Wall Street rebounds on last day of the quarter

Wall Street resumed its advance Tuesday as investors bought up technology and financial stocks to beef up their portfolios on the last day of the quarter.

Analysts attributed much of the market's gain to large investors loading up on rising stocks in order to report strong holdings at the end of the first three-month reporting period of 2009, which ends on Tuesday.

Investors shrugged off lackluster economic data and snatched up some of the biggest names in technology and banking including Google Inc., International Business Machines Corp., Bank of America Corp. and Citigroup Inc.

The market is coming off a two-day pullback as stocks took a breather following a three-week rally that brought the Dow Jones industrial average up 21 percent since early March. That forward drive was pushed along by optimism that U.S. banks may be emerging from the worst of a lending crisis. The government finally delivered details of its plans to take failed loans off the books of struggling banks and leaders of several large banks said they did well in January and February.

The advance on Tuesday seems to be supported by "window dressing" buying as large investors not wanting to end the quarter with large amounts of cash loaded up on stocks they think have good prospects.

"Technology, of all the S&P sectors, is the only one that is up on the year," said Craig Peckham, an analyst at Jefferies & Co. "If you're going to try to window dress anywhere on the last day of the quarter, technology is a good place to start."

In light of the market's more upbeat sentiment in recent weeks, investors also are making bets on sectors that are poised to turn around first when the economy improves, including financial service providers, materials and consumer discretionary companies, Peckham said, like Capital One Financial Corp., Alcoa Inc. and Best Buy Co.

In early afternoon trading, the Dow Jones industrial average rose 135.96, or 1.8 percent, to 7,657.98. The Standard & Poor's 500 index gained 14.39, or 1.8 percent, to 801.92, while the technology-heavy Nasdaq composite index rose 35.21, or 2.3 percent, to 1,537.01.

The Russell 2000 index of smaller companies rose 4.60, or 1.1 percent, to 420.57.

Advancing issues outnumbered decliners by nearly 5 to 1 on the New York Stock Exchange, where volume came to 566.1 million shares.

Technology shares got a lift Tuesday after The Walt Disney Co. and Google announced an agreement late Monday that will allow Google's video site YouTube to show short-form videos from Disney's ABC and ESPN networks. Disney shares rose 49 cents, or 2.8 percent, to $18.34, while Google gained $7.21 to $349.90.

Lincoln National Corp. gained about 10 percent, pulling other life insurance stocks up as well, after saying it would pay off a debt coming due soon, assuaging concerns about the company's financial position. (quote: AP)

Oil prices slide under $50 on economic woes

Oil prices sank underneath 50 dollars per barrel on Monday, in line with stock markets on renewed concerns for the global economy and the struggling US auto sector, traders said.

New York's main futures contract, light sweet crude for delivery in May, dropped 2.87 dollars to 49.51 dollars per barrel, falling under 50 for the first time since March 18.

Brent North Sea crude for May shed 2.65 dollars to 49.33 dollars a barrel, after earlier passing under the psychological barrier for the first time since March 20.

Wall Street shares accelerated losses on Monday after the US government warned General Motors and Chrysler could face bankruptcy, stoking fresh fears about the recession-hit US economy.

European stock markets plummeted as the US unveiled plans for a major shake-up in the auto industry, with London's FTSE 100 index of leading shares falling 3.49 percent to 3,762.91 points.

"Worries regarding demand weakness are largely responsible for the decline," said Calyon analyst Christophe Barret.

"Indeed, it is difficult to be bullish on oil prices in an environment where economic forecasts are constantly revised downward, with ongoing recession getting deeper and deeper."

Prices have collapsed since striking record peaks above 147 dollars per barrel in July as the global economic downturn has ravaged the world's appetite for energy.

Crude oil has shed about five dollars since Thursday as demand concerns have returned to haunt the market amid plunging world stock markets.

"The market is probably a little concerned about the short-term performance of the equity markets," said Mark Pervan, senior commodities analyst of ANZ bank.

Oil prices at about 50 dollars a barrel will not support huge investments needed in the sector to meet demand, the secretary-general of the International Energy Forum said on Monday.

"Current prices will not support the huge levels of investment needed to meet future oil demand," Noe van Hulst told the opening of a two-day forum on cooperation between national and international oil companies in Kuwait.

"Around 12 trillion dollars of investments are needed in the oil and gas sector by 2030, or nearly 500 billion dollars per annum, to maintain market balance," Hulst of the Riyadh-based IEF said.

He warned that a delay in investments and projects, which is already taking place, will affect future energy supplies and he called for the maintaining of investment plans, as much as possible, to avoid a "boom-bust cycle."

Meanwhile, Qatar's Energy Minister Abdullah al-Attiya said Monday that the latest price of oil is "reasonable" given the ongoing global economic downturn.

"Fifty (dollars a barrel) is a reasonable price for 2009, considering the global economic crisis," Attiya told reporters on the sidelines of the two-day energy forum in Kuwait City.

"The world economy is in depression and has not reached the bottom. I am still waiting to see the worst," the minister said. (source:AFP)

Mexico asks U.S. to resist temptation of protectionism

Mexican President Felipe Calderon urged the United States to avoid raising new barriers to international trade, arguing that a resurgence of global protectionism will only make the world economic crisis worse.

Pressure is growing on politicians around the world to protect local industries as an economic downturn hits workers.

"Putting up trade barriers, which is a big temptation in all economies ... would worsen the crisis," Calderon told Mexican television in an interview late on Saturday.

"If the United States falls into that temptation to raise new barriers to international trade, including barriers for Mexico, it will ... make it harder to emerge from the crisis," he said.

Mexico and the United States are major trading partners but are currently locked in a trade dispute that erupted this month after the United States canceled a program allowing Mexican truckers onto U.S. highways.

Mexico retaliated with new tariffs on everything from American strawberries to Christmas trees, arguing that Mexican truckers are allowed on U.S. highways under the North American Free Trade Agreement, or NAFTA.

Calderon, who is due to meet with U.S. President Barack Obama when the American leader visits Mexico in April, called the U.S. ban on Mexican truckers "absurd."

He suggested Washington was acting on behalf of the U.S. teamsters union.

