment in the eurozone rose to nearly 10% of the workforce last month as businesses continued to shed staff in the face of the worst global downturn since the second world war. The European Union statistics office said the unemployment rate in the 16-nation eurozone rose for the 13th month in a row to 9.2% in April, from 8.9% in March as 396,000 more people lost their jobs, bringing the number of people out of work to 14.579 million. It is the highest unemployment rate since September 1999. (...)

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G.M. Seeks Bankruptcy and a New Start (The New York Times - U.S.)

General Motors filed for bankruptcy on Monday morning, submitting its reorganization papers to a federal clerk in Lower Manhattan.

G.M. said it had $82.3 billion in assets and $172.8 billion in debts. Its largest creditors were the Wilmington Trust Company, representing a group of bondholders holding $22.8 billion in debts, and affiliates of the United Auto Workers union, representing nearly $20.6 billion in employee obligations.

The filing itself seemed anticlimactic. It was a simple procedure done thousands of times each day across the country, by individuals and business alike. But not usually, as in this case, by companies like G.M. that have woven themselves into the fabric of America culture. (...)

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For Detroit, Not Just Another Bankruptcy (Business Week - U.S.)

A giant billboard on I-94 outside Detroit blares "AFFORDABLE BANKRUPTCY." Clearly, this is a city accustomed to the "B" word. In a state where bankruptcy filings jumped 71% from 2006 to 2008, what's one more?

Unfortunately, the bankruptcy of General Motors (GM) stings in a particularly acute manner, Detroit area residents say. In many ways the pain is worse than after the bankruptcies of rival Chrysler or the 137,000 other businesses and individuals that filed in Michigan in the last three years. Detroit revolves around the 100-year-old automaker, headquartered in the massive seven-tower Renaissance Center on the city's downtown riverfront. Stroll along a random street in Detroit or its sprawling suburbs and it's rare to meet someone without a close friend or family member connected to the auto business. General Motors employs 243,000 workers, down from 325,000 four years ago. It also covers benefits for about 377,000 retirees. (...)

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Geithner calls for closer ties with China ( Financial Times - U.K.)

Tim Geithner, the US Treasury secretary, arrived in China on his maiden visit on Monday with calls for China to make its currency more flexible in return for fiscal reforms on the part of the US.

"A successful transition to a more balanced and stable global economy will require very substantial changes to economic policy and financial regulation around the world," he told an audience at Peking University.

"But some of the most important of those changes will have to come in China and the United States."(...)

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Geithner tells China its dollar assets are safe (China Daily - China)

US Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that China's huge holdings of dollar assets are safe and reaffirmed his faith in a strong US currency.

A major goal of Geithner's maiden visit to China as US Treasury chief is to allay concerns that Washington's bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and US bonds.

China is the biggest foreign owner of US Treasury bonds. US data shows that it held $768 billion in Treasuries as of March, but some analysts believe China's total US dollar-denominated investments could be twice as high.(...)

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G.M. Plan Gets Support From Key Bondholders (The New York Times - U.S.)

As General Motors moved closer to a bankruptcy filing, possibly early next week, attention on Thursday turned again to the bondholders, the most important group that the company has yet to win over for its efforts to start fresh.

Early Thursday, G.M. proposed a deal in which bondholders would receive up to a 25 percent stake -- a bigger share than G.M. offered the autoworkers union -- if they do not oppose its bankruptcy reorganization, and then said that a group representing many of the largest bondholders had accepted the offer. (...)

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Recession Forces Immigrants to Send Less Cash Home to Families (Latin America Herald Tribune - Venezuela)

Battered by the recession, many Hispanic immigrants have seen themselves forced to reduce or even eliminate the remittances they send to their families back home.

"Before I sent $400 because I have four children in El Salvador, but now - $300, $250 per month at the most. The situation has become quite difficult," says painter Edwin Aparicio, 33. (...)

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Magna 'agrees to buy GM Europe' (BBC - U.K.)

The agreement was reached with General Motors, but will need to be approved by the German government, which will be providing funding to the new owner. The other potential bidder, Fiat, said it would not be attending Friday's talks with the German government.

GM in the US is expected to declare Chapter 11 bankruptcy on Monday. (...)

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UN: World economy to shrink further (Al-Jazeera - Qatar)

The United Nations has changed its growth prediction for the world economy for 2009, stating that it will shrink by 2.6 per cent.

The downward revision in the annual World Economic Situation and Prospects report on Wednesday comes after the UN said in January that the world economy would contract by 0.5 per cent this year.(...)

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U.S. Weighs Single Agency to Regulate Banking Industry (The Washington Post - U.S.)

Senior administration officials are considering the creation of a single agency to regulate the banking industry, replacing a patchwork of agencies that failed to prevent banks from falling into the worst financial crisis since the Great Depression, sources said. The agency would be a key element in the administration's sweeping overhaul of financial regulation, which officials hope to unveil in coming weeks, including the creation of a new authority to police risks to the financial system as well as a new agency to protect consumers, according to three people familiar with the matter. Most of the proposals would require legislation. (...)

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Eurozone economic sentiment improves (Financial Times - U.K.)

Eurozone recovery prospects appeared to have gained momentum this month with a closely watched survey showing optimism rising again and Germany reporting only a slight rise in unemployment. The European Commission reported its eurozone "economic sentiment " index had risen for a second consecutive month. The index is regarded as a guide to future trends in activity. (...)

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UAE drops out of planned Gulf monetary union (Al Arabiya - Middle East)

The United Arab Emirates withdrew Wednesday from a planned Gulf Arab Monetary Union, according to the state news agency, throwing the project into doubt even as four other Gulf countries reiterated their intention to participate. "The UAE has decided not to take part in the proposed monetary union agreement between the states of the Gulf Cooperation Council," the state news agency WAM quoted an unnamed Foreign Ministry official as saying, adding that the GCC had been notified. (...)

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A Comeback in the IPO Market (Business Week - U.S.)

Entrepreneurs and venture capitalists took notice just before the Memorial Day weekend when two technology companies had their initial public offerings in a matter of 24 hours. OpenTable (OPEN), a Web site for making restaurant reservations, went public one day after SolarWinds (SWI), a networking software company. The activity ended a drought of venture-backed IPOs that began last August. "It signals that investors are looking for growth stories," says Robert R. Ackerman, managing partner of Allegis Capital, a venture firm. (...)

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German-US Opel talks break down (Al Jazeera - Qatar)

Talks between Germany and the United States aimed at saving General Motor's (GM) Opel unit have broken down, raising fears over tens of thousands of jobs in Europe. All-night discussions in Berlin, the German capital, ended when GM and the US government said they needed an extra $416m in temporary loans from Germany to keep Opel afloat. Peer Steinbrueck, Germany's finance minister, described the last minute tactic as "scandalous". "We were unpleasantly surprised when this new demand came out of the blue. We found that pretty scandalous," he said. (...)

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Christian Lacroix Seeks Creditor Protection (Wall Street Journal - U.S.)

French fashion house Christian Lacroix SNC has filed a request to a Paris commercial court to protect it from creditors, the company announced in a statement on Thursday. The fashion house, which is known for its colorful gypsy-themed clothes, hasn't turned a profit since its creation 22 years ago. Christian Lacroix's owner, the Falic Group, a U.S.-based duty free store operator, has been trying to sell a stake in the company for a year. In the statement, Christian Lacroix's Chief Executive Nicolas Topiol said efforts to sell a stake in the company were "directly hit" by the financial crisis. (...)

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Debt Exchange Falls Short; G.M. Moves to Sell Units (The New York Times - U.S.)

By CARTER DOUGHERTY and DAVID JOLLY

Bondholders at General Motors on Wednesday rejected an offer to exchange $27 billion in debt for a small amount of stock, as G.M. prepared for a bankruptcy filing that could come as soon as this weekend. In Europe, the company moved to combine its main operations under the umbrella of Adam Opel, its German business, to simplify the sale of the unit. (...)

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Vauxhall rescue package 'not ruled out' (The Independent - U.K.)

By Matt Dickinson

The Business Secretary Lord Mandelson said the Government had "not ruled out" a financial contribution to help secure the future of car maker Vauxhall, a report said today. According to the Financial Times, the Cabinet member held "substantial telephone conversations" yesterday with the bosses of Vauxhall's parent companies. (...)

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Saudi minister sees oil demand rising (Financial Times - U.S.)

Global oil demand is picking up, supported by higher consumption in China, driving oil prices higher, Ali Naimi, Saudi Arabia's oil minister, said on Wednesday ahead of Thursday's Opec meeting in Vienna. Mr Naimi added that Opec did not need to cut its production, arguing that the cartel would "stay its course". Opec, which produces about 40 per cent of the world's oil, has reduced sharply its production since September to combat the decline in oil prices. (...)

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Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look (The Washington Post - U.S.)

By Lori Montgomery

With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax. (...)

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China's Yuan: The Next Reserve Currency? (Businessweek - U.S.)

Are the Chinese finally getting serious about loosening their ties to the dollar--and even replacing the greenback with the yuan as the global economy's reserve currency? The evidence is mounting that they are.

For the last two months, China's leadership has been complaining about the country's dangerous dependence on the dollar. Beijing holds $2 trillion in dollar assets, accumulated through years of exports to America and massive purchases of Treasuries by the Chinese government. If Washington can't rein in its mounting budget deficit, both Treasuries and the greenback could weaken considerably--and the Chinese could be big losers as a result.

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Zombie banks walk among us (CNN - U.S.)

Maybe the so-called "zombie" banks didn't die after all.

As recently as two months ago, many on Wall Street speculated that the nation's largest financial institutions -- banks like Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) -- were only operating as a result of extensive aid from the U.S. government.
Now, many experts wonder how so many small regional and community lenders that are capital starved and overwhelmed by escalating loan losses are able to stay in business. (...)

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Hard Times for the Kids (Economix - The Net)

The Great Recession is hurting almost everyone, but its harmful effects on kids could last for years to come.

A new report issued by the Child and Youth Well-Being Index Project at Duke University warns that virtually all progress made in family economic well-being since 1975 could be wiped out over the next two years.(...)

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Virgin Atlantic profits soar on premium flyers (The Times - U.K.)

Virgin Atlantic, the airline majority owned by Sir Richard Branson's Virgin Group, announced this morning that its annual profits almost doubled in the year to February, as its rival, British Airways, slumped to its biggest loss in more than two decades. (...)

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Humble but nimble (The Economist - U.K.)

In contrast to the doom and gloom coming from Europe's biggest firms, many small and medium-sized enterprises (SMEs) are cautiously optimistic. The main umbrella organisation for Germany's more than 4m SMEs predicts that its members' sales will contract by only 2% this year. The country's renowned Mittelstand will therefore outperform the economy as a whole, which the government expects to shrink by 6%. A survey last month of 804 French SMEs found that just over half of them expected revenues to either stay flat or increase in 2009. "I was surprised by how good the numbers were," says Jean-François Roubaud, president of a French lobbying group for SMEs, "and the data confirms what I see out in the field."(...)

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Global electricity use forecast to fall (Financial Times - U.K.)

Global electricity consumption will fall this year for the first time since 1945, according to the International Energy Agency.

The watchdog for developed energy consuming countries will tell energy ministers from the Group of Eight leading economies on Sunday that electricity demand will fall 3.5 per cent in 2009.(...)

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U.S. to Steer GM Toward Bankruptcy (The Washington Post - U.S.)

The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and reemerge as a global competitor, sources familiar with the discussions said.(...)

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Geithner Calls for 'Very Substantial' Change in Wall Street Pay (Bloomberg - U.S.)

Treasury Secretary Timothy Geithner called for major changes in compensation practices at financial companies and said the Obama administration's plan to help realign pay with performance will be rolled out by mid-June.

"I don't think we can go back to the way it was," Geithner said in an interview on Bloomberg Television's "Political Capital with Al Hunt," to be aired tonight and over the weekend. "We're going to need to see very, very substantial change." (...)

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Wider Confidence Lifts Economy From Winter's Deep, Dark Freeze (Washington Post - U.S.)

The financial system, frozen solid for the past nine months, is in a spring thaw. And it's happening even though many of the Obama administration's major rescue programs have yet to get off the ground. The improvement reflects the combined impact of a wide range of actions, many of them taken with little public attention, according to government officials and private economists. But more important than any single program, the sources say, is a deepening confidence from financial markets that the government is prepared to take aggressive action -- a confidence that Obama officials have repeatedly worked to cultivate in speeches and public appearances. (...)

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Eurozone PMI jumps in May (Financial Times - U.K.)

Eurozone prospects brightened this month with the pace of economic contraction slowing markedly, according to a closely-watched survey that will boost hopes of the region's recession ending this year. Purchasing managers' indices for the 16-country region jumped more than expected in May to the highest for eight months. Although they still indicated economic activity was contracting, the rate of decline fell for the third consecutive month. The improvement in Germany, the eurozone's largest economy, was particularly sharp. (...)

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World Economies Plummet (Wall Street Journal - U.S.)

Fall in GDP Quickens in Mexico and Japan; Global Outlook Brighter This Quarter Steep declines in the economies of three of the U.S.'s biggest trading partners -- Mexico, Japan and Germany -- underscored the severity of the global recession and put pressure on major industrialized nations to revive moribund global trade talks.(...)

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Ratings agency downgrades outlook for UK economy (The Guardian - U.K.)

Ratings agency Standard & Poor's today downgraded its outlook for the British economy, saying it had grown increasingly worried about the country's ballooning budget deficit. It also warned there was a "one-in-three chance" that Britain's credit rating may be cut. The surprise news pushed shares in London down sharply and caused gilt yields to soar on renewed fears about the recession-hit UK economy. The FTSE 100 at one point tumbled more than 2%, or 100 points, to 4352. Sterling, which had reached a six-month high of $1.58 earlier, fell three cents to $1.5530. (...)

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Beijing stimulus plan held up (Financial Times - U.K.)

China's much vaunted Rmb4,000bn economic stimulus package is being delayed by local governments unable to raise their share of financing, according to a report from the state auditor.

The survey, published yesterday, is the first official indication that China's stimulus measures have not been as effective as the government claims. (...)

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Japan's economy in record plunge (BBC - U.K.)

Japan's economy during the first three months of 2009 shrank at its quickest pace since records began, as exports slumped, officials figures have shown...

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Consumers Are Dealt a New Hand in Credit Cards (The New York Times - U.S.)

At first glance, the sweeping credit card legislation that passed the Senate on Tuesday looks like a huge victory for consumers. The bill, after all, contains relief from penalty fees and certain interest rate spikes.

But for people who pay off their bills each month, and milk the card rewards programs for everything they're worth, there is some cause for concern.(...)

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Immigration to Britain stalls as foreign workers flee recession (Vox EU - The Net)

The number of foreign-born workers leaving Britain rose by nearly 30% as the economic recession started to bite last year, according to statistics published today.

The latest official figures confirm that immigration to Britain has stalled, with the number of Polish and other east European migrants registering to work in Britain falling by 50% in January to March this year compared with the same period in 2008. (...)

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Housing: Recovering or Not? (Businessweek - U.S.)

Hopes are high that the deeply troubled U.S. housing sector has finally seen the worst of the recession and financial crisis.

But new data on May 19 raised questions about that optimism. U.S. housing starts hit a record low, dropping 12.8% in April, to an annual pace of 458,000. Housing starts are down 79.8% from their peak in January 2006.

