Archive for category World News
RBS Led Dubai World Lenders; HSBC Most at Risk in UAE
Posted by admin in Financial Market, World News on November 28th, 2009
By Vivian Salama and Gavin Finch
Nov. 27 (Bloomberg) — Royal Bank of Scotland Group Plc was the biggest underwriter of loans to Dubai World, the state company seeking to reschedule debt, while HSBC Holdings Plc has the most at risk in the United Arab Emirates, according to JPMorgan Chase & Co.
RBS, the largest U.K. government-controlled bank, arranged $2.3 billion, or 17 percent, of Dubai World loans since January 2007, JPMorgan said in a report today, citing Dealogic data. HSBC, Europe’s biggest bank, has the “largest absolute exposure” in the U.A.E. with $17 billion of loans in 2008, JPMorgan said, citing the Emirates Banks Association. Abu Dhabi Commercial Bank PJSC may be owed $1.9 billion by Dubai World, making it the largest creditor outside the emirate, said two people familiar with the companies.
“The market is very nervous about exposure to Dubai and RBS’s name has been associated with it as both a lender and a book runner,” said David Williams, a banks analyst at Fox-Pitt Kelton Ltd. in London. “People are concerned it’s going to produce a new wave of losses. Dubai is driving everything in the market at the moment.”
Stocks around the world have slumped for two days on concern a debt restructuring by Dubai World, with $59 billion of liabilities, will add to the $1.72 trillion of losses and writedowns from the global credit freeze. British banks have the most to lose among international lenders from a crisis in the United Arab Emirates, with a combined $49.5 billion of loans outstanding, according to a report from RBS that cites Bank for International Settlements data published in June.
‘Disruption and Uncertainty’
U.K. Prime Minister Gordon Brown’s government is monitoring the situation in Dubai, his spokeswoman said today.
“Clearly the restructuring announcement has caused disruption and uncertainty in world markets,” Brown’s spokeswoman Vickie Sheriff told reporters in London. Brown’s “view is that U.K. banks are well capitalized having undergone rigorous stress testing,” she said.
Dubai World, controlled by the emirate’s ruler, Sheikh Mohammed Bin Rashid Al-Maktoum, borrowed from more than 70 lenders to buy assets ranging from stakes in Las Vegas casino company MGM Mirage to London-based Standard Chartered Plc through Istithmar PJSC. The government said this week it will seek a “standstill” agreement to delay repayment of its debt, including $3.52 billion of bonds due Dec. 14 from property unit Nakheel PJSC.
In Contact
“We are in touch with Dubai World, and we have been in discussions more than once today and yesterday,” Ala’a Eraiqat, the chief executive officer of Abu Dhabi Commercial, the third- largest lender in the United Arab Emirates, said in a telephone interview yesterday. He declined to comment on specifics. “We have a lot of assurances which is a good thing.”
RBS spokesman Piers Townsend in London declined to comment. The bank had 4.98 billion pounds ($8.15 billion) of loans and advances outstanding to the UAE at the end of the first half, according to company filings. That included 2.7 billion pounds of corporate loans, 1.65 billion pounds to banks and financial institutions and 596 million pounds to consumers.
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Hitler’s favorite car makes comeback?
Posted by admin in Mix Up News, World News on November 28th, 2009
by Dave Graham - Nov. 25, 2009 09:49 AM est
Reuters.com
BERLIN (Reuters) - A car expert says he has tracked down Hitler’s favorite Mercedes to a garage near the town that helped the Austrian-born Fuehrer become a German citizen.
Classic cars specialist Michael Froehlich said he found the bullet-proof touring car after charting its postwar travels from Austria to Las Vegas and back to Munich, where Hitler burst onto the political scene with a failed putsch in 1923.
“It was the best car in the world at the time. Better than the Bugatti, Bentley, Rolls Royce or whatever,” Froehlich told Reuters from his office in Duesseldorf. “It was his favorite car: the one he used most often, which he used for parades.”