Global trade relations will also be a topic of discussion at the G20 meetings in London next week, where leaders from major economies will hold talks to plot a pathway out of the world's worst economic crisis since the 1930s.

Calderon said he would push at the G20 talks for more resources for global financial institutions, like the International Monetary Fund. (Source:Reuters)

China challenges US global financial leadership

The only major economy still growing at a fast clip, China is being unusually forthright in challenging the U.S.-led global order ahead of an April 2 summit on the financial crisis.

In his second rebuke of U.S. leadership this past week, the central bank governor, Zhou Xiaochuan, said China's rapid response to the downturn — including a 4 trillion yuan ($586 billion) stimulus package — proved the superiority of its authoritarian, one-party political system.

"Facts speak volumes, and demonstrate that compared with other major economies, the Chinese government has taken prompt, decisive and effective policy measures, demonstrating its superior system advantage when it comes to making vital policy decisions," Zhou said in remarks posted on the People's Bank of China's Web site.

In the approach to the London summit of 20 leading economies, Zhou called on foreign governments to give their finance ministers and central bankers broad authority so that they can "act boldly and expeditiously without having to go through a lengthy or even painful approval process."

China has made its agenda clear: It wants a stable U.S. dollar, and has even advocated the creation of another global currency altogether. It is leery of protectionism. And it is demanding a larger say in how financial systems are regulated and rescued, while holding back on any promises for new rescue or stimulus measures of its own.

"So far, China has been playing a game set up by other powers. Now China wants to be part of the agenda or rules-setting," said Ding Xueliang, a China expert at Hong Kong's University of Science and Technology.

Whether Beijing has a workable alternative vision for the future of world finance remains to be seen.

But China's growing assertiveness also suggests a sharpening urgency over its vulnerability to the global financial meltdown.

Fearful of any moves that might weaken the dollar and imperil China's estimated $1 trillion in Treasuries and other U.S. government debt, Chinese Premier Wen Jiabao has urged the United States to remain "a credible nation." In other words, Beijing wants Washington to avoid spurring inflation with excessive government spending on bailouts and stimulus packages. (quote: AP)

U.S. consumer spending rises 0.2 percent

U.S. consumer spending rose for a second straight month in February, while incomes reversed the previous month's gains, government data showed on Friday.

The Commerce Department said spending increased by 0.2 percent, after rising by a revised 1 percent in January, previously reported as a 0.6 percent increase. However, after adjusting for inflation, consumer spending in February fell 0.2 percent.

Incomes fell by 0.2 percent after January's revised 0.2 percent rise. Analysts polled by Reuters had forecast spending to rise by 0.2 percent and incomes to fall 0.1 percent.

Savings fell slightly to an annual rate of $450.7 billion. The savings rate was at 4.2 percent in February, indicating that households were still remaining frugal.

Prices edged up in February, with the overall personal consumption expenditures price index rising 1 percent on a year-over-year basis from 0.8 percent in January. Excluding food and energy, the index rose 1.8 percent after gaining 1.7 percent in January. (source: Reuters)

Indonesian economy seen further signs of decline

Indonesia, the largest economy in Southeast Asia, is coming under increasing strain from the financial crisis with new projections showing plummeting exports and slowing growth.

Bank Indonesia Deputy Chief Hartadi Sarwono said Thursday economic growth may slow to below 4 percent in 2009, down from 6.1 percent last year, due largely to declining exports.

Exports could contract by up to 28 percent annually in 2009, he said, after falling more than 30 percent in January.

Indonesia is a major exporter of coal, gold, palm oil, rubber and other precious metals. It also manufacturers textiles, shoes, electronics, automobiles and motorcycles.

Although Indonesia is relatively less reliant on exports than other Asian nations, declining shipments to overseas markets has started dragging down domestic consumption and gross domestic product.

"We have to see the risk of a (GDP) fall to below 4 percent, but BI's growth projection remains 4 percent because it's too early to make a revision," Sarwono said.

Indonesia, which has weathered the global crisis better than many Asian countries so far, has allocated funds for a fiscal stimulus package but those measures have yet to take effect.

A steep fall in commodities prices is also hurting businesses, which have been forced to lay off hundreds of thousands of workers. (AP)

Indonesia Retail growth in the second top Asia-Pacific

Indonesia retail sector growth in the year 2008 still sit second position after China in the Asia Pacific region. Although the crisis was, retail growth in Indonesia is still growing in 21.1% of the value of sales.

Thus presented by Retailer Service Director of AC Nielsen Yongky Surya Susilo in a press conference in Jakarta on Thursday (19/3/2009).

Say, although in the year 2008 begins with the increase in food prices that high, thus making the retail in the country is very cautious in developing the strategy. As a result, consumer purchasing power over the class was still awake even though there are some aspects that create a decrease in growth.

"Although consumer confidence in the index to decline, consumer purchasing power decreases and classes to the penetration of modern retail is also down, retail industry does not make Indonesia's ranking fell from top 2 Asia Pacific," he said.

Yongky said, out of position throughout the month of January-November 2008 from the same period in 2007 China's retail growth in Asia Pacific still leads at the top with 22% growth in sales volume and 10.4%, followed by Indonesia, India and Singapore.

Meanwhile, Hong Kong experienced sales growth rate of 9.9% and 0.5% volume. India and 18.4% for sales, 6.6% for volume. Indonesian sales to grow 20.6% volume and 4.5%, Malaysia 11.8% sales volume grew 3% Philippines ago sales grew only 7.7% Singapore 3.6% volume sales grew 11.9%, and volume 5, Thailand 8% and sales grew 8% and 3.3% volume.

While the two countries in the Asia-Pacific growth minus the South Korea in the volume growth of minus 5.1% and 9.7%, and sales in Taiwan sales down 3.4% and 7.3% volume.

"The minus is that irrespective of the impact of the crisis," Yongky said.

Kuwait to scrap $14 billion refinery project

Kuwait is scrapping a $14 billion project to build a fourth refinery in the oil-rich country, the prime minister said in remarks published Sunday. The announcement was the second cancellation of a major oil project since December amid government corruption allegations.

Sheik Nasser Al Mohammed Al Sabah told Al-Watan newspaper the decision, which the Cabinet will formally take Monday, was in compliance with results from an investigation by Kuwait's financial watchdog, the Audit Bureau.