A sharp drop in construction of multifamily dwellings drove the reading, with single-family starts actually up 2.8%.

However, the overall record low disappointed economists and investors, who had seen signs in recent months that housing might have hit bottom. (...)

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Despite Oil Reserves, Norway Slips Into Recession (The New York Times - U.S.)

By MATTHEW SALTMARSH

The slowdown in global economic activity has tipped Norway into recession, despite the country's deep oil reserves and strong budget position. Gross domestic product for Norway, excluding petroleum-related activity, contracted by 1 percent during the first quarter from the previous period, when it declined by 0.8 percent, Statistics Norway, the country's data agency, said Tuesday. (...)

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By Angela Monaghan

Britain sinks into deepest deflation since 1948 (The Telegraph - U.K.)

Inflation on the Retail Prices Index (RPI) measure, which includes housing costs, dropped sharply to -1.2pc in the year to April, from -0.4pc in March, the Office for National Statistics (ONS) said on Tuesday. It was the lowest RPI figure since records began in 1948, and weaker than economists had expected. (...)

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List of German Companies Needing Help Grows Longer (Der Spiegel - Germany)

When it comes to government subsidies, Wendelin Wiedeking has never been shy about making his views absolutely clear. Many corporate executives, the Porsche CEO was once quoted as saying, "get on their soapboxes to rage against government spending" while at the same time "holding out their hands" for public bailout funds. His insisted that he and his company wanted nothing to do with this sort of "government drug program," and that "luxury and subsidy are incompatible." (...)

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Local Banks Face Big Losses (The Wall Street Journal - U.S.)

By MAURICE TAMMAN and DAVID ENRICH

Commercial real-estate loans could generate losses of $100 billion by the end of next year at more than 900 small and midsize U.S. banks if the economy's woes deepen, according to an analysis by The Wall Street Journal. Such loans, which fund the construction of shopping malls, office buildings, apartment complexes and hotels, could account for nearly half the losses at the banks analyzed by the Journal, consuming capital that is an essential cushion against bad loans. (...)

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Migrant workers hit by global downturn (BBC - U.K.)

For the countries of East Asia, the global economic crisis feels hauntingly familiar: many saw their economies and their burgeoning growth struck down by the Asian financial crisis more than 10 years ago.

This time, Asian economies may avoid the worst of it, but for many of their citizens who took advantage of globalisation to find better paying work overseas, their opportunities and their remittances are drying up.

For Siti Juhariah, the first hint of the global economic crisis came when she heard the people she worked for arguing about money. (...)

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Smaller US banks need additional $24bn (Financial Times - U.K.)

Small and medium-sized US banks must raise some $24bn to meet the capital standards set by the government in its stress tests of large institutions, research for the Financial Times shows.

News of the potential capital shortfall could increase pressure on many of the 7,900 US banks that form the backbone of the US financial system.(...)

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Porsche, VW Shares Fall as Power Struggle Escalates (Der Spiegel - Germany)

A dispute between German automakers Volkswagen and Porsche is casting doubt on their merger plans and fuelling concern about Porsche's financial soundness. Their shares fell on Monday, with Porsche down as much as 6 percent.(...)

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Lloyds shareholders to profit from £4bn fundraising (The Guardian - U.K.)

Lloyds Banking Group has unveiled details of a £4bn fundraising, a day after news that chairman Sir Victor Blank is stepping down following pressure from major investors.

The proceeds from the placing and open offer will be used to repay £4bn worth of preference shares held by the government. Shareholders are being offered 0.6213 new shares at 38.43p each for every share they own. But in a change from the original plan, any of the bank's 2.8 million small shareholders who do not take up the offer will have their shares sold in the market, and will receive any profit above 38.43p a share.

The part-nationalised bank has the largest shareholder base in the UK following the merger of Lloyds and HBOS. The average private investor owns 550 shares, so would have to pay around £131 for 340 new shares. A shareholder vote on the plan will take place in early June.(...)

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No panic, just gloom (The Economist - U.K.)

Thanks to a mix of luck and good decisions, the economic apocalypse that loomed over central and eastern Europe seems to have been averted. But dizzy current-account deficits, wild foreign-currency borrowing and reckless fiscal policy are leaving a horrible hangover for some. The IMF forecasts a 4.9% average fall in GDP, with far bigger falls for some. The European Bank for Reconstruction and Development (EBRD) reckons on a 5.2% drop. The downturn is certainly nasty; but some changes have staved off the worst. (...)

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German, Euro-Zone Economies Report Massive Shrinkag (Der Spiegel - Germany)

With demands for exports dropping, the German economy was hit hard during the first quarter of 2009, with gross domestic product shrinking by 3.8 percent compared to the previous quarter. The decline was the biggest quarter-on-quarter drop since Germany began collecting GDP data in 1970 -- but some economists nevertheless expressed cautious optimism.(...)

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Once a feature of the American urban landscape, car dealerships are left with nothing to sell (The Guardian - U.K.)

Surrounded by gleaming, high-performance Pontiacs at his showroom near the shore of Lake Huron in upstate Michigan, veteran car dealer Mike Beattie sounds justifiably despondent. "It's a very difficult situation for all of us here - it's the end of an era," he says. "It's something we'd seen coming but we're still trying to wrap our heads around it."..(...)

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Oil demand could suffer a 28-year record drop (France24 - France)

The International Energy Agency believes that the demand for oil in 2009 will drop 3 % from last year to an estimated 83.2 million barrels per day, which would be the sharpest fall since 1981. (...)

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German deficit set to double in 2010 (Financial Times - U.K.)

The economic crisis could cost German taxpayers twice as much as the country's reunification 20 years ago, it emerged on Thursday, after Berlin said it would break its post-war budget deficit record this year. (...)

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Dissent Within the ECB Worsens Market Nerves (The Wall Street Journal - U.S.)

Rare public dissent among European Central Bank policy makers may indicate that the ECB's decisions are getting less predictable -- a prospect some say is helping to undermine the confidence the markets need to recover. The central bank signaled last week that its key rate could fall below 1% and launched a €60 billion ($81.6 billion) program to buy low-risk corporate bonds. Now, central bankers in the 16-nation euro zone are sparring publicly about the cost of the bond-buying program and whether it should be expanded to include other assets..(...)

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Sony makes first loss in 14 years (BBC - U.K.)

Electronics giant Sony has reported its first annual loss in 14 years, after being hit by a big drop in sales. Sony reported a loss of 98.9bn yen ($1.04bn; £685m) for the year to the end of March, compared with a profit of 369.4bn yen the previous year. The company blamed the global downturn and the strong yen for the loss. Worldwide sales were down 12.9%.(...)

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Toyota reports record loss (Al Jazeera - Qatar)

Toyota Motor, the world's largest vehicle manufacturer, has reported a loss of $7.7bn for the first three months of this year, its worst result ever. The Japanese company's latest fiscal results are a dramatic turnaround after it made a record profit of 2.27 trillion yen last year. (...)

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Recession Hits Social Security Projections (Businessweek - U.S.)

Doomsday for Social Security and Medicare has come a little closer, thanks to the deep recession. The costs of administering Social Security are now expected to exceed tax revenues in 2016, a year earlier than expected, and the trust funds for the program are now projected to run out in 2037, four years earlier than envisioned a year ago. The $468 billion Medicare program is in worse shape, with the Hospital Insurance trust fund now projected to be exhausted in 2017, two years earlier than a year ago.

The new projections were issued in the annual reports of the Social Security and Medicare trustees, issued on May 12. The revised Social Security projections are mainly due to the effects of the economic downturn and changes in longevity assumptions, while the changes in the Medicare outlook are due to lower payroll taxes because of the downturn.
(...)

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Foreclosures: 'April was a shocker' (CNN - U.S.)

Foreclosures in April exceeded even March's blistering pace with a record 342,000 homes receiving notices of default, auction notices or undergoing bank repossessions, according to a regular industry report.

One of every 374 U.S. homes received a filing during the month, the highest monthly rate that RealtyTrac, an online marketer of foreclosed properties, has recorded in four-plus years of record keeping.

"April was a shocker," said Rick Sharga, a spokesman for RealtyTrac. "I would have bet on a dip because March foreclosures were so high.

Instead, filings inched up 1% from March and rose 32% compared with April 2008. (...)

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U.S. Eyes Bank Pay Overhaul (The Wall Street Journal - U.K.)

The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.

The initiative, which is in its early stages, is part of an ambitious and likely controversial effort to broadly address the way financial companies pay employees and executives, including an attempt to more closely align pay with long-term performance.

Administration and regulatory officials are looking at various options, including using the Federal Reserve's supervisory powers, the power of the Securities and Exchange Commission and moral suasion. Officials are also looking at what could be done legislatively.(...)

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Europe Fines Intel a Record $1.45 Billion in Antitrust Case (The New York Times - U.S.)

The European Commission fined Intel a record €1.06 billion on Wednesday for abusing its dominance in the computer chip market to exclude its only serious rival, Advanced Micro Devices.

The European Union's competition commissioner, Neelie Kroes, said the penalty against Intel, the equivalent of $1.45 billion, was justified because the company had skewed competition and denied consumers a choice for chips.(...)

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Oil above $60 on economy hopes (BBC News - U.K.)

Oil prices have risen to their highest level in six months, buoyed by hopes the worst may be over for the world economy and demand for oil may recover. US crude rose as high as $60.08 a barrel, while London Brent crude rose to $58.64.(...)

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Spain stimulus targets car buyers (BBC News - U.K.)

Spanish Prime Minister Jose Luis Rodriguez Zapatero has announced new economic stimulus measures, including subsidies for people who buy new cars. He said consumers would get 2,000 euros ($2,730; £1,785) towards the cost of a car, with half the cash coming from central and regional government. (...)

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Legal & General faces union battle over redundancies (The Guardian - U.K.)

By Graeme Wearden

Legal & General faces a battle with unions after announcing it is to cut up to 560 jobs across the UK. The insurance company confirmed today that 300 full-time staff and 260 part-time and temporary workers face redundancy. Its operations in Kingswood in Surrey and Hove in Sussex are expected to bear the brunt of the losses, but London and Cardiff may also be hit. (...)

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Domestic demand helps restore growth as exports fall (France24 - France)

China's effort to boost its domestic demand has shown signs of success. Investments by domestic companies in the first four months of 2009 were up 34.6%. Yet shipments continued to decline for the sixth month running, falling 22.6 % in April. (...)

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Britain, China strike stock market deal (Newsweek - U.S.)

China and Britain agreed on Monday to prioritize opening China's stock markets to foreign companies and to arrange for more Chinese firms to list on London exchanges. No timetable has been set for opening China's stock markets but British officials said HSBC was at the forefront of negotiations. They emphasized an urgency to make it easier for Chinese firms to float in London within months. (...)

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Banks Brace for Credit Card Write-Offs (The New York Times - U.S.)

Experts predict that millions of Americans will not be able to pay off their debts, leaving a gaping hole at ailing banks still trying to recover from the housing bust. The bank stress test results, released Thursday, suggested that the nation's 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called a "worst case" economic situation. (...)

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Off their trolleys (The Economist - U.K.)

Whether it is for affordable homes or cheap goods, Americans are peering through the wreckage of the credit crunch and starting to buy again. After falling sharply in the second half of last year, consumer spending rose in the first quarter, and even sales of homes and cars have edged up from deeply depressed levels.(...)

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Long-Term Challenges Test China's Growth (The Wall Street Journal - U.S.)

China's aggressive stimulus has steadied its big economy faster than many expected. But the Chinese government hasn't yet delivered the deep structural changes that are needed to keep growth on track after those funds run out (...)

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Mined out in Zambia (Le Monde Diplomatique - France)

For decades Zambia's copper mines attracted foreign investors. Local miners put up with the atrocious working conditions and pollution because they were promised development. But the financial crisis now threatens to scupper those hopes(...)

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Stress Tests Results Split Financial Landscape (The New York Times - U.S.)

At one bank in Alabama, the problem is a construction bust. At two in Ohio, the trouble is real estate. And in San Francisco, at Wells Fargo, the worry is credit cards -- a staggering 26 percent of that bank's card loans, federal regulators have concluded, might go bad if the economy takes a turn for the worse.

The stress tests released by the Obama administration Thursday painted a broad montage of the troubles in the nation's banking industry and, for the first time, drew a stark dividing line through the new landscape of American finance. (...)

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Friedman Resigns as Chairman of New York Fed (Deal Book - The Net)

Stephen Friedman, the chairman of the Federal Reserve Bank of New York, abruptly resigned on Thursday, days after questions arose about his ties to Goldman Sachs. Mr. Friedman was chairman of the New York Fed at the same time he was a member of Goldman's board. He also had a substantial stake in the firm as the Fed was crafting a solution to keep Wall Street banks afloat. Denis M. Hughes, deputy chair of the board, will take over as the interim chairman, the New York Fed said in a statement. (Read Mr. Friedman's letter after the jump.) (...)

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Geithner Bets U.S. Can Avoid Japan Trap Through Bank Earnings (Bloomberg - U.S.)

GTreasury Secretary Timothy Geithner is betting that U.S. banks can do something their Japanese counterparts were unable to accomplish in that country's "lost decade" of the 1990s: earn their way out of trouble.

The stress-test results released yesterday by regulators found that the 19 largest banks face a $74.6 billion capital hole that may be filled mostly by private money. That compares with the hundreds of billions of dollars seen by outside analysts, including the International Monetary Fund, and takes into account banks' projected earnings over the next two years.

The "stress-test results are an important step forward," Geithner said in a statement announcing the results. "Americans should know that the government stands behind the banking system and that their deposits are safe." (...)

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ECB cuts rates to combat recession (Financial Times - U.K.)

European central banks on Thursday intensified their efforts to combat the continent's severe recession by unveiling bolder-than-expected moves to buy assets and boost growth through historically-low interest rates.

The European Central Bank cut its main interest rate by a quarter percentage point to 1 per cent, the lowest yet, and announced plans to buy €60bn of covered bonds, which are backed by mortgage or public sector loans.(...)

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Euro-Zone Retail Sales Post Record Declines (The Wall Street Journal - U.S.)

European businesses remain optimistic about the economy despite fresh evidence that the retail and manufacturing sectors continue to feel the pinch of the global slowdown. Business in Europe's manufacturing and services sector shrank at a slightly slower pace last month, while other sectors of the economy continue to contract rapidly. (...)

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ECB unveils measures to fight recession (Financial Times - U.K.)

The European Central Bank sought to kickstart the flagging eurozone economy on Thursday by reducing interest rates to record lows and announcing bold plans to buy corporate bonds as part of a credit easing programme. The ECB cut its main interest rate by a quarter-point to 1 per cent, pledged to buy €60bn in covered bonds issued by eurozone companies and said it would lend banks unlimited funds for up to 12 months. (...)

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What Happens to the American Dream in a Recession (The New York Times - U.S.)

Given the battered economy, increasing joblessness and collapse of the housing market, what is the state of the American dream? Pollsters for The New York Times and CBS News set out last month to try to answer that question. And the results seemed somewhat contradictory. (...)

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The Perils of Global Banking (Business Week - U.S.)