After being commissioned by a Cypriot buyer to find the vehicle, Froehlich discovered it had been bought by a farmer near Braunschweig, where in 1932 local Nazi officials got Hitler a civil servant’s job so he could claim citizenship.
“I thought it was an interesting job, but on the other hand I wasn’t too thrilled, because my parents and grandparents suffered greatly under his regime,” Froehlich said of the commission.
The dark blue car, which Froehlich said had spent decades in the basement of the Imperial Palace Casino in Las Vegas, was recently sold by the heirs of a Munich brewing tycoon before he traced it “in under two months” to northern Germany.
Froehlich said reports the buyer was Russian were mistaken, and rejected the notion that past owners of the vehicle with the number plate “1A 148 461″ were admirers of the dictator.
“They weren’t Nazis from what I can see, I think it’s something they saw as a business investment,” he said. “I can well imagine that an old Hitler banger has a certain value.”
Froehlich declined to name the car’s price tag, or give details about the buyer, but said the 1935 edition custom-made vehicle could fetch “more than 10 million euros ($14.91 million).”
Though he had not yet had outside confirmation of the car’s authenticity, the owner’s paperwork left no doubt, he added.
“The Mercedes sales register shows this 770 K model was ordered for the Fuehrer and Chancellor of the Reich in 1935,” he said.
Only 88 of the series were ever made and the Braunschweig car showed all the special modifications made for Hitler, who had to be driven because he had no “Fuehrerschein” — a German word made up from “driver” and “license” — Froehlich said.
“He was a Fuehrer without Fuehrerschein,” he said.
China Could Flood The World With Goods, Damage Global Economy
Posted by admin in Mixed Economy, World News on November 28th, 2009
by Douglas A. McIntyre - Nov. 26, 2009
247wallst.com
China’s stimulus package
may work too well. The world’s most populous nation is still building many factories even though its exports remain low. Building the facilities creates jobs and offers the country the chance to be ready to send out a huge amount of goods when the world’s economy recovers without straining its manufacturing capacity
China may have erected so many new manufacturing facilities that it could flood the world with goods as it keeps millions of its workers employed creating products for which that are not enough buyers in the West.
A new study from The European Union Chamber of Commerce in China describes the problems of overbuilding. European Chamber President Joerg Wuttke wrote, “Our study shows that the impact of overcapacity is subtle but far-reaching, affecting dozens of industries and damaging economic growth not only in China but worldwide. Domestically, excess capacity squeezes profit margins, hampers innovation and prevents the emergence of true local champions, while on the global stage its influence is clearly seen in the rise in trade tensions between China and its major trading partners.”
The dangers from the overbuilding could be grave. As America and Europe begin to re-industrialize, providing millions of new jobs, a huge supply of goods, manufactured at below market prices in China could undermine the foundations on which a Western recovery needs to be built. China will have created a means for employing it massive middle class work force, but that middle class will not be large enough to consume what China builds, at least not on its own.
China is almost certain to create the unprecedented problem of revitalizing its own economy by increasing its manufacturing capacity so greatly that its output will reach levels well beyond those that existed when the global economy was expanding rapidly. No other industrial nation will countenance having its own manufacturing base destroyed by a massive influx of Chinese goods.
It is the stuff that trade wars are made of.
Dubai’s Shock May Not Be Last
Posted by admin in World News on November 26th, 2009
by Richard Barley - Nov. 26, 2009
The Wall Street Journal
Dubai has delivered investors a wake-up call. The Gulf State’s decision to seek a six-month standstill on debt of conglomerate Dubai World isn’t only a reminder of the deep problems in Dubai itself but highlights the biggest risk for markets in 2010: less-predictable actions by governments. With sovereign finances stretched, investors need to remember that governments can and will change the rules when necessary. Asset prices, buoyed by a faith in policy support, may need to adjust to that.