He did not elaborate. But lawmakers have accused state officials of profiteering from the project because the contracts to build it did not go through the Central Bidding Committee. The Cabinet denies the accusations.

The cancellation comes at a time of elevated tension between Kuwait's executive and legislative powers, and parliament members have accused the prime minister of wrongdoing and inadequacy.

Since the beginning of this month, five lawmakers have barraged Sheik Nasser with a number of attempts to question him in parliament over possible misuse of funds, failing to run the country and demolishing a mosque.

The ruler, Sheik Sabah Al Ahmed Al Sabah, might dissolve parliament to pre-empt hearings scheduled for Tuesday. They are seen as an embarrassment to the ruling family and they could lead to a decision by parliament to declare its intent not to cooperate with Sheik Nasser's Cabinet.

In November, the Cabinet resigned to stop an attempt by three lawmakers to question Sheik Nasser about corruption and deteriorating public services despite the country's oil wealth. Many lawmakers said the accusations were unfair, and the emir reappointed him as prime minister. Sheik Nasser formed a new Cabinet in January with few new faces.

The scrapped refinery was to come on line 2012 with a capacity of 615,000 barrels a day.

The state-owned Kuwait National Petroleum Co. said in May it has awarded the main $3.99 billion contract to build it to Japan's JGC and South Korea's GS Engineering and Construction Corp. Other South Korean companies were to build some of its facilities.

Bowing to lawmaker pressure, the Cabinet in December backtracked on a $17.4 billion joint venture with U.S. giant Dow Chemical Co., just days before the petrochemical project was to be launched. Legislators had threatened to question the prime minister in parliament because they said the deal was not transparent and too expensive.

The cancellation raised concerns about the country's credibility with foreign investors and the effect of local politics on the development of the oil sector, the mainstay of the economy.

Oil analyst Kamel al-Harami said canceling contracts will harm Kuwait's business reputation. But he stressed that investors have to respect that unlike most other Arab Gulf neighbors, Kuwait has an active parliament.

He said the real danger was the "inability" of higher management in the country's state-owned companies to deal with mega projects.

G20 skirts discord to focus on rescue fund boost

G20 finance ministers sought on Saturday to reassure struggling countries that they could rely on international aid, but they differed on what to do next about fighting the worst economic crisis since the 1930s.

China, India, Brazil and Russia called for stricter control of hedge funds, for example, but one European official said the matter was "not the priority of priorities" for Britain, which holds a crucial summit on the crisis on April 2.

The ministers, meeting south of London to lay the ground for that meeting, were expected to paper over splits on the emphasis and urgency to be given to anti-recession spending on the one hand and regulation on the other.

Nor was there any more clarity from the United States on how it plans to clean up banks' toxic assets, which many say is essential to get the world economy moving again.

That shifted the primary focus to securing pledges that the International Monetary Fund, Asian Development Bank and other agencies have the financial firepower to come to the rescue of countries in difficulty.

"We need a commitment from countries that they will do whatever is necessary and as for long as necessary to support their economies," said Alistair Darling, Britain's finance minister, host to the talks at a luxury countryside hotel.

Perhaps mindful of the massive exodus of money that occurred during the Asian financial crisis of the 1990s, Darling added:

"We really must take action to stop damage being done to the emerging economies, who are seeing money coming out of their systems."

The IMF has spent close to $50 billion bailing out countries in eastern Europe in recent months and is asking for its funding for rescue duties to be doubled to $500 billion, while the Asian Development Bank is also hoping for more ammunition.

China, India, Russia and Brazil backed the call and officials said a communique to be issued by the G20 as a group later in the day was expected to cover similar ground.

"It is imperative that multilateral financial institutions should expand their lending to offset the massive decline," said a statement by China, India, Russia and Brazil, the four emerging economic powers known as the BRIC nations.

They and the rest of the G20 accounts for over 80 percent of the world's output, or gross domestic product, which is expected to shrink this year and by more than any year since the 1930s as a financial crisis that spilled from the United States in 2007 hits confidence, activity, trade and jobs worldwide.

BANKS KEY

Officials speaking on condition of anonymity indicated that the meeting would gloss over differences on issues such as how much governments should spend by just saying in general that all must to their utmost to support demand with fiscal stimulus.

The United States was demanding earlier this week that other governments commit two percent of GDP to such stimulus and more than they are currently doing in certain cases, but that exposed a rift with the likes of Germany and France.

"You should not expect any big numbers or any concrete demands," said one official involved in the proceedings.

France considers Washington's call a distraction from G20 pledges at a summit last November to combine stimulus with a host of reforms to rein in the excesses of banks and financial markets that led to the current crisis.

Two meeting sources also said a relatively brief G20 communique would lay out a broad framework but leave specifics for the April summit that British Prime Minister Gordon Brown is billing as delivery time on last November's G20 pledges.

World Bank chief Robert Zoellick, also attending the meeting on Saturday, said government spending would give the economy no more than a brief "sugar high" if governments failed to rid banks of toxic assets that continue to undermine confidence, trust and the desire to lend or invest.

Canadian Finance Minister Jim Flaherty said too that this was the nub of the problem now.

"Hopefully we will have an agreement on steps to be taken and I would hope some timeline about steps to be taken to isolate toxic assets in banks, that is fundamental," he said.

"There has been some delay with respect to solving it....In the U.S. and Europe there is still work to be done."

Along with regulation of hedge funds, France is pushing for progress on tougher control of credit ratings agencies, which stand accused of fuelling the crisis by granting high ratings to many derivatives that have now turned into toxic assets.

The ministers can be expected to take some of the credit for at least one small advance in recent days.

Under mounting international pressure, Switzerland, Austria and Luxembourg offered on Friday to partly relax strict bank secrecy in some tax evasion cases.

Welcome as the moves are to many other countries which fear tax evasion, German Finance Minister Peer Steinbrueck said that Swiss promises to relax secrecy in some cases was no substitute for more ambitious goals formulated by the OECD.(Reuters)

'Excess of fear' must be broken

President Barack Obama's top economic adviser said Friday the nation's economic crisis has led to an "excess of fear" among Americans that must be broken to reverse the downturn.