JA Solar Holdings, a once-thriving Chinese manufacturer of solar-power cells, is getting a rude introduction to the dangers of global finance. So is Peter Howard, a retired British tax official. And so are Cedric Ruber, a Belgian school inspector, and his father, Rene, a retired employee of the U.S. Army. (...)

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Gold sales cost Europe's central banks $40bn (Business Week - U.S.)

J Europe's central banks are $40bn poorer than they might have been after they followed a British move taken 10 years ago on Thursday to shrink the Bank of England's gold reserves, analysis by the Financial Times has shown. London's announcement on May 7 1999 that it would sell a large share of the Bank's gold reserves in favour of assets offering a return, such as government bonds, was the high water mark of so-called "anti-gold" sentiment among European central banks. (...)

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U.S. May Set a Debt Test for Banks (The New York Times - U.S.)

The Treasury Department is planning to require banks seeking to free themselves from the government's grip to show that they can survive without the taxpayer aid that has helped them through the financial crisis, senior government officials said Tuesday. Banks have been enjoying an indirect subsidy adopted by the government last fall that allows them to issue debt cheaply with the backing of the Federal Deposit Insurance Corporation. The Treasury is expected to announce as early as Wednesday that healthier banks must show that they can issue debt without the guarantees before they are allowed to repay the money they accepted from the Troubled Asset Relief Program, or TARP.

The banks also must demonstrate that they will be able to sell stock to private investors and pass a government stress test to show that they are healthy enough to survive without the taxpayer aid.(...)

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Chrysler won't repay bailout money (CNN - U.S.)

Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

This revelation was buried within Chrysler's bankruptcy filings last week and confirmed by the Obama administration Tuesday. The filings included a list of business assumptions from one of the company's key financial advisors in the bankruptcy case. (...)

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BofA Faces $34 Billion Gap (The Wall Street Journal - U.S.)

Regulators have told Bank of America Corp. that the company needs to take steps to address a roughly $34 billion capital shortfall based on results of the government's stress tests, according to people familiar with the situation.

The exact amount of the needed infusion couldn't be determined late Tuesday, and Bank of America officials either declined to comment or couldn't be reached.

Regulators began notifying the 19 financial companies subjected to the government tests of the results Tuesday.

An official announcement is expected after the close of U.S. stock-market trading Thursday. (...)

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Inquiry Panel on the Economy Nears a Vote (The New York Times - U.S.)

Congress will take a major step on Wednesday toward creating an independent panel with sweeping powers to investigate the root causes of the economic crisis.

The House is expected to vote in support of a commission modeled on the Sept. 11 panel, which was made up of former lawmakers and former administration officials who used subpoena powers to investigate lapses in intelligence gathering and law enforcement that had led to the attacks.

Backed by the Democratic leadership with some Republican support, the House provision closely tracks a Senate measure already approved. The panel would probably have 10 members, most appointed by the leadership in both chambers. (...)

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More Banks Will Need Capital (The Wall Street Journal - U.S.)

By DAMIAN PALETTA and DEBORAH SOLOMON

The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter, a move that officials hope will quell fears about the solvency of the financial sector. (...)

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Brussels doubles EU recession forecasts for 2009 (The Independent - U.K.)

By Sarah Arnott

The European Commission has revised economic forecasts sharply downwards and pushed recovery predictions out to the second half of 2010 in the face of the "deepest and most widespread recession in the post-war era". (...)

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Obama Targets Overseas Tax Dodge (The Economist - U.S.)

By Lori Montgomery and Scott Wilson

President Obama yesterday announced a major offensive against businesses and wealthy individuals who avoid U.S. taxes by parking cash overseas, a battle he said would be fought with new tax laws, new reporting requirements and an army of 800 new IRS agents. (...)

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Fiat Plan for Opel Raises Specter of Job Reductions (The Wall Street Journal - U.S.)

By STACY MEICHTRY and MARCUS WALKER

German auto maker Adam Opel GmbH might close one of its plants if it merges with Italy's Fiat SpA, according to a senior German official, signaling for the first time that Fiat's plan to create one of the world's biggest car makers could lead to significant job cuts in Europe. (...)

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GM's European future is still hanging in the balance (The Independent - U.K.)

By Sarah Arnott

The German government described Fiat's plans to take over GM Europe as "interesting" yesterday, but gave no further hint of an outcome from the talks. Fiat's chief executive, Sergio Marchionne, fresh from last week's deal to take a 20 per cent stake in beleaguered Chrysler in the US, was in Berlin yesterday to try to sell his vision of a new automotive behemoth. (...)

EU Slashes Euro-Zone Economic Outlook ( The Wall Street Journal - U.S.)

The European Union said Monday that the economic downturn this year will be deeper and last longer than originally thought, including worse-than-expected unemployment and fiscal strains. The commission, the EU's executive arm, said in its latest forecasts that the economies of the 27-state EU will contract by 4% this year. In January, it had predicted a 1.8% contraction in the EU and a 1.9% fall in the euro zone..(...)

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Obama Wants $190 Billion Tax Increase on Companies (Bloomberg - U.S.)

President Barack Obama will propose today to outlaw three offshore tax-avoidance techniques U.S. companies such as Caterpillar Inc. and Procter & Gamble Co. want to use to save $190 billion over the next decade and make it riskier for Americans to stash money in tax-haven banks.(...)

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You're hired--next year (The Economist - U.K.)

According to a survey carried out by Watson Wyatt, a consulting firm, three-quarters of American companies have implemented a hiring freeze. But that means around a quarter of companies are still hiring, despite the economic gloom. They are, however, doing so in new ways.(...)

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Tourists Leave Mexican Caribbean, Hotels Close on Flu Fears (The Latin American Herald Tribune - Latin America)

Tourists Leave Mexican Caribbean, Hotels Close on Flu Fears Hundreds of tourists have left the tourist resort of Cancun where some hotel chains closed certain establishments as a precaution in the face of the Mexican health alert over the AH1N1 flu virus.(...)

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Mexican Economy Could Shrink 4.8 Percent, Central Bank Says ( Latin America Herald Tribune - Latin America)

MEXICO CITY - Mexico's central bank said Wednesday that the national economy will shrink by between 3.8 percent and 4.8 percent this year, even without taking into account the potential economic repercussions of the current outbreak of swine flu.(...)

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Chrysler Chapter 11 Is Imminent (Wall Street Journal - U.S.)

Talks between the Treasury Department and lenders aimed at keeping Chrysler LLC out of bankruptcy broke down Wednesday, making it all but certain the car maker will file for Chapter 11 protection Thursday, according to people familiar with the discussions. Administration officials, who have been braced for a Chrysler bankruptcy filing for weeks, say all the pieces are in place to get the company through the court quickly, perhaps in a matter of weeks.(...)

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Fiat-Chrysler Deal Gets Final Go-ahead (Il Corriere Della Sera - Italy)

Thumbs up from banks. Employees to have 55% equity holding.

MILAN - The Fiat-Chrysler alliance is almost ready to be signed. After the nod from the US unions to cuts in labour costs, initial agreement with the four main creditor banks was also reached yesterday. JP Morgan, Citigroup, Goldman Sachs and Morgan Stanley are said to be willing to write down Chrysler's debt in exchange for equity, slashing the total owed from 6.9 billion dollars to about two billion. Nothing is official so caution is in order.(...)

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Fiat May Prefer A Bankrupt Chrysler (Forbes - U.S.)

Reports that Chrysler has filed for Chapter 11 bankruptcy protection could be good for the Italian carmaker.(...)

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Japan factory data raises hopes (Al Jazeera - Qatar)

Japan's factory output has risen for the first time in six months, raising hopes that the country's worst recession since World War Two may have bottomed out.

Government figures released on Thursday showed industrial output rose 1.6 per cent in March compared with a month earlier, with forecasts that production will increase further in April and May..(...)

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Economy in U.S. Contracted at 6.1% Annual Rate in First Quarter (Bloomberg - U.S.)

The U.S. economy plunged again in the first quarter, capping its worst performance in five decades, reflecting a record slump in inventories and further declines in housing.

Gross domestic product dropped at a 6.1 percent annual pace, more than forecast, after contracting at a 6.3 percent rate in the last three months of 2008, the Commerce Department said today in Washington. The report, which marked the weakest six months since 1957-58, comes as Federal Reserve policy makers meet for a second day.

Smaller stockpiles may set the stage for a return to growth in the second half of the year amid signs Fed efforts to reduce borrowing costs and unclog lending are starting to pay off. The recession persisted even as lower gasoline prices and larger tax refunds helped bring an end to the worst slump in consumer spending in almost three decades.

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Obama's First Business Report Card (Businessweek - U.S.)

Corporate leaders give President Obama and his team relatively good grades 100 days in, but the devil is in such details as card check and corporate taxes

How does the business community think President Barack Obama is doing? As he hits the 100-day mark, there's little doubt the new President is getting high marks overall for his 24/7 moves to revive the economy. And the favorable sentiment on Obama's job performance reflected in many public polls is also mirrored in the views of many business executives.(...)

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Berlin Predicts Sharp GDP Contraction for 2009 (Spiegel - Germany)

On Wednesday, the German government corroborated what leading economists had predicted last week -- that 2009 would see the German economy contract by a massive 6 percent. But the Economics Ministry does see a rosier 2010 than the think tanks do.

The German government on Wednesday predicted a 6 percent contraction of the nation's gross domestic product for all of 2009, which would be the largest shrinkage since World War II and a massive revision from its January forecast of 2.25 percent.(...)

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Societe Generale chairman resigns (BBC - U.K.)

Societe Generale's chairman Daniel Bouton has announced his resignation, saying the personal attacks against him risked "harming the bank".

Mr Bouton has faced rising criticism ever since the bank said rogue trader Jerome Kerviel had lost 4.9bn euros ($6.5bn; £4.4bn) at the start of 2008.

SocGen then needed a 1.7bn-euro loan from the government in December because of the impact of the credit crisis. (...)

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Banks, Lenders Near Chrysler Debt Deal (The Wall Street Journal - U.S.)

By JOHN D. STOLL, NEIL KING JR. and STACY MEICHTRY

Banks and lenders holding $6.8 billion in secured Chrysler LLC debt are nearing a deal with the Treasury Department to cut that debt to about $2 billion, but a concrete agreement isn't completely wrapped up, according to people briefed on the matter. The deal would come after the United Auto Workers union agreed to concessions on Chrysler's behalf. It is unclear whether the deal with lenders will be enough to keep the auto maker out of bankruptcy court.

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U.K. Retailers See Sales Volumes Rise in April (The Wall Street Journal - U.S.)

By ILONA BILLINGTON, JOE PARKINSON and NICHOLAS WINNING

Sales volumes at U.K. retailers jumped unexpectedly to their highest level since January 2008 in April, fueled by record sales of groceries and strong sales of footwear and leather goods, the Confederation of British Industry said Tuesday. The CBI's Distributive Trades Survey reported the retail sales balance rose to +3 in April from -44 in March. The balance is the difference between the percentage of retailers reporting higher sales and those reporting lower sales. (...)

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Swine flu fears may hammer travel industry (USA Today - U.S.)

by Kitty Bean Yancey

For an ailing global travel industry, swine flu couldn't have erupted at a worse time. "It has the potential to paralyze travel," says Roger Dow, president and CEO of the U.S. Travel Association, which represents all segments of the U.S. travel and tourism industry. "Certainly if it gets out of hand," it will be catastrophic. (...)

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The monetary-policy maze (The Economist - U.K.)

The collapse of stable relationships in financial markets has forced central banks to make judgments they once left to the private sector. From lenders of last resort, they became lenders of first resort when banks stopped trusting each other. They are, increasingly, arbiters of which types of borrowers get credit. With the reputation of market discipline in tatters, central bankers will get vast new supervisory powers. All this is dragging central banks back towards political turf from which they had been distancing themselves for years.

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Britain urges World Bank to spend $4bn now to protect poorest countries (The Guardian - U.K.)

The development secretary warned fellow ministers on the Bank's governing development committee that on current projections the Washington-based institution will provide less money to poor countries through its soft loan facility in 2009 than it did in 2008.(...)

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GM offers bondholders equity swap (The Financial Times - U.K.)

by John Reed and Bernard Simon

The US government would end up as a majority shareholder in General Motors under a series of sweeping restructuring measures proposed on Monday by America's largest carmaker. GM said it was seeking to swap about 50 per cent of its emergency loan to the US Treasury, or $10bn, for equity in GM to be held by the US government. (...)

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Swine Flu Outbreak Could Deepen Mexico's Recession ( Washington Post - U.S. )

By Anthony Faiola

Amid serious concerns that the swine flu outbreak could worsen an already-deep recession in Mexico, the World Bank yesterday moved to provide that nation with millions in emergency aid and set up a special fund for longer-term assistance.(...)

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(The Guardian - U.K.)

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Power to the Hedge Funds! (Newsweek - U.S.)

Long demonized, they may be the model firms of the future. Hedge funds are evil. We all know that without being told. They're secretive clubs of filthy-rich guys whose only goal is to make each other richer so they can buy overpriced art and palatial estates in the Hamptons. We also know that as the bubble began to overheat in the last few years, our government authorities were most worried about the damage that those unregulated, mysterious hedge funds might do to the financial system. (...)

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Crisis pushes up urban jobless rate (China Daily - China)

China's urban registered unemployment rate hit 4.3 percent, a 0.1 percentage-point increase in the first quarter, the Ministry of Human Resources and Social Security said on Thursday.

It's the second straight quarter of increases. The rate jumped to 4.2 from 4 percent in the fourth quarter last year, the first increase in five years. (...)

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New trade and reserve numbers from China (China Financial Market - The Net)

Exports in March dropped a less-than-expected 17.1% from the same time last year - below expectations of 20% and the 21.1% drop for the first two months of 2009. Most of the articles I read in the Chinese and foreign press including, not surprisingly, comments from the customs bureau, hailed this as a sign that the export slump is bottoming out. (...)

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Credit Suisse, Barclays 
Join Earnings Revival (Wall Street Journal - U.S.)

Credit Suisse's results and Barclays' upbeat outlook provided fresh evidence of a bank-industry recovery. (...)

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South Korea's Economy Expands Slightly, Surprising Analysts (The New York Times - U.S.)

The South Korean economy grew 0.1 from the previous three months, supporting hopes that the economy may at least be bottoming out as stimulus measures take hold. South Korea narrowly avoided slipping into recession and the country's corporate giant, Samsung Electronics, reported better results than expected for the first quarter -- news that provided some relief to an economy that continues to be battered by crumbling exports. Data for the first quarter, released Friday, showed that the South Korean economy grew 0.1 percent from the previous three months, rebounding from a 5.1 percent slump during the previous quarter and surprising many analysts who had expected a slight contraction.(...)

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Central Bank Cuts Refinancing Rate 1/2 Point (The Moscow Times - Russia)

The Central Bank announced Thursday that it would cut its key refinancing rate to 12.5 percent from 13 percent as the government grows more confident that it has brought inflation and the volatile ruble under control.(...)

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Darling stands firm on 'extraordinary' Budget (The Times - U.K.)

Alistair Darling denied today that he had been overoptimistic to predict in his Budget that the British economy would pull out of recession by the end of the year.

Mr Darling has been flatly contradicted by the International Monetary Fund (IMF) and faced a barrage of criticism from financial analysts, business leaders and other political parties since revealing his growth predictions for the UK economy.