Dubai World, whose activities span real estate, ports and leisure, has $60 billion of debt. The immediate casualty is a $3.5 billion bond due to be repaid in December from real-estate developer Nakheel, the builder of the emirate’s palm-tree-shaped island. It isn’t yet clear which other parts of Dubai World’s empire will be affected. Port operator DP World said Thursday that its debt, which includes $3.25 billion of bonds, won’t be included in the restructuring.
The Dubai World decision has raised doubts about other Dubai government-related debt. Moody’s has estimated the emirate may need to restructure up to $25 billion of debt, particularly in real estate. Credit Suisse estimates European banks could have $40 billion of exposure to Dubai. But it is difficult to assess the full impact as Dubai doesn’t publish consolidated data on public-sector debt. The uncertainty is reflected in Dubai’s credit-default swaps, which have soared to 5.7 percentage points from 3.18 percentage points in just two days.
Until now, corporate-credit and stock markets have remained fairly sanguine in the face of global jitters over sovereign credit quality in countries such as Japan, Greece, Ukraine and Dubai itself. But the Dubai World announcement, which came the same day as Dubai said it had raised $5 billion in bonds from Abu Dhabi banks, has shaken investors out of their complacency. Some Western European stock indexes fell about 3% Thursday, Eastern European currencies declined and the Markit iTraxx Crossover index widened by some 0.30 percentage points.
Dubai’s decision may mark a watershed. Throughout the crisis, governments have looked to prop up some assets: After the global-banking bailout, support was extended to some auto makers in the U.S. and Europe. At a sovereign level, countries have banded together to provide support to peers in trouble, such as Latvia. Dubai itself set up a Financial Support Fund for its government-related companies.
But this support carries a cost. Governments are under pressure to rein in borrowing, particularly as central banks start to withdraw stimulus measures, thereby removing some of the support for government-bond markets. As a result, they may no longer be able to provide such wide-ranging support. The result could be more nasty surprises as governments cast other nonviable investments adrift.
China’s $9 trillion global warming problem
Posted by admin in World News on November 24th, 2009
By Alex Salkever - Nov. 24, 2009
Daily Finance
If Chinese premier Hu Xintao had any doubts about taking an aggressive stance to enforce carbon-emission reductions at the upcoming Copenhagen Climate Summit, a report today may push him over the edge. A detailed analysis of the potential economic impacts of rapid global warming, put together by insurance-industry experts and underwritten by the World Wildlife Fund and insurance giant Allianz, found that China stands to suffer a whopping $9 trillion in economic damage by 2050.
The U.S. followed closely behind, with $7 trillion in potential damage, and India took the third spot with $3 billion in potential environmental damage. The study was notable in that it was performed by experts in insurance and actuarial research, rather than climate researchers, which implies more objectivity and financial-industry rigor.
Glacial melting combined with drier weather conditions due to global warming could also decimate river flows. Such glacial flows from the Himalayas feed key rivers in China and India. “In India alone, melt-water from Himalayan glaciers and snowfields currently supplies up to 85% of the dry season flow, and initial modelling suggests that this could be reduced to about 30% of its current contribution over the next 50 years,” the report says.
A Worst-Case Scenario
The report paints a “worst-case” scenario, as is the wont of actuaries and insurers in pricing policies. In this scenario, sea-level rises will flood megaports in China, and New York, Boston, and Baltimore will all suffer massive damage. Wave surges from storms coming off the risen seas will cause further problems, and soot and smog from China’s factory towns will create sever adverse economic and environmental impacts.
But the report may not have accounted for mitigating factors resulting from global warming, often cited by global warming skeptics, that could actually reduce atmospheric greenhouse gas emissions. One example: longer growing seasons and milder winters in the Northern Hemisphere could help plants absorb more carbon, and the types of plants that thrive could likewise suck up more carbon than their cold-loving predecessors.
Overall, though, the report should act as a powerful prod to the world’s leaders as they enter into contentious talks over cutting back on carbon emissions, and balancing the economic cost of reducing environmental risks between developed and developing countries. Brazil has publicly stated it will have difficulty preserving the rainforest without Western aid. And developing countries have reiterated time and again that the developed world poured most of the carbon into the atmosphere and brought the world to this point long before every Chinese, Indian, or Brazilian citizen dreamed of owning a cell phone, let alone buying a car.