"Fear begets fear," and that "is the paradox at the heart of the financial crisis," Lawrence Summers, the president's director of the National Economic Council, told a forum.

"It is this transition from an excess of greed to an excess of fear that President Roosevelt had in mind when he famously observed that the only thing we had to fear was fear itself," Summer said. "It is this transition that has happened in the United States today."

Summers spoke amid new signs of a deepening recession. The U.S. trade deficit plunged in January to the lowest level in six years as the economic downturn cut America's demand for imported goods, the Commerce Department reported Friday.

The economic adviser said it's still too early to gauge the broad impact of the president's recovery program.

"But it is modestly encouraging that since it began to take shape, consumer spending in the U.S., which was collapsing during the holiday season, appears, according to a number of indicators, to have stabilized," Summers told the Brookings Institution, a think tank.

Summers was asked by a member of the audience what the nation's business community could do to help speed the recovery.

"What we need today is more optimism and more confidence," Summers said.

"Those who have sound long-term stragegy, who have investments that they want to make, who see productive opportunities, are going to find this a very good moment to make those investments," he said. "There are a very large number of things that are on sale today. Think about the cost of doing construction today, versus the cost of doing construction two years ago.

"My advice to business leaders is not to foreshorten the horizon at a moment like this."

On Wall Streets, stocks were seesawing after three straight days of gains.

The government said the U.S. trade imbalance dropped to $36 billion in January, the lowest level since October 2002.

However, while America's deficit with many of its trading partners declined sharply, the politically sensitive shortfall with China bucked the trend, rising by 3.5 percent to $20.6 billion.

U.S. manufacturing companies, battered by what they view as unfair competition from China, said that the continued high deficit with that nation pointed to a need for the Obama administration to take a tougher line on trade rules with the Chinese. (AFP)

World's Billionaires 2009

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 our 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.

The world's richest are also a lot poorer. Their collective net worth is $2.4 trillion, down $2 trillion from a year ago. Their average net worth fell 23% to $3 billion. The last time the average was that low was in 2003.

Bill Gates lost $18 billion but regained his title as the world's richest man. Warren Buffett, last year's No. 1, saw his fortune decline $25 billion as shares of Berkshire Hathaway (BRK) fell nearly 50% in 12 months, but he still managed to slip just one spot to No. 2. Mexican telecom titan Carlos Slim Helú also lost $25 billion and dropped one spot to No. 3.

It was hard to avoid the carnage, whether you were in stocks, commodities, real estate or technology. Even people running profitable businesses were hammered by frozen credit markets, weak consumer spending or declining currencies.

The biggest loser in the world this year, by dollars, was last year's biggest gainer. India's Anil Ambani lost $32 billion--76% of his fortune--as shares of his Reliance Communications, Reliance Power and Reliance Capital all collapsed.

Ambani is one of 24 Indian billionaires, all but one of whom are poorer than a year ago. Another 29 Indians lost their billionaire status entirely as India's stock market tumbled 44% in the past year and the Indian rupee depreciated 18% against the dollar. It is no longer the top spot in Asia for billionaires, ceding that title to China, which has 28.

Russia became the epicenter of the world's commodities bust, dropping 55 billionaires--two-thirds of its 2008 crop. Among them: Dmitry Pumpyansky, an industrialist from the resource-rich Ural mountain region, who lost $5 billion as shares of his pipe producer, TMK, sank 84%. Also gone is Vasily Anisimov, father of Moscow's Paris Hilton, Anna Anisimova, who lost $3.2 billion as the value of his Metalloinvest Holding, one of Russia's largest ore mining and processing firms, fell along with his real estate holdings.

Twelve months ago Moscow overtook New York as the billionaire capital of the world, with 74 tycoons to New York's 71. Today there are 27 in Moscow and 55 in New York.

After slipping in recent years, the U.S. is regaining its dominance as a repository of wealth. Americans account for 44% of the money and 45% of the list's slots, up seven and three percentage points from last year, respectively. Still, it has 110 fewer billionaires than a year ago.

Those with ties to Wall Street were particularly hard hit. Former head of AIG (AIG) Maurice (Hank) Greenberg saw his $1.9 billion fortune nearly wiped out after the insurance behemoth had to be bailed out by the U.S. government. Today Greenberg is worth less than $100 million. Former Citigroup (C) Chairman Sandy Weill also falls from the ranks.

Last year there were 39 American billionaire hedge fund managers; this year there are 28. Twelve American private equity tycoons dropped out of the billionaire ranks.
Blackstone Group's (BX) Stephen Schwarzman, who lost $4 billion, and Kohlberg Kravis & Roberts' Henry Kravis, who lost $2.5 billion, retain their billionaire status despite their weaker fortunes.

Worldwide, 80 of the 355 drop-offs from last year's list had fortunes derived from finance or investments.

While 656 billionaires lost money in the past year, 44 added to their fortunes. Those who made money did so by catering to budget-conscious consumers (discount retailer Uniqlo's Tadashi Yanai), predicting the crash (investor John Paulson) or cashing out in the nick of time (Cirque du Soleil's Guy Laliberte).

So is there anywhere one can still make a fortune these days? The 38 newcomers offer a few clues. Among the more notable new billionaires are Mexican Joaquín Guzmán Loera, one of the biggest suppliers of cocaine to the U.S.; Wang Chuanfu of China, whose BYD Co. began selling electric cars in December, and American John Paul Dejoria, who got the world clean with his Paul Mitchell shampoos and sloppy with his Patrón Tequila. (forbes)

Oil prices drop on OPEC warning

Oil prices fell Wednesday as Algerian energy minister and former OPEC president Chakib Khelil told AFP that the market would continue sliding if the cartel refrained from cutting output this weekend.

Traders were meanwhile gearing up for the release of key data on energy stockpiles in key consumer the United States.

In London, Brent North Sea crude for delivery in April fell 64 cents to 43.32 dollars a barrel.

New York's main futures contract, light sweet crude for April, dropped 92 cents to 44.79 dollars.

Ministers of the Organization of Petroleum Exporting Countries (OPEC), the cartel that pumps about 40 percent of world crude, meet Sunday in Vienna to discuss whether to slash output in a bid to shore up prices.

"If nothing is done, prices will fall in the second quarter," Khelil said, adding that the market remained oversupplied ahead of OPEC's gathering.