The Chancellor said yesterday that GDP would shrink by 3.5 per cent this year -- the worst contraction since 1946 -- but would grow by 1.25 per cent during 2010.

The prediction enabled him to make calculations about public spending that will prove unsustainable if the economy perfoms worse than he forecasts.

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Credit Suisse returns to profit (BBC - U.K.)

Credit Suisse has returned to quarterly profit following a strong recovery by its investment banking division.

For the first three months of 2009, the lender made a net profit of 2bn Swiss francs ($1.7bn; £1.2bn). (...)

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Falling Power Generation in April= China's Economy Still in the Woods (China Stakes - China)

Power generation and consumption is a leading economic indicator, a wind vane for future economic trends. A February bounce in power generation that continued in the first half of March was welcomed by economic policy makers, not least Premier Wen Jiabao, as a sign of recovery. It was, perhaps, a false hope as power generation again declined in late March. China Electricity Regulatory Commission officials predict a 4% decline in power generation in April. (...)

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Eurozone economic prospects look up (Financial Times - U.K.)

A surprisingly sharp drop in the pace of the eurozone's economic contraction has boosted hopes that the worst of its recession will soon be over.

A record rebound in April's purchasing managers' indices for the 16-country region provided the most substantial evidence yet that economic fortunes are improving. But they remained consistent with gross domestic product falling and also showed unemployment rising at a record pace.(...)

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Oil Prices Resist the World's Recession Trend (New York Times - U.S.)

In recent months, oil prices plunged as consumers curtailed fuel use around the world, with some analysts predicting that the dire economic situation would cause oil to fall to $20 a barrel or less.

But in a twist, oil prices have stabilized at close to $50 a barrel. While prices may have fallen by two-thirds since their peak last summer, oil remains expensive by historical standards.

The resilience shown by the oil markets is not because of any improvement in the global economy or rise in oil consumption. Global demand remains on course for its steepest drop since the early 1980s, and oil inventories are at their highest levels in 19 years. (...)

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For Housing Crisis, the End Probably Isn't Near (The New York Times - U.S.)

The closest thing to a real estate crystal ball in the last few years has been the house auctions that are regularly held around the country.

In 2006 and early 2007, the official housing statistics were still showing that house prices were holding up. But that was largely because so many sellers were refusing to sell. The auctions, made up mostly of foreclosed homes, showed the truth: house values were starting to plummet in many places.

So a few weeks ago, I decided to go to an auction at a hotel ballroom in Washington -- and to study the results of several others elsewhere -- with an eye to figuring out whether prices may now be close to bottoming out.

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When Will Housing Construction Resume? (Economix - The Net)

A housing bust got this recession started, so it is important to know when housing construction will resume at a normal pace. However, important determinants of housing demand have moved in opposite directions, so a housing recovery could be as close as this summer, or as far as 2011. The release later today of the House Price Index from the Federal Housing Finance Agency will provide insight into the relative likelihood of these scenarios.(...)

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Budget 2009: Alistair Darling targets rich with 50% tax (The Guardian - U.K.)

Alistair Darling today pledged to reinvigorate Britain's ailing economy with a £1.7bn job-creation scheme and a new 50p income tax band for the highest paid.

With the British economy set to shrink by 3.5% this year - its worst performance since the second world war - the chancellor attempted to draw clear dividing lines between Labour and the Conservatives by raising income tax to 50% for those earning more than £150,000.

The 50p tax rate replaces the planned 45p new top rate announced in November's pre-budget report and will kick in April 2010, a year earlier than planned. The new rate will only apply to the 2% earning over £150,000 a year, who will also see tax relief on their pension contributions curbed.

Admitting there were "no quick fixes" or "overnight solutions", Darling argued that it was right that those who earned the most should pay more.(...)

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IMF Says Global Recession Will Be Deeper, Recovery Slower (Bloomberg - U.S.)

The International Monetary Fund said the global recession will be deeper and the recovery slower than previously thought as financial markets take longer to stabilize.

The Washington-based IMF said in a new forecast released today that the world economy will shrink 1.3 percent this year, compared with its January projection of 0.5 percent growth. The lender predicted expansion of 1.9 percent next year instead of its earlier 3 percent projection.
The fund's latest outlook highlights the precarious state in which the world economy remains, even amid signs the worst slump since World War II may be easing. Recovery isn't assured and will depend on policy efforts to cleanse banks' balance sheets and craft measures that spur demand, the IMF said.(...)

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IMF sees long and severe slowdown (BBC - U.K.)

Slowdowns linked with financial crises tend to be severe, while synchronised slowdowns last longer, it said. The current global crisis has also been strongly felt in emerging economies, it said in its World Economic Outlook. The global links between financial sectors have intensified the speed the downturn has spread across the world. (...)

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IMF: Banks Need $875 Billion in Equity (The Wall Street Journal - U.S.)

By BOB DAVIS and DAVID ENRICH

U.S. and European banks need to raise $875 billion in equity by next year to recapitalize banks to a level similar to the pre-crisis years -- and twice that amount to match the level of the mid-1990s, the International Monetary Fund estimated. The steep funding requirements reflect a financial crisis that the IMF said continues to deepen along with the global recession. The banking sector's woes have spread from the housing sector to commercial real estate loans and emerging-market debt. Overall, the IMF estimates that the U.S., European and Japanese financial sectors face losses of about $4.1 trillion between 2007 and 2010. Of that amount, banks are confronting $2.5 trillion in losses, insurers $300 billion and other financial institutions $1.3 trillion. (...)

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Meltdown losses of '$4 trillion' (BBC - U.K.)

By Steve Schifferes

It says that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery. It says that banks may need $1.7 trillion in additional capital. But it warns that political support for further bank bail-outs is waning. One year ago, the IMF estimated that total losses from the credit crunch would be $1 trillion, which has been exceeded, showing how rapidly the financial meltdown has escalated. (...)

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Chinese Consumers Buck Trend by Spending More (The Wall Street Journal - U.S.)

By Mei Fong and Norihiko Shirouzu

Prime Minister Wen Jiabao said Beijing's stimulus measures are helping consumer spending and growth, and while he warned of some "prolonged difficulties" as the financial crisis spreads, foreign auto makers and other manufacturers already are seeing an unexpected rebound in sales in China. (...)

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Buckle down (The Economist - U.K.)

Is the worst over for the world economy? In recent weeks financial markets have latched on to the "green-shoots" thesis, rising smartly as an array of statistics turned out to be less dire than expected. Policymakers, too, have begun to sound less pessimistic. On April 14th both America's president, Barack Obama, and its central-bank boss, Ben Bernanke, pointed to signs of progress in stabilising the world's biggest economy. (...)

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$60 billion and counting: Carry trade-related losses and their effect on CDS spreads in Central and Eastern Europe (VoxEu - The Net)

By Raphael Auer and Simon Wehrmüller

Western bank exposures in Eastern Europe are an issue that is increasingly in policymakers' sights. This column estimates the losses arising to the non-bank sector and government from foreign currency-denominated debt in Central and Eastern Europe. It also estimates the effect that these losses have had on the market-implied assessment of sovereign default risk. Both losses are reflected in wider CDS spreads, but government losses have a bigger impact.. (...)

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Gordon Brown: Britain is overcoming economic difficulties (The Guardian - U.K.)

By Andrew Sparrow, Patrick Wintour and Ashley Seager

Gordon Brown today said Britain was "overcoming" the problems caused by the recession as it emerged that spending cuts worth £15bn are likely to be announced in the budget on Wednesday. The prime minister delivered his upbeat message as he published a strategy intended to help firms take advantage of economic opportunities in the future. (...)

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Nokia falls to first ever quarterly loss as handset makers suffer (The Independent - U.K.)

By Nick Clark

The crisis engulfing mobile phone handset makers was underlined yesterday as Nokia, the world's largest phone producer, slumped to its first ever quarterly pre-tax loss. Nokia was forced last month to announce a €700m (£618m) cost-cutting programme, which includes axing 1,700 employees, as customer demand has plummeted. The market is bracing itself for more bad news today as Sony Ericsson announces its results, just weeks after issuing a profits warning. (...)

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Google records first quarterly dip in sales (The Telegraph - U.K.)

By James Quinn

Chief executive Eric Schmidt admitted the search engine operator was "basically in an uncharted territory" after reporting a 3pc fall in sales in the three months to March from the previous quarter. Mr Schmidt admitted that Google users were still searching but they were buying less and the economic environment remained tough. Shares in Google fell 1pc in after-hours trading. Sales in the UK fell 9pc in the period as Google said the its Europe, Middle East and Africa division was seeing some of the slowdown first seen in the US. (...)

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Toshiba announces net loss and 3,900 more job cuts (France24 - France)

Japanese high-tech giant Toshiba Corp. will cut a further 3,900 temporary jobs by next March to cope with the global economic downturn, a company official said Friday. The group will not renew the contracts of the employees, most of whom are temporary workers, executive vice president Fumio Muraoka told reporters. Toshiba, which has already laid off 4,500 temporary workers, warned earlier in the day it expects a net loss of 350 billion yen (3.5 billion dollars) for the financial year that ended last month, even more than previously forecast.. (...)

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China slows again as IMF warns against optimism (The Independent - U.K.)

By David Prosser

China's economy slowed dramatically for the second quarter running during the first three months of the year, official statistics revealed yesterday, though analysts said they were beginning to see the first tentative signs of a recovery. China's annual rate of economic growth slowed from 6.8 per cent previously to 6.1 per cent in the first quarter of 2009, the weakest figure seen since the National Bureau of Statistics first began releasing quarterly data in 1992. (...)

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IMF Sees Slow, Weak Global Recovery Even With Strong Response (Real Time Economics - The Net)

The global nature of the current economic crisis and its origins in finance man that the recovery likely will be weak and drawn out despite the aggressive response from government policy, the International Monetary Fund said Thursday.

The worst slump since the Great Depression presents a unique challenge in that it combines a financial blowup in the world's largest economy with a global downturn, the IMF said in a chapter in its World Economic Outlook. The fund reiterated the need for coordinated and forceful monetary, fiscal and especially financial actions.

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JPMorgan Profit Beats Estimates on Fixed-Income Revenue Surge (Bloomberg - U.S.)

JPMorgan Chase & Co., the second- largest U.S. bank by assets, reported profit that beat analysts' estimates as fixed-income trading revenue rose to a record. Bad loan provisions climbed as more consumers defaulted on debt.

First-quarter earnings fell 10 percent to $2.14 billion, or 40 cents a share, compared with $2.37 billion, or 68 cents, a year earlier, the New York-based bank said today in a statement. Per-share profit was expected to be 32 cents, according to the average estimate of 18 analysts surveyed by Bloomberg.

JPMorgan's market value has almost doubled in the past month on speculation the bank's profit slide would slow. Chief Executive Officer Jamie Dimon, 53, helped spark the rally when he said the company was profitable in January and February. Still, the bank boosted reserves for credit losses in the first quarter, and Dimon said today the company may have to increase them further.
(...)

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Plan to boost electric car sales (BBC - U.K.)

Motorists will be offered subsidies of up to £5,000 to encourage them to buy electric or plug-in hybrid cars under plans announced by the government.

It is part of the government's £250m plan to promote low carbon transport over the next five years. But ministers do not expect eligible cars to hit the showrooms until 2011.

The car industry welcomed the plan, but critics said the government needed to invest more in places to recharge the vehicles and in public transport.

The strategy includes plans to provide £20m for charging points and other necessary infrastructure. At present they are very limited. (...)

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Tech Sector: A Battle-Scarred Edge (Businessweek - U.S.)

The recent thriftiness and insistence on lean inventories could keep tech companies well-positioned when the economy starts to heal
By Peter Burrows

After bearing the brunt of the economic downturn at the beginning of this decade, the technology sector looks as if it may be among the best positioned to benefit when the global economy recovers from the current recession. Of course, that's partly because it's not tech's bubble that burst this time. Real estate and finance have that distinction. Yet tech companies also appear to have learned tough lessons from the Internet bust that have helped them manage through the latest slump. Many cut costs and made other hard choices early on, and now look poised to profit if corporate and consumer demand begin to climb. "Have we learned from previous mistakes? Absolutely," says Niklas Savander, executive vice-president at phone giant Nokia (NOK). "Not everyone has managed perfectly, but I would say the tech industry has managed it better than others." (...)

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US inflation goes negative for first time in 54 years (The Times - U.K.)

Overall prices in the US economy registered their first year-on-year fall for more than half a century today, fuelling fears that the American economic slump could tip the world's biggest economy into a destructive bout of Japanese-style deflation.

US consumer prices fell by 0.1 per cent last month, leaving them down by 0.4 per cent compared with their level a year before, as plummeting consumer demand in America and worldwide drove steep falls in the cost of food and energy. It was the first time that US headline inflation has recorded a negative annual rate since 1955.

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Developers Struggle to Fill Manhattan Office Space (The New York Times - U.S.)

A striking 40-story tower under construction on Eighth Avenue between 41st and 42nd Streets in Midtown Manhattan has a number of things going for it, including floor-to-ceiling windows, still relatively rare for an office building; six terraces; a thick concrete core that reduces the need for view-obstructing columns; and many of the latest advances in energy-efficient technology.

But less than one year before it is due to be completed, there is one major thing that the 1.1-million-square-foot tower, known as 11 Times Square, is lacking: tenants.(...)

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FDI warms up as spending kicks in (China Daily - China)

Foreign investment activities dampened by the world financial crisis seemed to show signs of warming up in China as the decline of foreign direct investment (FDI) continued to slow in March. Statistics released by the Ministry of Commerce (MOC) on Wednesday showed the FDI dropped for the sixth consecutive month in March to US$8.4 billion, down 9.5 percent from a year earlier.(...)

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Swiss bank UBS to cut 8,700 jobs (BBC - U.K.)

Switzerland's biggest bank, UBS, has said it will seek to cut costs by shedding 8,700 jobs by next year.

The news came as the bank announced it had lost about 2bn Swiss francs ($1.75bn; £1.2bn) in the first three months of 2009.

UBS has been one of the biggest banks hit by exposure to the sub-prime loans crisis in the US and ensuing turmoil.

"Unfortunately I am not able, as yet, to offer you any good news," said chief executive Oswald Gruebel. (...)

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UK banks buoyed by Goldman's better-than-expected profits (The Guardian - U.K.)

Shares in UK banks rallied today, after better-than-expected profits at Goldman Sachs and its plans to pay back emergency bailout money boosted hopes that the worst of the financial crisis could be over. Barclays was the second-biggest riser on the FTSE 100 index, jumping 24.25p to 201.75p, an increase of nearly 14%. That took the shares to their highest level since last October.

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The EU as a Whole Must Feel Responsible (Der Spiegel - Germany)

Austrian Chancellor Werner Faymann, 48, discusses the impact of the economic crisis on his country, whose financial sector is deeply exposed to high-risk loans in Eastern Europe. He says the foreign media has been unfair and that hard facts "paint a very positive picture."

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Weak Retail and Price Data Dim Hopes of Quick Recovery (The New York Times - U.S.)

Two months of tentative gains in retail sales slid backward in March, the government reported on Tuesday, signaling more weakness in demand as worried consumers continue to tighten their budgets. The 1.1 percent monthly drop in retail sales displayed the fragility of some recent "glimmers of hope" in the economy cited by President Obama and other policy makers as they press the administration's economic agenda.