But know this. When your insurance company tells you the bill is likely going way, way up, it’s time to start thinking about behavioral changes — because these guys aren’t doing it for the warm-fuzzy feelings.
Chinese banks cap gains in Hong Kong, Shanghai
Posted by admin in Mixed Economy, World News on November 24th, 2009
By V. Phani Kumar - Nov. 24, 2009 09:24 PM EST
MarketWatch.com
HONG KONG (MarketWatch) — Hong Kong shares climbed early Wednesday, as property developers and local banks staged a rebound following a decline in the previous session. But Chinese lenders’ stocks in Hong Kong and Shanghai remained under pressure amid concerns over capital-raising issues, capping market gains. The Hang Seng Index rose 0.3% to 22,492.74, although the Hang Seng China Enterprises Index of top mainland companies fell 0.4% to 13,311.38. The Shanghai Composite rose 0.5% after toggling between gains and losses in volatile trade. Henderson Land Development Co. /quotes/comstock/22h!e:12 (HK:12 55.55, +1.85, +3.43%) /quotes/comstock/11i!hldcy (HLDC.Y 6.90, -0.25, -3.50%) rose 1.5%, and heavyweight HSBC Holdings Plc. /quotes/comstock/22h!e:5 (HK:5 95.55, +0.50, +0.53%) /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 61.64, +0.31, +0.51%) added 1% in Hong Kong. Among Chinese banks, Bank of China Ltd. /quotes/comstock/11i!bachy (BACH.Y 15.12, -0.63, -4.00%) /quotes/comstock/22h!e:3988 (HK:3988 4.42, -0.20, -4.33%) fell 3.3% and China Construction Bank Corp. /quotes/comstock/22h!e:939 (HK:939 7.01, -0.14, -1.96%) /quotes/comstock/11i!cichf (CICHF 0.92, -0.03, -2.65%) gave up 1% in Hong Kong, while in Shanghai BOC dropped 0.5% and CCB was flat.
A Chinese-owned GM, it could happen
Posted by admin in World News on November 23rd, 2009
by Chris Isidore - Nov. 23, 2009 04:12 PM ET
CNNMoney.com
NEW YORK (CNNMoney.com) — GM could one day be Chinese owned.
A shocking concept for the ultimate all-American company but one some auto industry experts say isn’t too far-fetched.
“I can tell you right now the Chinese are shopping heavily in the U.S. auto sector,” said David Cole, chairman of the Center for Automotive Research, a Michigan think tank.
Cole said such a deal isn’t imminent and wouldn’t happen until GM starts selling shares to the public again, likely a year or more from now. But he says buying GM would be a major opportunity for the nascent Chinese auto industry.
“The Chinese have a lot of our money and they’re looking to invest it,” he said.
The Chinese have already shown an eagerness to buy some of the damaged brands being cut loose by U.S. automakers. GM is in the process of finalizing the sale of its Hummer unit to Sichuan Tengzhong Heavy Industrial Machinery. Ford Motor (F, Fortune 500) is in talks to sell its Swedish car unit Volvo to Chinese automaker Geely.
The Chinese industry is extremely splintered, with more than 100 automakers, some no more than regional players. But the Chinese government is pushing the industry to consolidate; something experts think will greatly reshape the industry in the next few years. And the new larger players will become even better positioned to make a play for troubled automakers around the globe.
Cole isn’t saying that GM would be China’s top purchase target in the near term. Other experts see it as more likely for the Chinese to buy a second-tier Asian or European manufacturer, or perhaps even Chrysler if its combination with Fiat Group doesn’t go as well as planned.
But a Chinese-owned GM wouldn’t be a shock to Bob Schulz, the top automotive credit analyst at Standard & Poor’s, not after all the other changes the company and the industry has seen in recent years.