Khelil said he believed the "majority" of OPEC's 12 member nations backed a reduction in production that would help to support prices and in turn their incomes.

Elsewhere, the US Department of Energy (DoE) on Wednesday is to release its latest weekly update on energy inventories in the United States, the world's biggest oil consuming nation.

"We would certainly pay close attention to crude stocks and refinery runs, following a sharp rise in (US) refinery capacity" in last week's data, VTB Capital analyst Andrey Kryuchenkov said.

"There is a slim chance for a small (fall) in crude inventories, provided runs remain near the same levels as the previous week."

Even though US refineries are working harder, DoE data released on Tuesday projected average annual world oil consumption will decline by almost 1.4 million barrels per day in 2009.

OPEC, which pumps about 40 percent of world crude, had agreed late last year to reduce output by 4.2 million barrels a day as oil prices plunged from record highs of more than 147 dollars a barrel in July with the economic crisis hurting demand.

"Right now the message out of OPEC is mixed," said Victor Shum, senior principal at energy consultancy Purvin and Gertz in Singapore.

"I think what is likely to happen is that there will be a lot of comments to stick to full compliance (with) output cuts that have been planned and there will not be further cuts," he told AFP.

"At the time they meet, if pricing is really below 40 dollars, that will give OPEC more reason to cut output," Shum added.

Some analysts said the market still believed that the OPEC cartel had not done enough to check falling prices.

"As we approach the March OPEC meeting, crude oil markets appear to be in much better balance than the last time OPEC met and this is due in no small part to the excellent compliance by OPEC members with the lower quotas agreed at the December meeting," said Nic Brown of Natixis.

"Does this mean that OPEC has done enough? We suspect not," Brown added. (AFP)

World Bank: Developing world may need $700 billion

Developing countries could face a financing gap of $270-$700 billion -- equivalent to the latest U.S. economic rescue package -- to help deal with the effects of the global crisis, the World Bank said on Sunday.

The World Bank said even at the lower end of that estimate, resources of international institutions would not be sufficient to meet the financing needs as more and more emerging and developing countries are hit.

"Should a more pessimistic outcome occur, unmet financing needs will be enormous," the World Bank said in a paper prepared for meetings of the G20 group of countries in London in April.

The World Bank spends billions of dollars annually fighting poverty in developing countries.

Last week, the International Monetary Fund said developing countries would need $25 billion, and possibly as much as $140 billion, in 2009 to meet their financing needs.

The World Bank said the crisis threatened long-lasting repercussions for developing countries, struggling to find markets for goods as world trade volumes suffer their first annual decline since 1982, while remittances from overseas workers slow, and falling commodity prices provide less revenue for governments.

"The challenge facing developing countries is how, with fewer resources, to pursue policies that can protect or expand critical expenditures, including on social safety nets, human development and critical infrastructure," the World Bank said.

Until recently, the impact the crisis would have on developing countries was unclear. But recent data has highlighted the potential scale of the damage, prompting institutions like the World Bank and IMF to raise alarm bells.

The worry is that many developing countries will not be able to afford fiscal stimulus packages of their own and will require aid from external sources.

MATURING DEBT RISKS

More immediately, concerns are mounting as to how the rollover of maturing debt in emerging markets will be financed given the global credit crunch, especially for banks and large corporations, which will put financial pressure on governments who themselves are finding foreign capital hard to access.

The World Bank estimates well over $1 trillion in emerging market corporate debt and $2-3 trillion in total emerging market debt will mature in 2009, the majority of which reflects claims of major global banks extended cross-border or through affiliates and branches in emerging markets.

Most of this lending is in foreign currency, and for relatively short terms, meaning currency and maturity risks are primarily on the balance sheet of emerging market banks, corporate and households.

"There is mounting evidence of growing pressure on interbank lines, particularly those extended to the corporate sector. Recent evidence of rollover efforts on public debt of major corporates indeed suggests that even stronger corporates in key emerging markets are struggling," the World Bank said.

It estimated that in 2009, 104 of 129 developing countries will have current account surpluses smaller than private debt coming due. For these countries, total financing needs were expected to amount to more than $1.4 trillion during the year.

External financing needs are expected to exceed private sources of financing (equity flows and private debt disbursements) in 98 of the 104 countries, implying a financing gap -- not taking into account flows from official sources -- in those 98 countries of about $268 billion.

Should rollover rates, or loan renewals, come in lower than expected, or capital flight significantly increase, this figure could rise to almost $700 billion, the World Bank said.

It said the situation could become as severe in poorer countries where falling growth will impact families living just above the poverty line, who are particularly vulnerable.

Many of the worst affected countries are heavily reliant on aid which could be cut as rich nations cope with budget pressures of their own.

"There is a therefore a strong need to expand assistance to (lower income countries) to protect critical expenditures and prevent an erosion of progress in reducing poverty," the World Bank said.

Meanwhile, the likely sharp drop in remittances will affect the incomes of poor families as unemployment rises and more migrant workers lose their jobs in Europe and the United States.

Remittance flows are estimated to have reached $305 billion in 2008, up 9 percent from 2007. World Bank projections suggest remittances to developing countries will fall in 2009, with Africa, Eastern Europe and Central Asia hardest hit. (reuters)

When economy bottoms out, how will we know?

When will this wretched economy bottom out? The recession is already in its 15th month, making it longer than all but two downturns since World War II. For now, everything seems to be getting worse: The Dow is in free fall, jobs are vanishing every day, and one in eight American homeowners is in foreclosure or behind on payments.

But the economy always recovers. It runs in cycles, and economists are watching an array of statistics, some of them buried deep beneath the headlines, to spot the turning point. The Associated Press examined three markets — housing, jobs and stocks — and asked experts where things stand and how to know when they've hit bottom.

None of them expects it to come anytime soon.

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JOBS

HOW BAD IS IT?: The U.S. unemployment rate hit 8.1 percent in February, a 25-year peak. The nation has lost 4.4 million jobs since the recession began in late 2007.

The job cuts began early last year, as the housing and construction industries slowed down. The collapse of the financial industry in the fall battered white-collar workers. Soon, layoffs spread across industries and income levels.