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Can U.S. Jewish organizations survive the economic crisis? (Haaretz - Israel)

The economic crisis didn't spare the Jewish federations in the United States. Across the country, they are trimming their budgets and firing parts of the staff; introducing emergency programs to meet the growing demand for social services, coping with the uncertainty of what lies ahead and hoping it will all be over before the situation demands more serious sacrifices.

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Stocks: Is the Rally on Sound Footing? (Businessweek - U.S.)

Almost everyone has been surprised by the stock market's month-long run. But keeping the momentum going could be tricky

By Ben Steverman

Recession? Financial crisis? Never mind. The stock market just finished an extraordinary month, a big surprise for even the most optimistic observers.

Stocks, measured by the broad Standard & Poor's 500-stock index, hit a low for the current bear market on Mar. 9. A month later, by the close on Apr. 9, the S&P 500 was 26.6% higher.

If this March-April advance were a calendar month, it would be the best month for the S&P 500 since 1933.

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China pledges 'ample liquidity' to sustain economic growth (The Independent - U.K.)

China's central bank yesterday reaffirmed its commitment to ensuring sufficient liquidity to sustain economic growth, dousing speculation that it may tighten the availability of credit after new loans soared to record highs in March.

The statement from People's Bank of China came as the country's prime minister, Wen Jiabao, said the Chinese economy is showing signs of recovery from the global financial crisis.

The Chinese central bank said it will "implement moderately loose monetary policy and maintain the continuity and stability of policy". It also said it would provide "ample liquidity" to "ensure money supply and loan growth meet economic development needs," on its website yesterday.(...)

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Japan PM unveils $150bn stimulus (BBC - U.K.)

Japan has formally unveiled its record $150bn (£105bn) stimulus package as it seeks to revive its flagging economy.

Prime Minister Taro Aso said the plan - worth about 3% of its gross domestic product - aimed to protect livelihoods and to foster future growth.

The 15.4 trillion yen package includes measures to boost fuel-efficient vehicles and consumer electronics.

Japan's economy has been battered by a collapse in exports and is facing its deepest recession since World War II.

Japan's ruling coalition plans to put the stimulus package before parliament by the end of the month.

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Is China's Economy Strong Enough To Save the World? (TIME - U.S.)

Some China-watchers see a light at the end of the tunnel for the country's faltering economy. These optimists note that there are mounting signs that the government's stimulus efforts -- and in particular the flood of credit unleashed by the Central Bank last November -- are beginning to have an impact.

Hopeful signs have indeed appeared. Retail sales are still growing at a robust 16% annual rate. The Purchasing Managers Index, an indicator of the health of the manufacturing sector, rebounded into positive territory in March after falling for months, indicating that industrial output may be expanding again. Home sales are also showing signs of recovery, as is lending. Even the stock market, which had plunged by some two thirds from its peak in 2007, has clawed back 25% in the last few months.(...)

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Fed Said to Order Banks to Stay Mum on 'Stress Test' Results (Bloomberg - U.S.)

The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of "stress tests" that will gauge their ability to weather the recession, people familiar with the matter said.

The Fed wants to ensure that the report cards don't leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government's plan to release the results in an orderly fashion later this month.

"If you allow banks to talk about it, people are just going to assume that the ones that don't comment about it failed," said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia. (...)

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Brazil to Loan Money to the IMF (Latin American Herald Tribune - Venezuela)

President Luiz Inacio Lula da Silva announced that Brazil -- which has borrowed money from the IMF in the past -- will now loan money to the International Monetary Fund (IMF) to fulfill the commitment it made at last week's G-20 summit in London, where it was decided to beef up the IMF's coffers with $1 trillion to confront the global crisis.(...)

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Japan's leader unveils ambitious growth plan (Daily Youmiri - Japan)

Japanese Prime Minister Taro Aso unveiled an ambitious long-term growth strategy Thursday, vowing to refashion the world's second-largest economy and create millions of jobs, with the first step a massive new stimulus package. Aso aims to boost domestic demand by at least 40 trillion yen ($400 billion) within three years and add between 1.4 million and 2 million new jobs. By 2020, he wants to lift gross domestic product by 120 trillion yen ($1.2 trillion) and create 4 million jobs. (...)

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Yuan trade settlement to start in five Chinese cities (China Daily - China)

Five major trading cities have got the nod from the central government to use the yuan in overseas trade settlement - seen as one more step in China's recent moves to expand the use of its currency globally. Shanghai and four cities in the Pearl River Delta - Guangzhou, Shenzhen, Dongguan and Zhuhai - have been designated for the purpose, said a State Council meeting chaired by Premier Wen Jiabao yesterday. The Pearl River Delta boasts the country's largest cluster of export-oriented manufacturing operations. (...)

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Bad economy helps cut CO2 emissions (USA Today - U.S.)

The worldwide economic slowdown is having an unexpected positive impact in the fight against global warming: Emissions of carbon dioxide are falling, records collected by governments show. From the United States to Europe to China, the global economic crisis has forced offices to close and factories to cut back. That means less use of fossil fuels such as coal to make energy. Fossil-fuel burning, which creates carbon dioxide, is the primary human contributor to global warming. (...)

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Ireland Sets Up Its 'Bad Bank' Agency (Wall Street Journal - U.S.)

Ireland will take commercial-property assets off the books of six of its biggest lenders and house them in a new state agency, a plan it hopes will restore international confidence in the nation's financial system.

If necessary, the state will take majority stakes in Ireland's two main banks. (...)

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We're Close to Hitting Bottom (The Moscow Times - Russia)

Last week, the World Bank again lowered its expectations for Russia's economic performance in 2009. Its prognosis is that the country's gross domestic product will fall by 4.5 percent this year. Meanwhile, the Organization for Economic Cooperation and Development expects a 5.6 percent drop over the same period. (...)

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Jobless rate hits seven-year high (The Globe and Mail - Canada)

The recession ravaged the Canadian job market again in March, eliminating 61,300 jobs - all full time - and pushing the unemployment rate up to 8 per cent, the highest in seven years.

The job cuts hit all parts of the country, and a wide array of industries, from manufacturing and construction to finance, real estate and insurance.
The recession has eliminated 357,000 jobs so far in Canada, a drop of 2.1 per cent in the number of positions since October. That's the biggest five-month plunge since the deep 1982 recession. (...)

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A Risky Bankruptcy Looms for GM (Business Week - U.S.)

Washington dreams of a quick resolution in court, but GM hastens to cut a deal with the UAW and bondholders to avert a drawn-out process

The chance that General Motors (GM) ends up in bankruptcy to fix its problems appears more likely, people close to the company's plans said on Apr. 7. GM would like to avoid going to bankruptcy court, but the company is making preparations to file for protection. One of its biggest tasks before any filing is cutting a new deal with the United Auto Workers on health-care liabilities, these people say.

For months, GM and its legal advisers have examined a quick bankruptcy in which the auto giant enters court and splits into two companies--a ";good GM" with Cadillac, Chevrolet, Buick, and GMC--and a "bad GM" that has Hummer, Saturn, some shuttered factories, and a load of debt. The good GM would emerge quickly, sources say, while bondholders would be left to collect some portion of their collective $28 billion in debt from the assets in the bad GM. (...)

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Debt Bomb Is Ticking Loudly on Campuses (Chronicle of Higher Education - U.S.)

After borrowing billions, colleges rush to avert financial fallout

The end of the fiscal year usually isn't a momentous occasion for colleges. But this June 30 could be a day of reckoning many never expected.

Colleges borrowed tens of billions of dollars over the past decade to improve facilities, in some cases stretching themselves to the limit and beyond. Now the financial crisis threatens to turn that debt into a ticking bomb.

The complex problem arises from a simple scenario: The debt load for many colleges has gone up, but the value of their assets has plunged. On top of that, some of the debt that they structured to protect themselves from rising interest rates has now become a financial liability.(...)

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Mid-year rebound forecast (China Daily - China)

The government's $586-billion stimulus package may be strong enough to drive the economy to an early rebound in the middle of this year, the World Bank said Tuesday, adding a caveat that a full recovery ultimately depends on developments in the advanced economies.

"Fueled largely by the huge economic stimulus package, a recovery in China is likely to begin this year and take full hold in 2010, contributing to the region's stabilization," the bank said in its latest semi-annual report on the economic health of East Asia and the Pacific region.

"A wide range of economic indicators in China are improving," indicating that a recovery is underway, said Vikram Nehru, the World Bank's chief economist for the East Asia and Pacific region.(...)

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German car scrap scheme expands (BBC - U.K.)

Germany has tripled the size of its car-scrapping scheme, which rewards trading in old cars for new ones.

The government will raise its budget from 1.5bn to 5bn euros ($6.6bn; £4.5bn), aiming to cover up to two million cars instead of 600,000.

The scheme has been very popular, driving German car sales to their highest level for 10 years last month.

But the news came as parts firm Karmann became Germany's biggest car company to fall victim to the economic crisis. (...)

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UK industrial production suffers worst annual fall since 1968 (The Telegraph - U.K.)

The broad measure, which makes up a fifth of the economy and includes output from manufacturers, miners, utilities, oil and gas, fell 12.5pc in the year ending February, the Office for National Statistics said. It is the biggest drop since records began in 1968 and a sign that GDP - or economic growth - figures for the first quarter are unlikely to be much better than the fourth quarter. (...)

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Record number of bankruptices in March (The Copenhagen Post - Danmark)

More companies than ever before sought protection from their creditors last month. Greater Copenhagen is especially hard hit The number of companies filing for bankruptcy is steadily increasing and hit a record high in March. New figures show that 528 businesses went bankrupt in March compared with 516 in February. (...)

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RBS and Union in Talks Over Job Cuts (The Wall Street Journal - U.S.)

By RAGNHILD KJETLAND

Royal Bank of Scotland Group PLC said Tuesday it is in talks with employee representatives about a plan that could lead to 9,000 job cuts. The announcement came after RBS earlier said nongovernment shareholders subscribed to only 0.7% of shares issued in an open offer to raise £5.37 billion ($7.92 billion), leaving the government to buy the rest and lifting the state's stake in the bank to 70.3% from 57.9%. (...)

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OECD removes tax havens from list (BBC - U.K.)

The Organisation for Economic Co-operation and Development (OECD) has removed all four countries from its blacklist of tax havens. The blacklist published last week included Costa Rica, Malaysia, the Philippines and Uruguay. OECD chief Angel Gurria said in Paris that all four countries had now agreed to adopt its regulations. (...)

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G20 refuses to consider new global currency (Eurasian Home - Russia)

The main result of the G20 summit in London was the decision to inject $5 trillion into the global economy. Of that sum, $1 trillion will be provided to the IMF for assistance to nations most affected by the global financial downturn.

This means that the United States' stance gained the upper hand and the summit did not even consider Russia's proposal of a new global currency to replace the dollar.(...)

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U.S. economy sheds 663,000 jobs (Reuters - U.S.)

U.S. employers slashed 663,000 jobs in March, lifting the unemployment rate to 8.5 percent, the highest since 1983, official data showed on Friday in a report underscoring the growing distress in the labor market. The Labor Department also revised January data to show job losses of 741,000 that month, the biggest decline since October 1949, as the economy battles a recession that has entered its 16th month.(...)

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The Full Picture: Broader Unemployment Hits 15.6% (The Wall Street Journal - U.S.)

Americans are giving up on their job searches at a faster pace. The nation's official unemployment rate jumped to 8.5% in March from 8.1%, putting U.S. joblessness at its highest since November 1983. But the Labor Department's most comprehensive gauge of unemployment surpassed even its early 1980s levels. The government's broader measure, known as the "U-6″ for its data classification, hit 15.6% in March -- a big leap from 14.8% in February.(...)

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The List: Globalized Motors (Foreign Policy - U.S.)

As sagging demand in the United States and Western Europe has pushed General Motors close to bankruptcy, the auto behemoth has actually been expanding in emerging markets and building new factories.(...)

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Marchionne Flies to US as Fiat and Chrysler Reach Agreement (Il Corriere della Sera - Italy)

Italian-made eco-technology clinches deal. Six billion dollars in aid. Fiat CEO thanks Obama, promises to pay US taxpayers back.(...)

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Housing: Signs of Life (Business Week - U.S.)

Housing sales are picking up in some of the hardest-hit markets. Will confidence spread?

Last year the Cape Coral area of Florida had the highest foreclosure rate in the country. Banks moved to seize more than 1 in 10 residential properties in the Gulf Coast community of 165,000. The reverberations are still being felt. Newly built McMansions sit vacant, dusty monuments to the great real estate boom. Smaller homes have been ransacked. Apartment buildings have been boarded up. Former owners are stripping whatever items they can from their homes before the locks get changed, says Kirsten Prizzi, a local real estate agent at AC Global Realty. "Knobs, appliances. Someone was selling windows."(...)

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G20 leaders seal $1.1tn global deal (BBC - U.K.)

Leaders of the world's largest economies have reached an agreement to tackle the global financial crisis with measures worth $1 trillion (£681bn).

To help countries with troubled economies, the International Monetary Fund (IMF) will get extra resources worth up to $750bn. (...)

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The Obama effect (Economist - U.K.)

The disarming charm of Barack Obama at the G20 in London

BARACK OBAMA had difficulty pronouncing the name of his Russian counterpart, Dmitry Medvedev, but people forgave him. In fact, they forgave him for almost everything: his aura seemed to glow ever brighter as he made his first foray into global, crisis-busting diplomacy.

A general willingness to give Mr Obama the benefit of the doubt was palpable even among the exuberant anti-capitalist demonstrators jamming the streets of London's financial district--a minority of whom turned violent and clashed with police as they attacked a branch of the Royal Bank of Scotland. "He's got good morals," conceded a graffiti artist called Monkey, while helping his friend scale a traffic light and drape a banner: it depicted a grim reaper clutching fistfuls of banknotes.(...)

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G20 leaders agree to fight protectionism, begin plenary session (China Daily - China)

LONDON -- Leaders from the Group of 20 (G-20) have agreed to fight protectionism as they started their first plenary session after a working breakfast here on Thursday to search for a global solution to the economic and financial crisis.

In a brief opening statement, British Prime Minister Gordon Brown outlined a working plan for the discussion, calling on leaders to finalize the joint communique which covers banking regulations.
Brown said the world leaders attending summit are anxious to reach agreements on major points, including a joint call to resist protectionism, and to strengthen financial regulation.(...)

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Auto Sales for March Offer Hope (New York Times - U.S.)

DETROIT -- New-vehicle sales fell in March for a 17th consecutive month, but carmakers said that proposed federal incentives and reports from dealers of increased sales in the last week of the month could mean the market was bottoming out. Sales were generally better than analysts expected, even for General Motors and Chrysler, which are fighting to avoid bankruptcy with the help of billions of dollars in government loans.(...)

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The Economist Group expands (The Economist - U.K.)

AS PART of a strategy designed to broaden the revenue base, leverage content over new platforms and promote The Economist brand to a young and dynamic audience, The Economist Group is delighted to announce the development of a public-entertainment facility that combines the magic of a theme park with the excitement of macroeconomics. After six months of negotiations with the British government, The Economist Group can confirm that Econoland will be built on a former industrial estate in East London, close to the beating heart of the City and thus to a large potential market of financial-sector employees. (...)