HOW MUCH WORSE COULD IT GET? The darkest days for the job market are almost certainly still ahead. With spending weak and credit markets stalled, experts think the economy will probably shed a total of 2.4 million jobs this year. That would mean an unemployment rate above 9 percent.

That would easily surpass the 2001 and 1990-91 recessions but trail the 10.8 percent rate of December 1982. Those expectations could be optimistic: The government's "stress tests" to check the strength of banks' balance sheets assume a 10.3 percent rate.

The job market will probably be weak for years, even if the economy starts to turn around next year. The unemployment rate may not fall back to its pre-recession level of 5 percent until 2013, according to Moody's Economy.com.

WHERE'S THE BOTTOM?: Economist Sophia Koropeckyj, a managing director at Moody's Economy.com, is keeping an eye out for two signs — an inching up in companies hiring temporary workers and a rise in the number of hours worked by those who have managed to keep their part-time and full-time jobs.

When business conditions improve, employers hire temporary workers first, she said, and a pickup in permanent hiring wouldn't be far behind. Koropeckyj estimated that could come in mid-2010.

HOUSING

HOW BAD IS IT?: The median price of a home sold in the United States fell to $170,300 in January, down 26 percent from a year and a half earlier, according to the National Association of Realtors.

But that figure masks the complexity of the market. Price drops have been far steeper around Phoenix and Las Vegas, where new homes sprouted everywhere during the housing boom, than, say, in Detroit, where economic problems predate the recession.

And even within a single metro area, price declines vary sharply. Faraway suburbs, where many buyers stretched to qualify for mortgages, have been hit harder than city centers.

This housing crash has spread pain more widely than any before it. Home prices fell about 30 percent during the Great Depression, according to calculations by Yale University economist Robert Shiller. But the nation was less concentrated in urban centers then. And a much smaller proportion of adults owned homes.

Other housing downturns in recent decades have been regional. This one is truly national. Prices in the fourth quarter of 2008 fell in nearly 90 percent of the top 150 metro areas, according to the Realtors group. And 5.4 million homeowners, about 12 percent, were in foreclosure or behind on mortgage payments at the end of last year.

HOW MUCH WORSE COULD IT GET?: The Federal Reserve estimates home prices could fall 18 to 29 percent more by the end of 2010. Declines will probably be less severe in cities with healthier economies that don't have a glut of unsold homes, like Tulsa, Okla., and Wichita, Kan.

The nation's overall economic health is vital to the health of housing. "History tells us that as long as we're losing jobs, that's not good news for the housing market," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies.

WHERE'S THE BOTTOM?: Susan Wachter, a professor of real estate at the University of Pennsylvania, is watching the backlog of unsold homes. At January's sales pace, it would take about 9 1/2 months to rid the market of all those properties. A more normal pace would be six months.

Once foreclosures level off and the backlog is cleared, Wachter says, the housing market can begin to recover. But even with the Obama administration directing $75 billion in bailout money to stave off foreclosures, most economists don't expect home prices to bottom out before the first quarter of 2010. And don't expect an explosive rebound: Price increases will probably be modest when they come.

STOCKS

HOW BAD IS IT?: The Dow Jones industrial average and the Standard & Poor's 500 index have lost more than half their value since the stock market peaked in October 2007. It's the worst bear market since the aftermath of the crash of 1929, when the Dow plunged 89 percent and the S&P 500 index tumbled 86 percent.

HOW MUCH WORSE COULD IT GET? Analysts generally think Wall Street has endured the worst of the bear market. But many of those same analysts never thought the market would fall this far.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said the Dow could fall to 6,000 if the economy slows much further and unemployment rises well past the current 8.1 percent. He pegs the likelihood of that at about 30 percent. Others are more pessimistic. Bill Strazzullo, chief market strategist for Bell Curve Trading, contends the Dow might fall to 5,000 and the S&P to 500.

WHEN WILL THE BOTTOM COME?: In downturns over the past 60 years, the S&P 500 has hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.

Investors will be looking for turnarounds in housing, lending and employment, plus signs that consumer spending has picked up. Then market players would be more likely to move their money from safe havens, such as gold, back into stocks.

Other investors may look to obscure indicators such as the Baltic Dry Index, which tracks the cost of shipping iron ore, grain and other materials. Rising rates can indicate demand for raw materials is increasing, which suggests a strengthening economy.

But most of all, traders are waiting for a sudden spasm of selling known as capitulation. That wrings fearful investors out of the market, and as they rush out, bargain-hunters rush in. Capitulation would trigger a huge plunge in prices and frenzied trading volume.

Many market experts say the bottom of the stock market could come in the second or third quarter of this year. And the recovery, whenever it comes, could be as breathtaking as the fall: Since 1932, the S&P 500 has gained an average of 46 percent in the year after stocks have hit a bottom. (AP)

Senate Republicans force delay on spending bill

Senate Republicans, demanding the right to try to change a huge spending bill, forced Democrats on Thursday night to put off a final vote on the measure until next week. The surprise development will force Congress to pass a stopgap funding bill to avoid a partial shutdown of the government.

Republicans have blasted the $410 billion measure as too costly. But the reason for GOP unity in advance of a key procedural vote was that Democrats had not allowed them enough opportunities to offer amendments.

Majority Leader Harry Reid, D-Nev., canceled the vote, saying he was one vote short of the 60 needed to close debate and free the bill for President Barack Obama's signature.

Democrats and their allies control 58 seats, though at least a handful of Democrats oppose the measure over its cost or changes in U.S. policy toward Cuba. That meant Democrats needed five or six Republican votes to advance the bill.

None of the GOP's amendments is expected to pass, but votes on perhaps a dozen are now slated for Monday night, Reid said.

The huge, 1,132-page spending bill awards big increases to domestic programs and is stuffed with pet projects sought by lawmakers in both parties. The measure has an extraordinary reach, wrapping together nine spending bills to fund the annual operating budgets of every Cabinet department except for Defense, Homeland Security and Veterans Affairs.

Once considered a relatively bipartisan measure, the measure has come under attack from Republicans — and a handful of Democrats — who say it is bloated and filled with wasteful, pork-barrel projects.

The measure was written mostly over the course of last year, before projected deficits quadrupled and Obama's economic recovery bill left many of the same spending accounts swimming in cash.