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My Last Free Post (Greg Mankiw - The Net)

Crisis Observer will miss having free access to professor Mankiw's expert opinions

With Harvard having lost so much of its endowment lately, the university has asked me to stop providing this blog free of charge. Going forward, therefore, this blog will be available only to Harvard students and alumni and to others who subscribe via the new Harvard-bloggers program. All revenue from this program will be split between building the new Allston campus and providing students hot fudge sundaes on alternate Thursdays and every day during exam periods.(...)

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"Alan Greenspan: I screwed up!" (Models & Agents - The Net)

In his bluntest admission to date of his role in inciting the financial crisis, former Fed Chairman Alan Greenspan has decided to come out clean:

"I screwed up!"

Greenspan, 83, was speaking at a press conference in Basel, Switzerland, at the fringe of the Global Symposium on Rebuilding the Pillars of Self-Regulation, which he intended to boycott.
(...)

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Brown and Obama deny G20 splits as protesters scuffle with police (The Times - U.K.)

Anti-capitalist protesters scuffled with police outside the Bank of England today as Gordon Brown received a series of world leaders in Downing Street to prepare for tomorrow's G20 summit.

First up was Barack Obama, making his first trip outside North America since his inauguration, The US President and his wife, Michelle, received a rare round of applause from staff at No 10 as they arrived for a breakfast meeting this morning.

Mr Obama's outsized motorcade was just the first in a series of armoured convoys due to pass through the Downing Street gates. The Prime Minister was also holding talks with President Medvedev of Russia, President Hu of China, the Indian Prime Minister, Manmohan Singh and Taro Aso, Prime Minister of Japan. (...)

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G20 call for action amid protests (BBC - U.K.)

Thousands of protesters are demonstrating in London to coincide with the G20 summit. Riot police have been deployed after windows were smashed at the Royal Bank of Scotland and clashes with uniformed officers outside the Bank of England.

Climate Camp demonstrators have also set up a peaceful camp nearby to protest against global warming.

Eleven people were earlier arrested after being stopped in an armoured personnel carrier with police uniforms.

Police estimate there are currently up to 4,000 demonstrators in the City and say they have 5,000 officers on the capital's streets.

Riot police are heading to Threadneedle Street after windows were smashed at the RBS building, close to the Bank of England(...)

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As Auto Deals Add Up, Will Buyers Bite? (Business Week - U.S.)

A fast-growing package of incentives is slashing the prices of GM, Ford, and Chrysler vehicles. But wary would-be buyers still may not take the bait. Jonathan Ezor wasn't really in the market for a new car until yesterday. When the 42-year-old father of three read about Ford's (F) new 0% financing plan, the offer was enough to make him call a dealer. Ezor, a professor and lawyer in West Hempstead, N.Y., says he and his wife had talked about replacing their 2003 Ford Windstar minivan, which is showing its age despite having only 40,000 miles, but "it didn't seem to make economic sense." With interest-free financing, however, he puts the odds of them buying a new Taurus X in the next two months at 50-50. (...)

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Hu calls for joint efforts to tackle financial crisis (China Daily - China)

BEIJING -- Chinese President Hu Jintao left Beijing Wednesday morning to attend the G20 summit in London scheduled for April 1 to 2.

Before meeting the leaders of other nations, Hu has called for strengthened coordination among different nations on economic polices and joint efforts against trade and investment protectionism to help the world economy recover.

The international community as a whole was severely challenged in the course of tackling the global financial crisis and resuming growth in the world economy, Hu told Xinhua on Tuesday ahead of the summit.(...)

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France is threatening G20 walkout (BBC News - U.K.)

France will walk away from this week's G20 summit if its demands for stricter financial regulation are not met, the finance minister has told the BBC. Christine Lagarde told Hardtalk that President Nicolas Sarkozy would not sign any agreement if he felt "the deliverables are not there". (...)

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France curbs bonuses at bailed-out firms (The Sydney Morning Herald - Australia)

Leaders of the world's 20 leading and emerging economies meeting in London this week are set to reiterate a pledge to avoid protectionism and complete stalled global trade talks but offer little to those calling for more economic stimulus. (...)

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Merkel offers state aid for Opel (BBC News - U.K.)

German Chancellor Angela Merkel has given assurances that any investor in General Motors (GM) subsidiary Opel will have state support. Ms Merkel was speaking at Opel's headquarters the day after President Obama said the US government would not bankroll the troubled US carmaker. She said: "We must lay the foundation for the creation of a European Opel." (...)

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U.S. Threatens Bankruptcy for GM, Chrysler (The Wall Street Journal - U.S.)

The Obama administration, wading deeply into the U.S. auto industry, is weighing a fix for General Motors Corp. and Chrysler LLC that would divide their "good" and "bad" assets and send the auto makers into bankruptcy to purge their biggest problems. The potential move would transform two companies that have helped define U.S. industrial power over the past century. Following the ouster of GM Chief Executive Rick Wagoner, it would represent one of the biggest-ever government incursions into private enterprise. (...)

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Developing Nations Set to Get More Say (The Washington Post - U.S.)

By Anthony Faiola and Mary Jordan

At this week's summit of world leaders, the big winner will be the developing world, with the United States, Europe and Japan offering China, India, Brazil and other emerging nations unprecedented new influence in global financial decisions. At the meeting Thursday of the Group of 20 industrialized and developing nations, heads of state including President Obama are expected to back the addition of 10 developing countries to a key economic council in Switzerland that has long operated as a club of rich nations. This will grant them a platform to help revamp global financial standards and take part in the supervision of the world's 25 largest banks, according to diplomatic sources. (...)

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For G-20, Lofty Goals Have Fallen to Earth (The Wall Street Journal - U.S.)

It was supposed to be the inauguration of a Global New Deal, in the hopes of British Prime Minister Gordon Brown, a comprehensive policy response to the world economic crisis, a root-and-branch effort to reorder the way capitalism itself works. But by the time the much-heralded Group of 20 meeting of heads of government ends Thursday, it may be difficult to spot a new world order. (...)

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G20 communiqué steers clear of protectionism ( Financial Times - U.K.)

Leaders of the world's 20 leading and emerging economies meeting in London this week are set to reiterate a pledge to avoid protectionism and complete stalled global trade talks but offer little to those calling for more economic stimulus. (...)

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Obama calls for G20 'unity' ( Financial Timesl - U.K.)

President Barack Obama is voicing optimism that this week's crucial G20 summit will set the framework for recovery, saying that world leaders know they must "deliver a strong message of unity" for the sake of the global economy. Speaking to the Financial Times on the eve of what some believe will be the most fateful economic summit in decades - but which others dismiss as a talking shop that will do little to halt further global contraction - Mr Obama played down talk of a split between the US and the leading continental European economies, notably Germany and France. (...)

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U.S. Lays Down Terms for Auto Bailout (The New York Times - U.S.)

The decision to ask G.M.'s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration's determination to keep a tight rein on the companies it is bailing out -- a level of government involvement in business perhaps not seen since the Great Depression. (...)

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Markets Dive at Opening (The Washington Post - U.S.)

The markets are likely at least partly responding to yesterday's news that the White House has forced GM chief executive Rick Wagoner out of his job as a condition of getting more government bailout aid.(...)

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Obama seeks JP Morgan, Goldman Support on Bank Plan (Bloomberg - U.S.)

Executives from some of the nation's largest banks began arriving at the White House as President Barack Obama seeks support for his plan to stabilize the financial system and move beyond the furor over bailouts and bonuses. (...)

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State aid urged for Russian banks ( The Financial Times - U.K.)

Hundreds of Russian banks are likely to go under by the end of the year as the amount of bad loans surges, potentially hitting as much as 20 per cent of credit portfolios, a senior Russian banker has warned. (...)

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Private Equity Portfolio Shrinks ( The Wall Street Journal - U.S.)

While the losses to AIG are likely to be tiny compared with the billions the company lost elsewhere, the creation of the listed investment vehicle is a sign of how far AIG strayed from its insurance roots in search of growth. It also illustrates how complicated it will be for AIG, now majority-owned by the U.S. government, to unravel the morass of businesses around the world losing money. (...)

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Toyota: Reluctant savior of faltering U.S. carmakers? (Japan Times - Japan)

The futures of GM and Chrysler are not yet clear. Both must submit restructuring plans to prove their viability to the federal government by the end of this month to get more loans. Analysts say Toyota may end up extending some kind of help to GM and Chrysler to avoid the repercussions of their possible failures on U.S. auto sales, parts makers and trade policy. (...)

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Global financial crisis hits world's poorest hardest (The Guardian - U.K.)

People living in the world's poorest communities are eating less frequently and consuming worse food as a result of the global financial crisis, according to a study of the impact of the recession in five developing nations published today.(...)

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Geithner's Gambit (Forbes - U.S.)

Treasury secretary to ask Congress for broad new powers to seize foundering non-bank financial firms.

Thursday morning, Treasury Secretary Timothy Geithner will kick off the Obama administration's effort to overhaul regulation of the financial services industry.

At a hearing before the House of Representatives' Financial Services Committee, Geithner is expected to ask Congress to grant the Treasury Department sweeping authority over a range of financial institutions previously beyond the reach of bank regulators, including insurance companies and hedge funds, and possibly even the finance divisions of major U.S. corporations. (...)

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Gov't to order ban on stock options and bonuses (France24 - France)

Claude Guéant, general secretary to Nicolas Sarkozy, said on France 24 on Thursday that the government would order a ban on stock options and bonuses next week for top executives from bailed out French companies. (...)

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Russia adds to calls for currency reform (Financial Times - U.K.)

Russia wants to convene an international conference at government envoy level to discuss the creation of a new global currency, RIA news agency on Thursday quoted Andrei Denisov, first deputy foreign minister as saying. "This proposal is aimed at a practical realisation of the idea about a new global accounting unit or a new global currency. It is a question which should be discussed to create a consensus," said Mr Denisov, according to the RIA news agency. (...)

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Poor little rich kids (The Economist - U.K.)

As the economy deteriorates, even oligarchs are suffering

Russians are hardly falling over themselves to watch Dmitry Medvedev's weekly televised talks. Muscovites, it seems, would prefer a Hollywood movie. For one thing, Mr Medvedev has little positive to say. Oil prices have stabilised above $40 a barrel and Russia's two main stock indices have rallied a little. But the torrent of grim economic news flows on. Industrial output continues to collapse, unemployment keeps rising, wage arrears are growing fast--and some big companies may be on their deathbeds.
(...)

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GDP contracts at record pace in fourth quarter (The Irish Times - Ireland)

Gross Domestic Product (GDP) fell 2.3 per cent in volume terms last year while Gross National Product (GNP) declined 3.1 per cent, according to new figures from the Central Statistics Office (CSO). (...)

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Economic downturn weighs on SA corporates (Business Day - South Africa)

South Africa's economic downturn is having an increasingly negative impact on the rating profile of the local corporate sector, Fitch Ratings said in a statement today. It added that this could lead to further downward rating pressures across all corporate sectors.However, the agency noted that companies that continued to display stronger cash generation and liquidity were better positioned to cope with the impact of the downturn. "Statistics South Africa released its quarterly financial statistics per sector on March 24, 2009, indicating a significant decrease of business activity in the majority of industries within the South African economy," Fitch said. (...)

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Italian Bank to Seek State Funds (Wall Street Journal - U.S.)

Monte dei Paschi, one of the world's oldest financial institutions, is expected to ask the Italian government for financial help. (...)

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How Some Places Fare Better in Hard Times (Economix - The Net)

The whole world seems to have been touched by the current recession, but that doesn't mean that it has touched every place equally.

Last week, the Bureau of Labor Statistics released data on January unemployment rates across metropolitan areas, and the heterogeneity across space is staggering. Some places, like Ames, Iowa, or Lafayette, La., have unemployment rates that are less than 4 percent. At the other end of the spectrum, El Centro, Calif., has an unemployment rate of 24.2 percent and the rate in Flint, Mich., is over 14 percent.(...)

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Toxic-Asset Plan: Tricky Times Ahead (Business Week - U.S.)

The Treasury's program to cleanse bank balance sheets may be hampered by banks' unwillingness to pony up bad loans--and investors' fears of political risk Treasury Secretary Timothy Geithner's long-awaited public-private investment program, announced on Mar. 23, has fueled hopes that it will solve one of the most nettlesome problems of the financial crisis: reasonably pricing illiquid assets and getting them off banks' balance sheets once and for all.

But the plan may not be the slam-dunk hoped for by the market. The only clear beneficiaries at this point appear to be the handful of asset managers to be picked by the government to oversee the sale of the toxic "legacy" securities that have dogged U.S. banks since the start of the housing downturn.(...)

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Czech currency falls on vote against PM (Financial Times - U.K.)

The Czech koruna lost ground on Wednesday after the country's government collapsed after losing a vote of confidence over its handling of the economic crisis.

Tuesday's 101-96 vote marked the end of the coalition government of Mirek Topolanek, the centre-right prime minister, as well as the effective conclusion of the already bumpy and crisis-ridden Czech presidency of the European Union, which formally expires on June 30.

In what would otherwise have been branded a routine gaffe, Mr Topolanek, now caretaker prime minister, said in Brussels on Wednesday that the US was on the "road to hell" with protectionist steps that threaten to deepen the global economic crisis.(...)

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Power Up (Newsweek - U.S.)

What's called a 'global' recession is in fact shrinking economies mainly in the West, not the East. As Chinese Premier Wen Jiabao informed the world recently, he's a "little bit worried." Not about China, mind you, but about the United States. "We have loaned huge amounts of money to the U.S., so of course we have to be concerned," said Wen earlier this month, warning America to "honor its word" and "ensure the safety of Chinese assets." Translation: Those guys on Wall Street really screwed up. We think the dollar might tank and erase the value of our $2 trillion in T-bills. Get your act together. It's a stunning turnabout from even a year ago, when such warnings were almost always issued by rich nations, like the U.S., to poorer ones. But a lot has changed in recent years and recent days. Emerging giants like China are stronger, more economically competent and vastly richer. Their confidence has only increased amid a calamity that is widely described as the worst "global" recession in 70 years, but is in fact not truly global. It is shrinking the richest economies, but only slowing the emerging giants. This year GDP is expected to contract by 3 percent in the U.S. and Europe, and by close to 6 percent in Japan, while continuing to expand in China and India by 7 and 5 percent, respectively.(...)

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Treasury Chief Seeks Wider Power to Seize Troubled Firms (New York Times - U.S.)

By DAVID STOUT and BRIAN KNOWLTON

The crisis surrounding the American International Group was a near-tragedy that underlines the need for broad new government authority to regulate or even take control of financial institutions other than banks, the government's top fiscal officials told lawmakers on Tuesday.(...)

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Wall St. celebrates, others wary as US pushes to buy toxic assets (Boston.com - U.S.)

By Beth Healy

Investors cheered the Treasury Department's plan to buy up to $1 trillion in toxic assets from banks with the help of private investors, sending blue chip stocks up nearly 500 points, or 7 percent, yesterday even as some economists predicted the program would fall short.(...)

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Fed wanted to block AIG bonuses (BBC News - U.K.)

Federal Reserve boss Ben Bernanke says he wanted to take legal action to stop insurer AIG paying millions of dollars of bonuses but was advised against it. He also said that had AIG collapsed, it would have caused a 1930s-style global financial and economic meltdown.(...)