And, to the embarrassment of Obama — who promised during last year's campaign to force Congress to curb its pork-barrel ways — the bill contains 7,991 pet projects totaling $5.5 billion, according to calculations by the GOP staff of the House Appropriations Committee.

Sen. John McCain, R-Ariz., Obama's opponent in last fall's presidential campaign, called the measure "a swollen, wasteful, egregious example of out-of-control spending" and again criticized Obama for pledging to sign the measure despite his earlier promises on earmarks.

"It doesn't sound like he's willing to use his veto pen to back up his vow," McCain said.

The earmarks run the gamut. There's $190,000 for the Buffalo Bill Historical Center in Cody, Wyo., $238,000 to fund a deep-sea voyaging program for native Hawaiian youth, agricultural research projects, and grants to local police departments, among many others.

While earmarks have come under attack from conservative watchdog groups and cable television commentators, lawmakers in both parties seek them, arguing they best know the needs of their states and home districts. Under a long-standing tradition, Republicans get about 40 percent of them since they are the minority party.

Several lawmakers took to the floor during the week to defend their projects, including Sen. Tom Harkin, D-Iowa, who backed $1.7 million for pig odor research. Sen. Carl Levin, D-Mich., promised $3.8 million to preserve and redevelop part of old Tiger Stadium to help revitalize a distressed area of Detroit.

By a 52-42 vote Thursday, Democrats cleared the way for the Obama administration to reverse a rule issued late in the Bush administration reverse that says greenhouse gases cannot be restricted in an effort to protect polar bears from global warming. Another Bush administration rule that reduced the input of federal scientists in endangered species decisions can also be quickly overturned without a lengthy rulemaking process.

The big increases — among them a 21 percent boost for a popular program that feeds infants and poor women and a 10 percent hike for housing vouchers for the poor — represent a clear win for Democrats who spent most of the past decade battling with President George W. Bush over money for domestic programs.

Generous above-inflation increases are spread throughout, including a $2.4 billion, 13 percent increase for the Agriculture Department and a 10 percent increase for the money-losing Amtrak passenger rail system.

Congress also awarded itself a 10 percent increase in its own budget, bringing it to $4.4 billion. But the House inserted a provision denying lawmakers the automatic cost-of-living pay increase they are due next Jan. 1.

Separately, the House on Thursday rejected an effort by Rep. Jeff Flake, R-Ariz., to launch an ethics committee investigation into possible connections between campaign contributions made by the PMA Group lobbying firm and special projects designated in the spending bill that benefit clients of the firm. The vote to table, or kill, Flake's resolution was 222-181. (AP)

China to grow about 8 pct despite crisis

Premier Wen Jiabao said Thursday China was facing unprecedented challenges from the global crisis but he was confident the country would still achieve economic growth of about eight percent this year.

In his annual "state of the nation" address to open parliament, Wen gave the most detailed blueprint yet of a four-trillion-yuan (585-billion-dollar) stimulus plan aimed at steering China through the downturn.

The premier acknowledged the Chinese economy, the third-biggest in the world, was hurting and the climate was not expected to get better soon in the face of a global recession that has weakened demand for Chinese goods.

"We face unprecedented difficulties and challenges. The global financial crisis continues to spread and get worse," Wen told the 3,000 delegates gathered for the Communist Party's showpiece political event of the year.

"Demand continues to shrink on international markets. The trend for global deflation is obvious and trade protectionism is resurgent," he told the lawmakers, who will be gathered for nine days.

But Wen said China's economy was still expected to grow by about 8.0 percent this year -- a rate officials have stressed is needed to prevent social unrest triggered by widescale unemployment.

"We are fully confident that we will overcome difficulties and challenges, and we have the conditions and ability to do so," Wen said, delivering a rare bit of relatively positive news on the global economic front.

China's economic growth dipped to 6.8 percent in the final quarter of last year, worrying figures for a government long used to double-digit expansions and marking a dramatic slowdown from 13.0 percent growth in all of 2007.

The slowdown in China's economy, which is reliant on exports to developed economies that are now in recession, has made 20 million rural migrant workers jobless in recent months amid countless factory closures.

China typically sees tens of thousands of protests each year even in economic boom times, and rising unemployment has fuelled fears among the communist leadership of social unrest.

Wen also acknowledged problems that could fuel tensions and had been exacerbated by the crisis, such as an inadequate social safety net and health care system, as well as a wealth gap.

But he said the 8.0-percent growth target was achievable and would provide a sound platform for creating millions of jobs and soothing social tensions.

"Maintaining a certain growth rate for the economy is essential for expanding employment for both urban and rural residents, increasing people's incomes and ensuring social stability," he said.

Wen's assessment was more optimistic than that of the International Monetary Fund, which has forecast economic growth for China this year of 6.7 percent.

Highlighting unrest concerns, security was tight around the Great Hall of the People, where parliament was sitting, and dissidents told AFP that authorities had placed new restrictions on their movements.

"There are police stationed outside 24 hours and I can't go anywhere unless I travel in a police car," dissident Gao Hongming told AFP by phone from his Beijing home.

Adding to the sense of unease are tensions surrounding China's 58-year rule of Tibet as a sensitive 50th anniversary of a failed uprising falls on March 10.

Wen gave details of the wide-ranging plan for the four-trillion-yuan stimulus package, which is to be spent over two years and contribute to a record budget deficit of 950 billion yuan in 2009.

This included plans to boost domestic consumption, raise incomes for the nation's roughly 800 million people living in the countryside and give support for the steel, auto and other industries.

Spending to improve the social safety net will increase 17.6 percent this year to 293 billion yuan, Wen said.

The budget for medical and health care will rise 38.2 percent to 118.06 billion yuan.

The plans had a mixed impact on regional stock markets, with the Chinese, Australian and Japanese bourses rising on Thursday but Hong Kong's declining. European stock markets opened lower. (AFP)

The End of Neoliberalism?

The economist and author Prof Patrick Bond warns that the optimism about the dawn of a post-neoliberal era is premature and that ‘‘a more dangerous and painful’’ period may be ahead before any real change to the current global economic regime will be possible.