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Beijing wants a new world reserve currency (France24 - France)

President Barack Obama urged world powers Tuesday to agree a strategy to kickstart the global economy at next week's G20 summit as key eurozone data offered a glimpse the slump may finally be easing. Stock markets continued mostly firmer as investors cheered the latest US bank bailout plan, designed to neutralise the toxic assets at the heart of a financial collapse that has brought the global economy to its knees..(...)

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Eastern Europe's Economic Crash (Spiegel - Germany)

By Jan Puhl

The global downturn has hit Eastern Europe with particular vengeance. Countries that profited more than many others from globalization and were previously capitalism's rising stars are now seeing demand for exports collapse, along with their currencies. They are bracing for a hard landing.(...)

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Flexibility signaled on trade talks (China Daily - China)

The nation will be flexible on some "sensitive issues" in global trade talks to stem the rising wave of protectionism, Commerce Minister Chen Deming said yesterday. "China will show flexibility on issues like the Agricultural Special Safeguard Mechanism to facilitate the completion of the multilateral world trade system," he said at the China Development Forum 2009 held in Beijing.(...)

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Online retailers far outstrip high street (The Telegraph - U.K.)

Online retailers remain confident that they will prosper during the recession, a new business survey by eBay indicates.

Almost two thirds of the 410 businesses polled from eBay's top 2,000 sellers list said they were confident about the future and more than three quarters planned to expand their business this year.

Mark Lewis, eBay's UK manager, said this confidence was based on their robust sales performance over the past year, with the average from his top 1,000 sellers hitting 29pc growth in the last quarter of 2008, up from 23pc in the same period of 2007.(...)

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Treasury Offers Details of Plan to Purchase Risky Assets (New York Times - U.S.)

WASHINGTON -- The Obama administration formally presented the latest step in its financial rescue package on Monday, an attempt to draw private investors into partnership with a new federal entity that could eventually buy up to $1 trillion in troubled assets that are weighing down the nation's banks and clogging up the credit markets.(...)

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Unemployment, County by County (Economix - The Net)

Editor's Note: Follow the link to a spectacular interactive map showing nationwide unemployment rates.

Our graphics team has updated the interactive map of county-by-county unemployment rates to reflect January conditions.

Unemployment rates were generally higher across the country in January from December, and as a result, the graphics editors decided to add a new color category to the map key: one for counties with unemployment rates of 20 percent or higher.(...)

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Rapid Declines in Manufacturing Spread Global Anxiety ( New York Times - U.S.)

That manufacturing is in decline is hardly surprising, but the depth and speed of the plunge are striking and, most worrisome for economists, a self-reinforcing trend not unlike the cascading bust that led to the Great Depression.(...)

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EU pledges extra €75bn to fight crisis (Financial Times - U.K)

The European Union on Friday raised its flag in the battle against the global economic crisis by pledging €75bn ($102bn) in new contributions to the International Monetary Fund and vowing to forge a deal with the US on stricter financial market regulation.

Concluding a two-day summit in Brussels, EU leaders also sought to strengthen market confidence in central and eastern European economies by doubling the size of a EU balance of payments facility fund for non-eurozone countries to €50bn.(...)

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Bernanke Says Exec Compensation Must Be Monitored (Associated Press - U.S. )

Federal Reserve Chairman Ben Bernanke on Friday called for banking supervisors to pay ''close attention'' to compensation practices as they examine the soundness of financial institutions.

Banking regulators have observed that ''poorly designed compensation policies can create perverse incentives that can ultimately jeopardize the health of the banking organization,'' Bernanke said in prepared remarks to a meeting of smaller ''community'' banks in Phoenix, Ariz.(...)

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A test of will (The Economist - U.K.)

The Fed finds innovative ways to pump hundreds of billions of additional dollars into the economy. A FEW days ago Ben Bernanke, chairman of the Federal Reserve, was asked to identify the biggest obstacle to economic recovery. That "we don't have the political will," he replied. (...)

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Cash In A Mattress? No, Gold In The Closet ( Newsweek - U.S.)

With prices setting new records, the worried wealthy are piling up ingots in home safes. NEWSWEEK goes shopping for precious metal.(...)

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U.K. and Germany Call for Tougher Regulation of Banks (Wall Street Journal - U.S.)

Policy makers in the U.K. and Germany set out plans to place a much heavier regulatory burden on banks and other financial institutions in a sign of how rules throughout Europe are likely to change in the wake of the financial crisis. (...)

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Disney Halts Hong Kong Design Work, Raising Government Tensions (Bloomberg - U.S. )

Walt Disney Co., the second-largest U.S. media company, halted creative and design work on the expansion of its Hong Kong theme park, leading to 30 job cuts and raising tensions with Hong Kong's government. The theme-park operator said it still hasn't reached an agreement with the government on an expansion plan after two years of investment and negotiations. The city government, which owns 57 percent of the venture, said the cuts aren't conducive to the talks. (...)

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WB cuts China's 2009 growth forecast again (China Daily - China)

The World Bank (WB) has cut its forecast for China's 2009 economic growth yet again - this time to 6.5 percent from 7.5 percent, it said here Wednesday. This is the second cut the WB has made for China's 2009 gross domestic product (GDP) growth forecast. Last November its prediction stood at 9.2 percent. Although China's economy had been hit hard by the global financial crisis, it was still holding up, the WB said in the China Quarterly Update.

The report, a regular assessment of the Chinese economy, found China's banks have been largely unscathed by the global financial turmoil and the economy still has plenty of space to implement forceful stimulus measures.(...)

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The List: The Best Places to Lose Your Job ( Foreign Policy - U.S.)

As many as 50 million people could be out of work by the end of 2009. But the unemployed in some countries definitely have it better than others.(...)

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Cities in Crisis (Next American City - U.S.)

By Ariella Cohen

America's cities are fighting foreclosures, stalled development and budget shortfalls on a scale not seen in a generation. But innovation is taking root in the empty spaces left by economic retreat. A look at how tomorrow's American cities will be leaner -- and greener.(...)

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The Bonus Explainer: How did the AIG executive "bonuses" become a legal obligation? (Slate - U.S. )

By Brian Palmer

President Obama expressed outrage on Monday at the use of federal bailout money to pay $165 million in bonuses to AIG employees and ordered the Treasury Secretary to use all legal means to prevent the payments. Yet some administration officials have cautioned that the company has a legal obligation to make the payments. Why would AIG have to pay out its "bonuses"?(...)

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We are on the brink - perhaps it is time to look to the Romantics for what lies ahead ( Guardian - U.K.)

By Larry Elliott

It has been 75 years since the world economy has had a real depression. There have been plenty of recessions, some of them painful, but nothing to match the slump suffered in the 1930s. But consider the following. Imports into China are down 45% year on year. Unemployment in the United States is rising at 600,000 a month. (...)

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G20's real agenda should be saving Europe from itself ( Der Spiegel - Germany)

By Christian Reiermann, Michael Sauga and Thomas Schulz

As the global economic downturn worsens, the industrialized nations are at odds over how to fight the crisis. Obama wants the Europeans to introduce additional stimulus programs, but Merkel insists Germany is already doing enough. The most important aspect of a political encounter is often the joint photo op. The parties shake hands and smile into the cameras, signaling to the public that they understand each other perfectly and everything is on track. (...)

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Ahead of the Class: Stiglitz on China's Savings Hoard (The Japan Time - Japan)

The economy is "worsening rapidly" and is "in a severe situation," the government said Monday, leaving its assessment unchanged for the first time in six months. The Cabinet Office had downgraded its view for five consecutive months to February to reflect sharp declines in economic activity. The March report lowered the office's assessment of corporate profits, saying they are "decreasing very substantially." In February, the office said they were "falling substantially." (...)

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Euro boosted by German investor confidence (France24 - France )

The European single currency climbed Tuesday after the closely-watched ZEW survey showed that investor confidence in eurozone powerhouse Germany rose for the fifth straight month in March. In morning London trade, the euro rose to 1.3011 dollars from 1.2983 dollars late in New York on Monday. Against the Japanese currency, the dollar rose to 98.54 yen from 98.16 yen on Monday. (...)

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Protectionism: we've been here before (Le Monde Diplomatique - France )

by Serge Halimi

Although the recent EU summit put pressure on France not to make loans to auto manufacturers conditional on favouring French suppliers, the economic crisis has put protectionism back in the spotlight, with increases in customs duty and massive aid for the car industry. Examining the debates of the late 19th century shows that we have been here before. (...)

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When jobs disappear (The Economist - U.K.)

Last month America's unemployment rate climbed to 8.1%, the highest in a quarter of a century. For those newly out of a job, the chances of finding another soon are the worst since records began 50 years ago. In China 20m migrant workers (maybe 3% of the labour force) have been laid off. Cambodia's textile industry, its main source of exports, has cut one worker in ten. In Spain the building bust has pushed the jobless rate up by two-thirds in a year, to 14.8% in January. And in Japan, where official unemployment used to be all but unknown, tens of thousands of people on temporary contracts are losing not just their jobs but also the housing provided by their employers. (...)

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Jobless from Dubai to Beirut (Al jazeera - Lebanon)

By Brooke Anderson in Beirut

According to Lebanon's finance ministry, there are some 350,000 Lebanese people working in the Gulf states, which in the past decade had become popular employment destinations. However, with world markets in recession and foreign investments dwindling, fortunes have been reversed; the ministry says 15,000 Lebanese expatriate workers have returned in recent weeks (...)

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R is for recession (& recovery) (Mail&Guardian online - South Africa )

By Kevin Davie in Johannesburg

When third-quarter gross domestic product figures for 2008 are revised later this year, it is likely that they will be adjusted downwards from the reported 0.2% to show negative growth. This, coupled with fourth-¬quarter GDP, which came in at -1.8%, will show that the [South African] economy is in recession, defined as two consecutive quarters of negative growth (...)

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Bernanke Sees Recovery Beginning in 2010 (The New York Times - USA )

"We'll see the recession coming to an end probably this year." With those words, Federal Reserve Chairman Ben S. Bernanke staked a marker on what he believes will be the end of the malaise that has descended upon the United States economy (...)

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The warm of Hell recession is burning Fiscal Paradises (Financial Times - U.K.)

Pressures of greedy and debt-burden governments (including US and Germany) breaking up the secrecy of exotic banking systems. Also Swiss sanctuary accept to increase transparency in order to save itself from the collapse. (...)

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Obama: China can have confidence in America's economy (China Daily - U.S.)

US President Barack Obama assured on Saturday that China can have confidence in the American economy after meeting with his Brazilian counterpart Luiz Inacio Lula da Silva at the White House.

"Not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the United States," Obama said.(...)

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Ok, it's enough! Citigroup CEOs statement is the signal the patient is now able to survive? (CNN Money - U.S.)

By Colin Barr

The Holy Grail of the bank-mare bottom could be have been discovered on Friday. Vikram Pandit declared Citigroup does need public money anymore to avoid bankruptcy. Could be the turning point of the banking system emergency but we've heard a lot of times about it.(...)

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China's Premier Wen 'Worried' on Safety of Treasuries (Bloomberg - U.S.)

March 13 (Bloomberg) -- China, the U.S. government's largest creditor, is "worried" about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said. "We have lent a huge amount of money to the United States," Wen said at a press briefing in Beijing today after the annual meeting of the legislature. "I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China's assets."

U.S. President Barack Obama is relying on China to sustain buying of Treasuries as his administration sells record amounts of debt to fund a $787 billion economic-stimulus package. Chinese investors have lost money on the securities so far this year, after increasing their holdings 46 percent to $696 billion in 2008, according to Treasury Department data.

"China's purchases of American debt have been one of the few bolts keeping the wheels on the global economy," said Phil Deans, a professor of international affairs at Temple University in Tokyo. "If China stops buying where does Obama's borrowing to fund his stimulus come from?" (...)

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Americans See 18% of Wealth Vanish (Wall Street Journal - U.S.)

The wealth of American families plunged nearly 18% in 2008, erasing years of sharp gains on housing and stocks and marking the biggest loss since the Federal Reserve began keeping track after World War II.

The Fed said Thursday that U.S. households' net worth tumbled by $11 trillion -- a decline in a single year that equals the combined annual output of Germany, Japan and the U.K. The data signal the end of an epoch defined by first and second homes, rising retirement funds and ever-fatter portfolios.

Past downturns have been mere blips compared with the losses Americans faced last year, which set them back to below 2004 levels. "In the postwar period, we've never had anything other than very modest declines. That life experience led many people to think that houses were a one-way bet," says Douglas Cliggott, the chief investment officer of Dover Management LLC.
The decline in Americans' net worth, which was the first in six years, follows an extraordinary boom. Not accounting for inflation, household wealth more than doubled from 1990 to 2000, and then, after a pause, rose nearly 50% before the bust of 2008.(...)

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Economic Meltdown Not a Laughing Matter (The New York Times - U.S.)

By ALESSANDRA STANLEY

It wasn't a "Brawl Street," or a thrilla in vanilla. It wasn't a "Daily Show" friendly feud or even much of a discussion. Mostly, the much-hyped Thursday night showdown between Jon Stewart and Jim Cramer, the mercurial host of "Mad Money" on CNBC, felt like a Senate subcommittee hearing.

Mr. Stewart treated his guest like a C.E.O. subpoenaed to testify before Congress -- his point was not to hear Mr. Cramer out, but to act out a cathartic ritual of indignation and castigation.
"Listen, you knew what the banks were doing, yet were touting it for months and months, the entire network was," the Democratic Senator from Comedy Central said. "For now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst."(...)

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Can Marijuana Help Rescue California's Economy? (TIME - U.S.)

Could marijuana be the answer to the economic misery facing California? Democratic State Assembly member Tom Ammiano thinks so. Ammiano introduced legislation last month that would legalize pot and allow the state to regulate and tax its sale -- a move that could mean billions for the cash-strapped state. Pot is, after all, California's biggest cash crop, responsible for $14 billion in annual sales, dwarfing the state's second largest agricultural commodity -- milk and cream -- which brings in $7.3 billion annually, according to the most recent USDA statistics. The state's tax collectors estimate the bill would bring in about $1.3 billion in much-needed revenue a year, offsetting some of the billions in service cuts and spending reductions outlined in the recently approved state budget.(...)

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Billionaire Blues (Newsweek - U.S.)

It's been a tough year for the richest people in the world. Last year there were 1,125 billionaires. This year there are just 793 people rich enough to make Forbes annual list.

The world has become a wealth wasteland.

Like the rest of us, the richest people in the world have endured a financial disaster over the past year. Today there are 793 people on our list of the World's Billionaires, a 30% decline from a year ago.

Of the 1,125 billionaires who made last year's ranking, 373 fell off the list--355 from declining fortunes and 18 who died. There are 38 newcomers, plus three moguls who returned to the list after regaining their 10-figure fortunes. It is the first time since 2003 that the world has had a net loss in the number of billionaires (...)

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Madoff Ordered Jailed (The Washington Post - U.S.)

Disgraced financier pleads guilty to running an extensive Ponzi scheme; sentencing is scheduled for June 16. (...)