The understanding of the global economic crisis needs to move beyond concern with the financial form of the crisis to a richer sense of why capitalist dynamics are to blame, argues Bond, who is director of the Centre for Civil Society (CCS) at the University of KwaZulu Natal, in a recent paper. The CCS is based in Durban, South Africa.

In his paper he refers to comments by, among others, German chancellor Angela Merkel telling Time magazine that if the global elite ‘‘are not in a position to show that we can create a social order for the world in which such crises do not take place, then we'll face stronger questions as to whether this is really the right economic system’’.

Even conservative media such as Time magazine has featured Karl Marx, the author of Capital, on its cover with the question ‘‘What would Marx think (about the global crisis)?’’

Despite these apparent shifts in mainstream discourses, Bond points to three warning signs that show that the end of neoliberalism may still be some time off. The first is that public policy will suffer from austerity measures, associated with economic volatility, and from ‘‘a renewed lobby for micro-neoliberal measures’’.

Second, there is still ‘‘unjustified faith’’ in the multilateral system, including ‘‘a Bretton-Woods revivalism’’, which draws attention away from the national-scale solutions. Bretton-Woods refers to the meeting place where global powers formed the International Monetary Fund (IMF) and the World Bank after the Second World War, hence the moniker ‘‘Bretton Woods institutions’’.

Third, a new threat has emerged in the form of a re-legitimised neoliberalism and imperialism, ‘‘via the election of Barack Obama as U.S. president’’, according to Bond. His criticism of Obama centres on the latter’s choice of economic policy managers, which include several figures from the Clinton administration.

Among these is Lawrence Summer who was the main driving force in Washington behind the financial deregulation of the 1990s, which led to the global crisis. He also instigated the Asian economic crisis of 1997-1998.

Bond shows that the shift in rhetoric is not backed up in practice. He quotes

At a press conference after the Group of 20 (G20) summit on the financial crisis in November 2008, IMF managing director Dominique Strauss-Kahn urged all nations with the wherewithal to implement fiscal stimulus packages.

Bond reads this statement as aimed at satisfying the political imperative of the Bretton-Woods institutions to be seen as acting forcefully because of the global crisis.

But This is starkly contradicted by the IMF’s policy ‘‘advice’’ for South Africa, released in October 2008.

In its reports on South Africa, the IMF applies pressure on the South African government to maintain a budget surplus; and to implement privatisation for infrastructure and social needs, including electricity and transport. It pressurises the South African Reserve Bank to maintain current inflation-targeting and raise interest rates.

Furthermore, the IMF wants the South African treasury and trade ministries to remove protections against international economic volatility, especially financial and trade rules; and it wants the labour ministry to revoke workers’ rights in labour markets. This is despite the protection that South Africa’s residual capital controls have provided against the global crisis.

Bond adds that ‘‘the global crisis may conjure up triumphant centre-left rhetorics of post-neoliberalism in a European neo-Keynesian (and appropriately anti-American) context’’. Looking at the real power relations, however, it makes more sense to prepare a defence against austerity, he argues.

Keynesianism refers to policies inspired by influential British economist John Maynard Keynes whose proposals for a state interventionist approach in capitalist economies after the Second World War were widely embraced until the 1970s.

Regarding looming austerity measures, South Africa’s finance minister, Trevor Manuel, has warned of a further ‘‘tightening of belts’’ for some time.

In suggesting solutions, Bond calls for crucial strategic orientations to move from ‘‘an illusory post-neoliberal hubris, claimed by progressives in many sites around the world, to a more durable terrain upon which firm foundations are laid for human and environmental rights as political determinants, instead of markets and profits’’.

Bond further urges a refocus on sites of real power, which requires cutting through the ‘‘misleading hype’’ about a new Bretton-Woods conference under G20 or United Nations Financing for Development mandates, or a 2009 Copenhagen solution to the ‘‘Kyoto Protocol’s malaise’’.

The view from South Africa, he states, is to counteract the austerity, volatility and micro-neoliberal through reorganising the campaigning in ‘‘defence of financial degradation’’.

To explain the latter phrase, Bond gives as an example community members defaulting on un-repayable mortgage debt and forcing re-payment concessions from banks and creditors through community resistance, as was done in Mexico, Argentina and South Africa.

This should also be done at the national level. Bond quotes UN economic adviser Jeffrey Sachs telling African heads of state that they should refuse to pay back crippling national debt and rather spend that money on health and education.

Moreover, fruitless calls for UN action on environmental and other problems should be transcended with a reconsideration of applying national state powers, such as exchange controls, environmental re-regulation and financial nationalisation.

Bond also proposes that the ‘‘re-delegitimisation of U.S. power’’ be assisted by an insistence ‘‘on a world not addicted to the U.S. dollar and all that it represents economically, and also to provide critical (not dogmatic) support to rising anti-imperialist potentials’’.

Tremendous explosion in the global financial crisis

Could not be denied, the impact of financial crisis when the world feels this is very unusual. Following a period of economic boom, a financial bubble—global in scope—has now burst. The extent of this problem has been so severe that some of the world’s largest financial institutions have collapsed.

Others have been bought out by their competition at low prices and in other cases, the governments of the wealthiest nations in the world have resorted to extensive bail-out and rescue packages for the remaining large banks and financial institutions.

Some of the bail-outs have also led to charges of hypocrisy due to the apparent socializing of the costs while privatizing the profits. Furthermore, the institutions being rescued are typically the ones got the world into this trouble in the first place.

For smaller businesses and poorer people, such options for bail out and rescue are rarely available when they find themselves in crisis. There is the argument that when the larger banks show signs of crisis, it is not just the wealthy that will suffer, but potentially everyone because of the ripple effect that problems at the top could have throughout the entire economy.

Plummeting stock markets have wiped out 33% of the value of companies, $14.5 trillion. Taxpayers will be bailing out their banks and financial institutions with large amounts of money. US taxpayers alone will spend some $9.7 trillion in bailout packages and plans. The UK and other European countries have also spent some $2 trillion on rescues and bailout packages. More is expected. Much more.

Such numbers, made quickly available, are enough to wipe many individual’s mortgages, or clear out third world debt many times over. Even the high military spending figures are dwarfed by the bailout plans to date.

Are explosion 'boom' this economic crisis will destroy us all? Hopefully not occur until.