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No wait-and-see (Al-Ahram - Egypt)

It has been six months since the current financial crisis broke out. During that time it has become clear how revenues from hard currency earners, such as the tourism sector and the Suez Canal, will be affected. A third major source of hard currency is remittances from expatriates, particularly those working in the Gulf. However, to date there are no exact figures as to the extent to which these remittances will be affected. Nonetheless, the problem is already manifesting itself indirectly. (...)

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China as an Innovator, Not Just an Imitator (Der Spiegel - Germany)

Well known as a manufacturing base, China has shown progress in tech innovation that will be vital for even greater economic growth.

The last 30 years of reform have brought from the world's periphery to center stage. During each of the last two years, it contributed more in absolute value to world gross domestic product growth than any other country. Even in the midst of the current, China remains one of the few major economies that is still growing. (...)

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Beijing's GDP Numerology (Foreign Policy - U.S.)

The unscientific origins of the national obsession with 8 percent -- no more, no less -- economic growth.

There are few constants during a time of economic uncertainty. But for those seeking solace in the midst of economic torment, look to the ongoing meetings of the National People's Congress in Beijing. Last week, Premier Wen Jiabao launched the sessions by delivering China's version of the State of the Union address. Although the world, rattled by the global financial crisis today, looks vastly different than it did a year ago, he repeated with all the certainty of a pastor pronouncing "amen" that in 2009, yet again, Beijing would be setting a target of 8 percent annual GDP growth.

In recent years, this official target has drastically underestimated China's actual growth. This time, many observers think it may be an overestimate. In both cases, the question remains: Why is 8 percent considered the magic number? (Surely it isn't just because in Mandarin, eight is a near homonym for "prosperous" and considered a lucky number.)

Most China watchers will tell you, as though it were a certain fact, that approximately 8 percent growth is the level needed to keep employment up -- and the potential for "social unrest" down. It is typically assumed that 8 percent is what is required to create enough jobs to absorb laid-off workers from failing state-owned enterprises (SOEs) and new graduates entering the labor pool. Senior leaders in China, from the president down to the lowliest county magistrate, pay homage to the importance of achieving 8 percent growth. No one claims to want much more (well, a little more can't hurt much), or much less. Too much more than 8, and you risk runaway inflation; much less than 8, and unemployed workers will march in the streets and chaos will ensue. But when and how did 8 percent become sacrosanct? (...)

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Global Confidence Fell in March as Economies Crumbled (Bloomberg - U.S.)

Confidence in the world economy waned in March as the recession proved deeper than forecast and the U.S. mounted new rescues of financial institutions, a survey of Bloomberg users on six continents showed. The Bloomberg Professional Global Confidence Index fell to 5.95 from 8.5 in February. A reading below 50 means pessimists outnumber optimists. Sentiment about Europe and the U.S. slid, while respondents in Asia were less pessimistic about their region, the survey showed. German factory orders fell 38 percent in January from a year earlier, the government said today.

The global economy may shrink for the first time since World War II, with trade collapsing by the most since the Great Depression, the World Bank said this month. The erosion of confidence in the financial system is exacerbating the decline; U.S. banking stocks are down 25 percent since the last survey despite a third effort by the government to help Citigroup Inc.(...)

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Bridges to somewhere (Economist - U.K.)

The slowdown puts the onus on the government to start rebuilding India's rickety infrastructure.

India had felt one step removed from the global slowdown. Compared with its neighbours in Asia, it relies little on exports, which amount to only 21.2% of GDP. And it relies less than the overstretched economies of eastern Europe on foreign capital: its gross saving rate reached 37.7% of GDP in the past fiscal year.

But India does not mobilise its saving well. Households account for almost two-thirds of it. But they put more than half of their spare funds into physical assets, such as homes, rather than the financial system. Of the remainder, 11% is held in cash and 55% is deposited in the banks, which are now lending almost a third of their deposits to the government.(...)

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Europe's Indexes Turn Higher (The Wall Street Journal - U.S.)

European shares shrugged off early weakness Wednesday and rallied strongly, tracking an overnight surge on Wall Street.

The pan-European Dow Jones Stoxx 600 index was up 1.3% to 168.18. London's FTSE 100 Index was 0.7% higher at 3741.44 and Frankfurt's DAX Index was 1.6% higher at 3948.87. Paris's CAC-40 Index was up 1.4% to 2702.75.

Shares initially opened lower amid concerns that Wall Street's stellar advance was just another bear-market rally. U.S. stocks Tuesday staged their biggest rally since November, led by banks and other beaten-down financial stocks, wiping out March's losses in a single session. The Dow Jones Industrial Average rallied 5.8% to 6926.49, marking its biggest percentage gain since Nov. 21.(...)

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The Recession's Green Lining (Newsweek - U.S.)

A global downturn is doing what activists couldn't: closing dirty factories. Recession is not exactly a long-term environmental strategy, obviously. The challenge is to use the downturn to deemphasize manufacturing in favor of cleaner economic activity, and to reengineer what survives so that when the economy revs up it's not at the environment's expense. Even world-class polluters get it. In China, as factories seek lines of credit to see them through the downturn, local governments are "less likely to help companies that are considered major polluters," says economist Deng Yupeng of Dongguan University.(...)

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Irish economy 'to contract by 6%' (BBC - U.K.)

The Irish Republic's economy will shrink by more than 6% this year, the country's top central banker has said.

Unemployment will average about 11%, John Hurley, the governor of Ireland's central bank, told a committee of MPs.

That kind of contraction would make Ireland one of the worst-hit economies in Europe by the global downturn. (...)

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Calls to relax eurozone rules rebuffed (Financial Times - U.K.)

European Union countries hoping for milder terms on which to adopt the euro faced a rebuff on Tuesday from eurozone finance ministers, who said the credibility of Europe's monetary union required sticking to EU rules.

"Given the current volatility of the situation, this would not be the right time to launch a debate on this," said Jean-Claude Juncker, Luxembourg's prime minister and head of the 16-nation eurozone finance ministers' group.(...)

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Gordon Brown hints at tax changes to help savers (Guardian - U.K.)

PM says there will be 'announcements' in the budget to address concerns of people reliant on income from savings who have been hit by low interest rates.

Savers could benefit from tax changes being announced in next month's budget, Gordon Brown said today.

Speaking during a phone-in on BBC Radio 4, the prime minister said that there would be "announcements" in the budget that would address the concerns of people reliant on income from savings who have found that low interest rates have drastically cut the amount of money they receive(...)

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EU to call for a doubling of IMF resources to face economic crisis (France 24 - France)

According to a draft statement by EU finance ministers ahead of the G20 summit in London, the EU supports doubling IMF resources for countries affected by the economic crisis to 500 billion dollars (396 billion euros).

The European Union will call on Tuesday for the International Monetary Fund's resources for struggling nations to be doubled to 500 billion dollars (396 billion euros), a draft document showed.

"It is essential that the IMF has appropriate financial means to assist countries particularly affected by the current crisis," said the text EU finance ministers are due to approve ahead of a key G20 summit in London.(...)

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Central Bank Governor says jobless rate will pass 11 per cent this year (Irish Times - Ireland)

Ireland is now experiencing "an unprecedented contraction" in output, which is set to persist this year and next, Central Bank governor John Hurley told a Dáil Committee this morning.

In his opening statement to the Oireachtas Committee on Economic Regulatory Affairs, Mr Hurley said "we face significant challenges and it is critical for present and future generations that we work together now to confront them. If we do so, our economy will recover and has the potential to grow solidly again in the medium term".

Mr Hurley told TDs that Irish GDP is set to shrink by more than 6 per cent this year, while the unemployment rate will surpass 11 per cent.(...)

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Germany's Exports Evaporate (Wall Street Journal - U.S.)

FRANKFURT -- Europe's three biggest economies started the year with signs that their economic declines are steepening.

Industrial production crumbled during the first month of the year in France and the U.K. But many economists focused on the sharp drop in Germany's exports, the most important driver of the region's biggest economy.

The difficulties at big manufacturers and exporters are dimming hopes that Europe's economies may have found a bottom in the fourth quarter. The services sector is faring little better. A February survey released last week hit a new low as firms across the currency bloc slashed more jobs than at any time in the survey's 12-year history.(...)

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Downturn will 'set back Millennium Goals by three years' (Guardian - U.K.)

Government predicts 90m people falling into poverty Developing countries 'face shortfalls of up to $700bn'

The world's progress towards the internationally agreed Millennium Development Goals (MDGs) could be pushed back by at least three years by the "financial tsunami" sweeping across the world, Douglas Alexander, international development secretary, warns today.

Reflecting growing global concern that the world's poorest countries will suffer the most from the recession, Alexander will also unveil research from the Department for International Development (DfID) predicting that another 90 million people will be pushed into poverty by the end of next year.(...)

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Japan in record current account deficit (Financial Times - U.K.)

Japan suffered its largest current account deficit ever in January, reflecting the impact of plunging global demand on its export-dependent economy and raising concerns that it was now in a depression.

Japan's current account fell into deficit for the first time since 1996 and at Y172.8bn ($1.75bn, €1.39bn) was much larger than the Y15.3bn shortfall forecast by economists.(...)

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Heart of Europe (Warsaw Business Journal - Poland)

Poland remains the strongest country in a hard-hit region. Experts say it is coping as well as can be expected, but that its fortune is inextricably linked with that of the region and the EU.

During the most recent EU summit German chancellor Angela Merkel, for the first time, loudly proclaimed what Poland has been saying for a long time. In criticizing Hungary's call for a €190 (zł.892) billion CEE bailout, she noted that the situation in every CEE state was different and that what was happening in Hungary was not the same as what was happening in other countries in the region.

In other words, what's good for Hungary isn't necessarily good for Poland or other CEE countries. And thus, according to the German chancellor, there is no panacea for the region's woes.(...)

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Oversight of Bank Bailouts Criticized (Washington Post - U.S.)

Congressional investigators are criticizing the Obama administration for failing to police deals in which banks participating in the $700 billion federal bailout lent billions of dollars overseas, highlighting the growing political tension over the extent of government involvement in firms receiving taxpayer funds.(...)

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Auditors Raise Doubts About G.M.'s Viability (New York Times - U.S.)

DETROIT -- General Motors, which has borrowed $13.4 billion from the federal government and is seeking billions more, acknowledged in its annual report on Thursday that its survival was in "substantial doubt." "Our recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern," the company said in the filing. Auto stocks sank across the board on the G.M. filing, and the report was one of the factors weighing on Wall Street. General Motors shares tumbled 15.4 percent, to $1.87. Shares of Ford, which moved to restructure its debt on Wednesday, were down 0.5 percent.(...)

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China's Team of Rivals (Foreign Policy - U.S.)

A financial meltdown in China promises to test the Communist Party's power in ways not seen since Tiananmen. But theirs is a house divided, as princelings take on populists and Pekinologists try to make sense of it all. Will this team built for economic success implode once the money dries up? An insider's guide to the leaders at China's controls.(...)

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Wall Street on the Tundra (Vanity Fair - U.S.)

Iceland's de facto bankruptcy--its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance--resulted from a stunning collective madness. What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power? In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown.(...)

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The D-word: Will recession become something worse?s (Forbes - U.S.)

A Depression doesn't have to be Great - bread lines, rampant unemployment, a wipeout in the stock market. The economy can sink into a milder depression, the kind spelled with a lowercase "d." And it may be happening now. The trouble is, unlike recessions, which are easy to define, there are no firm rules for what makes a depression. Everyone at least seems to agree there hasn't been one since the epic hardship of the 1930s. But with each new hard-times headline, most recently an alarming economic contraction of 6.2 percent in the fourth quarter, it seems more likely that the next depression is on its way.(...)

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Australia on brink of recession after economy shrinks unexpectedly (Telegraph - U.K.)

Australia's economy unexpectedly shrank for the first time in eight years in the last quarter, pushing the country to the brink of its first recession in two decades. Only the performance of the agricultural sector spared Australia a technical recession, defined as two consecutive quarters of economic contraction. Despite the global downturn, economists had expected the economy to show modest growth. In fact, Australian gross domestic product shrank 0.5pc in the last three months of 2008 compared with a 0.1pc growth in the third quarter. Economists expected 0.2pc growth and the first drop since 1991, when the introduction of a sales tax caused a one-off slump in demand.(...)

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Fresh stimulus expected in China (Financial Times - U.K.)

China is preparing additional stimulus measures to boost its economy and is expected to begin unveiling them at the opening session Thursday of the National People's Congress, according to officials. The government announced in November a Rmb4,000bn ($585bn, €465bn, £413bn) investment plan for the next two years. But the rapid deterioration in the global economy since then has put pressure on authorities to take additional steps to prevent a collapse in Chinese growth.(...)

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Eurozone Ready to Rescue Members if Crisis Hits (Financial Times - U.K.)

Eurozone authorities would help a member-state in serious economic difficulties before it needed to turn to the International Monetary Fund because of a risk of debt default, a senior EU policymaker said on Tuesday. "If crisis emerges in one eurozone country, there is a solution before visiting the IMF," Joaquín Almunia, the EU's monetary affairs commissioner, said. "It's not clever to tell you in public the solution. But the solution exists."(...)

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Ukraine: Nation on the brink of bankruptcy (The Independent - U.K.)

Ukraine is so broke the nation is expecting to be cut off this week for failing to pay the gas bill, reports Mary Dejevsky from Kiev When the United States sneezed, Old Europe's banks caught a heavy cold, and New Europe's mini-tiger economies have succumbed, one by one, to a nasty bout of flu. But in the so-called neighbourhood states immediately to the east, chief among them Ukraine, pneumonia threatens - and the experts' prognosis is not good. International financiers will say, without wanting to be quoted, that Ukraine is already, for all practical purposes, bankrupt. They do not like the D-word, default, though that is clearly on their mind. Ukrainian officials like the word still less, smacking as it does of national humiliation. But the taboo was broken in recent days, when a senior IMF official, Marek Belka, director of the fund's European department, was quoted in the Ukrainian press as rejecting that idea. Which, in many Ukrainian minds, only made the prospect more real.(...)

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Indexes End Down But Off Early Lows (The Wall Street Journal - U.S.)

Asian shares broadly declined Tuesday, with the poor health of the global financial system pressuring regional banks and price declines in crude oil and gold weighing down resource stocks. But the declines weren't as big as those on Wall Street overnight as some investors focused on hopes of further economic stimulus steps from China and anticipation that Japan will employ public funds to support its stock market. The fact that regional markets had already fallen sharply on Monday also helped pare early losses. (...)

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Stocks: After Dow 7,000, What Next? (Business Week - U.S.)

The blue chip average's fall below 7,000--and the S&P 500's struggle to stay above 700--show the market is in "uncharted territory" Investors don't lack ways to measure the carnage on Wall Street. What they're missing is a way to calculate when the losses will stop. In falling markets, technical analysts look to stock market history for points where buyers might jump back into the game. These so-called support levels are places where, at least in theory, stock market momentum should slow or shift. The 7,000 level for the Dow Jones industrial average is a nice round number, but it definitely wasn't a support level. On Mar. 2, the Dow blasted through 7,000, dropping almost 300 points, or 4.24%, to 6,763.29. (...)

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Toyota arm seeks government loan (BBC - U.K.)

Toyota, the world's biggest carmaker, has said it is seeking a state loan to help its car financing unit. The company said Toyota Financial Services was in talks with the government-backed Japan Bank for International Co-operation. (...)

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